Hopscotching the world for (apocalyptic) headlines
“The world economy is deteriorating more quickly than leading economists predicted only weeks ago,” says the Washington Post. Which begs the question of why the Post and everyone else keeps going back to the same losers who make bum predictions.
But I digress. I haven’t even gotten through all of the first sentence of this article. The rest: “…with Britain yesterday [Friday] becoming the latest nation to surprise analysts with the depth of its economic pain.”
Those pesky surprises again. Even the British broadsheets write openly about the brink of depression.
But never fear, Prime Minister Gordon Brown, the guy who sold most of Britain’s gold reserve at the very bottom of the market from 1999-2002, knows exactly who’s to blame. “If you think we are going to build our policy around the comments of a few speculators who want to make money out of Britain then you are very, very wrong indeed,” he spluttered in a not-so-veiled reference to Jim Rogers.
It was Rogers who said last week advised, “Sell any sterling you might have,” and, “The City of London is finished” as a hub of world finance.
Lest Americans start feeling cocky from all of this, we see the news that Ben Bernanke, as Bloomberg aptly puts it, “may try once again to cure the aftermath of a bubble in one kind of asset by overheating the market for another,” that is, longer-dated Treasuries.
Funny, I thought those were already plenty overheated. But I guess since they’re down about 12% from their highs last month (using the TLT ETF as a proxy), it no longer qualifies as a bubble. Or something like that. “Fed policy makers meeting tomorrow and the day after are exploring the purchase of longer-dated Treasury securities in an effort to push up their price and bring down their yield,” continues Bloomberg. “Behind the potential move: a desire to reduce long-term borrowing costs at a time when the Fed can’t lower short-term interest rates any further because they are effectively at zero.”
Doesn’t help that the incoming Treasury Secretary is firing verbal RPGs at the Chinese. So if they won’t want to buy Treasuries much longer, that pretty much leaves the Fed. And the only way the Fed can pull off those purchases is to print the money for it. (Which may or may not mean the end of the Treasury bubble is nigh.)
Good grief. Well, we can take comfort that riots haven’t broken out. Yet. But from the Balkans to the Baltics, it’s a different story. Even in mellow Iceland police broke out tear gas for the first time in 60 years. That must have been quite a riot to draw that kind of response, seeing as the folks who pelted the prime minister’s car with eggs and pounded on his windows weren’t even arrested. (Just try something like that here in the Land of the Free.)
Surely this turmoil has something to do with the fact gold is back above $900 this morning. And in my continuing effort to assess what I call “gold awareness,” I see the Wall Street Journal has a gold-for-dummies piece in its personal finance section. It’s not great, it’s not awful, but the point is that unless there’s a sudden run for $1000 in the next few weeks, articles like this will continue to be an occasional, passing phenomenon — an anecdotal but convincing sign that we’re nowhere near the top of a secular bull market in gold. So there’s still ample time to pile in at a steep discount.