Paul Volker, who used to be the Fed chairman, and who blew the whistle on the UN “oil for food” corruption, last week made an interesting statement. “There are disturbing trends: Huge imbalances, disequilibria, risks…call them what you will. Altogether the circumstances seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot. I don’t know whether change will come with a bang or a whimper, whether sooner or later. But as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force the change. We are skating on increasingly thin ice.”
The Dow is up, and everyone’s so damned excited by the CNBC exhortations. All is well? Check this out. The Dow consists of 30 stocks, out of hundreds and actually thousands. THIRTY STOCKS, and that’s all everyone’s so exuberant about. The NASDAQ is still less than half of its peak and the S&P is also way down. Of the 30 DOW stocks, the following are no where near highs, but are the following percentages below their peaks. Intel 73% down. GM 65% down. Microsoft 54% down. Merck 53% down. DuPont 49% down. Coca Cola 49% down. Home Depot 46% down. Verizon 45% down. Pfizer 43% down. IBM 41% down. Alcoa 40% down. Honeywell 38% down, Wal mart 29% down. And on and on. The Dow eliminated Kodak and and International Paper, substituting two others. Most of the peaks were in 1999 and 2000. Only seven stocks made new highs in 2006 so far. The economics of America are literally in the dumps, regardless of what the pundits say. There are so many off budget items that are not figured in the balance sheet, that it would make your head swim. The long term debt of America is over $70 TRILLION, un-payable, paper dollars. Of course the bills will be paid with fiat money, just like all other bankrupt nations have used to pay their bills. Who suffers? Guess who? The Joe Sixpacks and other fools who have saved their surplus assets in dollars, that’s who. As prices go up, your saved dollars go down…buying ever less and less. Gold may be manipulated, and silver too, but the buck just goes down, along with every other paper currency in the world. Why not change denominations from dollars to ounces? H
Meantime, as I write this on Friday morning, 27 American soldiers have been killed in Iraq this week and it isn’t over yet. How revolting the Iraq war is, and how un-win-able as well. Baghdad is being totally destroyed with bombs, and hundreds of thousands of innocents are dead while Saddam is being tried for the death of 140, 25 years ago. Eventually, I am quite certain, we’ll declare victory and leave, as Nixon did in Vietnam. What will be left of it when we leave? Total destruction, I am sure. Baghdad was a beautiful city before we landed. The lights worked and water came out of the faucets. Everyone had a job and gasoline was plentiful and at low prices. Surely, assuming the voting machines aren’t screwed up, a lot of those who voted for Iraq will be defeated. Have a great weekend.