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Q3 2009

US households save while Obama fiddles

Nancy Pelosi: two heartbeats from the Presidency, representative of less than 1/100% of American voters.

In Q3 2009, American households saved 4% of their income, a sharp increase from 1.5% in 2007 before the current financial crisis. Tax breaks in the “economic stimulus” package were directed to savings rather than consumption.

Private sector tax payers were incensed by the profligate behavior of the Pelosi-Reid Congress, which gave rise to the Tea Party Movement.

The coming storm:

Will gold protect you against inflation?

Will Obama's exit crash gold?

In 35 of the last 50 years, gold prices have fallen relative to inflation. On four occasions, gold has fallen 50% or more. Gold does not track inflation, but rather anticipation of hyper-inflation or war.

In 2010, gold prices were soaring, reflecting fear of inflation from fiscal excesses of the Obama administration and continuation of war in Iraq and Afghanistan. If Obama is a one-termer, gold prices could fall.

Bond market:

World avoids US private debt

Fed Flow of Funds Table F.107, US$ billions (annual flows) to Q2 2009

The flight to safer investments, which started with the Crash of 2008, has accelerated as the consequences of economic policies of the Obama administration have become evident.

There has been a net swing away from certain classes of private debt on the order of USD 1.5 trillion, between 2006 and Q2 2009. This money has gone into US Treasury securities, driving rates to almost zero.

Featured articles on inside pages

Stock buybacks

Stock buybacks dry up

Since 1982, US equities have been driven upwards by stock buybacks. Federal Reserve statistics show corresponding sales of stocks as executives exercised options to take advantage of manipulated prices. More ...

Securities Analysis

Efficient Market Hypothesis: No proof

The Efficient Market Hypothesis continues to impede understanding of how capital markets work. This hypothesis suggests that world capital markets are guided by crowds of rational, competing, profit-maximizers, each trying to predict future market values of individual securities. The Efficient Market Hypothesis has never been proven.
More ...

US Politics

Why Congress won't kill ACORN

Closely connected with President Obama, the ACORN group of "community organizers" has drawn censure from the Democrat-controlled Congress as a result of investigative reporting by James O'Keefe and Hannah Giles. More ...

US equities

Stock values and cash dividends wither

Wall Street ballyhoo and flim-flam to the contrary, the year 2005 closed-out half a decade of misery and pain for the average investor in US equities. Average cash dividend yields never surpassed 3.8% during the period, and most of this was consumed by taxes and management expenses of the open-end mutual funds. More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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1969-12-31 19:00