By Swiss America News Daily
Gold prices settled modestly lower as equities markets rose on prospects of sustained market stimulus. U.S. stocks rise to record highs. Gold last traded at $1,451 an ounce. Silver last traded at $23.93 an ounce.
MARKET NEWS HEADLINES
-S&P 500 Enters Bull Market Territory- CNBC
-Clinton worried DC will just spin its wheels on deficit- Market Watch
-Obama Says U.S. Has No ‘Easy Answers’ in Confronting Syria- Bloomberg
-Dow Closes Above 15000 – Wall Street Journal
-British savers could face losses in eurozone bank stress tests- The Telegraph
-10,962,532: U.S. Disability Beneficiaries Exceed Population of Greece- CNS News
S&P 500 must rally 25% to hit new high – Market Watch
Stock market bulls may be celebrating the stock market rally too soon, one expert says. Once inflation gets taken into account, the stock market is not at an all-time high, not even close.
According to data compiled by Yale University finance professor Robert Shiller, in inflation-adjusted terms, the S&P 500 hit its all-time high in early 2000 at the top of the internet bubble. If that index’s level was adjusted in today’s dollars, the S&P before the bubble burst would have been above 2,000- 24% higher than where it stands today.
The CAPE ratio, introduced by Shiller and Harvard economist John Campbell, is a modified price/earnings ratio that is less immune to the cyclical variability that plagues traditional ratios. CAPE has an impressive track record in forecasting the stock market’s return over the subsequent 10 years. The CAPE in early 2000 was higher than at any other time in history. Today, the CAPE ratio stands 41% higher than the historical average, but is still below where it stood at the top of the internet bubble.
Time to End the Era of Ponzi Finance – Business Week
Despite continued economic and debt problems, many Americans remain persuaded that what happened in Cyprus can’t happen here. One expert says this time America won’t be able to “pull the magic rabbit out of the hat.” The fiscal cliff that threatened our economy earlier this year is nothing compared to the stone wall that lies ahead.
According to Daniel Stelter’s article, “Ending the Era of Ponzi Finance: Ten Steps Developed Economists Must Take,” the developed economies, including the United States, “has borrowed significantly from future wealth to fund today’s consumption, leading to huge burdens for the next generation” as many already know.
What is not generally understood is that we’ve also been creating a set of conditions that could potentially make it impossible for the next generation to meet the obligations that have bequeathed them. Stelter compares today’s borrowing and spending to a Ponzi Scheme that has “reduced the potential for future economic growth.”
World Bank Whistle-blower: “Precious Metals To Serve As An Underpinning For Paper Currencies” – Bull Market Thinking
Karen Hudes, former Senior Counsel to the World Bank, has recently been “let-go” after reporting internal fraud and corruption. In a recent interview, Hudes indicated the world is rapidly changing, “with western powers breaking down, economic and political influence gravitating to BRICs nations, all amid a pending currency transition which will highly favor precious metals.”
According to Hudes, a major shock to the centralized power base was the recent move by BRICs nations leaders to bypass the World Bank for their financial needs and establishing their own development bank. This action was their way of letting world governments know it is time to end the corruption. A growing number of U.S. states have also made major moves toward monetary independence and “the states are starting to recognize gold and silver bullion as legal currency.”
Hudes believes there are going to be changes to the world monetary system and there is going to have to be more transparency. This transparency may be found through a gold-backed currency system. “All of the countries of the world are going to allow precious metals to serve as currency, and this will be an underpinning for paper currency,” Hudes stated.
The Crash of 1929, and Why to Never Trust Forecasts – The Motley Fool
Three days before the stock market crashed in October of 1929, business executives claimed the economy was strong and there was no reason to worry. In one article by the New York Times it reported “bankers predict a rally…. and see no cause for alarm.”
In another article by the New York Times it stated “Fisher Says Prices of Stocks Are Low. Sees No Cause for Slump.” In the article Irving Fisher, head of the department of economics at Yale University, asserted that “the market has not been inflated, but has only been readjusted to the decreasing value of the dollar and the increasing pace of production and trade.”
As one can clearly see, experts were unable to forecast the crash that was coming.