Signs Economic Commentary for 4 August 2008

Summary: A comment on last week's SOTT Economic Commentary pointed out that four more U.S. banks had failed since the IndyMac run. I missed that news. Events get so strange and alarming that they become the new normal. Ho-hum another bank failure. Apparently I wasn't the only one because the mainstream media has been keeping this as quiet as possible.

And then, sure enough, on Friday night, the FDIC announced another bank failure.

While all the events in the banking crisis and the next Great Depression unfold, multinational corporations have quietly taken over core government functions in the United States, most alarmingly in the areas of war and intelligence. This may be one of the most important trends of the new century and probably has more ramifications than we can imagine - and we are probably past the point of no return...

Signs Economic Commentary for 28 July 2008

Summary: Gold and oil were down sharply last week. Over the last two weeks, oil fell 17.5% on lower probability of war in Iran and growing evidence of a serious global economic downturn. It may be that the commodities bubble will be short-lived and that we are shifting back to risk of deflation due to collapse in demand.

Bad news in the U.S. housing sector continued to pile up. Foreclosures have doubled from a year ago and existing housing sales hit a ten-year low. The result is a lot of personal pain and shattered lives. In the Boston area last week a woman committed suicide before her house was going to be repossessed.

Signs Economic Commentary for 21 July 2008

Summary: Oil prices fell sharply last week on fears of serious recession as well as signs that the U.S. is prepared to cut a deal with Iran. The media gave lots of coverage to the former and very little to the latter. After years of saber rattling, the Bush administration sent its third-ranking diplomat to Geneva to meet with the Iranian diplomat in charge of the nuclear program negotiations. It was also revealed that the U.S. is setting up an "interest section" in Teheran for the first time since 1979. That is an office that represents a country's interests when that country doesn't officially recognize the other.

What seems to be happening is that the old U.S. establishment has decided to cut its losses in Iraq by arranging a face-saving force reduction with help from Iran so that it can shift military resources to the war in Afghanistan. The war against the Taliban is going badly. Note also that the Taliban is an enemy of Iran.

The good news for the economy in all this is that we have a chance of having only a severe recession/depression instead of a complete collapse. If the United States can behave itself a bit more internationally and the banks and consumers ease up on some of the more obscene excesses, they might let Americans keep eating...

Signs Economic Commentary for 14 July 2008

Summary: Except for the 3% rise in gold against the dollar, market movements weren't drastic last week. But that doesn't capture the fear in the markets and in the media that things are close to getting much worse. The collapse of "IndyMac", the near collapse of Fannie Mae and Freddie Mac (such cute nicknames!) stoked that fear at the end of the past week.

It began on Thursday when the stocks of Fannie Mae and Freddie Mac plummeted. Fannie Mae stands for FNMA or the Federal National Mortgage Association and Freddie Mac stands for FHLMC or the Federal Home Loan Mortgage Corporation. In a nutshell they guarantee mortgage debt. $5 trillion of it. Half of all the outstanding mortgage debt in the United States.

As long as most mortgage holders are paying their mortgages off, the system works fine and Fannie Mae and Freddie Mac help free up lots more money for new mortgages, making house purchasing available and more affordable for people. But they are publicly traded companies. Their stock price in times like these, where it is not at all certain that people will be able to keep paying on their mortgages, can drop fast.

What happens if they crash? Why, the US government steps in and bails them out! But how can even the government guarantee $5 trillion dollars in bad debt?!

Signs Economic Commentary for 7 July 2008

Summary: Recent trends continued last week with gold up, oil up much more, stocks down and, in the U.S., jobs down. These are the economic effects of a crumbling empire.

The mainstream media is reporting that the reason some international investors aren't investing in America any more is because they are unhappy with Bush's foreign policy. But the reason is not because investors are "unhappy" with the policies - it's because the policies have failed and have wasted over a trillion dollars. These policies have enriched a few insiders feeding at the trough while bankrupting the U.S. government. If there is one thing we can thank George Bush for, it is destroying the U.S. empire and making the United States just another country. And as a U.S. citizen, I mean that sincerely, not ironically.

So, what's in store for us next?