Mexico Hurting: “Mexico’s economy taking hits from all directions”, by Arthur Brice, is the title of this CNN.com/world’s post on 8/23/09. It’s an important piece because not only is Mexico our close neighbor, it is one two countries (along with Pakistan) our security experts seem to believe is in the greatest danger of falling apart. Mexico is also one of America’s largest sources of oil and it’s with all this in mind that we present a few of the article’s highlights:

• “The Mexican economy went off a cliff in the second three months of 2009, with the gross domestic product dropping 10.3 percent from the same period last year according to government figures.
• “Analysts say the main cause of Mexico’s nosedive is that the nations economy is tied strongly to that of the United States, which is mired in the deepest economic downturn since the 1930’s.”
• “Other factors dragging the Mexican economy down include a tourism decline caused by H1N1 flu outbreak and fears over continuing violence, declining oil and tax revenues, and fewer Mexicans abroad sending money back home.”

The Economy-Bernanke Says Up: For an observation/comment on the Bernanke view of the economy we turn to James Howard Kunstlers 8/24/09 post on his blogkunstler.com/blog entitled “Financial Crisis Called Off”. Here’s a portion:

“What a relief! Everybody from Ben Bernanke and a Who’s Who of banking poobahs schmoozing it up in the heady vapors of Jackson Hole, Wyoming, to the dull scribes at THE NEW YORK TIMES, toiling in their McEscher hall of mirrors, to poor dim James Suroweicki over at THE NEW YORKER, to – wonder of wonders! – Green Shoots claque at the cable networks, to the assorted quants, grinds, nerds, pimps, factorums, catamites, and cretins in every office from the Bureau of Labor Statistics to the International Monetary Fund – every man-Jack and woman-Jill around the levers of power and opinion weighed in last week with glad tidings that the world’s capital finance system survived what turned put to be a mere protracted bout of heartburn and has been reborn as the Miracle Bull economy. Our worries are over, If you believe their bull—- [deletions/PH] Which I don’t.”

Roubini Says Down: The Nouriel Roubini article in the Financial Times (ft.com) of 8/24/09 was entitled  “The risk of a double-dip recession is rising”. Among other things it gave seven solid reasons Professor Roubini thinks the economy may be headed into a double-dip recession but for us regular folks he gave this:

“Another reason to fear a double-dip recession is that oil, energy and food prices are now rising faster than economic fundamentals warrant and could be driven higher by excessive liquidity chasing assets and by speculative demand. … The global economy could not withstand another contractionary shock if similar speculation drives oil rapidly towards $100 a barrel.”

PrudentHome Says Caution: We are certainly NOT economists here at PrudentHome but we are observers  and listeners.

We observe that the American economy purportedly depends on the American consumer for 70% of it’s energy and that one in nine American’s is currently on food stamps while all are entertaining an unemployment level of about 16.3%-U6.

This in the context of continuing reduction in home values and equity, no pay increases (please include Social Security here for 2010 at least!), rising state and local taxes and fees, and finally; our local Salvation Army is requesting, via radio, donations of used clothing as they’re running out.

Mr. Bernanke, things may be looking up in your economy but in ours, not so much.

Until next time; keep your eyes on the horizon as the weathers changing fast.

• “A new report from bond giant Pimco predicts the dollar’s days as the world’s reserve currency are numbered.”
• “‘We are clearly seeing a loss of status for the U.S. dollar as a store of value even in the absence of a single viable alternative,’ Pimco managing Director Curtis Mewbourne says in a report.”
• “In combination with other factors, that likely means a continuing devaluing of the U.S. dollar versus other currencies, especially the EM currencies.”
• “He (Director Mewbourne) points out that China already has currency swap arrangements with a number of countries so that trade financing can be negotiated in yuan instead of dollars, and several countries can now replace part of their foreign currency reserves with non-dollar-denominated bonds issued by the International Monetary Fund.”

