Welcome to “The Room”

The January editions of The Casey Report and International Speculator are now available.



January 9, 2009

Ed. Note: We are pleased to announce that registration is now open for our next Casey Research Summit, Las Vegas, March 21 & 22. Details follow later in this edition of The Room.

Dear Readers,

Good friend Clyde Harrison forwarded me the following quote. I think it is worth keeping close at hand as a useful repartee to those who espouse the need for yet more government to save the U.S. economy.

    The problem with socialism is that you eventually run out of other people’s money. Margaret Thatcher

Well, it now appears that the U.S. government has, indeed, run out of other people’s money.

I say that because of a growing level of support for our long-standing contention – hats off to Casey Research Chief Economist Bud Conrad – that the 2009 U.S. government deficits were headed well over the $1 trillion mark.

Earlier this week, we heard Obama caution that we can expect “trillion-dollar deficits for years to come.” A point quickly confirmed by the Congressional Budget Office, which now calculates that the country is looking down the barrel of a $1.2 trillion deficit in 2009.

And even those dire numbers are too low, given the government’s established policy of underestimating just how bad things really are.

To help set the record straight, Bud sent over the following update.

Can the Budget Deficit Really Grow to $3 Trillion?

By Bud Conrad

The U.S. federal deficit could grow to the size of the total budget last year. That doesn’t make sense. It can’t happen.

Last fall, even before the 2008 fiscal year ending September 30 had ended, we published my calculations that the U.S. government was on track for a $1.5 trillion budget deficit in 2009. As the deficit in 2008 was a record $455 billion, a tripling of that number is serious. Initially, I was concerned that I might have been missing something, that there was something wrong with the numbers. And so I double and triple checked, and then realized that the numbers held up and even looked to understate the seriousness of the deficits. So, in recent months, we upped our forecast to expect a deficit in excess of $2 trillion.

As outlandish as that number is, with each passing day, the news supports an even further upward revision. To put a stake in the ground here at the beginning of 2009, let’s take a look at the data as we know them, then try to come to a conclusion as to just how bad it could be.

We’ll start with the base case as published by the Congressional Budget Office, the supposed non-partisan arm of Congress. The CBO base case includes only those items that have been legislated. This ignores potential updates, for example, additional spending for the wars in Iraq and Afghanistan and, most importantly, Obama’s new stimulus.

  • The Office of Management and Budget (OMB) baseline deficit published January 7, 2009, starts out at $1.186 trillion.

    (For those interested in the raw data, the source is the Congressional Budget Office. See table 4, page 15: http://www.cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf)

They admit there’s much more. So let’s see how much will have to be borrowed by the U.S. Treasury to fund the additional outlays now expected:

  • The Obama stimulus package is expected to be $775 billion. That alone gets us pretty close to $2 trillion.

OMB makes assumptions about existing programs. Here are some snippets:

  • The defense spending is estimated at increasing 5%, but they often allocate more:

    “Final appropriations and additional funding for operations in Iraq and Afghanistan may increase outlays for 2009 and beyond, and any stimulus package may raise discretionary spending further.”

The $700 billion of TARP is only entered at $180 billion of outlays by estimating the present value of all future cash flows. OMB assumes the $700 billion TARP will be spent, but they are still claiming that they are investing in some profitable ventures. Even if that is the case (and I surely don’t trust Treasury to have made good investments), they will have to borrow the entire $700 billion to buy whatever troubled assets or banks’ equity they deem necessary. Even the White House is using a cash basis, not some accounting flimflam. So I say, add the total of the TARP accounting for $520 billion more. Here is the quote:

    “Assuming that the TARP eventually disburses the full $700 billion that was specified in the legislation that created the program, CBO has estimated outlays of more than $180 billion for 2009 to account for the subsidy costs related to those investments and loans.”

For economic assumptions, they recognize the economy slowing:

    “In addition, economic developments have reduced tax receipts (particularly from individual and corporate income taxes) and boosted spending on programs such as those providing unemployment compensation and nutrition assistance as well as those with cost-of-living adjustments.”

The GDP is projected to be flat compared to last year, and the 3-month T-bill is estimated at only 0.2% yield for the year. From those assumptions, the “net interest payments are projected to decline by more than 20 percent.” But our view is that rates are likely to rise, and the economy is likely to get even worse, leaving us with lower tax revenue. On that note, it is of interest that at the bottom of the Great Depression, tax receipts had fallen 50% from prior levels. Anything approaching that level in the current slowdown would blow an even bigger hole in the budget.

