The housing slump is far worse than you think

You might be tempted to believe that after four years of brutal declines in home prices, the worst of the crisis is over. The Standard & Poor’s/Case-Shiller 20-city index of prices has fallen back to where it was in 2003. Housing prices in Phoenix are at 2000 levels, and Las Vegas is revisiting 1999. Lower prices have made homes more affordable than they’ve been in a generation, and sales have gone up in six of the past nine months. “It’s very unlikely that we will see a significant further decline” in prices, Housing and Urban Development Secretary Shaun Donovan said in a July 3 appearance on CNN. “The real question is, when will we start to see sustainable increases? Some think it will be as early as the end of this summer or this fall.”

Gold hits £1,000 an ounce – and there's further to go

Gold hit £1,000 an ounce yesterday for the first time ever. No wonder. Both the dollar and the euro, the world's key reserve currencies, are under unprecedented pressure. Things are going from bad to worse in the eurozone. Now that analysts have had a chance to digest the results of the bank stress tests, they can see that the European financial system is indeed incredibly vulnerable.

A Sovereign-Debt-Default Survival Kit: The Four Countries That Will Keep Their AAA Ratings

Stories about debt downgrades and sovereign-debt defaults are dominating the headlines. And it's no longer just Europe that we have to be worried about. On Friday, Standard and Poor's warned that there was a 50-50 chance that the United States would lose its AAA debt rating in the next 90 days - even if the debt ceiling didn't result in a U.S. default. When you get right down to it, we're all asking the same urgent question: Just where the hell can I go for a really safe investment? Fortunately, I have an answer for you.

The Painful Consequences of a Debt Ceiling Increase

Failure to reach a compromise on a U.S. debt ceiling increase could result in an unmitigated economic disaster - one so unprecedented government and private analysts can't even accurately pinpoint all the potential consequences. To avert this crisis, U.S. President Barack Obama wants a debt ceiling increase of $2 trillion, which analysts say would carry the country through the end of 2012. The president has moved the deadline for reaching an agreement up to July 22. President Obama said the time cushion was needed to prevent a last-minute panic by the financial and debt markets that could "potentially create another recession" - panicking investors and possibly causing an economic meltdown even worse than the one in 2008. But even after a debt ceiling increase is approved - though it would obviously produce a brief sigh of collective fiscal relief - the U.S. economy and markets will suffer painful effects, and almost no longer-term positive impact. So what can investors expect once the U.S. debt limit is, in fact, raised?

China is heading for a fall – here’s what it means for you

China needs to end its economic dependence on exports, by encouraging consumers to spend. But getting there won’t be easy, warns James Ferguson.

We should have listened to Zhu Min years ago – don’t ignore him now

The “twin pillars” of the world economy continue to totter. Global investors, politicians and the financially-literate general public are wringing their hands about two previously “unthinkable” disasters – the US Congress “closing down” the government of the world’s largest economy and the break-up of the eurozone.

For all Italy's attractions, there's good reason for concerns

Italy's worrying combination of high debt and weak economic growth, coupled with a dysfunctional government, places it firmly on the list of countries which present a relatively high risk of defaulting.

Portugal's Prime Minister Pedro Passos Coelho discovers 'colossal' budget hole

Portugal's new leader Pedro Passos Coelho has told the nation to brace for further austerity measures after his government discovered a "colossal" €2bn (£1.7bn) hole in the public accounts left by the outgoing Socialists.

Stupidities of the eurozone threaten Britain with hardest times since 1930s

If there is one positive to have emerged from the horror story of News Corp, it is that at least the nation has been able temporarily to forget its economic woes.

A modest proposal for eurozone break-up

The eurozone can in theory still be saved, if two sets of conditions are fulfilled; if the leaders of Germany, Austria, Finland, and the Netherlands accept fiscal union and a common pooling of debt, and can persuade their parliaments and courts to ratify such a revolution.

Return of the Gold Standard as world order unravels

As the twin pillars of international monetary system threaten to come tumbling down in unison, gold has reclaimed its ancient status as the anchor of stability. The spot price surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train.

The key ratio warning of trouble ahead for the US

The US is still the world's largest economy. If it sneezes, the rest of the world gets a cold. So how can we best predict what's about to happen in America? There are plenty of economic indicators around. But watching them all can end up giving confusing signals. So it's a good idea to stick to the tried and tested measures. One such measure has worked well for years. What's more, as technology becomes an increasingly large part of our lives, its efficiency as a leading indicator is only improving. And right now, it's blaring out distress signals – which is bad news for investors on this side of the Atlantic too.

Europe Fights the Growing Currency Crisis

For a while, Europe's common currency crisis seemed to be cooling down. But this week Italy joined other debt-ridden euro-zone countries in the crosshairs of the financial markets. Europe's indebted nations are fighting to get their houses in order -- with some success.

