Boom2Bust.com

Ron Howard, Andy Griffith, And Henry Winkler Support Obama

It’s great seeing Ron Howard, Andy Griffith, and Henry Winkler reprise their roles again as Opie, Andy, and The Fonz from “The Andy Griffith Show” and “Happy Days” in a new short film (hat tip My Two Cents blog). All three support Barack Obama for POTUS.

“Ron Howard’s Call To Action”
Funny Or Die Video Link

Ron Howard said in the film:

…it is so crucial that we vote for change. I’m talking about real change. The kind of change that will allow us to trust our government again.

I agree with him 100 percent. Which is why I cast my vote for Ron Paul for President of the United States this morning.

Ron Paul On The Proposed Government Bailout

U.S. News & World Report Associate Editor Luke Mullins got the chance to speak with political maverick and one-time candidate for POTUS, Congressman Ron Paul, about the government’s proposed massive intervention in the U.S. financial system. From his piece, “Ron Paul: This Bailout Won’t Be The Last”:

I recently chatted with Rep. Ron Paul (R-Texas) about the gigantic financial bailout that the government is preparing to undertake.

Some excerpts from the interview:

What’s your take on this huge financial bailout?
“It’s more of the same. More debt and more inflation and more pressure on the dollar. Ultimately, although the markets are responding very favorably at the moment, I think it is going to be devastating to the dollar and to our financial situation in this country.”

Dr. Paul sees some nasty stuff coming down the road. So do I.

You can read the rest of Mullins’ interview with the Texas congressman here.

Financial Chaos Not Much Of A Surprise For Some

I came across a piece the other day where the Chicago Tribune’s personal finance columnist Gail MarksJarvis talked about PIMCO’s Mohamed El-Erian and his visit with professional investors at Morningstar’s annual investment conference in Chicago. MarksJarvis wrote:

El-Erian, co-CEO of Pimco, thinks the world is fundamentally changed, with complexity that neither central banks, government leaders, businesses nor investors know how to handle.

As evidence, he said, the world has gone through what he called “the unthinkable” in the last 12 months. If he had made a prediction a year ago that the world’s first systemic crisis would have been set off by the “most sophisticated financial system in the world”—which, of course, is Wall Street—“investors would have thought that improbable,” he noted.

And if he had suggested there would have been “runs on banks” like the debacle at Bear Stearns, he said, people would have imagined the mess occurring in Latin America, Asia, or Russia, but not the U.S.

And if he had suggested that the banking system would have raised $350 billion in fresh capital and then written off a similar amount, “I would have lost most of you,” he said.

But the ultimate assertion that no one would have imagined, he added, is that the richest country in the world would receive capital from poorer nations, like South Korea and Kuwait, to relieve the financial pressure.

Time to set the record straight. There were quite a few individuals who recognized and warned others of the “unthinkable,” the “improbable,” and the “unimaginable” in the U.S. and global financial systems. Bonner, Bookstaber, Buffett, Das, Faber, Grantham, Gross, Panzner, Paul, Prechter, Puplava, Roach, Rogers, Rosenberg, Roubini, Rubino, Schiff, Shiller, Schultz, Soros, Tice, Turk, Volcker, Wiedemer, Wiggin, are just a few names that come to mind.

Marginalized and ridiculed by the financial mainstream for such cognizance, I have a feeling history will be kind to these individuals…

Source:

“Inaction speaks to uncharted territory”
Gail MarksJarvis
Chicago Tribune, June 26, 2008

Investment Bank Predicts Ron Paul Victory As Economy Weakens

Every year, the Strategy Team at Danish investment bank Saxo Bank puts together a list of ten long-shot predictions for the new year. It’s interesting to note that more than a few of these predictions have come true over the years. For example, at the end of 2006, Saxo analysts said they were bullish on oil “given the raft of alarming geopolitical scenarios with alarming implications for global supply.” Crude oil prices in 2007 almost reached $100 per barrel. Another prediction by bank staff was that the Federal Reserve would bring the federal funds rate down to 4% by the end of 2007. It now stands at 4.25%.

