The Economy–Debt Doom: “Can they pay it back?” by Colin Campbell at www2.macleans.ca, via lewrockwell.com today, sports this sub-line, “The U.S. is about to go broke and they’ll take us down with them”. Scary but apparently somewhat sensational unless you read on to find that this article very much revolves around the views of Peter Schiff. Here then are some of Mr. Schiff’s views and the articles highlights:

• “Peter Schiff was making the rounds on U.S. cable news shows in 2007, warning about the collapse of the housing market, anchors and fellow guests literally laughed in his face when he launched into his gloomy predictions. That kind of meltdown could never happen, they said. The economy was on rock-solid ground.. In those rosier economic days, Schiff, the president of Darien, Conn.’s Euro Pacific Capital, was repeatedly cast as a successful broker who’d gone off the deep end.”
• “These days, a vindicated Schiff is back on the talk show circuit with an even darker message. The current recession, he argues, is only the beginning of a larger economic restructuring. The American economy has been destroyed by years of reckless spending and borrowing. And now, the U.S. government is so deeply in debt that at some point in the very near future, he says, its lenders–namely China– are going to come to their senses and cut America off. …”When the system collapses –and it inevitably must, he insists–inflation will run wild as the U.S. prints money to support its spending habit. Interest rates will jump and everyone will suffer. The real day of reckoning is still to come.”
• “Late last month, well-known bond guru Bill Gross, founder of Pacific Investment management Co., warned the U.S. could eventually lose its AAA investment grade ranking.”

A PrudentHome Note: Peter Schiff is one of a dozen or so financial and economic players who have been pretty much spot-on regarding the condition of the economy and future national and international economic conditions. It’s our view that this relatively small group (i.e., Jim Rogers, Nouriel Roubini) who have proven their predictive mettle, should  have our attention when they speak to the future. The government and the “blue Sky” business news employees predictions and opinions should be very suspect.

Food–Wheat: survivalblog.com (Jim Rawles’ blog) led us to an interesting site (marketskeptics.com) this 6/21/09 and an article entitled “USDA Deliberately Misleading Investors To Hide Looming Food Shortage” by Eric deCarbonnel. The article’s contents were not all that surprising, that the USDA was “finessing” the wheat production and consumption numbers to suppress grain prices, but what caught our eye as we finished this informative article was a 6/15/09 post entitled “Wheat: Living On The Edge”: … “a batch of entries on the world’s agricultural situation from Nogger’s Blog.” Here are a couple of entries we thought you might find as interesting as we did:

• “So the top six exporting nations that account for over half of world production and 87.%5 of global trade in wheat are set to see their output fall by around 35.5MMT in the year ahead.”
• “…it looks a nailed certainty that Argentina (a world class wheat producer and exporter/PH) won’t even have any wheat to export at all in 2009/10, and will probably be a net importer (despite the fact the USDA currently has them down to export 4MMT next season).”

Interesting, no?

Next time we’ll plan on finishing our post on farmland investment (Part 2) and how this effects the individual family. Until then, keep your eyes on the horizon as the weathers changing fast.

The Economy–What If?: Here at PrudentHome.com we’ve been caught up for the last couple of weeks in concerns about swine flu, a preparedness-book review and the status of world food production. Bits and pieces of economic news crept in here and there, expected increases in unemployment and bankruptcy filings as well as some possible adjustments in the credit card debacle, but something around the edges seemed to be growing; a distinctly more positive economic outlook from the government.

We were kind of surprised with all the “green shoots” talk from almost every government official and thought that just maybe there was some co-ordination involved: as in a clear plan to “blue sky” the current and future economic situation. We weren’t the only ones.

Michael Panzer over at financialarmageddon.com (a good daily read) observed the same phenomena and raised an interesting question regarding not just the coordinated “blue sky” chatter but also about the economic recovery plan itself: “What If It doesn’t Work?”

Here are some highlights from Mr. Panzers 5/8/09 post:

• Mr. Panzer notes that among “realists/cynics …it’s not hard to figure out the game being played in Washington and on Wall Street.” The game being played is one of buying time: buying time until the economy turns around, businesses adjust and turn around or until the clock runs out on this administration and it turns the problems over to the next.
• “Those pulling … the strings are also trying to make use of programming techniques that have long been advocated and employed by “personal development” gurus and neuro-linguistic programming (NLP) experts — that is, get people feeling better about themselves and believing in the vision of good times ahead, and they will act in such a way as to make it happen.”
• “The U.S. Government has done everything in it’s power to avoid the perception that it has lost control.” “And if the stock and bond markets continue to go straight up and if risk premia fall, then the ’Big Brother” approach taken could be vindicated.”
• “But what if, just what if, the economy HASN’T (caps ours) turned the corner? What if job losses continue apace, residential mortgage defaults continue to rise and corporate bankruptcies spike?”
• What if the problems in sophisticated financial instruments such as CMBS‘s, RMBS’s, and CDS’s don’t get straightened out in a timely manner?
• What if “… the Chinese government gradually reduces its net purchases of US Treasuries, and also shortens the duration of its Treasury portfolio?’ What if “… the US Treasury continues the printing presses, the Chinese would gradually build a compelling argument … as to why the US Dollar should no longer be the global reserve currency and the basis of exchange in oil. Profligate spending coupled with fewer willing buyers will drive up US dollar long rates, debase the currency and set off a very unpleasant inflationary cycle.”
• “The Administration and Congress have clearly taken the path of least resistance. … The path taken looks and feels good today, but potential troubles lurk just below the surface.”
• “Is there a monster in my closet? Well, maybe …”

The concern for prudent homes all across America is our country’s economic well-being. In the largest economic arenas, individual families have little play. But we can do much in our own homes, among our own families and neighbors, to mitigate the effects of this economic crisis and perhaps that will be enough.

Until next time; keep your eyes on the horizon as the weather’s changing fast.