Italy money supply plunge flashes red warning signals

Monetary experts are increasingly disturbed by the pace of money supply contraction in Italy and most recently France, fearing that it could prove a leading edge of a sharp economic slowdown over the winter.

Ben Believes Gold Only Has Value Due To Tradition

ron paul just asked the bernank if he thought gold was money. The bernank almost swallows his tongue, stares blankly for a few seconds and then says, “no.” paul then asks why banks hold gold on their balance sheet? why not diamonds? the bernank says, “tradition, I suppose.” so let me get this straight, banks hold billions of dollars of an asset that pays no interest or dividends on their balance sheet for reasons of "tradition". nothing to do with anything else, just tradition. uh, yea. that must be it.

Phone Hacking: Top BSkyB investor calls for chairman James Murdoch to resign

A shareholder group has demanded that James Murdoch stand down as chairman of BSkyB in a bid to clear up the "questionable governance practices" at the company.

The best currency to hold in troubled times

I've just come back from Ireland. Recession or not, I found it expensive. I'm from London, and I'm used to having to pay too much for everything. I'd always thought things were more reasonably priced in Ireland - they were last time I went. But, whether it's food, drink, hotel accommodation or even labour, Ireland is not a cheap country. It should be. You experience a bust, you lower your prices, you get competitive again. But they can't do that. There's this thing that's strangling them. And it's not just strangling the Irish, but the whole of southern Europe. I'm talking, of course, about the euro. And the question I'm asking in today's Money Morning is: "Will Ireland stay expensive?" In other words, what's next for the euro?

The 2012 Election and the Truth Behind the Debt Ceiling Debate

At this point, there can't be anyone left who truly believes that the debt ceiling debate taking place in Washington is really about what's good for America. The truth is it's about the 2012 election - and the party that wins the debt ceiling debate will be the party that comes out on top next year. It's politics - pure and simple. Republicans and Democrats have their own respective agendas heading into the 2012 election. And with 16 months to go, there's just enough time for actions taken now to work their way through the system and swing the economy in one direction or the other. Now, I'm not a believer in conspiracy theories, but I am a firm believer in Public Choice Theory. That means I believe we can make clear statements about what economic conditions each party would like to see 16 months from now - considering their own selfish political points of view. The Democrats would like to see rapid growth, with unemployment coming down sharply. They don't care so much about whether inflation is ticking up a bit, or whether an over-large budget deficit may cause trouble in the future. If they get elected in November 2012 they figure they will sort out any problems after the fact - particularly if they can recapture the House. Conversely, the Republicans would like growth to be sluggish, with unemployment stubbornly high. They also would like to make the painful decisions that bring long-term growth now, so that they can benefit from the growth and not suffer the political cost of the pain if they capture the Presidency and ideally both Houses of Congress in November 2012. Both parties, of course, have strong beliefs about what policies work better, about what policies are better for the interest groups that support them, and about what policies are best suited to their ideology. But at this stage of the electoral cycle, they're pragmatists. Here's how the election cycle breaks down:

Does the Eurozone Have Its Own Lehman Bros?

Does the Eurozone have its own American International Group Inc. (NYSE: AIG), or worse, its own Lehman Bros. when it comes to Greece? I believe it does. Why else would the European Union have bent over backwards to "save" a member nation that: A) Accounts for 2.01% of the EU by trade volume; and B) Would essentially be like letting Montana go out of business - no offense to Montanans or Montana! More to the point, if things really were under control, why would European Central Bank President Jean-Claude Trichet say that risk signals for financial stability in the euro area are flashing "red" as he did following a meeting of the European Systemic Risk Board in Frankfurt? The short answer: Because he knows what the European banks are desperately trying to hide from the rest of the world - that there are still enormous risks and they're even more concentrated now than they were in 2008 at the start of the financial crisis.

What the crisis in Italy means for your wealth

Borrowing costs are soaring across the eurozone as the Greek crisis morphs into something much more serious. It's fair to say that Europe's leaders aren't really impressing anyone with their crisis management skills. About the only idea they agree on so far is that they should set up their own credit ratings agency. As Viviane Reding, European Justice Commissioner, tells The Times, this would "smash" the 'cartel' of US agencies who want to make life difficult for poor old Europe by pointing out how bust their economies are. But while a pet ratings agency might be entertaining for the rest of us, Europe will have to do an awful lot more than simply pay someone else to pretend Greece is creditworthy. Because now an economy that actually matters is in trouble. Italy.

Liam Halligan: The West is in for a rude awakening after years of abusing 'risk-free' debt

The global economy faces a unique double threat. The eurozone, of course, remains on the brink of a major, perhaps terminal, crisis. Then there's the small matter of the US Congress possibly "closing down" the government of the largest economy on Earth.