On Fannie and Freddie, the cost is recognized as only $200 billion, but those two institutions, now de facto extensions of the U.S. government, have $5 trillion in guarantees:

    “Recognizing the cost of the takeover adds about $200 billion (in discounted present-value terms) to the deficit this year, reflecting the long-term net cost of the more than $5 trillion in credit guarantees issued and loans held by those entities at the start of the fiscal year.”

The purchase of mortgage-backed securities requires cash and borrowing by issuing new Treasuries, but it is not considered a loss to the budget because they are getting the asset:

    “Additionally, the Treasury is purchasing mortgage-backed securities from the private market; CBO assumes that such purchases will total nearly $250 billion this year, thereby necessitating additional borrowing of a similar amount (although the budgetary impact of the purchases, shown as an estimated subsidy amount in 2009, is relatively small).”

There is nothing in here about the new healthcare promises. Try $300 billion as a down payment.

The tab for borrowing for next year (so far)…

$1,186 Base
$775 Obama stimulus
$700 – 180 = $520 TARP fully accounted
$300 Healthcare
$250 Accounting for MBS
$100 War supplement
$100 AMT, autos, or… or…
= $3 trillion !!!!!!

The news headlines are slowly catching up, now saying the deficit will be above $1 trillion. It is actually at least $2 trillion and, if the numbers hold up, heading to $3 trillion.

$3 trillion is 21% of the $14 trillion GDP! That was the size of all spending last year. The 2008 deficit was a record at $455 billion or only 3% of GDP. Even a $2 trillion deficit would still be 14% of GDP, a very dangerous and entirely unsupportable level.

The implications are explosive. To provide just one example, the 10-year Treasury rate is currently only 2.5%. How will the government handle a 5% or 10% interest rate on its $7 trillion of debt, let alone another $3 trillion?

That said, the deficit won’t be that big, because something will break first. I don’t know what: the bailouts, the dollar, new taxes, riots in the streets…

Remember, this is entirely separate from the Fed’s trillion dollars in bailouts and stimulus so far, which is also feared to grow. The Fed has no requirement to get a budget approved or to project what it is doing and has thumbed its nose (I was thinking of a more graphic analogy, but this is for a general audience) at a lawsuit from Bloomberg, which asked them to reveal their actions to the public. Amazingly, all the well-known economists from Roubini, to Feldstein, to Krugman want more spending.

If anyone wants to guess what the effect will be on the dollar, interest rates, or the economy, I’m looking for opinions. I bet you can guess where I’m coming from. This isn’t just your garden variety of government excess.

Implications

David again.

I’d like to take up Bud’s challenge to guess what the effect of these deficits will be on the economy.

First and foremost, the government’s extreme funding demands will outstrip its ability to raise said funds, and certainly not at anywhere near current interest rates. While the whole dance around Treasury financings is very complex and to some extent rigged, you’ll know the economy is approaching the wall when the size of the Treasury auctions – already running well above the norm – begins to spike, and the ratio of bids to the offering begins to fall. (We’ll start tracking this data in The Casey Report.)

Secondly, per above, Treasury rates will have to go up, and when they do, it will set off a vicious cycle. For a time, buyers may stick with 3-month Treasuries, even at zero interest rate, but buying 10- to 30-year Treasuries at anywhere near today’s record-low yields will quickly be a non-starter.

Foreigners, who have been the biggest buyers of our debt in recent years, will stay away in droves. The latest data, out earlier this week, show signs that this is already beginning to happen.

As a result, rates will begin to ratchet steadily higher, exacerbating the record deficits. At some point, and I am guessing this will occur sometime around the middle of the year, the government will run out of ways of obfuscating both the severity and immediacy of the problem.

To use Bud’s term, it is at this point that the economy breaks.

While I am not afraid to offer the occasional opinion in this weekly adventure in pondering, it’s more important than ever to focus on what we actually know, versus what we think we know.

Critically, we now know two things.

One is that a trillion-dollar deficit is locked in, with a very high probability that it’s going over $2 trillion and maybe even $3 trillion.

While I strongly suspect that most members of Congress have next to no idea of the mechanics of the economy, and so are paying more attention to what’s for lunch than to the dire implications of these deficits, a recognition of the problem cannot be far off. When it comes, they can be counted on urgently calling for a rousing round of televised committee meetings complete with ardent hand waving and finger pointing. After that, expect an avalanche of new legislation, none of it well thought out and most of it actually counterproductive. Nero fiddling comes to mind as a useful analogy. That pretty much sums up the extent of the role we can expect Congress to play.

