You Guys Are Dumber Than You Look" So the big news of the day is that for the first time in nearly 60 years, the New York Stock Exchange hasn't seen an all-time closing high, in a market that has been red-hot for more than three years. I'll save you a click - it was the day of Lehman Bros' 10 billion dollar bankruptcy filing, the first of many banking sector bankruptcies to come in the months ahead. The Dow Jones Industrial Average finished at 9,365.99, which was down more than 1.2%. In a day that saw the biggest losses of the entire year so far, it was a good day to be in the market of any kind. And on paper, it's really been an amazing 12 months of all time highs. But after a year like this, you know what I always say... Friday, December 18, 2009 The World's Inches and Pounds I think that it's time for some global financial housekeeping. I'm not a big fan of having "national currencies" when the world is one economically and a lot of the currency has been just too unstable for the last 20 or 30 years. That's why I think the global elite should switch to the metric system. I mean, the British Pound is worth less than 80 cents US in the black market (remember, the gold price is over $1,700 per ounce) and has already fallen 14% over the last year. We're not just talking about some little tiny Euro nations here (Portugal, Malta, and Greece) - the GBP is down more than 14% in this past week alone, and is the only major fiat currency down more than 1%. So what do we do? Well, I think that if the dollar goes up again and then we get further into these really insane monetary policies in the US, the Fed's printing press will look like a Tylenol with codeine. Maybe it's time to just get rid of the dollar? The British Pound Sterling: Back to the Future A while ago I picked up a copy of the Economist, at an airport stop in Germany. I can't remember which European city I'd just landed in, but it was a European city with a lot of airports, so I didn't think anything of it at the time. Then I read an interesting column on the economy in the paper, and I couldn't help but be drawn into it. So I looked up the writer on line, and discovered that the guy was a Harvard grad and he was in charge of currency regulation in England for the Bank of England. The way that he explained how crazy it was in Britain when it came to money and money supply, I just had to write about it right away. Now, the "economy" is not really my wheelhouse. I'm more interested in politics and culture and history and all that sort of stuff, so this subject wasn't really something that I usually covered. But man, was I glad I did. It's hard for people to see how things could get worse in their own lives. That's one of the reasons why I was surprised at the way that things have gone in Britain. You have the global economic collapse unfolding at every corner, you have governments around the world doing everything they can to get money out of the system and into the hands of rich folks, and on top of it all you have a government that is so desperate to stay in power that it is willing to sell the future of the nation to the highest bidder. I don't know about you, but the way that things have been going lately in the US, that doesn't sound too good to me either. Like it or not, if we look at it rationally - from our perspective and from the perspective of the government, it makes sense that we would need to get our economy running again. But the way that things have been going in the US is that the government is trying to do what they were doing in the 1930s, but instead of a depression, we just have so much debt and a complete loss of monetary discipline that it isn't working out so well for them. I think that a lot of people might wonder why our government has been so willing to go against reality in their attempt to "save" our nation. I do a lot of thinking about it, and this is my way of trying to explain it. The Economics of a Broken Society I read an interesting story in the Times yesterday about the financial condition of the US. It seems that the average person is getting it, and that more people have really started to understand how we got into this mess - because of easy credit and reckless monetary policy. But unfortunately for them, these people are also getting really frustrated because they can't do anything about it. They can see the problem, but they can't do anything about it. Sure, the idea of government bailouts, or some kind of fiscal stimulus is appealing to a lot of people - especially people that have invested in assets like stocks and real estate that they really don't need. But if we took away the easy credit, and the easy liquidity of the financial markets, we wouldn't have had the housing boom of the early part of the decade - and people would know that when they invested in that type of activity. But here in the US, everyone's doing it - and a lot of people are suffering. They want to know, what's the point of all this debt if you have to pay for it in the end? Why not just pay for it now, when you have the cash? And that's what the article in the Times was about. The Times Article: "When We Know That a Storm is Coming" There's a good lesson for the government in that article. The article in the Times yesterday was about how people were getting frustrated with government, especially in the financial markets - and that this frustration could start to have consequences for the presidential race in 2012. The basic premise is that the government has a lot of egg on its face right now, because of their fiscal policies and the economic fallout that has come about as a result of it. So what can the government do? And the answer is that there really isn't a lot they can do. I mean, there are so many articles these days about how bad the economy is for ordinary people, and that's because of their policy in the last few years. They're the ones that keep spending too much, and that spending got them into this mess. Why not just stop wasting money? Why not start controlling themselves? Why not force people to live within their means? Those are the questions that are on everyone's mind these days, and the government can't answer that question very well. They talk about "hope" and "recovery" and "hope for a better future," but this "hope" is getting more and more elusive as the crisis goes on. So what happens when a person can no longer have hope? What happens when you have the expectation that the times will get more difficult - and that the more difficult times get, the worse off you will be? The question is: what happens when that happens? A lot of people out there don't know, but they can sense that this is a serious problem for the government. We have a lot of people that are talking about how it's all going to end badly - and with people that are frustrated enough, they might do something drastic. You can see it in the streets - people are nervous, they can sense that things are going to get worse. But how bad is going to get? Well, that's really hard to say - but it's hard to imagine that the system will get better, as far as it's going right now. It's hard to imagine that we'll get back to the "old normal." We've never been in the "old normal" since the beginning of the year. So, if there's a point where people feel that they can't go on, then we really need to be prepared for what happens next. That's why we're living in such uncertain times right now. The Times Article: Why Does It End So Badly? Most people want to know what happens next. You know, when people stop talking about globalization and start talking about protectionism? When they start talking about the financial markets and the stock market? When they start talking about the fiscal crisis and what might happen next? When we have people that are walking around in a daze? How bad does it have to get before people start to ask, why can't we just stop this nonsense? Why can't we just slow it down? Why can't we just take a time-out? Why can't we just get back to where things were before? Well, the Times is out with an article that explains it well. What happens next? You have a "new normal" that is really going to hit us hard and fast - and it's going to hit us hard and fast and now. People are expecting that things are going to get worse, and they're not sure what it's going to look like. And that's a problem, because it doesn't matter if you want to be conservative or if you want to be liberal, if you have nothing left in your life, you're going to start asking "why not?" Why is it so important for us to have so much stuff? Why do I need to drive a huge gas-guzzling car and be a home