Here are some of the investment bank’s more notable predictions for 2008 (from Emirates Business 24/7):

World oil prices to hit $175 even if growth slows
Much of the conventional wisdom on oil has been proven wrong over the past few years, as previously unimaginable new highs in the price of oil have only been a reflection of the strength of global growth, rather than an obstruction in its path. With the weak US dollar and shrinking profit margins for refiners, the end consumer in many places worldwide hasn’t noticed a difference between oil prices at $99 compared to oil prices at $75. Even if global growth slows in 2008, it will continue to move ahead in the emerging markets of the world where marginal energy demand is growing the most. As “peak oil” becomes an accepted principle and supply and demand do a nervous dance, the price risk in energy remains firmly to the upside.

UK economy likely to go into a nosedive
The British economy may go into a nosedive in 2008, weighed down by some of the same factors that have toppled the US. The UK housing bubble is possibly worse than the US bubble and has only begun to unwind. The Bank of England has dragged its feet as the credit crisis has unfolded, which could worsen the situation compared to the Fed, where “Helicopter” Ben Bernanke has replaced “Easy” Alan Greenspan. The UK consumer is even more overextended in terms of all forms of debt than his US counterpart.

S&P 500 falls 25% from its 2007 high to 1,182
Why 1,182? That would be an exact 25 per cent drop from the 1,576 high the S&P 500 index reached in mid-October this year. History shows that a stock market drops 15 to 30 per cent when housing markets fail. “Easy Al” and “the slice and dice any manner of junk and pass on the risk to your clients” investment banking paradigm triggered the biggest housing bubble in US history. The unwind from the height has already been severe, but it has further to go. So we are daring to forecast that the fall in the major US index will lie at the extreme end of the scale.

Grain prices to double again as demand rises
This year saw the most spectacular gains in the grains complex in recent memory as wheat prices doubled and soybean prices rose to levels not seen since the wild grain markets of the 1970s. Human population growth has slowed on a percentage basis, but per capita consumption of grain is accelerating as emerging markets switch to higher protein diets, which have a multiplier effect on the grain market. Every kg of beef requires seven kgs of feed, for example. Chinese meat consumption has also doubled per capita since 1990 and milk consumption has tripled since 2000.

Many of the big US home builders to go bankrupt
As 2007 draws to a close, many of the stocks for the largest home construction outfits in the US are rallying after George W Bush rolled out his desperate attempt to stem the sub-prime tidal wave by fiddling with rate reset mechanisms and implementing other measures, which seem like pumping medicine into a dead horse. These steps are too little and too late, as the last phases of the US housing boom were one of the worst examples of overextension by any industry – driven by excess liquidity. At least three of the largest US home builders could go bankrupt in 2008.

Chinese equities likely to see correction next year
The Chinese stock market bubble in 2007 saw one of the most remarkable accumulations of paper wealth in financial market history. The rise in Chinese equities is certainly due in part to solid fundamental underpinnings, including a liberalisation of markets and remarkable economic growth. But there are a number of factors we believe may have resulted in an unhealthy overextension in equity prices that could mean an ugly correction in 2008 – possibly around the psychologically important 2008 Summer Olympics in Beijing.

Ron Paul elected President of the United States
The most outrageous! One would imagine a party with the least popular president to inhabit the White House – ever – wouldn’t stand a snowball’s chance in Texas of getting a new candidate elected to the presidency. But Ron Paul is no George W Bush, even if he is a Republican like Bush and is from Texas like Bush. His libertarian, anti-war platform is about three standard deviations away from the platform of any other republican candidate — or even Hillary Clinton, for that matter. Paul’s share in the Republican candidate polls has rocketed from one to six per cent in the space of a few months and there is the best part of a year to go until the election. As should be clear from this year’s outlook, we are quite negative on the US economy in 2008. A general slowdown and stock market turmoil must increase the odds of a Ron Paul nomination as he has been the only candidate to speak about the budget, account deficits and the dollar crisis.

