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U.S. Budgets, U.S. Debt, Gold
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February 4, 2010
Good Morning:
U.S. Budgets,
U.S. Debt, Gold
I believe thoughtful consideration of all three of these things highly relevant
to one's personal, economic, and equity investment 'well-being'. Today I summarize
3 articles worth carefully thinking about. In particular, I recommend you
take the time to read and reflect on the first two of them.
U.S. Budget Forecast
An article this morning titled 'Dour forecast underpins Obama's budget plan'
says that when estimating budget figures for the next few years the Obama Administration
has assumed:
· U.S. unemployment will average 10% this year, 9.1% in 2011,
8.2% in 2012, and above 5% until 2020; and,
· a 2.7% U.S. GDP growth this year and 1.9% CPI inflation - leaving
a 'real' growth rate of 0.8% (as contrasted to nominal, inflation included, growth
rate).
These unemployment forecasts seem to fly in the face of President Obama's rhetoric
around job creation - certainly in the near-term. Moreover, I have said many
times in these e-mails that the shorter the forecast the better chance actual results
will approximate it. Economists generally adopt historic trends to predict
future outcomes, and use the current data available to them to make economic projections.
Again, I have said a number of times that while I can see how that 'forecasting
basis' makes sense in 'normal' economic times, I can't see being nearly so useful
or reliable in the unusual economic and geo-political times we currently are experiencing.
All that said, if the foregoing are the Obama Adminstration's 'best guesses' as
to U.S. unemployment and GDP growth going forward, I don't see the U.S. budget being
balanced any time soon - meaning the U.S. National Debt almost certainly has to
keep going up and up (see following 'Debt Ceiling commentary) - with the U.S. becoming
ever less dominant on the world stage over time.
U.S. Debt - Through Government Approved Ceiling By
March
An article this morning reports 'US debt to hit proposed ceiling by end-February:
Treasury'. The current approved National Debt ceiling is $12.4 trillion
which is said to have been exceeded on February 1st. U.S. National Debt is
reported as being "on track to hit a congressionally proposed debt ceiling of 14.3
trillion dollars by the end of February' according to a February 3rd U.S. Treasury
statement - a day ahead of today's vote on the 'debt ceiling increase'.
I must say I have more than a little difficulty understanding why Congress would
be asked to approve something that will immediately be met - and virtually certain
to be exceeded given what I think must be a lot more U.S. National Debt to come
going forward. I will be looking for an answer to this over the next few days,
and will report my findings in an e-mail early next week. An analogy I would
draw from this, having once myself for a brief but terror-stricken moment been caught
in quicksand, is that the U.S. economy seems mired in it in circumstances where
no one is likely to be able to help the U.S. out of its problems any time soon,
if ever.
John Embry on Gold
An article this morning titled 'Gold to hit $1,350 - $1,400 by late Spring - John
Embry', says the Toronto based partner in Sprottt Asset Management expects
gold to consolidate over the next few weeks, and that the next major move will be
'up'. Embry is reported as looking for the gold price to hit +/-U.S.$1,400
by late spring.
Notes to Readers
This email and its content is in no
way to be interpreted as an endorsement of one or more of the companies mentioned
herein, a suggestion as to the future direction of the stock price of one or more
of them, or a suggestion or recommendation to buy or sell the shares of one or more
of them. Rather this email is simply a short overview commentary and tutorial
demonstrating the type of information available on StockResearchPortal.com and how
to access it.
The owners of Stock Research DD Inc. (the owner of StockResearchPortal.com and StockResearchPortalBlog.com)
or their families, entities in which they have ownership interests, and officers,
directors, employees, agents, partners, affiliates and partners of Stock Research
DD Inc. may beneficially own securities and participate in Private Placements of
companies referenced in this E-mail. The fact that one or more companies are
referenced or discussed in this E-mail should not be construed as an endorsement
or investment recommendation with respect to those companies or their securities.
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