Prepare for Mass Retail Closings – 220,000 May Close This Year!

• Aaron Task of tech ticker interviews Howard Davidowitz on the retail situation in America :
   
  About 220,000 stores may close this year in America, says our guest, retail consultant Howard Davidowitz of Davidowitz & Associates. As more Americans save and spend less, it’s clear there’s too much retail space. Just visit Web site deadmalls.com and track retail’s growing body count. And luxury retailers? They’re on “life support,” Davidowitz says. 

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Gold Primed to be ‘Mania Asset’

Photo: EDDIE MULHOLLAND

• Gold briefly went above US$1000/ounce yesterday. More investors are piling in. We will see gold test the previous high of US$1035/ounce very soon.
   
• During times of monetary distress, people run to gold. Gold is real money throughout history. Fiat currencies have come and gone. Empires have fallen but gold has stood the test of time as real money. Paper currencies have collapsed, remember the Wiemar republic and Japanese Yen in WW2 ? The USD will collapse too.
   
• Will Gold collapse when USD collapse? Obviously not. Just because gold is traded in USD in the Comex does not mean that it will become worthless when USD collapses. On the contrary its value will skyrocket as people realize the USD is just a piece of paper. Bernanke and his cahoots have been creating trillions of USD out of thin air.
   
• The likely scenario when there is a monetary meltdown is : Gold will be coveted. The demand for gold will be mania like. Financial Times reports in Gold primed to be ‘mania asset’:
    
  Gold is exhibiting all the classic signs of being in a structural bull market. On fears of inflation in early 2008, it rallied. Then, on fears of deflation in late 2008, it rallied again. So does gold perform better during inflation or deflation?
   
  In our view, that question is the wrong starting point. On the contrary, the rationale for owning gold, as it once again approaches the $1,000-an-ounce level, is the prospect of mounting monetary disorder.
   
  The US Federal Reserve, having flooded the market with liquidity by more than doubling its balance sheet in less than six months, may be unable or unwilling to withdraw it in time for fear of precipitating a secondary relapse in economic activity. Other central bankers will also face intense pressures to “support” their domestic economy by weakening the currency, leading to competitive currency devaluations.
   
  The race to the bottom in fiat currencies has begun and hard assets, particularly gold and silver, should be the primary beneficiaries.
   
  Gold is a prime candidate to become a “mania asset” once its demand becomes chiefly financially driven as opposed to jewellery and/or industrial demand driven where its upside could be capped by “sticker shock.”
   
  In fact, gold is currently one of the few remaining major asset classes where a case could be made for it to rise in a parabolic fashion. Once the psychologically significant $1,000-an-ounce is breached convincingly, the speed of the move beyond that level could accelerate sharply. One precondition for a mania is there must be uncertainty about how the asset is properly valued which allows “new era” thinking to take hold. This is very true for gold.
    
  Price explosion might not be imminent, however. Gold is experiencing unprecedented buying by exchange-traded funds, offset by substantially reduced jewellery demand. The fall in the Indian rupee has meant Indian gold prices have reached record levels. This is causing a slowdown in jewellery purchases (even though rupee expenditure levels are holding up, the tonnage of gold imports is suffering).
   
  The long-term story for gold, however, is as a remonetisation play as investors lose faith in fiat currencies. Keep an eye on gold lease rates; a spike would be a good lead indicator that gold is about to punch higher as this would reflect a shortage of lendable bullion. Rising lease rates will cause gold to go into backwardation as holders of gold may not want to sell their gold forward under any circumstances a trend currently evidenced by the high physical premium being paid for gold coins. 
    …….
  Speaking to central bankers, this is the first time I can recall them actually favouring a high gold price. Normally they see high gold prices as a lack of trust in the financial system (not to mention their ability as central bankers). Alan Greenspan, the former Fed chairman, for example, used to target a gold price of around $400 to $500 an ounce.
   
  Recently, the central bankers have become more enamoured of higher gold prices as it would suggest that their attempts to stave off deflation were starting to work.
   
