Money Morning Mail Bag
- Money Morning Mailbag: With Many Ways To Hold It, Investors Need To Get Their Hands on Silver
- We Want to Hear From You: How Do You Feel About the U.S. Government's Proposals to Boost Employment?
- Money Morning Mailbag: Ending Bush Tax Cuts Not a Cure-All for U.S. Financial Woes
- Money Morning Mailbag: U.S. Credit-Rating Agency Fights Back to China's Attacks
- Money Morning Mailbag: Big Banks Under Fire for Metals-Market Manipulation
- Money Morning Mailbag: Emergent Natural Gas Market Improves U.S. Fleet Vehicles
- Money Morning Mailbag: Will Elections and a Resignation Open the Door for U.S. Budget Changes?
- Money Morning Mailbag: How Will New Accounting Standards Affect U.S. Banks and Investors?
- Money Morning Mailbag: BP's Post-Oil-Spill Reputation Leads Readers to Consider Socially Responsible Investing
- Money Morning Mailbag: Investors Show Growing Concerns Over Deflation
- Money Morning Mailbag: The Euro and Other Hot Topics Spark Reader Debate
- Money Morning Mailbag: Investors Should Steer Clear of Australia's Mining "Super Tax"
- Money Morning Mailbag: State Budgets Far From Healed After Recession
- Money Morning Mailbag: Readers Eager For Effective Financial Regulation
- Money Morning Mailbag: What's More Broken – Washington or Wall Street?
- Money Morning Mailbag: Can Anyone Fix the Fiscal Mess?
Barnes detailed why silver is poised for a breakout, based on its current price surge underway in India, the price run up of gold - a leading indicator of silver prices - and the fact that the white metal has yet to set a new nominal record price in U.S. dollars.
Barnes outlined the actions investors should take to involve silver in their investment plans, offering three strategies: physical acquisition and accumulation, exchange-traded funds (ETFs) and stocks, and options on futures.
But with midterm elections approaching, U.S. President Barack Obama is trying to show voters there's hope in resolving the stubbornly high unemployment rate. On Monday, he unveiled a six-year infrastructure plan that would invest billions in transportation projects and create a "substantial" number of jobs.
The government would supply $50 billion off the bat to rebuild 150,000 miles of roads, 4,000 miles of rail and 150 miles of runway, plus modernize the air traffic control system. The plan also sets up a government-run infrastructure bank to finance the projects, combining tax dollars with private investment for funding.
The Congressional Budget Office yesterday (Thursday) reported that extending the tax cuts would result in only short-lived economic benefits.
"[It would provide] a considerable boost to economic activity in 2011 and beyond for a few years," CBO Director Douglas Elmendorf told CNN. "Over time, [however,] the negative consequences of very high federal borrowing build up."
The CBO reported that if the cuts for most U.S. taxpayers were made permanent - as proposed by U.S. President Barack Obama - the nation's accrued debt (not including money owed to Social Security and other government trust funds) could climb to 100% of gross domestic product by 2020, up from 62% this year.
Harold "Terry" McGraw III, chairman and chief executive of S&P said that companies like Dagong joined up with politicians and other countries to unfairly attack U.S. ratings firms.
"If you're in a populist mood, you've got to find the villain," McGraw told the Financial Times in an interview in Beijing.
McGraw referred to comments made to the Financial Times in July by Guan Jianzhong, the chairman of Dagong.
The article alleged that JPMorgan, which holds a number of derivatives in precious metals, attempted to lower the price of silver for its own profit. JPMorgan was quick to issue a response, stating there was no criminal or civil investigation into the company's silver trading practices.
But as word spread around the Web, readers' comments poured in with concerns over the news:
U.S. natural gas will play a major part in reducing greenhouse gas emissions by replacing older, inefficient coal plants. Its use is likely to double to 40% of the energy market over the next several decades, according to a study by the Massachusetts Institute of Technology.