The second thing we know is that, with time running out on any rational, market-oriented response, the incoming administration is viewing the situation through the tired old lens of statism, the very condition that got us here in the first place.

In support of that contention, I enter into evidence the words of President-Elect Obama, with some fairly blatant plagiarism from JFK, uttered earlier this week (I have added the boldface for emphasis)…

    “It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.

    Only government can break the cycle that is crippling our economy — where a lack of spending leads to lost jobs, which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit.
    That’s why we need to act boldly and act now to reverse these cycles. That’s why we need to put money in the pockets of the American people, create new jobs, and invest in our future. That’s why we need to restart the flow of credit and restore the rules of the road that will ensure a crisis like this never happens again.

    … That’s why I’m calling on all Americans, Democrats and Republicans and independents, to put good ideas ahead of the old ideological battles, a sense of common purpose above the same narrow partisanship, and insist that the first question each of us asks isn’t “What’s good for me?” but “What’s good for the country my children will inherit?”

    President-Elect Obama speaking to students at George Mason University, January 8, 2009.

And so it is in the cards that we are going to see yet more government, more taxes, more regulation, more interference… and all for the “greater good” (cheering mob) versus the “selfish individual” (hiss, boo).

Which brings me to my macroeconomic forecast for the U.S. and the global economy for the fiscal year 2009.

We’re screwed.

    (Well, at least the unprepared are. The current edition of The Casey Report, published January 7, contains 39 action-packed pages and includes Doug Casey’s excellent “The Greater Depression, Part II.” One reader just wrote in his assessment that…

      “Your piece in The Casey Report was terrific. It made me want to go out and tell everyone I know to read it… especially the “What the Government Should Do/Will Actually Do” section. It really is one of those pieces you want to send to everyone in America every single day.

    Among much, much more, the issue also includes a comparison by Bud Conrad between the current crisis and the Great Depression of the 1930s… specifics on how to position yourself to profit from what’s coming next. Fortunes will be lost, but fortunes will also be made.

    If you are not yet a subscriber, now is the right time to take us up on our no-risk, three-month trial. Don’t put it off. Details on our three-month guarantee subscriptions to The Casey Report here.)

Helpful Context

Doug Casey forwarded the following post from the Financial Mail.

    Remember one year ago? RBS (Royal Bank of Scotland) paid $100bn for ABN Amro?

    For the same amount of money today, it could now buy:

    Citibank  $22.5bn
    Morgan Stanley           $10.5bn
    Goldman Sachs $21bn
    Merrill Lynch $12.3bn
    Deutsche Bank  $13bn
    Barclays  $12.7bn

    And still have $8bn change… with which you would be able to pick up GM, Ford, Chrysler, and the Honda Formula 1 Racing-Team or, tomorrow, maybe something better.

Puts the current downturn in an interesting perspective, eh?

Gasoline Tax

In the November 26, 2008 edition of this column/bloggy thing, I guessed that we might see a push for higher gasoline taxes. Here’s the quote…

    While I know what I am about to say means going out on a limb, I think, as part of its New Deal, the Obama administration is going to backfill some of the recent retracement in gasoline prices with an energy efficiency tax or some such. Thus, if the national average is now $1.85 a gallon, which it is, a 25 cent EET tax would seem a reasonably easy sale (with vouchers for the less fortunate), given that that would still leave prices well below where they recently were.

    Further, the story could be trumpeted in the press by showing comparisons to the prices paid by European countries, which are already well over $5.00 a gallon.

    Obama ran on the platform, “Change You Can Count On”… well, in this case, the change you can count on will be the extra change it costs for a gallon of gasoline.

My rationale at the time was that such a tax was just the sort of thing the more-government aficionados could fall in love with, given that it could be said to be supportive of “green” initiatives by punishing the carbon abusers.

Even so, at the time, I was somewhat skeptical even at my own reasoning. After all, could the enviro-alarmists really be so callous to the plight of the working man to support such a measure?

Apparently so. Here’s Thomas Friedman, writing recently in the New York Times…

    The two most important rules about energy innovation are: 1) Price matters — when prices go up, people change their habits. 2) You need a systemic approach. It makes no sense for Congress to pump $13.4 billion into bailing out Detroit — and demand that the auto companies use this cash to make more fuel-efficient cars — and then do nothing to shape consumer behavior with a gas tax so more Americans will want to buy those cars. As long as gas is cheap, people will go out and buy used S.U.V.’s and Hummers.

