Here’s a very interesting article by Dereck DeCloet on ReportOnBusiness.com. Some very good reasons on why you should be investing in Canada right now.
Heed the advice of The Smartest Man
Crackpot. Crank. Scaremonger. Alarmist.
The Smartest Man We Know has heard the slurs. When you make your living on Wall Street, yet hold the opinion that Wall Street is populated by incompetent fools, you’re not going to win a lot of friends at dinner parties, are you?
According to Jim Rogers, the increasing foreign debt of the United States has created fundamental problems for its economy and the US dollar will lose its position as the world’s reserve currency.
“The US dollar is and has always been the world’s reserve currency; that is in the process of changing.” Rogers said during a presentation at the IFSA annual conference at the Gold Coast on Wednesday.
“America is out of control,” he said. “The US is now the world’s largest creditor, having US $13 trillion in outstanding foreign debt.
But what is even worse is that our foreign debts are increasing at the rate of US $1 trillion every 15 months.”
What a day for financial stocks! Regional banks got slaughtered and even large national banks sank like bricks. Washington Mutual (WM) was down 35% and Wachovia (WB) dropped 15%. I guess the market didn’t care for the Federal Reserve’s bailout of Fannie Mae (FNM) and Freddie Mac (FRE).
So should the Federal Reserve have offered to bailout FNM and FRE in the first place?
I read two very interesting news reports today. One was about the spread of global inflation.
Last week came word that the Gulf States were piling up $1.5 billion net per day in oil revenues. In China, not an oil exporter, the rate of growth of foreign currency reserves has slowed down recently, but the country still nets about $1 billion per day. Overseas central banks accumulate Everests of these dollars, and lend many of them back to the United States – by buying U.S. Treasury bonds. To give you an idea of how fast this mountain of money is growing, foreign central bank holdings of U.S. treasury bonds, held in custody at the Fed, are increasing at a 37% annual rate.
Legendary investor Jim Rogers has been bullish on commodities since 1999. He started out bullish on oil and metals and to a certain extent on soft commodities like orange juice, coffee and grains.
Here’s a great 10 minute video on his current economic views and what he’s investing in right now.
As always, he calls Ben Bernanke a clueless moron and has a great explanation for why lowering the interest rates is bad for the US economy. That’s always entertaining.
He thinks we might fall into the same trap as Japan and see 17 years of stagnant GDP. That’s downright depressing.
According to Bloomberg, Jim Rogers is in the process of getting all his assets out of the dollar.
“I’m in the process of, I hope in the next few months, getting all of my assets out of the dollar. I’m that pessimistic about what’s happening in the U.S.” Rogers said.
“The yuan is the best currency to buy right now, I don’t see how one can really lose on the renminbi in the next decade or so. It’s gotta go. It’s gotta triple. It’s gotta quadruple.”
In Part I, I discussed the various options available to stash my savings to get the maximum rate of return, while preserving liquidity.
I decided to split my savings into 3. The first half while be kept with Bank of America in their flexible 5 month CD currently paying 5.1%. After 7 days, I can withdraw the money without penalty. Not a bad option, since it balances liquidity with return.
However, one of my main concerns is the devaluing of the US Dollar. Its currently lower than its ever been in history. No one knows where the bottom is, and because Ben Bernanke has hinted that he’s going to continue to lower the interest rates, I feel the bottom is still far away.
On Tuesday, Ben Bernanke cut the Federal Funds rate by 50 basis points (or 0.5%) to 4.75%. While most people may not have expected a cut of this magnitude, they definitely were expecting some sort of rate cut. There’s been too much bad news regarding the economy to think otherwise.
Comedian George Carlin talks about consumerism, education, politics, slave/wage labour, wall-street, critical thinking and the american dream, all in under 5 minutes. His assessment of these topics is pretty accurate too.
[Profanity Alert: The language in this video is NOT PG-13].
NPR had an interesting section on increasing economic anxiety in the middle class. Even though the economy is thriving, 7 out of 10 Americans report living paycheck to paycheck, meaning there never seems to be enough left over for savings.
I definitely don’t agree that the economy is thriving. I think the economy is actually in recession but it won’t be announced for another 6 months, meaning it’ll be March before the Fed actually admits to it. (Thats one reason why I think Ben Bernanke will reduce the Fed Funds rate 50 basis points this week, but I digress).
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