What Uncle Sam Gives in Rebates, OPEC Takes, Stalling Economy
May 5 (Bloomberg) -- Wal-Mart and OPEC are battling for the tax rebates the U.S. government began handing out last week. The result may be a draw for the economy.
While consumers might spend enough of the $117 billion stimulus at retailers to keep the U.S. economy afloat in the months ahead, the boost from their purchases will be diluted by gasoline prices at $3.62 a gallon and rising.
Since President George W. Bush signed the stimulus package in February to much fanfare, the price of a gallon of gasoline has risen 64 cents, according to AAA, the nation's largest automobile club.
Food prices, too, have climbed at an annual rate of 5.1 percent since the start of the year...
``A lot of that stimulus money is going to go to filling the gasoline tank and the refrigerator,'' says Mark Zandi of Moody's Economy.com in West Chester, Pennsylvania. ``It's not going to be quite the boost that most of us were hoping for when it was put together a few months ago.''
Are you kidding me? George Bush promised me that this stimulus package was going to help fix everything! And now all it "might" cover is my gasoline and food bills? George, what about my beer tab? Another "smoke gets in your eyes" moment courtesy of the US Government...
The rest of the world opened the week keen to the nonsense we witnessed last week regarding the Dollar, Gold, Silver, and Oil. Traders jumped at the word go Sunday night and began the week by dumping the Dollar and bidding up the Euro, Gold, and Silver. The fire in the Oil pits was reignited as well. The world is coming to the quick realization that the economic spin cascading out of the US managed financial media is old fashioned BALONEY. The potential for massive short squeezes in the Precious Metals may be imminent. The ECB meets Thursday to announce NO CHANGE in Euro Zone interest rates as the continue to remain vigilant in the face of escalating inflation. The ECB recognizes the obvious: rising prices are not very good for their economy and will chose to fight slowing growth by attempting to keep prices in check. The US Fed should have realized this months ago...
Europe Price Surge Persuades Politicians to Back ECB
May 5 (Bloomberg) -- The European Central Bank is winning Europe's political leaders over to its policy of focusing on fighting inflation even as economic growth slows.
Politicians from France, Belgium and Luxembourg, who previously complained that the ECB paid too little attention to economic growth, have signaled increasing concern that inflation is eating away at voters' incomes.
``There isn't much appetite for having these inflation levels, whether you're the monetary authority or government,'' Robert Barrie, chief European economist at Credit Suisse Group in London, said. ``There's a recognition that inflation is too high and broader-based support for the ECB to do something about it.''
The ECB has refused to follow the U.S. Federal Reserve and Bank of England in lowering interest rates after inflation surged since August, to reach a 16-year high of 3.6 percent in March. The bank argues that rising prices are a bigger threat to economic growth than the increase in credit costs resulting from the collapse of U.S. subprime mortgages.
I can always count on Bob Chapman, The International Forecaster to tell me like it is. This week he spares no words in telling us what a joke the events of the past week really were:
On February 7, 2008 the lead contract on the USDX closed at 77.120. On that day, the Fed funds rate stood at 3.00%, the discount rate stood at 3.50% and the price of gold was trading between 896 and 912. Now this past Friday, May 2, with the lead USDX contract closing at 73.690, the Fed funds rate at 2.00% and the Fed discount rate at 2.25%, the price of gold is trading in the 845 to 860 range, $50 per ounce less than the price range on February 7. So, the fact that since February 7, the funds rate has been lowered 1.00%, the discount rate has been lowered 1.25% and the USDX has closed 3.43 points lower, appears to translate into lower gold prices, prices that are $50 per ounce less than they were on February 7! Sure, there was some anticipation about rates being lowered after February 7, but come on, to what level? We'll tell you what level. The level we are at currently, of course, which is what was anticipated by virtually everyone according to futures that anticipated all these events. And now we are told about a possible pause that is currently being jawboned by the Fed and the fane-stream media, but with the potential for even lower rates, and certainly not for higher rates that would send us into deflation and economic destruction. Does anyone in their right mind think that rates will be raised to support the dollar when the darlings of fraud on Wall Street are about to get a big "swirly" in the gargantuan financial toilet bowl where we now all collectively find ourselves? At this point, we simply have a pause, so the Fed can retain some of its rate-lowering ammunition in order to thwart the next debacle, which will take the form of Alt-A mortgage and credit card defaults mixed with a further and ever-deepening bank insolvency, a worsening credit-crunch, hyperinflation, a sagging and negative GDP, nonexistent consumer spending despite the piddling stimulus, even lower corporate earnings and a potential war against Iran and Syria. SO WHAT GIVES? Can we suggest massive manipulation and gold price suppression by the cartel and their diabolical insider trading team known at the PPT (Plunge Protection Team)?! Heaven forbid that the US public should ever be told the truth about the dire state of our economy.
"Look at gold shoot to the moon! The Mogambo was right! We're freaking doomed!"
-Richard Daughty, The Mogambo Guru
http://news.goldseek.com/RichardDaughty/1209955214.php
http://news.goldseek.com/RichardDaughty/1209955214.php
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