The Holler: “Leroy’s; They’re Everywhere:” is the title of Mike Folkerth’s 8/19/09 post over at Mike Folkerth -King of Simple (mikefolkerth.com). As usual Mr. Folkerth goes right for the knees in his analysis of where we are and where we’re going. Here are some of his views;

• ” … people like Ben Bernanke, Alan Greenspan, George Bush, and we now add Barak Obama, who talk as they may, have little influence on the reality of our situation.”
• “I ran an article on this site some three times that is titled, “3^rd World Status; A pink Slip Away”. The jest of that article is; ALL THAT SEPARATES US FROM THE UNFORTUNATE STATUS OF SAY MEXICO; IS EMPLOYMENT.” (caps/PH)
• “However, to believe that our economy would return to past levels, we would have to believe that viable full employment as a percentage of the available growing manpower will return to past levels. We would then also have to believe that the resources are available to put all of those folks back to work; forever.”
• “The reason that investment ads contain the caveat, “past performance is no guarantee of future results,” is because the circumstances that surround the investment change! And the circumstances that surround viable employment also changed.”
• “As for instance of changing circumstances, as our fishing boat was sinking, my old childhood pal Leroy Finkenbinder once said, “This thing never sunk before. To which I added, “Well Leroy, you never hit the fishing pier at 15 knots before.”

The Collar: Lew Rockwell (lewrockwell.com) posted this excellent Bill Bonner piece yesterday, 8/20/09, entitled, “No Durable Recovery”. Mr. Bonner’s work includes not only his own superb analysis of why there won’t be a durable recovery but a Nouriel Roubini supporting opinion also. While we recommend that you read the entire article, this brief observation stood out to us:

• “The feds are running into a brick wall of the future. They’ve made promises – mainly to older voters – that now have to be fulfilled. And the number of older voters is increasing … as the Baby Boomer generation enters its retirement years. Social Security and health care promises alone will add trillions to federal deficits. By one estimate, US debt could rise to 300% of GDP by the middle of the century.”

PH Note: What we here at PrudentHome see coming for the US, in the short and long haul, is a reduction in permanent employment with a lower standard of living. This will be brought about by a weakened political will, a demographic shift in ages and population, and reduced national and international availability of natural resources: harder times appear to be ahead.

We suggest coping through greater self-reliance while, at the same time, placing your trust and effort in faith, family, friends and neighbors.

Until next time; keep your eyes on the horizon as the weathers changing fast.

Unemployment: “Brown Manure, Not Green Shoots – The jobs situation is even worse than the headlines” is the forbes.com headline for it’s article by Nouriel Roubini (NYU Stern School of Business Professor and generally right-on economic prognosticator).

• For the “man-in-the-street” (and that’s us too!), the article discusses unemployment as it relates to a supposed beginning economic upswing. Here are a few key points:
• “The June employment report suggests that the alleged green shoots are mostly yellow weeds that may eventually turn into brown manure. The employment report shows that conditions in the labor market continue to be extremely weak … .”
• “It is very clear that the unemployment rate could reach 10% by later this summer – around August or September – and will be closer to 10.5%, if not 11% by year-end. I expect unemployment to peak at around 11% at some point in 2010, well above historical standards for even severe recessions.”
• “It’s clear that even if the recession were to be over anytime soon – and it’s not going to be over before the end of the year – job losses are going to continue for at least another year and a half.”

PH Note: Remember that while the professor has been nearly always correct in the direction of economic trends, he seems to frequently underestimate the extent of those trends and that economists in general almost never estimate/discuss the social CONSEQUENCES of these economic realities (read: civil disorder and political instability).

Credit Delinquencies: money.cnn.com this past 7/9/09 posted this, “Credit delinquencies hit record high” by Julianne Pepitone.  Here are some highlights:

• “Soaring unemployment and the housing bust are leaving consumers hard-pressed to make loan payments on everything from credit cards to cars.’
• “The percentage of borrowers at least 30 days late paying a balance is the highest since the group (the American Bankers Association) began keeping records in 1974.”
• “The number one driver of delinquencies is job loss Chessen (ABA Chief Economist, James Chessen) said, “When people lose their jobs, they can’t pay their bills.”

