Is Gold Finally Headed For A Bubble?
With the United States and the world economy as well heading for a possible collapse or at the very least some serious trouble, many are wondering if gold will soon be experiencing a bubble and moving to an ever increasing price.
The main cause of this would be complete irresponsibility in the governments of the world, especially from the United States Government. With 2 economic stimulus packages under its belt that can never work and talk of another on the horizon, hardly any of our elected officials in Washington DC see the utter folly of trying to get out of debt by creating even more debt. Anyone with even an ounce of sense understands that you can’t pay off your bills by creating even more bills. This current financial thinking is spelling a fast track disaster for our nation.
Much of the smart investing public is seeing around this insanity and are buying gold coins, bullion, silver and other precious metals. Gold coin dealers and auction sites such as eBay are experiencing an upsurge in sales of these commodities. Gold has not always been the best investment because it has lost as much as 40% of its value in the 1980’s, but economic times are looking seriously different now and into the future of the world economy.
To finance the senseless stimulus packages, the Federal Reserve and other central banks of the world are creating liquidity by simply printing more money. Unfortunately they don’t seem to understand that every dollar they create out of nothing devalues every other dollar already in circulation. As all other dollars lose value this is essentially what causes inflation and results in higher prices. As prices go up gold becomes more valuable and the wealth you have invested in it is preserved.
As the gold bubble is created it is obviously smart to buy now and sell when the price reaches the top. That’s not always easy to do, but when people are employed, central banks stop printing money and the economy starts to really recover, not when President Obama just hopes and says it will, that will be a good sign the gold bubble is going to burst and it’s time to move back to cash. But, all indications are that isn’t going to happen for several years, at least not until the current financial wizards in Washington stop their orgy of irresponsible spending.
California Has Gone Broke, Duh
California Governor Arnold Schwarzenegger in a press conference Tuesday said that, “California’s day of reckoning is here”, meaning in other words, they’re broke. As of Tuesday, the state has 14 more days before they completely run out of money having to shut down many agencies and make drastic cuts to education, prisons, health care and other money sucking government departments.
Well hello, California state lawmakers have know about the roughly $24 billion budget deficit for several years now and they’ve done absolutely nothing about it. Did they not know that overspending money on free health care for illegal aliens, education, bloated bureaucratic agencies, poor investments, welfare, and a multitude of other programs that were never intended to be funded by the state, was eventually going to lead to this?
If you are balancing your check book and paying credit card bills and having to take money out of savings (if you have any) every month, you darn sure know that there’s going to be a problem as soon as your savings run out. And simple math will tell you just how long you’re going to be able to rob your savings account before there’s going to be a serious problem. You can either do something about it, in other words stop spending money you don’t have, or you can continue on your path and go broke in 3 years, 1 year, 1 month or whatever your simple accounting tells you.
So obviously the big question is, why the heck didn’t California law makers, that are supposed to be so infinitely wise that we can’t function without their leadership, do something about a problem that was so huge they couldn’t ignore it. Stuff like this should make your brain melt. Everyone responsible for running the state of California should have known this was coming, yet they did nothing.
The situation could get even more insane if the US Government now decides to bail out the state of California. In effect this would be the rest of the taxpayers of the other individual states bailing out another state for being completely irresponsible with their budget. People will and should revolt if this happens. How dare my tax money be spent for such lack of foresight and fiscal lunacy.
Even if the US taxpayer doesn’t bail out California we still have a huge financial problem with the US Government because they are in a worse position fiscally than California is. The only difference between California running out of money and the United States running out of money is that the US Treasury can just print more money, California can’t.
But in reality, printing money just creates more problems. America’s day of reckoning is just around the corner.
Update - Obama To Take 72.5 Percent Ownership Of GM
As an update to the last blog post about government ownership of GM, President Obama is to take a larger slice of what was once the largest employer in the world (except for the US government) and of course the largest car manufacturer in the world. Up from owning 69% of General Motors, the President will now take a 72.5% ownership of GM.
How did this happen? How can the government take majority control of a major US corporation? More importantly however, is why we are going to let it happen. Any way you want to slice it folks, state ownership of industry is socialism. That’s where we are today in the United States Of America.
GM made some huge concessions to the labor unions in the form of unsustainable wages and unsustainable pensions to retirees, but that is no reason for the government to take it over. Somewhere GM should have told the unions a big flat out no.
It was painfully obvious to some, that with automobile sales down and its labor costs the highest in the industry, it would be impossible to be competitive in the marketplace. When GM’s labor costs were averaging out at some $75 per hour for each laborers hourly wages including taxes and benefits and their rival, Toyota, who was leading the car industry, had those same costs down to $43 per hour it should have been apparent to anyone and everyone in the accounting department that this couldn’t continue unabated forever.
Many people though several months ago, as I did, that GM would fail anyway, before Obama lent them nearly $20 billion. It’s pretty obvious now that the market should have been allowed to take its course and let GM go under last year, because that’s what was going to happen anyway.
Now the government will invest another $40 billion in GM and let it go into bankruptcy while taking a nearly 73% ownership of the company. Let’s see if GM has any better luck being run by Washington puppets and ultimately being controlled by the Messiah in Chief, Barack Obama. Something tells me it won’t last that long.
Welcome to socialism 101.