    There has to be a system that permanently changes consumer demand, which would permanently change what Detroit makes, which would attract more investment in battery technology to make electric cars, which would hugely help the expansion of the wind and solar industries — where the biggest drawback is the lack of batteries to store electrons when the wind isn’t blowing or the sun isn’t shining. A higher gas tax would drive all these systemic benefits.

    The same is true in geopolitics. A gas tax reduces gasoline demand and keeps dollars in America, dries up funding for terrorists and reduces the clout of Iran and Russia at a time when Obama will be looking for greater leverage against petro-dictatorships. It reduces our current account deficit, which strengthens the dollar. It reduces U.S. carbon emissions driving climate change, which means more global respect for America. And it increases the incentives for U.S. innovation on clean cars and clean-tech.

    Which one of these things wouldn’t we want? A gasoline tax “is not just win-win; it’s win, win, win, win, win,” says the Johns Hopkins author and foreign policy specialist Michael Mandelbaum. “A gasoline tax would do more for American prosperity and strength than any other measure Obama could propose.”

I don’t know about you, but the sort of logic that the highly overrated Mr. Friedman deploys here nearly brings me to my knees.

First off, I bristle at the notion that the government should use coercion and outright theft in an attempt to “shape consumer behavior.” If I want to use my money to buy a Hummer (and trust me, I don’t), that is my own business. The sort of economic meddling implicit in Friedman’s comments could be out of The Communist Manifesto, 2008 Edition.

Secondly, the idea that there is some net advantage to be had from government transferring yet more money to itself out of the pockets of commuters is not just misguided, it is ignorant.

To wit, if it costs $1.80 to get a gallon of gasoline into my car, how does layering, say, 25 or 50 cents onto each gallon reduce that cost? The same production/distribution apparatus must be paid, including the oil-producing countries that Friedman categorically links to terrorism. But now, according to Friedman’s formula, consumers should also have to send more money to Washington for it to use in paying off the deficits it has run up, and to provide handouts to friends, no small number of whom have recently reengineered their government money harvesting enterprises to capture “green” money.

Sure, if the government ratchets the gasoline taxes high enough, people would cut back further on driving and that could push the cost of gasoline down further. But we are already near the point where the margins on oil will result in a serious disincentive to oil producers to do further exploration and development. As our friends at the Hightower Report point out, commodity producers are very used to sharp swings in prices, and respond by cutting – or raising – production quickly in the face of changing conditions.

The fact is that any viable alternative mass energy solution is still a decade or more away – and when it comes, it will come out of one of the multitude of private enterprises now hard at work trying to capture the trillion-dollar grand prize. In the interim, trying to shape consumer behavior by crushing them with heavy new taxes on a commodity they have to use every day reminds one of the sort of reeducational policies the Khmer Rouge might have approved of.

But, hey, if you are a yuddite (yuppie luddites), outraged that people insist on driving carbon-spewing gas guzzlers versus, say, commuting on customized ten-speed bikes (titanium frames, of course), then I guess this might be a win, win, win, win, win. For everyone else, this is just another stone added to the wheelbarrow.

    (In an interesting and related development, perhaps sensing that there might be some outrage at a gasoline tax, no matter how well intended, the state of Oregon has begun a pilot program, which involved installing a GPS unit in 300 cars and then taxing people based on how far they drive each month. Apparently, the pilot program is attracting fans among officialdom in other states, and the federal government. You can read more here.)

Due to falling readership and flagging ad sales, there is talk that the New York Times won’t survive the current economic downturn. With columnists like Friedman, all I can say is, “Good riddance.”

Speaking of yuddites, I came across a funny video this week on the topic of carbon credits.

You can view it here…

1984: Coming Soon to Theatres Everywhere

Subscriber and regular U.K. correspondent Sadia sent me an item from The Guardian about a grand-scale theatrical production in that country in which each citizen will play a role in a live production of George Orwell’s classic, 1984.

While the actual debut date of the production hasn’t been announced, it appears to be due to open soon, if you credit the Guardian. Here’s an excerpt…

    The state’s latest plan to watch us makes every other imminent intrusion seem limited. Next month’s Queen’s speech will contain a brief reference to an innocuous-sounding communications data bill. But what this means is the development of a centralised database that will track, in real time, every call we make, every website we visit, and every text and email we send. That information will then be stored and analysed – perhaps for decades. It will mean the end of privacy as we know it.