’Q & A’: On 7/9/09 Mish Shedlock’s globaleconomicanalysis.blogspot.com website posted this little Q & A clip between an interviewer and the Former Assistant Treasury Secretary, Craig Roberts. Here’s the clip:

“Craig Roberts: bank bailout was a fraud and it won’t succeed. Don’t know what sort of stupidity the Treasury Secretary and the Federal Reserve will resort to next.”

“Max Kesier: Quick question. What should the treasury Secretary be doing?

“Craig Roberts: He should be trying to save the dollar as the world’s reserve currency which means stopping the wars, reducing the bailout money, and trying to reduce the trade and budget deficits in order to save the dollar. That’s what he should be doing.”

“Max Kesier: Does the treasury secretary work for the people of does he work for the banking system on Wall Street?”

“Craig Roberts: He works for Goldman Sachs.”

Until next time: keep your eyes on the horizon as the weathers changing fast.

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.

Social Security Bankruptcy?: “Social Security goes bankrupt” is the title of Jerry Robinson’s piece posted 5/18/09 at World Net Daily (wnd.com).

This article discusses the potential bankruptcy and status of Social Security and Medicare with references to our current economic conditions and some important demographic influences. Here are a few of the highlights:

• “Last week a new government report was released warning of the deteriorating financial condition of the nation’ two largest social safety nets. Thanks to the deepening global economic crisis, these two entitlement bombs are now set to explode even sooner than originally predicted.”
• “As of last year, the federal government predicted that by 2017, Social Security would begin paying out more in benefits than it generates in revenues. Last weeks report shifts this date back one year, to 2016. Even more startling is the reports finding that the Social Security trust fund will be entirely depleted by 2037. … four years earlier than the last year’s projected depletion date of 2041.
• Medicare’s outlook “…is even more bleak. According to this year’s report, Medicare will spend more on benefits than it takes in from tax revenues in 2009. And 2017, the Medicare trust fund will be entirely depleted – two years earlier than last year’s projection of 2019.
• “… there are about 78 million Baby Boomers alive today. Each of these 78 million Americans have paid large amounts into government entitlement programs … Until now, these 78 million … have been funding the entitlement system for the current retirees.”
• Many are now beginning to become eligible to receive Social Security retirement benefits. This means that they will begin to take from Social Security without any longer paying onto it.
• This also means that many of them will soon be eligible for Medicare benefits as well. “And this first wave is just the beginning.”

The Dollar Replaced?: A telegraph.co.uk post headline today says “China’s yuan ’set to usurp US dollar’ as world’s reserve currency”. This James Quinn (Wall Street Correspondent) article provides some interesting views from Professor Nouriel Roubini (NYU’s Stern Business School) concerning the future of the US dollar as the world’s reserve currency. Here are some highlights:

• “Professor Roubini … believes that while such a major change is some way off, the Chinese government is laying the ground for the Yuan’s ascendance.”
• “… Professor Roubini warns that with the proposal for a new international reserve currency via the International Monetary Fund, Beijing has already begun to take steps to usurp the greenback.”
• “China will soon want to see the yuan included in the International Monetary Fund’s special drawing rights “basket”, he warns, as well as seeing it “used as a means of payment in bilateral trade.”

PrudentHome Note: It is our understanding that China and Brazil have reached agreement on a bilateral exchange of currencies for trade payments. It is also our understanding that China has reached similar agreements with a half-dozen or so other countries. All of these agreements would bypass/exclude the US dollar. It’s probably a safe bet to assume that as US budget deficits grow and US balance of payment shortfalls continue, we’ll see a gradual movement away from the US dollar as the world’s reserve currency.

Until next time; keep your eyes on the horizon as the weathers changing fast.

“Some of the large banks in the United states, according to economists and other finance experts, are like dead men walking.”