  Central bankers in favour of higher gold prices? Things really have changed.
   
• When fiat currencies collapse, trade will be done via bartering or gold as currency. Can foods will be valuable: bake beans, Spam, sardines etc ….dry foods like: Quaker Oats, instant noodle…etc . All these can be used for bartering. But remember the perfect store of wealth is still gold! Let me tell you that when people will not accept USD in the future, they will still accept gold as payment !
   
• See also :
   
  Gold About to SkyRocket ! China Worries about Treasuries and Diversify into Gold !
  European Banks may need US$ 23 Trillion Bailout !
  Gold Price Set to Soar !
  What’s not to Like about Gold ?
  Dollar Devaluation, Debt Default & Gold
  Massive US Dollar Devaluation Against Gold During 2009
  Gold Rush Worldwide!
  Obama, Roosevelt, Gold Confiscation and Dollar Devaluation
  Economic Depression and Gold
  Celente – Code Red ! Economy in Collapse !
  GEAB : Systemic Economic Crisis: The Sequence of Global Insolvency Begins
  Global Financial & Economic Meltdown
  GEAB forecasts Next Financial Tsunami in March 2009
  Global Monetary Meltdown in 2009 ?
  America’s Debt – Ticking Nuclear Bomb!
  American & British Banks are Bankrupt!
  Economic Collapse of 2009 – Greater than Great Depression of 1929
  America is at the Edge of Niagara Falls
  Gerald Celente – Trends 2009
  Can Countries Go Bankrupt ?

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David Letterman on Economic Stimulus Package (Humor)

• Letterman on what will happen.

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Signs of Great Depression: Newly Poor Swell Lines at Food Banks !

Cindy Dreeszen and her husband Alex Orejuela and their son Matthew at the Interfaith Food Pantry in Morristown, N.J. - James Estrin/The New York Times

• Things are getting rougher by the week. People who sailed through previous recessions unscathed are now caught in this economic meltdown. Families that were way above the poverty line are now having difficulty feeding themselves.
   
• Julie Bosman writes :
   
  MORRISTOWN, N.J. — Once a crutch for the most needy, food pantrieshave responded to the deepening recession by opening their doors to what Rosemary Gilmartin, who runs the Interfaith Food Pantry here, described as “the next layer of people” — a rapidly expanding roster of child-care workers, nurse’s aides, real estate agents and secretaries facing a financial crisis for the first time.
  Demand at food banks across the country increased by 30 percent in 2008 from the previous year, according to a survey by Feeding America, which distributes more than two billion pounds of food every year. And instead of their usual drop in customers after the holidays, many pantries in upscale suburbs this year are seeing the opposite.
   
  Here in Morris County, one of the wealthiest counties in the country, the Interfaith pantry opened for an extra night last week to accommodate the growing crowds. Among the first-time visitors were Cindy Dreeszen and her husband, who both have steady jobs — his at a movie theater and hers at a government office — with a combined annual income of about $55,000.
   
  But with a 17-month-old son, another baby on the way, and, as Ms. Dreeszen put it, “the cost of everything going up and up,” the couple showed up in search of free groceries.
   
  “I didn’t think we’d even be allowed to come here,” said Ms. Dreeszen, 41, glancing around at the shelves of fruit, whole-wheat pasta and baby food. “This is totally something that I never expected to happen, to have to resort to this.”
   
  In Lake Forest, Ill., a wealthy Chicago suburb, a pantry in an Episcopal church that used to attract people from less affluent towns nearby has lately been flooded with people who have lost jobs. In Greenwich, Conn., a pantry organizer reported a “tremendous” increase in demand for food since December, with out-of-work landscapers and housekeepers as well as real estate professionals who have not made a sale in months filling the line.
   