    In the name of the fight against crime, and the fight against terror, we are all to be monitored as if we could be suspects. Computers will analyse our behaviour for signs of deviance. The minute we become of interest to anyone in authority – perhaps because we take part in a demonstration, have an argument with a security guard at an airport, spend too long on a website, or are witness to a crime – the police or the security services will be able to dip into our records and construct a near-complete pattern of our lives.

(You can read more on this legislation here… )

We are sure that this production will be such a smashing success that it will soon be copied around the globe, especially in that the database work is being contracted out to private companies, so it might actually get done. And once it is, I am sure it will quickly be taken on the road.

Something to look forward to.

Since we are on the topic of government – a topic, regrettably, that is becoming increasingly dominant in this new era of big government – here’s some quick jots from Don Grove, our Washington correspondent.

It’s All Pork

By Donald Grove

The president-elect is receiving accolades for his ban on stimulus pork. He said, “We’re not having earmarks in the recovery package, period.” This apparent constraint accompanied his warning of $1 trillion deficits “for years to come.” Whether a particular legislator earmarks part of a spending bill for the benefit of his own constituents or a spendthrift majority of legislators acting as a group does it for all their constituents, we are still talking about unconscionable theft from our unborn progeny to appease clueless voters today.

Where do these people think this money is coming from? I’m convinced that most don’t think about it and don’t have enough rudimentary knowledge of economics to understand the phenomenon of creating money out of thin air. After the temporary distraction of a flight to the “safety” of the dollar (for the time being, still the world’s reserve currency), a fundamental truth will remain: if you put twice as many dollars out there with no corresponding increase in underlying wealth, each dollar is worth about half as much – and is ultimately worth nothing, backed only by rapidly eroding trust.

Living Wage

The reality of inflation has not been lost on the judiciary. Judges are the only federal employees to begin 2009 without a cost-of-living adjustment. In his year-end report on the state of the federal judiciary, Chief Justice John Roberts wrote: “Given the judiciary’s small cost, and its absolutely critical role in protecting the Constitution and rights we enjoy, I must renew the judiciary’s modest petition: Simply provide cost-of-living increases that have been unfairly denied! We have done our part — it is long past time for Congress to do its.”

Nor has this reality been lost on Congress, which voted to give each member a $4,700 pay raise this month. While judges and the unborn must help foot the bill for pork barrel spending, Congress does not, nor does the president.

Change We Need

Michele Bachmann (R-Minn) is a member of the House Financial Services Committee helping to hold the line against Chairman Barney Frank. She told the Washington Times:

    … someone has to pay for [the stimulus package] whether it’s today’s taxpayers or their children and grandchildren. There comes a time when government simply cannot provide enough government jobs to bolster the economy. There comes a time when the taxpayers’ burden to pay for all of the projects is too heavy to carry. With the trillions in bailouts and stimulus packages that have already been passed and that are in the works, that time may be sooner than we think.

    Government should not take on the role of creating the jobs and buying the goods. Government should be in the business of establishing an environment in which businesses can thrive and play those roles themselves. Americans need a stimulus proposal that actually stimulates the economy. Economists are in near unanimous agreement that too large an infusion of government into the economy slows growth, raises interest rates, and makes tax increases and spending cuts a near certainty.

    With the federal share of the nation’s economic activity at nearly one in every four dollars, the highest rate since World War II, do we really need to debate whether our infusion has reached the point of too large? Cutting taxes and empowering small businesses to flourish is a surefire way to stimulate economic growth. Letting taxpayers keep more of their hard-earned money for the purchases of their choice is what makes the economy thrive.

Representative Bachmann co-sponsored (along with Ron Paul and others) the Economic Growth Act of 2008, HR 5109, which she explained “is a commonsense plan that would reduce the corporate income tax rate from 35 percent to 25 percent, a rate that is closer to our European competitors; index capital gains to inflation; and simplify the capital gains tax to free up capital for investing.” (View the bill here. )

The list of co-sponsors of this bill and its Senate counterpart S.2592 is a rough indicator of who has their head screwed on straight in Congress. I expect this legislation to be reintroduced in the 111th Congress and urge you to let your legislators know that you want them to support it.

Regards, Don

A Time to Gather

As longer-time readers know, we take a pretty unusual approach to holding conferences. First off, we don’t have a fixed annual schedule, but only hold an event when we think there is a pressing reason to do so.

