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Confidence in stocks plummets as gold bullion soars. Part 2.

December 14, 2010 – While Paul B. Farrell’s article in MarketWatch gives us great cause to invest in gold bullion, a much darker message lurks within.

Farrell looks not only at the threat to our economy posed by perverse derivative trade, he also call into question the strong promotion of investments in emerging economies. Citing a Fortune interview with hedge-fund kingpin Jim Chanos, “China’s economy is about to implode in a spectacular real estate bust.” Chanos went on to say in an interview with Charlie Rose that “China’s on an economic treadmill to hell.” If that were to happen there would be a domino effect throughout Asia. While Chanos is “is shorting the entire country,” the likes of Goldman Sachs continue to push investors into risky territory.

Chanos likens the situation to that in Japan three decades ago when they grew their economy “largely on the back of capital investment.” China’s economy is “60% fixed-asset investment, and not even in the developing world is that sustainable.”

While Wall Street gambles with America’s retirement investments, the economy languishes. Real economic growth in 2011 is predicted to lag what is needed to sustain population growth by 1.3%. According to Farrell we are entering a “new era, featuring no growth, deflation and a jobless recovery, will continue for years, resembling Japan over the past two decades.”

The government bailout sent rogue Wall Street traders a very clear message: “they can take bigger and riskier bets in the future because they will get away with it . . . when they fail miserably again.” Even their apparent compliance with the Dodd-Frank bill banning proprietary trading is but a smokescreen. According to Michael Lewis in a Bloomberg article, “They are merely disguising the activity, by giving it some other name.”

It is a mess, one which cries for investments in gold bullion.

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Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org

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