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- October 19, 2008: THE WEEK OF OCTOBER 13 IN REVIEW
- October 13, 2008: COMING MARKET CRASH
- October 6, 2008: THE TIMEBOM_ KEEPS TICKING
- October 4, 2008: Bailout ALERT
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- September 22, 2008: THOUGHTS ON THE NEW RTC RESCUE PLAN
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Archive for September 2007
Recommendations on How to Build a Fantastic Gold & Silver Investment Portfolio
September 27, 2007 by david.pennington.
by: Michael M. Pennington
Knowing WHAT to buy . . . WHEN to buy . . . and HOW to buy precious metal coins is the secret to building a world-class portfolio. But incredibly, only a handful of people even the so-called “Experts” know the real inside story.
Let’s face it, today’s rare coin market is blazing hot . . .new investors are entering the market everyday looking to safeguard their assets AND earn above average rates of return. Today we are witnessing rare coin collectors and investors expecting 15% to 25% appreciation from their rare coin investments (and sometimes much, much more than that) annually.
The really BIG gains in rare coins (like 100% to 200% or more) come from owning the finest examples of certain types of gold and silver coins. The key to big appreciation is knowing which coins to buy . . . and how much to pay for them.
The biggest mistake I watch people make is buying coins with the “pig in a poke” theory. This theory often works well when markets, be they stocks, real estate or coins, are in major market upswings. But a far better strategy, I think, is buying coins which carry all three of the fundamentals that should be applied when evaluating a potential coin acquisition: Rarity . . . popularity . . . and historical significance.
If you apply common sense to your acquisitions and measure your coins against rarity, popularity and historical significance standards, then you will most likely enjoy the greatest appreciation in your collection . . . AND . . . most likely have ready buyers, whatever the market climate is, at the time you choose to sell.
The following are my “TOP PICKS” for 2007 and beyond, rarities that I believe more than meet the standards for rarity, popularity and historical significance . . . AND . . . also have above-average potential for significant price appreciation in the months and years ahead. I encourage you to browse through these recommendations, and then either contact me or go directly to the “Coins Section” and review current availability and pricing of the items for which you have the greatest interest. RECOMMENDATIONS
1. 2007 PLATINUM EAGLE 4 COIN PROOF SET – Worldwide, platinum prices have steady increased to where they are now at historical highs. The 2006 Platinum 4 coin set appreciated 100% twelve months after it’s release. I am confident that the 2007 set will experience similar appreciation one year from now. The coins are rare, beautiful and historically significant. What more can you ask for?
2. 2006 SILVER EAGLE 20TH ANNIVERSARY 3 COIN PROOF SET –There were only 250,000 of these sets minted so they definitely meet our rarity criteria. In addition, collectors flock toward anniversary type coins because they commemorate a special occasion. This meets our historically significant criteria. They also contain the beautiful Reverse Proof Silver Eagle, the first of its kind.
3. $20 Liberty & St. Gaudens Gold Coins –$20
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Investors are Flocking to Gold and Silver as Price Soars to 30 year High!
September 20, 2007 by david.pennington.
Gold highest since January, 1980
| Reuters |
Thursday, September 20, 2007
LONDON — Spot gold prices surged to a 28-year high in European trading on Thursday, as the dollar sank to record lows against the euro and oil traded near all-time highs — raising the precious metal’s appeal for investors.
Gold rose as high as US$730.25 an ounce, its highest since January 1980, when it hit a record high of US$850. Bullion was later quoted at US$729.10/729.90 by 7:18 a.m., compared with US$721.10/721.90 in New York late on Wednesday.
“The market was in two minds yesterday, jumping between US$722 and US$726, but the euro’s push through US$1.40 against the dollar gave the market fresh impetus to break up again,” said Tom Kendall, metals strategist at Mitsubishi Corporation in London.
“The metal is likely to see some consolidation now until the U.S. markets open. We could see further gains then, but the higher we go, the more nerves will be jangling,” he said.
The dollar fell to lifetime lows against the euro, weighed by a hefty U.S. interest rate cut earlier this week and expectations of more moves to come.
A weaker dollar makes gold cheaper for non-U.S. investors, while it is also seen as a hedge against oil-led inflation.
Crude hovered just below record highs after U.S. inventories fell more than expected and as the threat of a storm gathering near Florida reignited supply concerns.
“Technically speaking, we are moving through to uncharted waters if we breach US$730 cleanly. And that would be very positive for gold because it does open up the upside,” said David Holmes, director of metals sales at Dresdner Kleinwort.