A sober assessment of the growing mountain of losses from bad debts measured in today’s marketplace, would overwhelm the value of the bank’s assets, they say, “The banks, in their view, are insolvent.” Nouriel Roubini (NYU Prof at the Stern School of Business and “right on” economic prognosticator of our financial crisis) and Adam Posen (a senior fellow at the Peterson Institute for International Economics) are among those holding this view.

“THE PLAN”: “Will Stimulus Bill Work? Yardeni: Experts Say No” says the NewsMax headline of 2/13/09.

“I think (doing) nothing would have been better,” said Ed Yardini, an investment analyst who’s usually an optimist, in an interview with McClatchy Newspapers. He argued that the plan “…fails to provide the right incentives to spur spending.”

William Galston, a senior fellow at the center-left Brookings Institution and a former Clinton White House adviser, warned Thursday that a bank-rescue plan being finalized will make the $789 billion look like “pocket change.” and “While the stimulus bill is a necessary condition for economic stabilization and recovery, it is hardly sufficient…”

“Harvard University economist Martin Feldstein, former adviser to President Ronald Reagan, was an early supporter.  He said …the compromise falls short of what’s needed”.

From “The Daily Reckoning” (dailyreckoning.com) of 2/09/09, Bill Bonner notes in a piece entitled “The Real Cost of the Bailout”, “If there is evidence to suggest that these bailout plans will work we haven’t heard of it. In the two instances (we assume the Great Depression and Japan during the ’lost decade”) in which they were tried, they failed. Plus, there is no theory that makes any sense to us explaining why or how they SHOULD work. Bad bets don’t get better when you lend the bettor more money. They just become more expensive.”

TOILET PAPER (SOMETHING YOU CAN DO SOMETHING ABOUT!): We here at PrudentHome skipped a day of posting during the middle of the week because almost all of the news was about the technical machinations going on in congress concerning the ‘bailout’ and that’s just not worth our readers time: interesting to some perhaps but not constructive.

Here’s something constructive, important, and hopefully interesting too: toilet paper.

During a time in your home when you’re under more-or-less ordinary conditions, mark the inside of a roll of toilet paper with your begin-usage date. Do this for each of the bathrooms in your house. When you’re ready to replace a roll. Note and mark the end-use date. This process will enable you to calculate the rate at which you use toilet paper in your home under normal circumstances.

If your using a roll of toilet paper in a bathroom every three days for example, then you’ll need to have 10 rolls to get you through a month of normal use in that bathroom.. Now check your stores. If you don’t have 10 rolls stored for that bathroom and there’s an emergency, you’re in a mess of trouble. Think that’s too far fetched? Think about the recent western Kentucky ice storms.

Until a little later in the week then, lets think about the positive and constructive things we as families can do during these trying times and keep our eyes on the horizon.

In conjunction with higher unemployment comes the additional bad news that state unemployment trust funds are facing difficulties with four states’ funds having become insolvent within the last four months and another thirteen on the edge. These funds are supported by taxes on employers.

THE ECONOMY–CONSUMER CONFIDENCE: CNNMoney.com (money.cnn.com) of 1/27/09 provided these headlines, “Consumer index sinks to all-time low”.

“The Conference Board, a New York-based business research group, said that its Consumer Confidence Index fell to 37.7 in January from the revised 38.6 reading in December. The month’s reading represents an all-time low going back to the index’s inception in 1987.”

THE ECONOMY–STIMULUS: “$825B question: How fast will it work?” is CNNMoney.com’s (money.cnn.com) question headline on 1/27/09. While the government’s stimulus plan is given an almost grudging nod by some, “Overall, the CBO (Congressional Budget Office) said the bill’s provisions “would have a noticeable impact on economic growth nd employment in the next few years.”, others believe that “…many of it’s provisions would not jolt the economy back to life quickly enough.”

PH Note: We here at PrudentHome believe that the real question is not so much one of timing but one that asks whether or not the stimulus package proposed will work at all! Perhaps there’s an equation that might help us: STIMULUS = EMPLOYMENT = CONSUMER CONFIDENCE = ?

