John Rubino's Contributions

That US home prices are once again trending down is no secret. But just how bad things are likely to get is not yet well understood. What’s happening to the homes of all those defaulted borrowers that we hear about? Many of those properties are a part of so-called shadow inventory.

Now that Greece has been kicked down the road, it’s time for the other PIIGS countries to start lining up for similar deals. Portugal looks to be next, after its most recent deficit report.

As U.S. deficit talks enter their final stage, the consensus expectation is for a last-minute deal that combines a few modest cuts with a barnyard of gimmicks to produce a “reduction” number big enough to placate the financial markets.

Conventional wisdom — backed up by years of observation — states that gold mining shares tend to outperform the underlying metal in good times because they’re “leveraged to the price of gold.” That is, their extraction costs are more-or-less fixed, so when gold rises, most of the increase flows directly a miner’s bottom line, increasing its earnings at a rate that exceeds the metal’s move.

First, consumers will be scaling back for years to come, even if interest rates stay low. Second, government will have to keep piling up debt to compensate for the runoff in mortgages and credit cards. So the economy treads water, unemployment stays high enough to force Washington to continue borrowing (no austerity for the mighty USA), and the game goes on until the markets lose their taste for new dollars.

The Organization for Economic Co-operation and Development (OECD) is apparently worried about accelerating inflation and is now in favor of raising interest rates. Nobel laureate economist Paul Krugman hates this idea and argues for its opposite...

The action has fizzled. Home prices and sales stabilized, and housing seemed destined to bump along for a while, playing little or no role in the burgeoning government bond bubble.

Spain has so far managed to avoid being sucked into the Eurozone periphery financial abyss. But that might be about to change. This week protesters rallied against the relatively modest cuts in government spending implemented so far. And upcoming elections are a nearly-certain source of more instability...

With QE2 scheduled to wind down this summer and millions of American voters still unemployed, it was clear that the Fed was itching to keep the monetary spigot open. But how would that be possible with oil, food, and precious metals at or near historic highs and the dollar at multi-year lows? Clearly, something would have to happen to justify QE3.

During the early stages of the housing bubble Morgan Stanley’s Stephen Roach was one of the few sane voices on Wall Street. His warnings about the global economy were clear and obviously true, and his willingness to bite the hand that fed him was admirable. The guy had guts.

The Fed chairman’s first press conference generated neither heat nor light, but did include some typically, um, questionable statements. Here are a few, followed by my responses.

Lately just about the only things not soaring in price are US houses and electronics beginning with “i”. Raw materials, for instance, have had a good week based on the price action of this commodities ETF:

All those new dollars being created by an apparently-still-panicked Fed are pushing up asset prices across the board (with housing the only exception) and pushing the dollar down to near-record lows versus other currencies. The charts look eerily like a replay of 2007, which, of course, is exactly what policymakers want.

Citizens who work hard, save, and eventually retire with money in the bank are the bedrock of a stable society. In a rational world they would be held up as examples for the rest of us to emulate, and public policy would aim to create the highest possible number of self-reliant seniors.

Back in February 2010, a clearly very sharp and articulate reader responded to a DollarCollapse.com article on Spain’s coming sovereign debt problems with the following:

When Fed officials claim that inflation is “well contained” are they measuring per ounce or per package? It wouldn’t be a surprise, given how disconnected from reality they frequently sound, if they’re being fooled by manufacturers’ packaging scams.

Back in 2009 it seemed obvious that the next shoe to fall — or bomb to go off — was commercial real estate. The thinking went something like this: homes go into foreclosure fast, when the mortgage holder loses a job, or the monthly payment adjusts to some ungodly number that dwarfs the hapless homeowner’s disposable income, or they simply realize that they can rent a similar house for half the money.

Europe has been pretty quiet lately. But apparently that was an illusion. The Eurozone’s slide down the slippery slope continues, but because the current stage involves colorless bureaucrats debating the terms of debt swaps rather than street riots and air strikes, it has been overshadowed by the chaos in the Middle East.

One of the disturbing things about trying to understand the US economy is the sense that official statistics don’t match personal experience. They seem to be lying to us, in other words, and more blatantly all the time; hence the popularity of honest analysts like John Williams at ShadowStats.com.

The effects of inflation aren't just a matter of increasing prices...