“The scenario is quite bullish. There is still an underlying credit concern that makes gold a sensible investment,” he said.
A global credit crunch stemming from the U.S. high-risk mortgage sector has left investors looking for safe parking places for their cash, magnifying bullion’s safe-haven status.
Growth in bullion exchange-traded funds (ETFs) continued as investors diversified their portfolios into the metal. Gold used to back StreetTRACKS Gold Shares hit a record high of 577.10 tonnes on Wednesday.
London-based ETF Securities said investment in its gold ETF jumped 240% in the past seven weeks, with total assets under management exceeding US$300-million. The product now holds nearly 350,000 ounces of gold.
“In light of the prospects for further Fed (rate) cuts and potential for further U.S. dollar weakness, the recent increases into the gold ETFs could continue,” said John Reade, head of metals strategy at UBS Investment Bank.
“This, combined with private investor buying of OTC gold (bars and coins) has the potential to bring more investment money into gold,” he said in a daily research note, referring to over-the-counter business.
Bullion investors await a testimony from Fed Chairman Ben Bernanke on problems in the subprime mortgage sector before a congressional committee from 1400 GMT.
In other bullion markets, the most-active December gold contract on the COMEX division of the New York Mercantile Exchange also hit a new 28-year high of US$738.30 an ounce in electronic trade on Thursday. It was last quoted at US$736.40.
But Tokyo gold futures dropped on the back of profit taking. Benchmark futures for August ended 10 yen per gram lower at 2,719 yen.
Other precious metals also gained, with platinum rising to an 8-week high of US$1,313/1,317 an ounce from US$1,301.70/1,308.70 in New York.
Silver rose as high as US$13.16, the highest in nearly two months, before easing to US$13.12/13.17, versus US$12.95/13.00. Palladium rose to US$333/336 from US$330.25/334.25 an ounce.
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FED RESERVE LOWERS FED FUNDS RATE & DISCOUNT RATE
September 19, 2007 by david.pennington.
by Michael Pennington
Will today’s Fed action solve our problems? No, our problems are alot deeper. By lowering interest rates, the Fed might help increase those who want to borrow but they won’t help the banks find the money to lend.
Foreclosures are off the charts and housing start confidence is at an all time low. The housing problems are causing huge layoffs in the mortgage and banking industries. Today’s action by the Fed will cause commodity prices to go much higher and INFLATION will become our worst nightmare. By bowing to Wall Street with interest rate cuts, Main Street will suffer through painful dollar debasement. The only solution for the hard working man on the street is to buy Gold & Silver.
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Spanish Gold Move Boost for Bullion
September 18, 2007 by david.pennington.
By Javier Blas in London
Published: September 17 2007 22:06 | Last updated: September 17 2007 22:06
The Bank of Spain, the largest seller of gold this year under the central banks’ gold agreement, plans no more significant sales of the precious metal in a move that is likely to fuel further the recent surge in prices.
People familiar with the pact said Spain’s central bank had already achieved the bulk of its planned bullion disposals.
Analysts said the end of Spanish sales could reduce next year’s central bank gold sales and improve sentiment in the bullion market just as the gold price is approaching a 26-year high.
The gold price rose on Monday to a fresh 16-month high of $719.65 a troy ounce, underpinned by the weakness of the dollar ahead of Tuesday’s Federal Reserve rate-setting meeting.
The metal is within a whisker of the 26-year high of $730 an ounce it hit in May 2006. However, it is still about $130 below its all-time high of $850 reached in early 1980.
Large gold sales by the Bank of Spain, and lately by the Swiss National Bank, have undermined gold sentiment, analysts said. But the weakness of the US dollar and strong physical demand from India, the Middle East and China was pushing up prices.
David Holmes, of Dresdner Kleinwort in London, said that as well as speculative investors, the market was witnessing the resurgence of medium and long-term investors interested in structured gold products.
Spain has been the largest seller of gold under the current year of the central bank pact which runs to the end of September, according to data from the World Gold Council.
Spain sold about 149 tonnes, or 37 per cent of the total 399 tonnes sold by central banks in industrialised countries. The French central bank was the second largest seller with 99.2 tonnes.
The Spanish central bank declined to comment on gold sales.
