Last week Northwest Mutual announced a major change in asset holdings. It seems the firm’s management has chosen bullion over bonds.
Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company’s 152-year history to hedge against further asset declines.
Northwestern Mutual has accumulated about $400 million in gold, and CEO Edward Zore said the price could double or even rise fivefold if the economy continues to weaken.
“The downside risk is limited, but the upside is large,” Zore said.
June 1 (Bloomberg)
Federal Reserve Chair, Ben Bernanke, lectured the House Committee on negative repercussions of what he and the Federal Reserve continue to allow the US Government to do -> issue more bonds and spend money THEY DON’T HAVE!
"Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance," Bernanke told the House of Representatives' Budget Committee.
"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth."
June 3 (Reuters)
Bill Gross, founder of Pacific Investment Management and a leading expert in bonds, had this to say about future Government spending programs.
“Our expectation is the government won’t be able to exit” from those positions, Gross said in an interview on Bloomberg Radio today. The programs “will be semi-permanent positions on their balance sheets.”
The U.S. growth rate “requires a government checkbook for years to come,” Gross wrote. Coupled with Medicare and Social Security entitlements, government borrowing could reach 300 percent of GDP, meaning “the Chinese and other surplus nations cannot fund the deficit even if they were fully on board,” he wrote.
June 3 (Bloomberg)
Tim Geithner visited China last week and was laughed at by the country’s youth. The Chinese understand the weakening fundamentals of their bond and dollar holdings.
U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University...
His answer drew loud laughter from his student audience, reflecting skepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.
June 1 (Reuters)
Paul Craig Roberts, former Assistant Secretary to the Treasury in the Reagan administration, had this sobering commentary on our current situation.
The incompetents who manage US economic policy have created a perfect storm.
The Obama-Federal Reserve-Wall Street plan for the US to spend its way out of its problems is coming unglued. The reckless spending is pushing the dollar down and interest rates up.
Every sector of the US economy is in trouble. Former US manufacturing firms have been turned into marketing companies trying to sell their foreign-made goods to domestic consumers who have seen their jobs be moved offshore. Much of what is left of US manufacturing--the auto industry--is in bankruptcy. More declines await housing and commercial real estate. The dollar is sliding, and interest rates are rising, despite the Federal Reserve’s attempts to hold interest rates down.
When the Reagan administration cured stagflation, the result was a secular bull-market in US Treasuries that lasted 28 years. That bull market is over.
The next shoe to drop will be the dollar’s loss of the reserve currency role. Then the US, an import-dependent country, will no longer be able to pay for its imports. Shortages will worsen price inflation and disrupt deliveries.
Life for most Americans will become truly stressful.
Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company’s 152-year history to hedge against further asset declines.
Northwestern Mutual has accumulated about $400 million in gold, and CEO Edward Zore said the price could double or even rise fivefold if the economy continues to weaken.
“The downside risk is limited, but the upside is large,” Zore said.
June 1 (Bloomberg)
Federal Reserve Chair, Ben Bernanke, lectured the House Committee on negative repercussions of what he and the Federal Reserve continue to allow the US Government to do -> issue more bonds and spend money THEY DON’T HAVE!
"Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance," Bernanke told the House of Representatives' Budget Committee.
"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth."
June 3 (Reuters)
Bill Gross, founder of Pacific Investment Management and a leading expert in bonds, had this to say about future Government spending programs.
“Our expectation is the government won’t be able to exit” from those positions, Gross said in an interview on Bloomberg Radio today. The programs “will be semi-permanent positions on their balance sheets.”
The U.S. growth rate “requires a government checkbook for years to come,” Gross wrote. Coupled with Medicare and Social Security entitlements, government borrowing could reach 300 percent of GDP, meaning “the Chinese and other surplus nations cannot fund the deficit even if they were fully on board,” he wrote.
June 3 (Bloomberg)
Tim Geithner visited China last week and was laughed at by the country’s youth. The Chinese understand the weakening fundamentals of their bond and dollar holdings.
U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University...
His answer drew loud laughter from his student audience, reflecting skepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.
June 1 (Reuters)
Paul Craig Roberts, former Assistant Secretary to the Treasury in the Reagan administration, had this sobering commentary on our current situation.
The incompetents who manage US economic policy have created a perfect storm.
The Obama-Federal Reserve-Wall Street plan for the US to spend its way out of its problems is coming unglued. The reckless spending is pushing the dollar down and interest rates up.
Every sector of the US economy is in trouble. Former US manufacturing firms have been turned into marketing companies trying to sell their foreign-made goods to domestic consumers who have seen their jobs be moved offshore. Much of what is left of US manufacturing--the auto industry--is in bankruptcy. More declines await housing and commercial real estate. The dollar is sliding, and interest rates are rising, despite the Federal Reserve’s attempts to hold interest rates down.
When the Reagan administration cured stagflation, the result was a secular bull-market in US Treasuries that lasted 28 years. That bull market is over.
The next shoe to drop will be the dollar’s loss of the reserve currency role. Then the US, an import-dependent country, will no longer be able to pay for its imports. Shortages will worsen price inflation and disrupt deliveries.
Life for most Americans will become truly stressful.