THREE, 800 POUND GORILLAS

May 30, 2006

Stuff has hit that proverbial fan- on Wall Street. Another blood-letting in the market place. The Dow tanken another 184 points and the experts say they don’t get it. Really!

Well, do you think that the Federal debt which has climbed 50% in six years has anything to do with it? The $5.6 TRILLION in 1999 is now $8.3 TRILLION in 2006. After a while it’s just chips at Las Vegas; however, the visitors are running the tables, and I am not sure the “house” has enough to pay off.

Yes, we can keep printing money, and a lot faster than we used to. However, since the US$ has dropped 98% of it’s value in the last 90 years (ever since the Fed was created in 1913 to protect the US$), maybe the continued printing of money can’t be a sustainable plan.

Maybe our annual trade deficit has something to do with the ugly mood. In 2004 our trade deficit was $666 BILLION. In 2005, it was $782 BILLION. And my bet is that 2006 will be higher yet. How long will the other nations continue to extend us CREDIT with MONEY that is worth less and less each year?

My guess is not much longer.

And many other nations are being hit by the economic crush of the last three weeks as well. BRIC (Brazil, Russia, India, and China) was looked upon as an emerging economic giant. But they have fallen on hard times as well. The stock markets of the four in order are off 8%, 17%, 14%, and 11%.

I’ve just mentioned three 800 pound gorillas that are jumping up and down on the US markets. And, they are all systemic problems that won’t go away any time soon. And I don’t see anyone big enough or with enough courage to do anything about them!

Written by Ernie · Filed Under Daily Commentary