Ron Paul: The Second Coming Of Guy Fawkes?

Remember, remember the Fifth of November,
The Gunpowder Treason and Plot,
I know of no reason
Why Gunpowder Treason
Should ever be forgot.
Guy Fawkes, Guy Fawkes, t’was his intent
To blow up King and Parli’ment.
Three-score barrels of powder below
To prove old England’s overthrow;
By God’s providence he was catch’d
With a dark lantern and burning match.
Holloa boys, holloa boys, let the bells ring.
Holloa boys, holloa boys, God save the King!

Every November 5th, citizens of the United Kingdom celebrate Bonfire Night, or Guy Fawkes Night, in commemoration of the foiling of the Gunpowder Plot of November 5, 1605. On that day, a group of religious conspirators, including one Guy Fawkes, plotted to kill King James I, his family, and most of the British aristocracy by blowing up the Houses of Parliament during the State Opening. Fawkes is the most well-known of the bombers, as his soldiering experience meant he was probably responsible for executing the plot. Fawkes was caught before he could blow up Parliament, but managed to avoid a grisly execution by jumping from a scaffold where he was supposed to be hanged, breaking his neck in the process. Despised in his time, Fawkes was ranked number 30 in the 2002 list of “100 Greatest Britons,” which is sponsored by the BBC and voted for by the public. It is said that Guy Fawkes is “the only man to ever enter Parliament with honorable intentions.”

On the anniversary of Guy Fawkes Night, there is yet another group of individuals looking to bring an abrupt change to government (peacefully, I should add). As of 8 PM Central Time this evening, supporters of 2008 U.S. presidential candidate Ron Paul have raised over $3.25 million for his campaign though the website ThisNovember5th.com, in reference to Guy Fawkes and the Gunpowder Plot. The remarkable thing about all this is that it is being carried out at the “grassroots” level, and not part of some “official” Ron Paul campaign drive. U.S. Senator Hillary Rodham Clinton holds the record for raising the most in a single day at $6.2 million back on June 30.

So, just who is Ron Paul? According to the November 12 issue of Time, as of early October 72% of GOP voters told Gallup pollsters “they didn’t know enough about Paul to form an opinion.” To be honest, I don’t know too much about the Texas congressman either. From his website:

As a member of the U.S. House of Representatives, Dr. Paul tirelessly works for limited constitutional government, low taxes, free markets, and a return to sound monetary policies. He is known among his congressional colleagues and his constituents for his consistent voting record. Dr. Paul never votes for legislation unless the proposed measure is expressly authorized by the Constitution.

Nothing too subversive to justify the comparison to Guy Fawkes. However, if you take a closer look at some of the things Dr. Paul is pushing for, you discover why he may be seen as a threat to the “establishment.” According to the Time piece, the congressman wants to abolish the Federal Reserve and return to the gold standard. He is also against foreign intervention, subsidies, and the federal income tax. The list goes on. There are those in his own party that are none to thrilled with him or his ideas. GOP consultant Frank Luntz told Time that:

His supporters are the equivalent of crabgrass. It’s not the grass you want, and it spreads faster than the real stuff. They just like him because he’s the most anti-Establishment of all the candidates, the most likely to look at the camera during the debates and say, ‘Hey, Washington, f___ you.’

The identification with Fawkes suddenly becomes clearer. In a New York Times piece earlier today, campaign spokesman Jesse Benton made it clear that the Republican congressman does not support blowing up government buildings, like Fawkes and his colleagues. “He wants to demolish things like the department of education, but we can do that very peacefully, in a constructive manner.”

According to the latest update, more than 22,000 donors have contributed $3.5 million to the fundraiser today. Remember, remember the Fifth of November…