Hussein Allidina, of Morgan Stanley in New York, said official gold demand was coming mainly from oil exporting nations such as Russia, Kazakhstan and Qatar, as well as South Africa and Argentina.
read more here: http://www.ft.com/cms/s/0/22f4ab90-6546-11dc-bf89-0000779fd2ac.html
Copyright The Financial Times Limited 2007
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Jones on Gold and Silver
September 17, 2007 by david.pennington.
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PenncoCoins Michael Pennington comments on Today’s news headlines…
September 14, 2007 by david.pennington.
by: Michael Pennington
1. Gold Surges Past $700 per oz
http://www.businessday.co.za/articles/economy.aspx?ID=BD4A563711
http://africa.reuters.com/business/news/usnBAN454016.html
As the dollar declines, the price of gold continues to surge. Now that gold has closed over $700 for several days, $700 becomes support instead of resistance. The bullion market is still very strong as the supply and demand dynamics favor a continuing increase in the price of gold. Gold production around the globe is declining, while demand from countries like China, Russia, India and the Middle East are rapidly increasing. There is nothing now that can prevent gold from achieving unprecedented levels, probably $1,600-$2,000 within the next 12-24 months.
2. “Oil tops $80 per barrel or the first time in history”
http://www.kitco.com/ind/Wiegand/sep122007.html
This is not good news for the US economy and especially for the Stock Markets. Higher energy prices mean higher inflation on many products we buy everyday – food, plastics, transportation and even healthcare.The FED has been fighting this inflationary trend for over a year by raising interest rates. Unfortunately, though the FED now needs to lower interest rates to offset the liquidity problems brought on by the sub prime mortgage market. The stock market has already priced in an interest rate cut, so without a cut the Stock Markets would plunge significantly. The FED is in a no win situation. However, look for them to bow to their Wall Street Masters and cut rates on September 17. Be aware that this will help fuel greater inflation throughout the economy and help lower the US dollar against all other currencies. Both of these effects will definitely help to drive the prices of gold and silver higher.
3. US Heads for Recession as Foreign Investors Flee from US Dollars
http://news.bbc.co.uk/1/hi/business/2056587.stm
As the US Dollar continues to drop in value other countries have begun to diversify out of dollars. This makes perfect sense since their dollar holdings will continue to buy less goods and services. The problem for the US is that we depend on those funds to support our massive debt. If foreigners are buying less US Treasuries, the FED has to monetize its own borrowings and the dollar falls even further. As our credit expansion is restricted, a recession soon follows.
4. Greenspan says he didn’t foresee until late 2005 how significant sub prime lending problems would be.
This is political buck passing at its best. Mr. Greenspan was the architect of the sub prime lending problem we’re seeing right now. He was responsible for creating an environment of easy credit. He directly encouraged people who couldn’t afford it to borrow more. He, better than anyone, understood that the success of our entire economy is based on ever expanding credit. People were converting their mortgages to ARMS and using the funds to buy new cars, boats and other luxury items instead of paying off their mounting credit card debt. This spending was good in the short term for the economy, but in the long run debt has to be paid. Greenspan knew by then it would be someone else’s problem.
5. “The US Dollar loses its luster as the world’s reserve currency” – International Monetary FundAs the dollar continues its decline against other currencies, the IMF says the Euro is gaining in popularity. It is my opinion that this is being orchestrated by the world’s banksters to help bring the US down from its perch as the world’s most powerful nation. Everyone needs to understand their history. The world has never seen a fiat currency survive beyond 200 years without losing its full value. The US is on the road to complete dollar debasement as we speak. Behind the scenes the US government is working on plans to introduce the “Amero” at a time just before the dollar crashes. The only way the average hard working Americans can protect their assets is through buying gold and silver bullion. Know that the Fed, the Treasury and the elite banksters who control them, only care about protecting their interests.
6. Banks borrow $7.2 billion from the FED
This is a glaring example of the problems our economy faces right now. Some of the biggest banks in our nation are literally broke right now. These borrowings from the FED’s discount window are a sign of desperation. Due to sub prime forfeitures, losses on hedge funds, derivatives and non recourse loans, the banks have no new money to lend out now – even to their best, highest rated creditors.
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GREENSPAN SAYS HE KNEW ABOUT ABUSES IN SUBPRIME LENDING BUT FAILED TO FORSEE THEIR PARALYZING MARKET EFFECTS UNTIL LATE 2005
September 14, 2007 by david.pennington.
