I read two very interesting news reports today. One was about the spread of global inflation.
Last week came word that the Gulf States were piling up $1.5 billion net per day in oil revenues. In China, not an oil exporter, the rate of growth of foreign currency reserves has slowed down recently, but the country still nets about $1 billion per day. Overseas central banks accumulate Everests of these dollars, and lend many of them back to the United States – by buying U.S. Treasury bonds. To give you an idea of how fast this mountain of money is growing, foreign central bank holdings of U.S. treasury bonds, held in custody at the Fed, are increasing at a 37% annual rate.
A recent articl,e Is $1 Million Enough to Retire On?, got me thinking. According to the article, the average American thinks that retiring on $1 million is more than enough.
However, living on a $1 million isn’t what it was a few decades ago. It will only generate between $40,000 and $50,000 a year in income. Assuming that your house is paid off and your kids are independent, that sounds like a decent amount to live on.
According to Peter Schiff, Gold should be back at $1,200 by year end. He also thinks that it’s impossible for the US dollar to make a comeback because the Fed will not raise interest rates for fear of pushing the economy into recession.
He states that Gold should hit $2,000 per ounce in 2009 and within 4-5 it might even hit $5,000!!!. He also thinks that Silver’s rise will be even larger than that of Gold!
I’ve been under the impression that after the collapse of the residential real estate market, the commercial real estate market will follow.
My assumption is three fold: 1. Unemployment is much higher than is being reported.
2. Consumer spending will drastically slow down.
3. There will be a credit crunch regarding mortgages for commercial lending
I spent the day at the office of a rich hotel owner. He was accepting bids for the construction of a new $10 million, 100 room Hampton Inn, and was kind enough to let me watch the process. I saw two different companies present their bids and both of them had extremely different operating styles. However, the owner and his team had a consistent approach in both cases. They had a rough idea of how much money they were willing to spend on a per foot basis and tried to negotiate on costs that they knew the contractors had some flexibility with. I also saw them put an offer on an adjoining piece of land and I realized what terrific negotiators they were. Just because he was rich didn’t mean he was generous with his money!
Warren Buffett was recently featured on CNBC where he discussed oil depletion and the fact that we could be close to peak oil production.
He says that we’ve been “sticking straws in the ground” since the 1850s and all of the easy to reach oil has been tapped. We’re consuming 85 million barrels of oil every day and the demand from countries like India and China is just increased. Existing production is maxed out and the fields seem to be in sharp decline.
Legendary investor Jim Rogers has been bullish on commodities since 1999. He started out bullish on oil and metals and to a certain extent on soft commodities like orange juice, coffee and grains.
Here’s a great 10 minute video on his current economic views and what he’s investing in right now.
As always, he calls Ben Bernanke a clueless moron and has a great explanation for why lowering the interest rates is bad for the US economy. That’s always entertaining.
He thinks we might fall into the same trap as Japan and see 17 years of stagnant GDP. That’s downright depressing.
Its tax season again, and there have been quite a few new rules added to our million-plus lines of IRS code.
Forgiven home debt is now non-taxable.
But there are a few restrictions:
1. There is a limit on the forgiven debt: up to $2 million or $1 million for a married person filing a separate return.
2. The tax break also has a time limit. It only applies to mortgage debt discharged by a lender in 2007, 2008 or 2009.
3. The loan also must have been taken out to buy or build a primary residence, not a second or vacation home. If debt is forgiven on those additional properties, the owner will owe cancellation of debt income as usual.
Todays guest post is about optimizing your credit card expenses and making sure you don’t get hit with hidden fees.
Consumer Reports says that Americans shell out $31 billion in credit card fees every year. However, most consumers don’t even know these fees exist until they show up on their statement. Don’t let these fees sneak up on you; read about these 5 hidden credit card fees that you might be paying right now.
Its the eve before Black Friday. I went to grab an ice cream cone and stopped to admire the lines outside BestBuy. It was 11pm and there were probably 250 people camped outside in the cold. Even the parking lot was entirely full.
Thats one reason I like to shop online at Ebay. Its great for buying new or used stuff at great prices. Its especially good for increasing my coin collection. I started buying gold and silver coins 2 years ago. I’ve bought them all from online retailers like Apmex.com or from Ebay.
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