Secondly, to maintain a collegial atmosphere and to assure that everyone gets their most pressing questions answered, we strictly limit the number of attendees, usually to no more than 350. As a result, every Summit held to date has been a sell-out.

We have not held a Summit in a number of months, largely because we recognized that it would have been largely futile to meet before the new administration had a chance to get its feet on the ground and, more importantly, make its policy priorities known.

With Team Obama moving quickly to take control and with the financial crisis worsening daily, the time has come to get together, which we are doing March 21 & 22 at the beautiful Four Seasons Hotel in Las Vegas. (Registration and some fairly informal activities will be held late afternoon and early evening on March 20th).

The focus of the Summit will be on persevering and profiting in a politicized economy.

While the faculty is still being confirmed, so far it includes:

    Doug Casey, Chairman, Casey Research Rick Rule, Chairman, Global Resource Investments Porter Stansberry, Founder, Stansberry Research Peter Schiff, Euro Pacific Capital David Bond, the Wallace Street Journal David Hightower, The Hightower Report Bud Conrad, Chief Economist, Casey Research Andy Miller, Miller Frishman Group Marin Katusa, Senior Energy Strategist, Casey Research Olivier Garret, CEO, Casey Research Louis James, Senior Mining Analyst, Casey Research Frank Trotter, President, EverBank Direct Frank Holmes, U.S. Global Simon Black & Fitzroy McLean, Without Borders.

In addition, a panel of Explorers’ League Honorees will provide an update on opportunities in the dramatically oversold resource exploration sector. Confirmed panelists so far include Ron Netolitzky of Brett Resources; Arnie Armstrong, Red Hill Energy, and Ron Parratt, AuEx Ventures… as well as special guest panelist, Rui Feng, president of Silvercorp.

We’ll have more on the Summit soon, but I wanted to let you have this early heads-up. Because of a drop in tourists to Las Vegas, we were able to arrange for a block of rooms at the Four Seasons at deeply discounted prices, but those rooms will go on a first-come, first-served basis. If you are interested in attending, don’t put it off.

Personally, I am not much of a conference-goer, but these Summits really are different – more like a gathering of the clan, as opposed to a business or investment-oriented event.

I hope to see you there. Here’s the link to the registration site.

Miscellany

Nice music from a nice person in a nice place. Over the last year, I have made it a habit to share the music I am listening to you while I write. This week, the song that has resonated most comes from Shirley, our expatriate subscriber living in Uruguay. I have mentioned Shirley in the past; she has a great story, having decided one day to break the mold of everyday life in the Midwest and relocate to Uruguay… a decision she made two years ago. When we met in that country, she was positively invigorated by her new lifestyle and, based on her correspondence over the holidays, remains that way.

In any event, the music she brought to my attention was Montserrat, by an Argentine/Uruguayan band, Bajofondo, which you can listen to here.

Predicting the future pays. Marko Ferenco sent along a website that allows you to bet on the outcome of various future events. For example, on whether Guantanamo will be closed before December 31, 2009 (the punters have that as an 85% chance), or whether the U.S./Israel will launch an overt airstrike against Iran (only 6% chance). While I find the idea of betting on this sort of thing intriguing, I am more interested in seeing how well this sort of accumulation of individual attitudes, backed by money, works as a leading indicator. In any event, it’s kind of fun. You can visit the site here.

Walk-away calculator. Now here’s a useful tool for the times… a calculator that calculates when it makes more sense to walk away from your mortgage and make it the bank’s problem. http://www.payorgo.com/

The world’s ugliest building? Not sure what it’s function will be once the U.S. finishes withdrawing from Iraq, but here’s a picture of the new U.S. Embassy in Iraq, at once the most expensive – and ugliest – embassy ever built, anywhere. I suspect it will end up being a prison for Sunnis once the Shias finish consolidating their power.

That’s It for This Week…

While it is always nice to have a little break in my routine, I must confess to missing writing this weekly column over the past couple of weeks.

Now it is on to a new year, a year that promises to be most interesting.

As I sign off for this week, I see that gold is trading at $854 and the Dow is off just 83 points. Given the latest unemployment report, out today, showing the largest level of job losses since 1945, it should be down 830 points.

That it isn’t supports the idea that we’ll see a dead-cat bounce in stock markets soon.

More on that topic, and much more, next week.

Until then, thank you for reading and for subscribing…



David Galland
Managing Director
Casey Research, LLC.