Former Federal Reserve Chairman Alan Greenspan admits he “didn’t really get it” that the subprime lending trend was significant enough to hurt the economy until very late 2005, but still defends his lowering of interest rates from 2001 until 2004 that critics say caused the crisis in the first place. Greenspan, who led the U.S. Federal Reserve Bank through 18 years and four presidents, speaks to Lesley Stahl in his first major interview, to be broadcast on 60 MINUTES Sunday, Sept. 16 (7:00-8:00 PM, ET/PT) on the CBS Television Network.Greenspan says he knew about the questionable subprime lending tactics that gave loans to homebuyers and investors with low adjustable interest rates that could rise precipitously, but not the severe economic consequences they posed. “While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late,” he tells Stahl. “I really didn’t get it until very late in 2005 and 2006.”
Even though one of the Federal Reserve governors raised a red flag on those lending practices, Greenspan says there was little he could do. “Well, it was nothing to look into particularly because we knew there was a number of such practices going on, but it’s very difficult for banking regulators to deal with that,” says Greenspan.
Several of Greenspan’s former Federal Reserve governors have since said that Greenspan’s policy of lowering interest rates for three consecutive years early in the decade was wrong because it opened the door for the subprime lenders. They think he kept rates too low for too long. “They are mistaken,” Greenspan tells Stahl. “It was our job to unfreeze the American banking system if we wanted the economy to function. This required that we keep rates modestly low,” he says.
Some believe today’s market slide — U.S. stocks have lost significant ground over the past few months — could have been slowed had the current Federal Reserve Chairman Ben Bernanke lowered interest rates like Greenspan did early in the decade. Would he act as dramatically and quickly now as he did then if he were the current chairman as some believe? “I’m not sure that’s true,” says Greenspan. “We were dealing in an environment back there where inflation was easing. We could have acted without the fear of stoking inflationary pressures. You can’t do that anymore… I’m not certain I would have done anything different [if he was the chairman today],” he tells Stahl. “I think [Bernanke] is doing an excellent job.”
posted on: www.drudgereport.com
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Hyperventilating Hyperinflation
September 13, 2007 by david.pennington.
By Roger Wiegand
“We read over Chopper Ben’s speech from Berlin yesterday evening and conclude the Federal Open Market Committee is more entertaining than the USA’s cartoon network. On the other hand, Janet Yellin, the San Francisco Federal Reserve President, chose to tell the truth in her speech. We found that one alarmingly refreshing.” - Traderrog
Fiat currency chopper pilot Benjamin Bernanke wowed ‘em in Germany with a new economic theory that easily surpasses anything Pinocchio could offer. He said the “Global saving glut” is still helping to keep interest rates low, and they may not rise much in the event that the pool of excess capital dwindles in coming decades.” We think if his mother heard this one she would wash his mouth out with soap and give Benny a good spanking.
If we read the entire news report, it would appear Benny is learning to talk in riddles as his former teacher Sir Alan Greenspan championed for so many years in his remarkably circuitous discussions with Congress. Ben has learned to offer both sides of a statement in one sentence with the omnipresent “On the other hand,” stuck between those two ideas. What a neat path to escape while telling the truth and holding your self harmless.
He didn’t comment (of course) on the current economy or, FOMC’s interest rate policies. Instead we got, “We are again reminded of the need to maintain appropriate humility in forecasting.” For this fabulous cover “your you know what” clause we suggest he should be promoted from Chopper Captain to at least Major or, maybe even Colonel. One or two more of these wowser’s and he’s a genuine fiat General for sure.
It’s Not China’s Savings but a Pile of Valueless Paper Sinking to Unheard of Depths Faster than You Can Say We’ve Been Tricked
To say that the Trillions in bonds, notes and currency held by China and Japan is “SAVINGS” is beyond even our wild imagination. China has been taking these failing dollars in return for their plastic junk and stuff sold to greedy, non-saving Americans. Asia is getting real tired of this short stick and falling bond sales reflect this. Japan has had a Yen-carry trade enjoying a near zero interest rate for eons to make money for themselves, and prop-up Mr. and Mrs. USA, Asia’s biggest buyer and customer.
The whole deal is a big sham. We keep their Chinese workers employed, bubble-balloon our economy and theirs and con New York Hedgies, LBO’s and Banksters into fueling this monster with additional billions. The New York boys involved with this game aren’t happy with just billions in legitimate sales, they lend and the Chinese borrow even more for huge fees. We can assure you those borrowings shall vanish. All of this paper trash soon goes into the ionosphere never to return or be repaid again. Calling that savings is legendary and beyond bold. Apparently, if something super-preposterous is uttered, the Sheeple are supposed to believe it. This beauty is one for the liar’s history book.
