America looks like Russia in 1998

Hmmm.....Russia was pretty messed up. 

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"America today looks like Russia in 1998," Jochen Wermuth, Chief Investment Officer at Wermuth Asset Management, explained to CNBC today. "Consumers, companies and the government are all highly indebted. America as a result is a bankrupt Mickey Mouse economy."




Wermuth went on to remind pundits that "Even before the (Troubled Asset Relief Program) and the expansion of the Fed's balance sheet, total US public and private debt as a percentage of GDP...stood at 290 percent..."

Marc Faber thinks US Govt could go bust

Investment guru Marc Faber says the financial system must be cleansed to save capitalism.

"I think the final low in markets will occur when the system is cleaned out," Faber told CNBC.

Unless that happens, "the way communism collapsed, capitalism will collapse," he says. "The best way to deal with any economic problem is to let the market work it through."

He sees the Federal Reserve and other central banks continuing to print piles of money. And the outcome won’t be pretty.

"The U.S. government for sure will go bust,” Faber says. “That I guarantee you. Not tomorrow, but it will go bust."

He isn’t optimistic for the fate of the global economy either.

“I don’t think that the global economy will recover anytime soon,” he says. “And we have to define what a recovery is.”

If economic output drops far enough, a mere revival of inventories can push growth up a bit, creating a mild rebound, Faber says.

“I take 2006 and early 2007 as the peak of prosperity in this long cycle, and I don’t think we’re going back there anytime soon.”

Many other experts share Faber’s bearish view of the global economy.

“The debate will continue on whether it’s going to be a V, U or L-shaped recession,” former World Bank president James Wolfensohn said at a recent conference.

“My own judgment is that it’s more likely the latter. I don’t believe we’ll get a quick fix any time soon.”

China’s Stockpiles Are New Sovereign Wealth Strategy,

China is continues moving away from its US dollar investments. That just means higher interest rates on US debt and increase in commodity prices.

May 18 (Bloomberg) -- China is stockpiling commodities such as copper and iron ore as part of a reallocation of its sovereign wealth amid concern that the value of its dollar assets may decline, according to the Royal Bank of Canada.

“It’s part of an overall desire to decrease its exposure to dollar assets,” said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong, in an interview today. China fears the hundreds of billions of dollars the U.S. is spending on bank bailouts and stimulus will cause “higher inflation and a weaker dollar,” he said.

Premier Wen Jiabao has said he is “worried” about the safety of the nation’s $767.9 billion in holdings of U.S. Treasuries and called on the U.S. “to guarantee the safety of China’s assets.” Central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.

Gross Reduces U.S. Debt for First Time Since January

May 11 (Bloomberg) -- Bill Gross, manager of Pacific Investment Management Co.’s $150 billion Total Return Fund, reduced his holdings of U.S. government-related debt last month for the first time since January.