Remembering that roughly 70% of the U.S. economy is the U.S. consumer, it seems reasonable to us that a high jobless rate diminishes consumer confidence which will in turn lead to reduced consumption which will then provide for continued recession/depression. The stimulus must ultimately substantially increase private sector jobs to be successful.

THE ECONOMY–GLOBAL SLOWDOWN: Bloomberg.com on 1/28/09 yielded this piece “Roubini Sees ’Nowhere to Hide’ From Global Slowdown (update 2)”. Nouriel Roubini, NYU economics professor, says “We have for the first time in decades a global synchronized recession. Markets have become perfectly correlated and economies are also becoming perfectly correlated. This is not your kind of traditional minor recession”

Prof. Roubini goes on to suggest a temporary nationalization of the biggest U.S. banks to keep them from bankruptcy.

Until week’s end, keep your eyes on the horizon.

The article references eight predictions concerning the economic future from some very (deservedly) well respected individuals. Some of these are folks whose opinions we’ve referenced in the past (based more to their track records in prediction than their status/standing within the economic/financial communities) and three bear serious consideration now:

First, NYU professor Nouriel Roubini. Professor Roubini predicts, “Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak…that it’s going to feel like a recession.”

Second, Bill Gross, founder of the giant PIMCO bond fund, says: The future must be one, following huge government spending and bailouts, wherein …”Lenders and investors alike must begin to assume risk…the process will take time…twelve months will not be sufficient to heal the damage of a half-century’s excessive leverage.” The future “…will result in reduced profit margins and a slower rate of earnings growth after the bottom is reached.”

Third, Oppenheimer & Co. analyst Meredith Whitney, whose predictions of big problems in some of America’s big banks led those of both Wall Street and Washington analysts, notes that “ … TARP … has stemmed the bleeding, but what it hasn’t done is fundamentally alter the landscape… my concern is that it’s just going to plug the holes. It’s not going to create new liquidity.”

She continues, “…the companies cannot raise the capital they need, which means that the default provider of capital has to be the federal government.”, and “…I expect all these banks to be back in the market looking for more capital.”

Ms. Whitney concludes, “I think the overall economy will be worse than people expect. The biggest issue will be consumer spending.”

The foregoing predictions are from some of the very best individuals in business and academia but all analysis is limited by assumptions. None of the eight predictions appear to have included the news that Iran has apparently signed a deal with Russia for a more advanced air-defense missile system that the Israeli’s have said they won’t stand for. The predictions seem to have excluded the effects of a massive and successful Mumbai-style terrorist attack within the U.S. during an economic and social recession/depression. Also excluded was the bird-flu reprise in India recently and the current lack of resolution of the Pakistan-India friction resulting from the Mumbai terrorist attacks. Not mentioned was the effects of climate change and geo-political considerations on world food stocks.

You get the point: there’s no model that can give us an accurate picture of our future by just considering economics and finance. The future is looking grim right now but there’s a lot more to consider than just the economy.

NEXT TIME: We will be putting off a consideration of some actions that individual families might take to address the foregoing predictions until the end of the week as we want to give it some more thought.

Until the end of the week then, keep your eyes on the horizon.

The NYU Professor Nouriel Roubini terms our current economic situation one of “stag-deflation”. This is Professor Roubini’s term to describe an economy that is mired in the combination of recession, deflation, and economic stagnation..

These then are “desperate times” that give forth “desperate economic news” and therefore require “desperate policy actions” according to the professor. It is the combination of these “ desperates ” that will push the Fed into more “crazy” policies along with the worse economic news to come.

DEEP RECESSIONFROM DEEP JOB LOSSES: Bloomberg.com of 12/7/08 says in a piece, “U.S. Job Losses Signal Recession Will Be Long, Deep (Update2)” by Rich Miller and Bob Willis, that the U.S. “… may be headed for the longest recession since WW11…” due to increasing job losses.

