Should a trillion dollars be enough? How about three or more, depending on how you look at the bailouts being thrown around?

Mint.com and WallStats.com have some stunning visual expressions of what a Trillion Dollars represents.

One trillion dollars; it’s a number that few people can
comprehend, let alone your standard nine digit calculator. There have been attempts to put this number into perspective before. A trillion dollar bills laid end to end would reach the sun or you spend a dollar per second for 32,000 years or one trillion dollars in pennies would weigh as much as 2,755,778 Argentinosauruses (the largest known dinosaur).

Historical evidence doesn’t support the commonly held view that currency crashes are harmful to big economies, according to a Federal Reserve paper.

In fact, as long as they’re not triggered by an outbreak of inflation, crashes can actually have positive economic outcomes including stronger gross domestic product growth, lower bond yields and rising equity prices.

“Sharp exchange rate depreciations, or currency crashes, are associated with poor economic outcomes in industrial countries only when they are caused by inflationary macroeconomic policies,” wrote Joseph Gagnon, visiting associate director of the Fed’s monetary affairs division.

“On the other hand, crashes caused by rising unemployment or external deficits have always had good economic consequences with stable or falling inflation rates,” he wrote in the paper, which had the provocative title: “Currency Crashes in Industrial Countries: Much Ado About Nothing?”

The paper was posted on the Fed’s Web site Tuesday.

Gulp. Batton down the hatches!

via Fed Paper: Currency Crashes Can Have Good Economic Effects – Real Time Economics – WSJ.

A year ago Roubini was forecasting an 18-month recession with a U-shaped recovery; now, hes now expecting the downturn to last at least 24 months and possibly 36-months. He also sees rising risks of a Japanese-style L-shaped stagnation, i.e. a prolonged period with little or no economic growth.

“I was one of most bearish people [but] the economy has surprised the bears on the downside,” says Roubini of NYUs Stern School and RGE Monitor. “Whats happening in the world now is scary.”

via Even Dr. Doom Is Scared Economy Much Worse Than Roubini Predicted: Tech Ticker, Yahoo Finance.

As Paul Volcker pointed out over the weekend, the global financial system has disintegrated and no one has any idea how to fix it. Lots of good ideas about how to fix the banking system, but as weve explained, even if any of these things are done — and we are not holding our breath — its the endogenous credit system thats the real problem, the one that used to magically allow consumers to lend new money into existence by taking out a car loan or charging dinner on their Visa card, the one that depended on the now defunct securitized debt market.

Most reasonably aware North Americans have, like me, watched this mess develop for over 20 years. Credit was substituted for savings. Two incomes were substituted for one. Other peoples savings were substituted for our own.

These past 20 years have been like a long bus ride into the middle of a desert without food or water, with the driver all along telling us that, no, we are not heading into a desert but traveling along a long stretch of beach that leads to an ocean with palm trees and swimming pools, we just cant see the water yet.

All along the way the skeptics look out the window and say, “Were going the wrong way,” and, “Shouldnt we turn around or at least stop to pick up drinking water in case youre wrong?”

“Stop being so negative,” yells the driver over his shoulder. “You dont understand neo-classical geography.”

Meanwhile, the rest of the passengers in the bus sit watching Survivor on portable DVD players or reading about Britney Spearss hairstylist in The National Enquirer.

One day the bus runs out of gas. The driver gets out, looks around and says, “How about that. Here we are in the middle of the desert without food or water. Who could have known?”

He pulls out a cell phone and shortly a helicopter rescues him and his friends, leaving everyone else behind to fend for themselves.

The End

Postscript: Our leaders have driven our economy to the place economies eventually wind up that run on credit, discourage savings, and sold off productive capacity needed to generate new savings. Our readers have not listened to them but have saved their own food and water, metaphorically speaking, by staying out of debt and increasing their savings, even if this was not what everyone else was doing. Good for you. On the other hand, readers who are expecting a Mad Max world need to get a grip and re-read Are You a Doomer? Law abiding citizens do not turn into criminals overnight. Your town will not be run by warlords. There will be no wandering hoards of looters or ox-drawn Rolls Royces. Thats Y2K stuff. Try to keep it in perspective, folks. Everything is going to get really, really slow for a while.

via What just happened? – iTulip.com.

FWIW, I’d agree. This looks like standard profit-taking and runs strongly counter to the ongoing drumbeat of profligate spending and tax increase news piled atop negative economic reports and continued bailout needs. 

