“Please write to President Obama and tell him we are outraged at the massacre of peaceful, indigenous protestors in Peru as a result of the FTA.

At dawn on Friday, June 5th, 600 Peruvian police in helicopters and on foot opened fire on thousands of peaceful indigenous protestors blocking a road near Bagua in the Peruvian Amazon. Conservative estimates indicate that 60 indigenous and police have been killed. Police are accused of burning indigenous bodies, throwing them in the river and removing wounded from the hospital to hide the real number of casualties.

For two months, over 30,000 indigenous have sustained nonviolent protests along the roads and waterways of the Amazon. These protests are in response to a series of Presidential decrees issued under the U.S.-Peru FTA implementation law that violate indigenous rights and open the way for an unprecedented expansion of new transnational petroleum, mining, logging and mono-cropping in the Amazon rainforest…”

The Obama administration rushed an alliance between Chrysler LLC and Fiat SpA despite Chrysler’s worries about Fiat’s financial health and its willingness to share technology, according to internal company emails.

Mr. Lauria’s persistence led one government lawyer in the Chrysler case to dub him a “terrorist” in an email to a Chrysler adviser.

HT: Instapundit

1. Global Increase in Long Term Interest Rates –the massive amount of debt that will need to be issued will cause rates worldwide to rise even in the face of a likely significant economic slowdown. …….

10yr U.S. Treasury rate is up 50bps in the last week even with the Fed having cut the fed Funds rate by 50bps…
IBM issued debt last week in the midst of this tsunami….they borrowed for 5yrs at app 6.75% and 10yr money at app 7.75% ( a full 400bps over Treasurys for one of the strongest global companies!!!!!!)
3 mo Libor is only down to 4.63% this morning from 4.75% at the end of last week…hardly a resounding vote of confidence
markets are now appreciating where REAL money will care to invest not the highly levered and speculative money that was the lifeblood of Wall St. and hedge funds for the last 8 yrs.

2. Financial asset deflation while hard goods and asset inflation. Why? I can already hear the printing presses at work churning out currencies worldwide. The rise in interest rates will depress bond values. With slower worldwide economic growth and increasing unemployment GDP prospects are not pretty for the foreseeable future. I think there is a very strong chance that we will see “stagflation”.
While financial assets have limited upside growth potential and significant downside even from here, hard commodities and assets will likely increase in value or perhaps I should write will hold their value as financial currencies and financial assets lose value.

3. Where do you put your money??

take what the market is giving you, and right now they are giving you security and guarantees in deposits in large money center banks,…this also provides flexibility to provide liquidity for those in desperate need and you will see more and more of that occur both at a personal level and a corporate level…. BE PATIENT…..
buy QUALITY…..this market is very quickly separating the wheat from the chaff…well managed institutions will gain market share and it will be reflected in the value of their stocks and bonds….one has to fully understand an entity’s ability to generate cash flow to meet their debt service and to grow their enterprise…..
4. Other Highlights…

if the government accedes to the pressure being applied to suspend the mark to market accounting principle, I would expect that that move would only prolong the underperformance of the economy….I view a suspension of the mark to market as the equivalent of an agreement to officially allow one to “cook their books”…
SELL RALLIES…….while financial institutions have been feeling the pain of overleverage for the last 12 to 18 months that pain is just now coming to bear on the consumer…given that the consumer represents app 70% of our GDP, the expected precipitous drop in consumption across a wide array of products and industries will be very painful….you will see a litany of corporations announcing layoffs on a regular basis…Pepsi did just that this morning…

Inflation, always and everywhere, is primarily caused by an increase in the supply of money and credit. In fact, inflation is the increase in the supply of money and credit. If you turn to the American College Dictionary, for example, you will find the first definition of inflation given as follows:

“Undue expansion or increase of the currency of a country, especially by the issuing of paper money not redeemable in specie.”

In recent years, however, the term has come to be used in a radically different sense. This is recognized in the second definition given by the American College Dictionary:

“A substantial rise of prices caused by an undue expansion in paper money or bank credit.”

Between Sept and Dec 2008 alone, the Fed’s balance sheet went from $900 billion to $2.25 trillion. Now add to that the fact that when banks start lending, the fractional reserve system is going to create even more money out of thin air.

So, here’s my take: we already have inflation, it’s just that the secondary effects of it (the ones that make us take notice–higher prices of goods and services) have not fully manifested themselves yet.

Questions for your guest: What is a person on a fixed income to do at this point?
What’s the best strategy for the rest of us to protect our savings?
How much more spending and/or money creation by the government do you see on the horizon?
What turns inflation into hyperinflation and what is the likelihood of that happening to us?

Thanks in advance for sharing your great information LD!!