Unemployment Climbs to 9.4%
Research for Online Investors

by John Dalt

6/05/09

The Labor Dept. unemployment report showed the economy lost 345,000 jobs in May.  This was much less than expected as monthly job losses have been in the half million range since winter.  Unemployment now sits at 9.4%, the highest since 1983.

You remember 1983, that is when President Reagan cut taxes and incentivized business to go to work and hire people, leading to an economic expansion that lasted into the Clinton years.  Now we give people money for breathing.  Reagan had to deal with a Democratic Congress, which spent money like drunks, until 1994 when conservatives won control of the House of Representatives.

Under Bush, in May 2008, there were 49,000 jobs lost; it was roundly criticized in the media as horrible.  Of course, he was a horrible President.  Unless you like work, patriotism, and national security.

Roger Penske is buying the Saturn name and dealer network from GM. He will buy cars from GM for two years, then import from an unnamed supplier.  Thats how to save jobs, Chrysler to Fiat, Hummer to the Chinese, and Saturn reduced to a nameplate for cars out of S. Korea.  So Oh! Bama has spent north of $100 billion to export jobs all over the world, wow.

Is this our future?  Latvia had a bond auction on Thursday to raise $100 million dollars, no buyers came.  Zilch, zero, nada.  They did not sell one bond.  What do they do now?  They can inflate their currency (the Lat), like the U.S., by printing money.

Their other option is to go to the IMF and the European Union for a loan.  There is a $10.6 billion loan package under consideration, but the government must keep the Lat pegged to the Euro and slash government spending.  Is this our future?  Will it take our lenders saying NO for the U.S. to stop spending money?  Latvia has already fired one-third of its teachers!  China is our Lender.

Have we already passed the sign that says “Danger Ahead”...yes.  We are inflating the dollar; we are buying our own bonds, creating dollars out of thin air.  The pain will be enormous, when we have to trim our budget to keep borrowing money.  This is like a dog chasing its tail, the game soon becomes unsustainable.

Interest rates are up.  Look at 2-year to 30-year.  Yesterday compared to Last Week.

The Highway Trust Fund is broke, they need $8 billion by August to fund projects already promised to states.  The trust fund is money from the Federal Gas tax levied every time you fill up your car with gas or diesel.  The tricksters in Washington divert funds to airports, subways, tunnels, Amtrak, and other pet projects.  Why not spend the money on what it was taxed for?

Check out this video, "National Debt Road Trip"

GLD (gold) gained 8.4% in May, SLV (silver) 25.7%, USO (oil) 36.4%, TLT (20-year treasury bonds) -3.1%

The Economist conducted a worldwide poll asking if “people were better off under free markets.”  The results will scare you; Indians answered ‘yes’ 75%, Chinese 72%, Americans 69%.  Parents, you better cut the money off for your college kids, if they have mud between their ears.

In 1986, 40% of Americans thought government interfered in the market too much; now 40% think Uncle Sugar does not regulate us enough.  This would make some old dead white guys turn over in their grave.

Today's chart presents the median single-family home price divided by the price of one ounce of gold. This results in the home/gold ratio or the cost of the median single-family home in ounces of gold. For example, it currently takes 192 ounces of gold to buy the median single-family home. This is considerably less that the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down 68% from its 2001 peak and remains within the confines of its four-year accelerated downtrend.

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium." - Murray N. Rothbard

Let me know what you think, I may use your comments in an article next week.  Send your best to feedback@galtstock.com

We have a new stock recommendation coming out in the Long-Term Portfolio on Monday. I have a great stock in mind that could be one of our best yet. Our average stock is up 21%, you can join us at Galt’s Long Term Portfolio.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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