Veer Right

With the recession, I became an unemployment statistic.  I’ve used this time to brush up on my investing skills.  I decided that simply buying and holding mutual funds is no longer an option for me with the reckless anti-business Obama administration in the white house.  I receive several investment letters to keep me up to date with investing.  Because of the Obama administrations reckless government spending and massive deficits, the dollar is on the decline.  Inflation and higher interest rates are on the way.  If the Republicans don’t get back in 2010, America as we know know it will no longer exist.  We will become just another noncompetitive socialist country without the opportunities our parents and we have enjoyed.

“Recent reassurances by Treasury Secretary Tim Geithner notwithstanding, China is also quietly making preparations for a post U.S. dollar era. China has set up a series of swap arrangements with other central banks, including Argentina, South Korea, Indonesia, Malaysia and Belarus, through which it will make its currency available to the other countries if they run out of foreign exchange. China and Brazil have begun talks on a scheme for bilateral trade to be settled in the renminbi and the real, rather than the U.S. dollar.

The Obama administration’s exorbitant efforts to “never waste a good crisis” as an excuse to re-shape American society in its own collectivist vision is a game changer. Its spending plans are simply off the charts. Even if China has no choice but to recycle the bulk of its reserves into U.S. Treasuries, the sheer size of the Obama administration’s expected deficit is mind numbing. A back of the envelope calculation shows that the projected U.S. deficit this year alone already matches that of all of China’s reserves. So where is the money to fund Obama’s vision going to come from? The answer is simple: the Fed has to print it. But to keep yields low is a mug’s game. Expecting the Fed to beat the bond market by buying Treasuries, mortgage-backed securities or corporate bonds is much like fighting gravity. Yes, you can overcome gravity’s effects over the short term through an extraordinary and concentrated effort. But the bond market will prevail in the long run. Sadly, that also signals the demise of the dollar.” – Nicholas Vardy