The abundance of natural gas - especially shale gas, an unconventional source packed tightly in rock formations - in the United States has driven down natural gas prices, making the fuel more desirable. Shale gas has grown to 15%-20% of the U.S. natural gas output, and as companies design better drilling technology, shale gas reserves will be more easily attainable.
"Natural gas is becoming sexy again, with all this new technology to get the gas out of the shale," Kim Hill, director of the Sustainable Transportation and Communities group for the nonprofit Center for Automotive Research told The New York Times.
The U.S. budget is under scrutiny as the budget deficit is forecast to hit $1.6 trillion by 2011. A President-appointed panel is currently working on budget reduction plans to be presented in a report due in December.
Orszag's strategies as former head of the Congressional Budget Office (CBO) supported a stop to deficit spending, but once he was placed in the budget driver's seat, making significant cuts was nearly impossible with recovery progress slow and unemployment high. Orszag instead ended up helping outline the $787 billion stimulus package in 2009.
The proposal is an effort to tighten banking regulation and improve financial transparency, and coincides with Congress finalizing financial reform.
News of the possible policy change prompted this reader to weigh in on what its enforcement, which has been pushed back to as late as 2013, could do for the banking industry:
"Convergence" between U.S. accounting practices and international accounting practices (from the International Accounting Standards Board) is to be implemented in one year. As part of this convergence, U.S. banks must soon begin to revalue (lower) assets on their books at current market value (mark-to-market).
In London trading Thursday BP fell 6.7% to 365.50 pence, its lowest closing price since January 2003 and 44% lower than the day the Deepwater Horizon rig exploded.
"The share price is political and in no way fundamental," said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh. "The U.S. needs to realize it needs BP to survive to clean up the mess. Scapegoating has gone too far."
"The recent trend in inflation has been swiftly to the downside," Eric Green, chief U.S. rates strategist at TD Securities, told Reuters. "All measures of inflation are decelerating."
Investment behavior has shown an anxious but mixed sentiment of hedging against both inflation and deflation: Demand for gold metal is outstripping supply by more than 1% per year and has pushed gold prices to record highs, while others have sought out both corporate bonds and U.S. Treasuries for safety.
Here is another look at some recent articles generating the most attention and some additional links for further reading.
Reader questions and comments poured in immediately, especially from our friends in the land down under. Some criticized the government's greed, others saluted the tax, and many wondered what action to take as investors. The result was a passionate, well-informed, and at times combative, reader dialogue.
Australian Prime Minister Kevin Rudd has proposed an additional 40% tax on mining company earnings and hopes to use the revenue to snag some hefty cash piles from the profitable natural resources industry. But instead he is putting the economy in danger of future funding shortfalls: If the mining industry's revenue stream starts to run thin, the projects the money is supporting will be strapped and funds will have to be squeezed from elsewhere.
Question: Which of the states are doing best and worst?
Answer: The first 9 months of 2009 handed states the biggest revenue decline in history and the bleeding hasn't stopped. The Center on Budget and Policy Priorities (CBPP) estimates state budget gaps will grow to $350 billion over the next two years, with every state in "fiscal trouble" except Montana and North Dakota. California is projected to hit $20 billion and New York $9 billion.
The Money Morning mailbag continues to overflow with reader thoughts and concerns regarding financial reform – which is finally making slow progress in Washington. After three failed attempts to bring a financial regulation bill to the floor this week, the Senate on Wednesday finally agreed to start debate.
Following is a collection of this week’s Money Morning reader comments on our articles regarding reform, inspired also by more news from the Securities and Exchange Commission case against Goldman Sachs Group, Inc. (NYSE: GS) as executives faced a Senate committee hearing.
A week after the Securities and Exchange Commission brought fraud charges against Goldman Sachs, President Barack Obama yesterday (Thursday) blamed the financial meltdown on both Washington and Wall Street in a speech in New York and urged Wall Street giants to stop fighting reform.