  And amid the million-dollar houses of Marin County in California, a pantry at the San Geronimo Valley Community Center last month changed its policy to allow people to stop by once a week instead of every other week, since there are so many new faces in line alongside the regulars. “We’re seeing people who work at banks, for software firms, for marketing firms, and they’re all losing their jobs,” said Dave Cort, the executive director. “Here we are in big, fancy Marin County, but we have people who are standing in line with their eyes wide open, thinking, ‘Oh, my God, I can’t believe I’m here.’ ”
   
  The demand is not limited to pantries, which distribute groceries from food banks, supermarket surplus and individuals who donate through church or school can drives. The number of food-stamp recipients was up by 17 percent across New York State, and 12 percent in New Jersey, in November from a year before. When a mobile unit of the Essex County welfare office, as part of a pilot program to distribute food-stamp applications in other counties, stopped in Shop-Rite parking lots recently in Morris County, it was swamped.
   
  “If one of our richest counties has people signing up for food stamps who have never signed up before, that indicates the depth of this problem with the lack of food,” said Kathleen DiChiara, executive director of Community FoodBank of New Jersey. “It’s the canary in the coal mine.”
   
  Experts said that chronically poor people tend to adapt to the periods where money is scarce by asking for support from friends or tapping into social services, but that working-class people who suddenly lose jobs or homes often find themselves at sea, unsure how to navigate the system or ashamed to seek help.
   
  It is those people who, over the last several months, have started arriving in growing numbers at food pantries, which are often the first tentative step for those whose incomes are too high to qualify for government assistance. (Many pantries have a no-questions policy, though they might determine how many bags of groceries a customer can receive by the number of people in the household.)
   
  “These are people who never really had to ask for help before,” said Brenda Beavers, human services director for the Salvation Army in New Jersey, which dispenses emergency food supplies at 30 pantries throughout the state. “They were once givers and now they’re having to ask for assistance.”
    
  In Morristown, Ms. Gilmartin, who started volunteering at the Interfaith pantry 13 years ago, has watched a stream of new faces pushing shopping carts among the cardboard boxes on metal shelves in a former nursing home. In 2008, the pantry gave away 620,000 pounds of food, a 24 percent increase from 2007; in November, December and January it had a 24 percent increase in customers and a 45 percent increase in food distributed, compared with the same period the previous year.
   
• Many Americans are suffering big time. But the government wants to take their money and bailout millionaire/billionaire banksters! Bank of America and CitiBank are bankrupt ! Yet the US government insist on giving them money. The money given to them so far is way above the market valuation of these 2 companies. Any investor will want full say and fire all these banksters. I don’t think any of them will be in food lines begging for food.
   
• The US government says no nationalization of banks. How about we stop giving them money and use the money to help the newly poor. So you do not nationalize the banks and let the bankster keep control. The result is: they give themselves enormous bonuses. This is basic stupidity. No private investor will allow themselves to be taken for a ride like this. The US government is clearly not serving the American people. They are serving the banksters! Why are we not more pissed?

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Impending GeoPolitical Earthquake?

• José Miguel Alonso Trabanco has written an excellent piece on what is likely to happen next. What are the geopolitical consequences of the current financial meltdown? We know that when the Soviet Union collapsed 20 years ago, the USSR empire ended. We are at the early stage of the end of the American empire. How will it affect the key powers of the world? How will regional powers react and who will fill the void should America (though unlikely) totally collapse?
   
• Trabanco writes in An Impending Geopolitical Earthquake? :
    
  Some scholars frequently hold that politics and economics are somehow separate. Such view is profoundly mistaken because politics and economics are strongly interlinked. Actually, political power and economic wealth cultivate one another. Likewise, economic trouble, more often than not, tends to lead to political trouble and the reverse is equally true.
   
  Therefore, it is fairly reasonable to assert that this financial crisis will have a major impact on the international system’s balance of power. Some states (including Great Powers) could redefine their priorities. Other states are in a direr situation so they would have to make dramatic adjustments concerning their policies.
   