Employers are cutting jobs at the fastest rate in 34 years in order to survive. Along with jobs, businesses are reducing investments to strengthen their cash positions for what they perceive as more economic difficulties ahead. This “survival mode” according to Mark Zandi, chief economist at Moody’s Economy.com, portends “big job losses” in the future.

FOOD–GOING HUNGRY: Energy Bulletin (energybulletin.net) on 12/8/08, notes in a brief Paul Myers (Sydney Morning Herald) article, entitled “Going Hungry in the 21^st Century,” that the world is currently experiencing, “The most acute food shortage in more than 40 years, according to the World Bank…”.

This food shortage is unique, according to the article, in two very important ways: first, it’s “… not confined to sub-Saharan Africa…” and second, it’s not “temporary”.

Declining food supplies are also in evidence in places like South Asia, Central and South America, and the Caribbean. Here it is important to note that for the past 12 months a number of countries have temporarily prohibited rice exports (China, Thailand, Cambodia, Vietnam, and Egypt) in order to, the article states, “…preserve local supply.”

At the end of this week, PrudentHome hopes to discuss a/some different perspective(s) on what some are calling the “depression”.

Until then, keep your eyes on the horizon.

The first sign refers to the dramatic drop in the price of moving raw materials around the world by boat/sea as evidenced in/by the Baltic Dry Index. This index has recently fallen by 98% due to the collapse in the world credit markets. This collapse manifests itself here in a lack of financing available to ship goods thereby reducing world trade.

The second sign refers to the Federal Reserves’ unprecedented involvement in the U.S. economy as not only the lender of last resort but as the only truly significant lender, period.

As a little add-on of interest, the article points out one result of the credit freeze is barter as a recourse. Here it noted that Thailand was planning to barter rice for oil with Iran.

THE ECONOMY-TOMORROW: money news.newsmax.com on 11/14/08 offered the views of Wilbur Ross, a Warren Buffet-class investor, on the bailout of GM in their article “Ross: Automaker Failure Devastating”. In this article, Mr. Ross opines that allowing GM to fail would not merely throw the company into bankruptcy (chapter11) but would, due to the tight credit markets, push it into liquidation (chapter7) thereby increasing government spending on workers unemployment, healthcare and pensions.

Note: The article didn’t mention the possible domino effect of a GM bankruptcy taking down Ford, Chrysler, and a host of auto suppliers as well as other dependent businesses to the tune of an estimated 3 million lost jobs.

Forbes.com of 11/12/08 (courtesy of a point-to by survivalblog.com) presented an article by Professor Nouriel Roubini (Stern Business School of NYU) entitled “The Worst Is Not Behind Us”. Prof. Roubini supports the title of his piece expertly as usual but points to something we’ve been saying here at Prudent Home: pay attention to the people whose opinions and observations have proven to be correct (regardless of the source).

Prof. Roubini says, “…Beware of those who tell you that we have reached a bottom for risky financial assets. The same optimists told you we reached a bottom and the worst was behind us after the rescue of the creditors of Bear Stearns in March; after the announcement of the possible bailout of Fannie and Freddie in July; after the bailout of AIG… in mid-September; after the TARP legislation was presented and after the G-7 and EU action….excessive optimism …has been proved wrong at least six times in the last eight months alone.”

Prof. Roubini continues, “…we will experience…the worst (global recession) in decades; … we are in the middle of a severe global financial and banking crisis, the worst since the Great Depression…”

FOOD-US: “Hunger among U.S. children skyrockets in 2007” states the cnn.com headline of 11/18/08. “Some 691,000 went hungry in America sometime in 2007“…while close to 1/8 of all Americans struggled to feed themselves. These numbers reflect the situation before the current economic crisis.

FOOD-THE WORLD: commodityonline.com in it’s piece “Meltdown to hit agriculture, food shortage looms”, notes that the UN’s Food & Agriculture Organization predicts that the current financial crisis along with land and water constraints could very well produce a shortage in food production especially in the under- developed world.

Food security will be a topic on Friday. Until 11/21, keep your eyes on the horizon.