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REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.

How YOU Can Help Reduce the National Debt

On June 7, 2010, in Debt, WTF?, by Tim

This was stumbled upon a short while ago and it’s just too good not to share (actually, I’m dying to know if and how much money the Treasury Department collects this way, but, for the time being, just knowing that these pages exist is amusing enough).

Anyway, if you go to the Bureau of Public Debt, you’ll find this at the bottom of the page:

Click on the link at the bottom and you”ll find this:

Now, I’m not one for telling people what they should do with their money, but, with the way elected officials in Washington spend it these days, surely people can find some no-good, drunk, loser cousin that could put the money to better use.

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Germany Applies the “Debt Brake”

On June 7, 2010, in Debt, Europe, by Tim

For those of you who don’t know it (and I don’t know why you would), your humble scribe with the Italian last name is also half German, some great, great, … great grandparents having come to Pennsylvania Dutch country from Baden Baden sometime in the early 1800s, or so I’m told.  As such, austerity is not an unfamiliar concept and, according to this report in Spiegel Online, the rest of Europe is getting more familiar with that word today.

German Government Agrees on Historic Austerity Program

The German government put together the largest austerity package since World War II on Monday, with spending cuts and new business levies aimed at saving 80 billion euros by 2014. Chancellor Angela Merkel says Germany, as Europe’s largest economy, must set an example.

The German government on Monday announced plans to reduce spending by €80 billion ($95.7 billion) by 2014 in the largest package of cuts since World War II. The austerity program aims at reducing the budget deficit and helping to protect the euro as it continues its slide.

“We have to save €80 billion by 2014 to put our financial future back on a solid footing,” Merkel told a press conference on Monday afternoon. She said the budget cuts for Germany, Europe’s largest economy, were a “unique show of strength” that signalled her government’s commitment to tackling the European debt problems that have plunged the euro single currency into crisis.

Of course, others in Europe are probably calling it something quite different while, here in the U.S., Keynesian economists are probably just shaking their heads again, muttering something about how “the Germans just don’t get it”.

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A Look at Relative Performance in 2010

On June 7, 2010, in Bonds, Commodities, Currencies, Stocks, by Tim

Spotted over at Paul Kedrosky’s blog earlier today was this chart from Finviz (no link, apparently) showing the  year-to-date performance of various asset classes. Don’t get too excited about hogs and cattle (as Paul did) as a wicked contango persists in these markets that is killing investors, the iPath DJ-UBS Livestock TR Sub-Idx ETN (NYSE:COW) now up a whopping one percent for the year despite what you see directly below.

Practically speaking, the trade-weighted dollar and gold are battling it out at the top while the only equities still in positive territory for the year are the small cap Russell 2000 stocks with gains of 1.0 percent, but, down 1.08 percent today, they too should be painted red. Bringing up the rear are a host of agricultural goods that Jim Rogers and a few others have been recommending for the better part of a year now, but they just keep going down.

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The End of the Gold Story

On June 7, 2010, in Commodities, by Tim

Brett Arends is out with the final installment of a three part Wall Street Journal series on everyone’s favorite metal these days – gold. A look at the first two parts are linked to below and, as should be clear from the titles, I didn’t think too much about part two:

The final chapter is titled Playing Gold without Getting Killed and, unfortunately, it really doesn’t add much to what has been an interesting discussion only insofar as it provides yet another window into mainstream thinking about the metal that has bested just about every other investment over the decade.

You can see signs of a gold rush everywhere, from nonstop TV commercials in the U.S. to the Emirates Palace Hotel in Abu Dhabi, where a vending machine dispenses gold coins.

If anything, the nine-year gold boom has intensified as traders nervous over the European financial crisis have flocked to the metal’s perceived safety. The assets in the SPDR Gold Trust , an exchange-traded fund that tracks the price of gold, jumped by more than 10% in May alone.

The question for investors who have remained on the sidelines until now is whether there still is an opportunity to join the stampede—and, if so, how to do it without getting crushed.

Gold prices have risen nearly fivefold since 2001. Yet, remarkably, some analysts say the rally might still have legs.

Gee. It’s not hard to guess what the real feelings are here.

Terms like “gold rush”, “gold boom”, “join the stampede”, “getting crushed”, and the telltale characterization of “remarkable” regarding the idea that prices might continue to rise from here, that is, beyond half of the inflation adjusted high from 30 years ago.

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The “Debt Super Cycle”

On June 7, 2010, in Debt, by Tim

Lately, those concerned about too much U.S. debt have been winning more arguments than they’ve been losing, charts like this one from Bloomberg no doubt making it even easier to sway all but the most ardent advocates of borrowing our way back to prosperity.

A forecast by the International Monetary Fund shows that total U.S. government debt – now at $13 trillion and still climbing rapidly – will exceed U.S. GDP in just two years. Of course, if the economy slows, this may happen even sooner.

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Monday Morning Links

On June 7, 2010, in Uncategorized, by Tim

TOP STORIES
Hungary attempts to soothe default worries – MarketWatch
G20 drops support for fiscal stimulus($) – Financial Times
G-20 Clash Over Recovery Risks ’Sub-Potential’ Growth – Bloomberg
Questions For Krugman, DeLong, Ferguson, And The Tea Party – Business Insider
Forget any would-be China crisis, its policies are too shrewd to fail – Telegraph
U.S.’s $13 Trillion Debt Poised to Overtake GDP: Chart of Day – Bloomberg
Gulf residents fear another impact of spill: lost oil jobs – McClatchy
Slowdown looming but no double dip – Reuters

Have these these links delivered to your inbox every weekday.

MARKETS/INVESTING
Oil extends losses to near $71 – AP
Buyers take a shine to new gold ETF – MarketWatch
Investor Fund Flows Most Bearish Since Lehman Collapsed – Business Insider
Gold bugs increasingly confident as gold shares are weak – MarketWatch
Extraordinarily Large Band-Aids – Hussman Funds
Playing Gold Without Getting Killed – WSJ

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