  Take the case of the United States. Following the end of the Cold War, the US intended to establish a unipolar era in which its hegemonic position would remain unrivaled (the so called ‘Project for a New American Century’). However, Washington has had to deal with several setbacks and challenges like the rise of other great powers (China and Russia), the proliferation of anti-American regimes (Iran, Venezuela) as well as Washington’s military quagmires (Iraq and Afghanistan). Thus, the position of the could be weakened as a result of the financial crisis.
   
  It is unknown at this point if the Dollar hegemony will prevail and remain unscathed. The dollar can certainly survive but its position could be critically eroded. This is extremely important to bear in mind because the Dollar hegemony is one of the twin pillars of American power, the other one being military strength. The US Dollar’s position as the top reserve currency is what has allowed the American economy to finance a huge trade deficit. A byproduct of that is the accumulation of the world’s largest external debt, equivalent to almost 99.95% of America’s GDP (!?).That means it cannot be paid so, what will happen if suddenly America’s creditors decide to collect at least a part of that debt? If the US refuses to pay, how will its debtors react?
   
  Moreover, the financial and economic crisis might acutely restrict NATO’s operational capabilities beyond its borders. The Atlantic alliance is currently contemplating an increased military presence in Afghanistan. It also seeks to advance further eastward into the Post-Soviet space. However, such agenda could be impeded by other concerns closer to home.
   
  It turns out that several European States (some with both NATO and European Union membership) are already facing sociopolitical complications that have been triggered by their severe financial and economic difficulties (lack of credit, unemployment, currency depreciation, external debt, GDP negative growth). If their situation deteriorates further, an eventual deployment of NATO troops in one or more of its members’ territory is not inconceivable at all. The official purpose would be the preservation of political stability. The unofficial (and real) goal would be to prevent NATO-friendly governments from collapsing. Iceland, Hungary, Greece and even Italy and France are in a particularly dire position. According to Der Spiegel Britain itself (the very cradle of modern finance) is “on the brink of financial ruin“.
   
  This scenario can be dismissed as far-fetched but even the American financial sector is under critical circumstances. Like Russian Prime Minister Vladimir Putin recently remarked “… investment  banks, [once] the pride of Wall Street, have virtually ceased to exist. In just twelve months, the have posted losses exceeding the profits they made in the last 25 years…”
   
  The Russian Federation itself is not immune. For instance, the Kremlin’s plans to make Moscow an international financial center do not seem very likely now, due to the ruble’s depreciation. In spite of that, the Russian government knows it has an important capability to maneuver through the crisis. Its main asset is the huge reserves of foreign currency (the third largest in the world) it has amassed during the last years. Plus, Russian energy and arms exports are a reliable source of income.
   
  Other Post-Soviet States are in a more delicate position. For instance, Kyrgyzstan decided to close the Manas Air Force Base (operated by the US Air Force) in exchange for Russian financial and economic concessions, which means Moscow scored a most crucial geopolitical victory. This teaches a vital lesson: Financial means are very useful to accomplish geopolitical objectives. On the other hand, Ukraine’s economy is rather fragile so it has been rumored that Kiev could even reconsider its foreign policy in exchange for financial assistance.
   
  It has to be taken into account that China possesses the world’s largest reserves of foreign currency so Beijing is not entirely unprotected. However, as a result of the global crisis, the Chinese need to avoid potentially destabilizing political consequences derived from unemployment and overall economic slowdown. Some prominent members of Obama’s administration intend to at least decrease the American trade deficit by pressuring Beijing to revaluate the Chinese yuan but China obviously is unwilling to artificially restrict its exports. This disagreement must not be underestimated because it could fuel dangerous tensions between both great powers.
   
  It is yet too early to accurately predict the full consequences of the world financial crisis. Nevertheless, it seems that it will spark some unforeseen geopolitical readjustments. The financial system is approaching a most critical turning point and so is the international balance of power.
   
• GEAB forecasts geopolitical dislocation by Q4 2009 (see earlier post). So 2009 will be a pretty interesting year. Which countries will rise up? Which will collapse? As the Chinese say: May you live in interesting times!? Let’s hope it does not get too interesting, with war breaking out all over the globe.

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