When The Levee Breaks, Then What?

Bush quick to react to jobs report

Employers across the United States slashed payrolls for the second straight month, according to a federal report that served as the latest sign of an economic slowdown so worrisome that President Bush called an impromptu news conference to comment on the news and calm the nation's fears.

"Losing a job is painful," Bush told the White House press corps Friday after the Labor Department reported the biggest payroll cuts in five years. "I know this is a difficult time for our economy.

"But we recognized the problem early and we provided the economy with a booster shot," said Bush, referring to the recent federal economic stimulus package.

Employers cut 63,000 nonfarm jobs in February, the department said. There was a loss of 22,000 jobs in January. February's loss was the steepest one-month decline since March 2003, when payrolls plunged by 108,000. The last time the job count fell two months in a row was May and June 2003.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/08/BUR4VG5ME.DTL

Damn, is that leadership or what? Booster shot my ass. Like that tiny handout is going to do ANYTHING for ANYBODY that has lost their job. It is painfully amusing how brainwashed Americans believe their government is going to "make everything all right" by throwing money at it, or coming up with some grandiose plan/program with a "vision of hope" attached to it's name. They believe everything that falls from their "leaders" mouths as if it were gospel. Six months from now Americans from coast to coast are going to to wake up, scratch their heads and groins and ask, "What the the hell, and how was this allowed to happen?" "Ignorance" will be the answer. You think things look bad today? Wait until this Fall.

What Will Take the Gold Price Higher?
Take a look at the fundamentals that have driven gold higher; have they changed? Have they been exhausted? Not at all! Has the $’s fall terminated? Has the oil price stopped rising? Has the credit crunch been resolved? Has the world’s money system been repaired and solidified? Has the wealth’s move from West to East stopped? Has confidence in the U.S. housing market and the global economy been restored? Can any of these matters worsen? Is the investment climate globally looking solid and worth more investment? Will the potential Tsunami of capital stay in one place only? If the answer to these questions remains negative gold has good reason to rise further.
http://news.goldseek.com/GoldForecaster/1204909200.php

Dollar-Gold: A Perfect Storm - by Jim Willie CB
When people ask whether the USDollar has hit bottom, a simple question goes out as my reply. HAS ANYTHING BEEN FIXED? HAVE ALL DESPERATE MEASURES BEEN INVOKED? The answer to the first question is NO WAY! and to the second question NOT EVEN CLOSE!
http://news.goldseek.com/GoldenJackass/1204905600.php

Real Rates and USDX

Since July 2001 our current dollar bear has bled 39.2%. This may seem extreme, but the USDX lost 52.4% in its last secular bear ending in September 1992. A similar loss in our current bear would yield a USDX level of 57.5! Ouch. This is another 22% lower from today’s all-time dollar lows! So in light of historical precedent, there is plenty of room for the USDX to continue falling even from here.
http://news.goldseek.com/Zealllc/1204907400.php

U.S. Consumer Borrowing Rose, Led by Credit Cards

Consumer credit increased by $6.9 billion to $2.52 trillion, the Fed said today in Washington. In December, credit gained $3.7 billion, less than a previously reported increase of $4.5 billion. The figures don't include borrowing secured by real estate, such as home-equity loans.

People once dependent on home-equity financing are turning to other forms of short-term financing after the collapse in subprime mortgages made it harder to qualify for loans. Personal income in January rose at a slower pace than inflation, and credit card usage in January rose for a second straight month.

``There's not much gas left in the tank,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``In the early stage of a recession, consumers tend to rely on credit cards to see them through the hard times.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJCsK7w8YlGk&refer=home

The biggest challenge for both the Fed and the economy
The weak jobs report was widely seen as indicating the Federal Reserve will have to continue cutting rates to stimulate the economy.

The central bank has cut the overnight fed funds rate to 3 percent. Before the credit crisis began last fall, it had remained at 5.25 percent for many months. The Fed will hold its next monetary policy meeting on March 18.

On Friday, Dallas Fed President Richard Fisher, who has voted against recent rate cuts, warned that the markets shouldn't expect more. Still, fed funds futures contracts on Friday showed investors are betting on a rate cut of up to 0.75 percentage point.

The biggest challenge for both the Fed and the economy is that inflation is rising although the economy is wobbly. Fed Vice Chairman Donald Kohn on Friday acknowledged that rising commodities prices have taken the Fed by surprise. If prices do not level out, as the central bank has projected, there will be "important implications" for monetary policy, he said.
http://www.fxstreet.com/futures/news/article.aspx?StoryId=c1b476e7-953b-4c1b-8ab4-91d8e95af998

Shockingly, following Friday's absolutely dismal jobs report, Gold and Silver failed to vault higher. Even more shocking, after plummeting to a new all-time low, the Dollar rebounded and actually closed higher on the day. Fundamentally, nothing has changed for the better for the US Dollar. Not one dollar of the BILLIONS the Fed has manufactured and thrown at the crumbling financial system has resolved a damn thing. What's another $100BILLION supposed to do? The Dollars "bounce" was most likely the result of investors rush to cash as paper assets got whacked, and will shortly be redeployed into commodities and the Precious Metals. A tsunami of increasingly worthless US Dollars is about to flood the Precious Metals and their mining stocks, and carry them to heights well beyond those forecast or imagined.

The inevitable "profit taking" as Gold nears the millennium mark, the margin calls on the permabulls in general equities as the markets plummet, and the endless efforts of the NY COMEX CROOKS to hold Gold down are but noise. "Investors" have barely made their presence felt in the Precious Metal markets. They'll be knocking on our door any day now.