Sunday, February 06, 2011

Manufacturing up - among down numbers

Economists are blaming the weather. Like January and February are different this year than any other year. Well they are different, but not by that much, that you can blame the economy on them.

Employment numbers are dismal this month, but with a slight bright spot in manufacturing. Manufacturing added 49,000 jobs last month, and that is just enough to call a bright spot. Manufacturing continues to look healthier than it has since Sep'08, however, it has a long ways to go to look as good as it did before the crash Strangely (in my view), markets did not fall much on the news that virtually all of the economic growth for the past couple of months is an illusion.

Inflation has already begun to show its face. Even though the government keeps telling us there is no inflation, as Carla Fried from MoneyWatch pointed out "the ring of the cash register doesn’t square with the government’s reports."

And more is on the way. Cost of energy is driving the prices of almost everything the average citizen buys, from motor fuel, to food, to ammunition. From aluminum cans, electric lights, to steel for cars, it all depends on energy, and its all going up. Virtually every commodity is going up. Everything except wages. And that is why the government's numbers are not showing inflation.

Hat Tip to John Keefe who writes "The Marco View"

I have mentioned before that I never invested in precious metals, and I still don't. (I also mentioned, had I, I would have made some money) On a few occasions I have said I might be persuaded if the price got low enough. There is quite a bit of hype and speculation in the prices. Gold might be a good deal at $1000 an oz, and Silver at $19 an oz. I don't foresee either of those prices showing up, unless it in the middle of a general melt down of some multinational economic system. There are a couple of sub-national economies on the brink of meltdown (Greece, Ireland, California, Illinois), but I don't see them impacting the price of gold enough to make it worthwhile. If China begins dumping its holdings in either gold or T-Bills, that might do it.

Another reason I wouldn't, and the primary reason I haven't invested in Gold or Silver is that those are places to park your money until after a meltdown. I expect to need funds during the meltdown, and as they say, you can't eat gold or silver, and in the middle of a meltdown, you can't trade them for anything worthwhile either. For those who are storing up their treasures on earth, and plan on emerging from the disaster as a tycoon, go ahead and invest in gold.

In the mean time, if your going to put your savings into something tangible, I have mentioned steel (as in tools, or a bicycle) in the past. It also looks like certain energy intensive metals might be useful places to invest. Like copper or aluminum. Be advised though, minimum time for return will be two or more years.

I should note, several of the "economic collapse" web sites(even some that I have quoted) are running advertisements (think "infomercials," for us older folks) for buying gold, other precious metals, or other survivalist stuff. That doesn't mean they are wrong, just one sided. They can be good source or links to good information, but over the long run, they tend to just repeat themselves in various forms.

All of the following headlines showed up on "The Economic Collapse Blog" in about a week's time.
  • 10 reasons why the latest unemployment numbers are no reason to cheer
  • nothing is stable anymore
  • even Donald Trump is warning that an economic collapse is coming
  • 12 facts which show that we are in the midst of the worst housing collapse in US history
  • warning signs
  • 5 reasons why Barack Obama's state of the union address was completely wrong about the economy
None of them are wrong really, but if you ingest too much of this stuff, you will grossly overestimate the immediacy of the threat. Economics is a marathon, not a sprint.

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