Now Janet Tells the Truth
One of our favorite World Champion Economist’s, whom we revere for his clear thinking and experience is David Rosenberg at Merrill Lynch. Mr. Rosenberg released a two pager analyzing Janet Yellin’s talk and pronounced her speech “a hard-hitting and sober assessment.” Yes!!
David told us, “First, it is worth noting that while she is not a current voting member of the FOMC, she is a highly regarded senior Fed official whose words carry a lot of weight.” We might also add Janet’s opinions have been 100% consistent with overall FOMC voting and attitudes. She has not opposed any of them even once. This tells us when she speaks, that is probably the internal, unspoken consensus within the group and her ideas and opinions are where this bunch goes next. Bottom line says, rate cuts ahead to save the immediate world.
Ms. Yellin said, “The present financial situation has added appreciably to the downside risks to economic activity and some markets have become downright illiquid. (Emphasis editor). She went on to say, “The illiquidity and sharply restricted credit terms in the secondary mortgage market and short-term asset-backed commercial paper market has increased the borrowing costs facing households and firms. And, it is these interest rates that influence spending decisions and aggregate demand.” Trader Tracks says, AMEN.
To this talk, we say you tell ‘em girl. It is totally refreshing to hear the truth being told rather than the usual party line, politically-correct crap. Her final conclusion says, “All together (this is) what we could characterize as a stark picture of increasing downside risks facing the consumer.” Mr. Rosenberg agrees and so do we.
Tricky Part is the Short Term Forecast
Some of the best analysts we know have been saying in the next few weeks we get the big one-a giant smash-crash. In our view, we heartily agree the danger is very high and they could in fact be totally correct. However, we have learned based upon cycles, time and history; the authority manipulators always have one more ace up their sleeve(s). Our forecast is for a Dow drop to 10,700 or 11,700 at worst by the end of October 31, 2007. We then expect a stocks’ recovery in November and the inevitable “Big One” to arrive in the fall of 2009.
There is Only One Way Out-Print the Bucks with Ferocity
In our view they cut rates 25 basis points at the next FOMC meeting and stocks rebound in ecstasy for a few days. After the dust settles, reality is recognized and stocks sell-off hard as the pros use this event to sell into strength and bail-out until November. Subsequent, further rate cuts would also seem inevitable.
Gold has been very strong and the shares of both gold and silver are responding with higher prices. We bailed out of a trade yesterday after recommeding a great, long silver futures move. We nearly called the top perfectly enabling our traders to exit with thousands. Last night, the gold traders took profits and gold returned to unchanged just before the open this morning. Our gold and silver forecasts are unfolding just as we have expected according to our forecasts. Between now and November 15th we expect some of our traders to double their accounts in value. To enjoy this, we must have hard, steady trends and they have arrived in both gold and silver. Silver has been weaker, but some of our favorite silver companies and their shares made nice moves over the past few days.
This is only the beginning. The dollar is trading this morning beneath 80.00, which is a line in the trading sand. If the dollar closes below 79.70, we forecast the next support to be 77.50 followed by something even worse. These dollar prices show us a monumental turning point in the global economy. The largest existing gold shorts with thousands of contracts are getting hammered like never before. They are deep with cash and have substantial staying power. However, we think this time, conditions have gone over the brink and they must somehow return with short-covering buying.
Unprecedented Inflation
Janet Yellin told us the truth. We are now in stagflation. Food, energy, services and others see rapidly rising prices. The remaining stuff, euphemistically called Core Inflation, is sinking. Next, the general economy drops hard while the necessities of life hyperventilate into hyperinflation including Mr. Dollar. These cycle shifts are gradual but evident. Moves from older conditions to newer ones should change steadily throughout the next 30-60 days.
Protect yourself without delay. Buy physical gold and silver along with tradable equities and others. You will not be disappointed but rather much relieved. - Traderrog
Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional futures and commodities trading with specifics for individual trades. See webeatthestreet.com for more information.
Contact Claudio Bassi, at Trader Tracks New York City publishing offices for a modestly priced trial subscription 718-457-1426 Monday through Friday, 9:30am to 5pm or, e-mail Claudio at cbassi@miningstocks.com
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The Day of Reckoning For Derivatives Has Arrived
September 7, 2007 by david.pennington.
BY: Jim Sinclair, Chairman & CEO of Tanzanian Gold Corp
Dear Friends,
It is not just coming - it is already here.
