Is US heading for a severe discontent?

Wednesday, November 10, 2010
By Paul Martin

By Steve Betts
CommodityOnline.com

Lost in all the election and Fed hoopla are the problems in Ireland. The yield on Irish debt is surging and the share price for Bank of Ireland stock is plummeting. Ireland, like it or not, is going the way of Greece. As of Friday the yield for Irish debt stands at close to 8% and that’s about 2.5% more than you would pay for a home loan in the United States. With respect to the Bank of Ireland shares lost almost 15% of their value on Friday and the share price has been cut in half over the last two months.

There was a complete breakdown on Friday in spite of the fact that the stock is extremely oversold. Without a doubt the European Central Bank will be digging into its pockets and doling out more liquidity in an effort to prop up the country.

Investments today are all about the search for value and security, or at least they should be. That’s why the Swiss Franc continues to rally regardless of what goes on in the US and the rest of the world. If you were paying attention you would have seen the Franc rally against the dollar on Tuesday, Wednesday and Thursday as the dollar plummeted, and then post a minor gain on Friday even though that same US dollar surged against all other currencies. Most people know little or nothing about Switzerland and fail to realize that it has been a financial safe haven for well over one hundred years.

If the US economy is on the mend as everyone seems to think, then tell me why gold, silver and the Swiss Franc all continue to churn higher? Why is the Fed going to print another US $600 billion if things are getting better? How come unemployment continues at 9.6% if things have been getting better for more than a year as the government claims? If things are getting better how come Americans refuse to consume and are increasing their savings rate? The per capita savings rate has increased from 0% to 6.5% over the last two years while consumption continues to decline. That’s not a vote of confidence for the policies of this administration.

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