Treasury Officials Weighing Options To Avoid Default

A small team of U.S. Treasury officials is discussing options to stave off default if Congress fails to raise the debt limit by the Aug. 2 deadline, sources familiar with the matter said on Wednesday.

The Three Tax Increases That Could Save the U.S. Economy

As the debt-ceiling debate escalates, U.S President Barack Obama says federal tax increases are necessary to close the U.S. budget deficit. Although Republicans then said that tax hikes were "off the table," this statement is reminiscent of a toddler who threatens to hold his breath until he turns blue if you make him eat spinach. Given that our elected leaders in Congress just can't seem to curb their spending addiction, the unpleasant reality is that some types of tax hikes are essentially inevitable. Truth be told, I can show you three tax increases that should be enacted. As a taxpayer, that statement will probably make you wince in anticipated pain. But once I've made my case, I'm betting that the investor in you will agree that these three federal tax increases could save the U.S. economic recovery. Let's take a look ...

Europe descends into monetary madness

Perhaps it’s crisis fatigue, but monetary policy in Europe seems to have descended into madness.

The European Central Bank is sealing Greece's fate

Interest rates have gone up again. Not in Britain, of course. Yesterday the Bank of England kept the bank rate at its 0.5% record low. But across the Channel, the European Central Bank (ECB) has just lifted its official rate – for the second time this year – from 1.25% to 1.5%. Neither decision was a surprise. In fact, anything different would have been a shock. But this move by the ECB matters for investors. Here’s why.

ECB tightens noose on Southern Europe

The European Central Bank has raised interest rates a quarter point to 1.5pc to curb inflation and signalled more to come, despite faltering growth in southern Europe and acute stress in peripheral bond markets.

European Bond Spreads

Five reasons to buy gold and silver stocks now

We’re back in the buy zone, folks, for gold, silver and the mining stocks. It might be another week or three before we hit rock bottom. Then again we might already have seen it. But I’m confident we’re in the zone. A number of boxes on my check-list have been ticked. For those that like a flutter, it’s ‘dipping your toe in’ time. Here are five reasons you should be buying in now:

How dodgy salesmen are destroying gold mining stocks

There’s your old school, Essex used-car salesman who, with a barrage of banter, smiles and gold chains, somehow persuades you to buy that Ford Cortina you know you’ve always wanted. There’s your Middle Eastern market trader who, as you stroll through the souk, seduces you with flattery and puppy-dog eyes. Half an hour after meeting him you find yourself leaving his stall with a belly full of tea and an overpriced carpet, which you’re not quite sure how you’re going to get home. There’s your Nigerian spam-scammer who, with a combination of persistence and poor spelling, somehow convinces you that you are just the person to look after that $19 million he has just inherited. All he needs is your bank details. These are some of the greatest salesmen the world has ever produced. But there is one against whom they all pale in comparison. The Vancouver stock promoter.

Team Bernanke's QE17: A Glimpse of America in 2015

At the end of last month, the U.S. Federal Reserve brought down the curtain on its $600 billion "quantitative easing" initiative, a U.S. Treasury-bond-purchase program that investors liked to refer to as "QE2." Fed Chairman Ben S. Bernanke has indicated that he does not intend to carry out a follow-up "QE3" program. But here's the reality: The U.S. federal deficit is running at about $1.6 trillion, meaning we need to sell a lot of Treasury bonds to finance the shortfall. So if the Treasury-bond market gets a case of "indigestion" - meaning there aren't enough buyers to fulfill our massive financing needs - many folks believe that Bernanke will have to step in with the-much-talked-about "QE3" bond-buying program. But Ben, please be forewarned: If you do this, our future is clear ...

The EU must pedal back to move forward

So Greece has accepted its austerity package. That's all right then; crisis over. Anyone who believes this needs a crash course in economic reality.

Lessons of Argentina crisis ignored in handling of Greece

For a vision of how the Greek debt meltdown is going to end, look no further than the International Monetary Fund's post mortem into a similar crisis that came to a head almost exactly a decade ago - Lessons From The Crisis In Argentina.

Is the UK following Japan into a 'lost decade'?

At Nissan's headquarters in Yokohama, just south of Tokyo, the air conditioning is set permanently on 26 degrees. It's hot and sticky outside and it would be nice to have things a little bit cooler. Regrettably, it's not an option.

Europe declares war on rating agencies

A chorus of policy-makers from Europe and across the world have denounced Moody's drastic downgrade of Portuguese debt as an act of financial vandalism, accusing the "Anglo-Saxon" rating agencies of driving states into bankruptcy and destabilising the global system.

It's not only Greeks who've lost their marbles

Taxpayers must pick up the tab for Athens – no bank will lend money to the bankrupt Greek regime, writes Jeff Randall.