Best Buy, Krugman and the Carry Trade

On ABC’s "This Week" show there were some interesting thoughts from Paul Krugman. He remarked:

“The cost of the deficit is only 1.2% real rate of interest at the Federal level.”

This is economic speak. What Mr. Krugman was saying is that the Government can borrow long term at 3.2% and inflation is 2% so the real cost of debt is only 1.2%.

In response, George Will made the point:

"In ten years the interest cost of servicing the debt will go to $700 billion per year!"

Mr. Krugman responded:

In ten years GDP will be $20 trillion, debt service would still be 3.5%. “That doesn’t sound too bad”.

Mr. Krugman believes in the ultimate carry trade. His view is that growth will come from affordable (cheap) debt capital. He thinks that the US can go to 100% Debt/GDP without upsetting the applecart. I think he is dead wrong.

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End of Empire – Propaganda and the American Myth

“Oh what a tangled web we weave, when first we practice to deceive”….ourselves. With apologies to Sir Walter Scott.

If only life were as neat and orderly as my ancient history text book showed it to be. There it was on glossy paper, spread out across two sets of adjoining pages, maps of the ancient and modern world. Including time lines top and bottom, with countries outlined and identified. Underneath their modern English names were one or two older names in smaller stylized script, often including exact beginning and end dates. I remember one in particular that caught my eye. “United States of America” followed by the year 1776. But with no end date indicated, it looked like unfinished business to me. You’ve got to love those historians and their exact dates.

Of course, in reality there are no exact dates for the birth and death of city/states, other than in the author’s mind. Children continue to be born, the old still die, and life goes on under different circumstances. But you’re rarely informed of the subjective nature of historical events when you’re young and impressionable, so they’re presented in the history books as fact. The last thing the reigning Empire wants is to appear uncertain about previous Empires. Even before we begin to read and comprehend on our own, we’re presented with the illusion of a beginning and end to everything, often with very clear lines of demarcation. This concept is continuously reinforced through our daily indoctrination of carefully scripted news stories, care of our modern media saturated existence. Naturally, critical thinking is optional and definitively not encouraged.

A sick ecomony - Conrad Black National Post

Washington’s massive spending stimulus and money-supply expansion have staved off the feared collapse into depression. But unemployment has continued to rise, and the economy has not really revived. Americans, who’d been encouraged by their fiscal and monetary guardians for over a decade not to save anything, but to binge on unaffordable housing and non-essential goods whose production had been outsourced to China and Japan, have rediscovered the virtues of savings. Banks, heavy-laden with the taxpayers’ money, are still too shell-shocked to lend, and the public is too shaken to spend. Personal and corporate loans are being sensibly paid down, to a large extent with money created for the occasion by the Federal Reserve.

Gold and Investments - Stuart Wilde

"When the banks can't manipulate the market any more, then gold will steadily move up to the $1500 range."

Gold Finger - A New Take On Operation Grand Slam With A Tungsten Twist - Goldseek.com

Crazy rumours about gold bars "salted" with tungsten...

Frank Holmes answers question: Is it over for gold?

David Bensimon on BNN

David predicts TSX 26,000 and Gold at $2,600 by 2014 based on a US Dollar falling by one half.

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Sell gold or hold till February - National Post

Either way, investors in an enviable position

The short and intermediate outlook and trading tips from seasonality trading specialist, Don Vialoux

David Frum: Beware the gold bug - National Post

Prosecutors still pursuing vigilante shopkeeper - National Post

Lorne Gunter: How to catch a thief in Toronto Read more: http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/10/23/lorne-gunter-how-to-

There are so many things wrong in the case of David Chen, it's hard to know where to begin. Mr. Chen is the Toronto grocer who back in May performed a citizen's arrest on a serial thief, but now faces charges of assault, kidnapping and forcible confinement for his actions. Let's start, though, with the aspect of this case that grinds my nerves the most: Crown prosecutors made a plea bargain with Anthony Bennett, the thief, in return for his testimony against Mr. Chen.