Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 03.28.2008
Silver vs. Gold: 2004 to Today In August of 2004, when silver was $6 and gold was $380, I wrote the following four reasons for liking silver more than gold: Mine production could not satisfy physical demands of either gold or silver. However, I like silver better because most official sectors, such as the US government, have run out of silver. Only governments do nutty things like selling a valuable asset to suppress its price. I trust the private enterprises holding silver stockpiles to be logical (i.e. profit-seeking) participants in the silver market. If Mr. David Morgan were right that China provided most of the silver to fulfill the demand for the last few years, then the silver picture would just get more bullish. I expect China in a year or two will be a net silver importer (if it has not already), just like soybeans, copper, steel, and any other commodity you can think of.
Consumer spending flat in February U.S. consumer spending was flat in February after adjusting for inflation, the third consecutive month of weak consumer demand, the Commerce Department reported Friday. Real consumer spending has risen less than 0.1% seasonally adjusted since November, a clear sign that the main engine of U.S. economic growth is stalling as job growth wanes and house prices tumble. Real consumer spending is on track to rise 0.8% annualized for the first quarter, economists said. "The plunging confidence numbers clearly point to an outright decline in the second quarter," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics.
Dollar Departure For Chinese Exporters Global industries are looking for ways to operate without the help of America's erratic currency. We learned yesterday that one of the world's biggest pension funds is shunning the paltry returns on U.S. government debt. Today the Financial Times is reporting that an increasing number of Chinese exporters are migrating away from the dollar to settle non-U.S. transactions. Alibaba.com, a company parly owned by Yahoo that hooks up international buyers with Chinese suppliers, says the vast majority of its 700,000 suppliers are moving to pounds, euros or even using China's own renminbi to complete sales. Abandoning the dollar is an attempt to minimize currency risk. Alibaba's chief executive explained his company's position, saying that prior to greenback volatility, dollar prices were valid for a month or two. Those same quotes are now good for just seven days.
Fannie Mae And Freddie Mac May Need $20 Billion Part of the plan to fix the mortgage crisis is for Fannie Mae (FNM) and Freddie Mac (FRE) to buy more debt securities. To do that, they will need more capital, perhaps as much as $20 billion. According to Bloomberg ``That's the top end of the range,'' James Lockhart,director of the Office of Federal Housing Enterprise Oversight said, Even in this day and age of multi-billion bail-outs, that is a lot of money. The companies will have to sell stock or bonds to raise capital. The may push their share prices down again because of dilution. The federal government probably does not want foreign capital to fund the new requirements. So, who does that leave?
Foreclosing on Fido In the swank Country Club area of Anthem, Ariz., Barbara Ward-Windgassen's rescue group has saved a bichon frise, Lhasa apso and shih tzu -- some with their leashes still on -- after their owners had abandoned them in their foreclosed high-priced homes. She's also helped find new homes for a rottweiler and pit bull that were being cared for over the fence by neighbors for nearly two months after the family left them in the back yard when their house was taken back by the bank. Call it reckless abandonment. Shelters and animal rescue organizations across the country are packed cage-to-cage with dogs and cats, even birds and reptiles, that have been ditched or dropped off as scores of foreclosed-upon homeowners relocate.
Fed Leaders Ponder an Expanded Mission In the past two weeks, the Federal Reserve, long the guardian of the nation's banks, has redefined its role to also become protector and overseer of Wall Street. With its March 14 decision to make a special loan to Bear Stearns and a decision two days later to become an emergency lender to all of the major investment firms, the central bank abandoned 75 years of precedent under which it offered direct backing only to traditional banks. Inside the Fed and out, there is a realization that those moves amounted to crossing the Rubicon, setting the stage for deeper involvement in the little-regulated markets for capital that have come to dominate the financial world.
Jump in rice price fuels fears of unrest Rice prices jumped 30 per cent to an all-time high on Thursday, raising fears of fresh outbreaks of social unrest across Asia where the grain is a staple food for more than 2.5bn people. The increase came after Egypt, a leading exporter, imposed a formal ban on selling rice abroad to keep local prices down, and the Philippines announced plans for a major purchase of the grain in the international market to boost supplies. Global rice stocks are at their lowest since 1976. On Friday the Indian government imposed further restrictions on the exports of rice to combat rising local inflation, with traders warning that the new regime would de facto stop all India’s non-basmati rice sales.
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