I am convinced that all that has been anticipated since 1968 has now occurred. I see the mountain of over-the-counter derivatives which, when including all types, exceeds USD$30 trillion. The mountain is shaking quite badly.
The situation now resembles the Weimar Republic (the term given to describe the German state from 1919-33) in the sense that the Weimar case study is predicated on planned currency destruction to avoid war reparations that got out of control.
The present situation is based on the ultimate sin of greed called over-the-counter derivatives. This mountain of unfunded special performance contracts is shaking and will, as a product of declining US business activity and profits, fall precipitously.
Before the fall of this unimaginably large mountain of garbage paper, ALL world central banks will in concert prime the pump any way they can. Priming for this purpose has no practical way of being drained. What is going to get out of control now is monetary inflation to offset the shaking mountain of over-the-counter derivatives. The beginning of this fall is in progress and will be history by 2012 or SOONER.
Simply stated this is it, today, now! Think the best but protect yourself under a worst case scenario.
There is no more “if this happens that will happen” scenario. It has already started to happen and the result will be a bull market for all commodities to a level that even the wildest (rational) bull cannot not even imagine. The dollar is headed below the estimates of the biggest (rational) bear.
I take what is said here very seriously. What I have just said, I have never uttered before.
The over-the-counter shaking mountain of derivatives can’t be fixed by trying to hide it. The problems cannot be fixed by any interest rate action. The problem will not even be fixed by a monetary inflation of unprecedented scope. The problem is coming home by
2012 or much SOONER.
Keep in mind that the $20 trillion plus
over-the-counter credit and default derivatives generally have the following characteristics.
They are:
Without regulation.
Without listing on public exchanges.
Without standards.
Not in the least bit transparent.
Without an open market of the bid/ask type.
Dealt in by private treaty negotiations.
Without a clearing house.
Unfunded without financial guarantee of any kind.
Functioning as contracts of specific performance.
Of a character or ability to perform that is totally dependent on the balance sheet of the loser in the arrangement.
Evaluated by computer assumptions made by geeks, non-market experienced mathematicians who assume religiously that all markets return to their normal relationships regardless of disruptions.
Now in the credit and default category and are considered by accepted authorities as totaling more than USD$20 trillion in notional value. Notional value becomes real value when the agreement is forced to find a real market for ending the obligation which is how one sells it.
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US Comptroller General, David Walker, says US is paralleling the end of the Roman Empire
September 6, 2007 by Mike Sr..
Learn from the fall of Rome, US warned
By Jeremy Grant in Washington
Published: August 14 2007 00:06 | Last updated: August
14 2007 00:06
The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.
David Walker, comptroller general of the US, issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations”.
These include “dramatic” tax rises, slashed government services and the large-scale dumping by foreign governments of holdings of US debt.
Drawing parallels with the end of the Roman empire, Mr Walker warned there were “striking similarities”
between America’s current situation and the factors that brought down Rome, including “declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government”.
“Sound familiar?” Mr Walker said. “In my view, it’s time to learn from history and take steps to ensure the American Republic is the first to stand the test of time.”
Mr Walker’s views carry weight because he is a non-partisan figure in charge of the Government Accountability Office, often described as the investigative arm of the US Congress.
While most of its studies are commissioned by legislators, about 10 per cent – such as the one containing his latest warnings – are initiated by the comptroller general himself.In an interview with the Financial Times, Mr Walker said he had mentioned some of the issues before but now wanted to “turn up the volume”. Some of them were too sensitive for others in government to “have their name associated with”.
“I’m trying to sound an alarm and issue a wake-up call,” he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on.
“One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough,” said Mr Walker, who was appointed during the Clinton administration to the post, which carries a 15-year term.
The fiscal imbalance meant the US was “on a path toward an explosion of debt”.
“With the looming retirement of baby boomers, spiralling healthcare costs, plummeting savings rates and increasing reliance on foreign lenders, we face unprecedented fiscal risks,” said Mr Walker, a former senior executive at PwC auditing firm.
Current US policy on education, energy, the environment, immigration and Iraq also was on an “unsustainable path”.
“Our very prosperity is placing greater demands on our physical infrastructure. Billions of dollars will be needed to modernise everything from highways and airports to water and sewage systems. The recent bridge collapse in Minneapolis was a sobering wake-up call.”
Mr Walker said he would offer to brief the would-be presidential candidates next spring.
“They need to make fiscal responsibility and inter-generational equity one of their top priorities.
If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably”.
Copyright The Financial Times Limited 2007
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