Economic Charts

All economic charts are at the bottom of the page.

Sunday, April 17, 2011

Weekly King World News Interviews

This week on KingWorldNews Eric King has a terrific line up with Michael Pento, Rick Rule, James Grant and Jim Rickards.  These interviews span multiple topics from the health of the stock market, the debt situation, Gold/silver, Japan economy as well as numerous other topics in our economy and their effects.

Michael Pento - Discusses inflation and how it is destroying the middle class currently.  Michael says that Wages and Salaries have been falling while year-over-year prices have increased dramatically.  Michael discusses various statistics that show huge inflation yet the FED says they have nominal inflation.  He mentions how multiple countries have raised their interest rates and would probably be better served there as the FED has kept interest rates at zero.  He mentions Q1 2011 GDP will be less than 2% and if you use a real rate of inflation which is close to 9.5/10% we have a very negative GDP reading.  Michael believes the cuts being proposed still doesn't get the job done, even with the very aggressive Ryan plan.  Michael puts together a very strong argument in this area.  Michael believes the only way out of this debt issue is to default and that is what Gold and Silver is telling us.  He believes we are experiencing a lower standard of living in the U.S. due to the currency destruction making discretionary spending dwindling and non-discretionary costs rising very quickly.  This whole interview is a wealth of information and is a must listen.  

Rick Rule - Discusses how silver is taking off, but Rick is taking some profits of silver (but is exiting the trade on the equity side, not the physical).  Rick says that physical silver market is extremely tight as far as physical inventory.  Rick says he doesn't think we are in such a gold bull market as much as we are in a paper bear market (causing the price to go higher).  Rick thinks long term he is a bull on Gold, but believes short term we may see a retrenchment of gold.  Rick says that their seems to be a race to devaluate all paper currencies, but gold is the only one that nobody is interested in or can devaluate.  Rick says in the next 5 years the energy complex will increase significantly for multiple reason (supply side, growing energy demand).  Rick goes on the discuss more about energy (impact of Fukishima on Uranium) and other interesting topics.

James Grant - Discusses how the FED owns the stock market and the FED claims responsibility for ensuring the markets rise since QE1.  James asks what happens if the FED doesn't do QE3, which may cause the market to fall hard (making equity holders suffer).  James says the humble saver has been left with nothing in their money market savings.  He says the FED has been managed negating the original founders goals and provides multiple examples of those failures.  James says he is bullish on gold right now mainly due to the reduction in confidence around the world in central banks ability to manage fiat currency.  James believes we need to move back to a gold standard to manage money supply and says it need more study as to what number gold would have be valued at.  James makes the best analogy I have heard which is "the country needs a debit card, not a credit card", which would definitely manage our spending.  He says we need to get back to honest money (money convertibility to an asset) to regain confidence in our currency.  James goes on with a very valuable discussion on multiple topics.

Jim Rickards - Discusses events around the world starting in Japan, where we are a month from the event and there are still people struggling to survive.  Also he says that Japan is not going to recover from this incident very quickly (like is being said).  There are multiple issues in the supply chain which is impacting businesses around the world.  Jim says China and Japan could form a regional currency long term due to strengthened relations and linkages (to the dollars detriment).  Jim says the Libya issue isn't as cut and dry as one might think with multiple issues on both sides (rebels and Khadafi's side).  Jim raises some very interesting complexities in the Libyan conflict currently that are not easily solved.  Jim says that the endgame of the Libyan war is a stalemate and has not stopped the decrease in oil flow.  Jim discusses changes on how the FED communicates with the public (more like the other central banks in the world).   He believes that the FED is going to let QE end in June (but will not terminate early) and will work on perpetual QE, which Jim discussed weeks ago (the size of the FEDs balance sheet is so big that they can continue to perform operations perpetually off the maturities).   By creating higher inflation the FED creates negative interest rates and increases borrowing and stimulates spending.  He says QE is not about monetization it is about suppressing interest rates.  Jim says gold doesn't have many industrial uses and its increase has been due to dollar devaluation (gold as a currency) and may not move with other commodities that have industrial ties.  Jim doesn't think gold will go to the 1330 level (be the bottom now) and goes on to make the argument on why gold is not a bubble due to being under-allocated by most.  Jim discusses more market impacting topics which are very important and must listen topics.

Weekly Unofficial Problem Bank List

CalculatedRisk released its weekly "Unofficial Problem Bank List" this week with 978 institutions on the list.  This week the FDIC lost 6 more banks which helped reduce the list.  In all there were 13 removals from the list (including he FDIC 6) and 9 additions to the list.  This is a lot of activity for one week.  The 978  institutions hold assets valued at $429.4 billion dollars.  The following states experienced the following change:


Weekly M1 and M2 Money Supply

This week M1 money supply (which includes currency, traveler's checks, demand deposits and other checkable deposits) increased by 0.057% and M2 (which includes M1 plus Money Market Mutual Funds, savings and small time deposits) increased by 0.29%.  Year over Year M1 increased by 11.7% and M2 increased 4.5%.  M3 (which is M2 +large deposits and other large, long-term deposits) has been rising since mid 2nd Quarter of 2010 after contracting since 2008 (probably due to loan defaults).

M3 Courtesy of


This week the Fed performed multiple POMO (Permanent Open Market Operations) purchases which totaled $26.909 billion dollars (with Mondays removed as it was already posted $19.048 billion was printed).  This brings the total since November 3rd 2010 ( the day the FED announced the printing of $600 billion dollars by June 2011) to $547.306 billion dollars and since August 17th 2010 to $611.766 billion dollars.

Weekly FDIC Bank Failures

Well the past few week have been uneventful when it comes to bank failures (a trend we would like to keep up), but this week a larger number of banks failed making things a little more eventful.  This week we lost 6 banks; Heritage Banking Group out of Carthage Mississippi, Rosemount National Bank out of Rosemount Minnesota, Nexity Bank out of Birmingham Alabama, New Horizons Bank out of East Ellijay Georgia, Bartow County Bank out of Cartersville Georgia and Superior Bank out of Birmingham Alabama.  This brings the total of banks failed during 2011 to 34 institutions.

Jim Grant on the FED's Actions

Jim Grant provides his views on the Federal Reserves actions to recover the economy, why they are unsustainable and why they are creating massive inflation. He also discusses the possibility that the punch bowl will be pulled away when most don't expect it and the stock market will fall.

Weekly Money Flows

This weeks money flows show another continuation of outflows in domestic stocks.  Domestic stocks had -$335 million in out-outflows, foreign stocks had the largest in-flows in quite a while with $2.776 billion going into foreign stocks.  Taxable bond had in-flows of $6.064 billion, which is almost double the prior few weeks trends.  Municipal bonds continued to sell off with -$847 million flowing out of Muni's.