Silver and gold prices continued correcting today. The Gold Price dropped 3.40 to close at US$965.70 at the Comex close 12:30 Central time, but dropped US$15 in the aftermarket, on no news that I saw. Gold must reckon here with a correction to US$925 – US$890. I expect this weakness will pass quickly, say, two or three weeks at most.

The Silver Price dropped only 12 cents today to $13.8750, but shaved off another 23.5 cents in the aftermarket to $13.64. The same normal, natural correction has hit both metals. Silver has strong support at 13.50,13.20,12.80,12.50, 12.00 and 11.00.

via Silver and Gold Prices: Silver and Gold Prices are Presenting Yall With a Rare Buying Opportunity – Watch, and Dont Miss It.

About 220,000 stores may close this year in America, says our guest, retail consultant Howard Davidowitz of Davidowitz & Associates. As more Americans save and spend less, it’s clear there’s too much retail space. Just visit Web site deadmalls.com and track retail’s growing body count. And luxury retailers? They’re on “life support,” Davidowitz says. 

via Americans’ Standard of Living Permanently Changed: Tech Ticker, Yahoo! Finance.

His introduction sums up his view:

Our new customers usually ask,  “Will the government seize gold again like it did in 1933?  Shouldn’t I buy numismatic coins to protect myself from seizure?  Aren’t numismatic coins exempt from reporting to the government?”  The correct answers are (1) No,  (2) No, and (3) No.  But numismatic coins do cost a lot more per  ounce than bullion coins, and they carry a much higher commission.

His big points are:

1. The current law provides no real protection of numismatics
2. There is no legal definition of what constitutes a “numismatic”
3. Very few other forms of gold are reportable by dealers (e.g., 100 oz. gold bars, anyone?)
4. The government’s far more likely to seize pension and retirement funds than gold anyway

via What You Need To Know Before You Buy Numismatics.

One of the more interesting points he makes is evaluating the value of the Dow in light of ounces of gold. When Bush took office, the Dow was roughly 42 ounces of gold. Now it’s about 9. He expects that by the time Obama leaves office, it’s likely to be around one ounce of gold in value.

He compares the attempts to “fix” the economy to attempting to recreate the debt-based house of cards.

His advice is the same that it’s been for a while, which is refreshing considering that he’s taken some heat for it recently: gold, silver, foreign currency (he calls the dollar’s recent surge a false rally), and foreign stocks and bonds.

for the gain from her is better than gain from silver
and her profit better than gold.

– Proverbs 3:13-14 (ESV)

via Passage: Proverbs 3 (ESV Bible Online).

Alexander Muse is a technology entrepreneur with a brilliant summary of where we’re at (and why I started this blog) — the rules have (apparently) changed (and I’m trying to figure out what they are… or, presuming that there are no rules, then I’m still trying to figure out what the best strategy for operating in the world without rules is).

Here’s the meat of his post: 

The biggest risk we face now is that there are no rules.  The government might force you to make loans that you know are bad.  Then again they might not force you to make loans.  The government might punish you for making loans despite the fact that they forced you to in the first place.  The government might punish for not making loans despite the fact that they didn’t force you to make them.  The government might take over your business.  The government might save your competitor and let your company go out of business.  The government might dictate how much you are allowed to earn.  The government might decide whether or not you deserve cancer treatment or a liver transplant. The government might let you keep your house even though you can’t afford it.  The government might pay you NOT to work.  Rules mean the game can go on – they don’t even need to be fair for everyone to prosper.  Of course, without rules everything stops until we all can agree on a new set of rules.  That is the reality of today.

I have this recurring argument with a good friend of mine when we discuss buying gold as a hedge against economic risk in this climate.

He advocates buying “semi-numismatic” or “numismatic” gold (basically rare coins), because when gold was confiscated by FDR back in the 1930s they were exempt from confiscation. So today you see a pretty healthy premium above traditional “rarity” due to demand being paid for those coins by folks who are concerned about the scenario where gold is once again confiscated to stabilize the currency.

My response is that there’s no guarantee that the same rules and limits will apply today. Just because FDR stopped at rare coins, why does that mean that BHO will? So why pay the inflated premium if there’s no guarantee? And if there’s no guarantee, then why not pay less for more gold and have a larger, less precarious investment in the metal and hope for the best?

In this example,  we’re not even talking about something more difficult to change, like economic instincts or regulations. Instead, we’re talking about federal policies, which can be changed on a whim with enough arm twisting, predicitions of impending catastrophe, or demagoguery.

via Remember: The old rules don’t apply. . . | Texas Startup Blog.