The latest outsourcing business to hit the US...

The US Treasury is busy printing so many US Dollars that they have outsourced it to printers in Switzerland. That's right--our government is so intent on printing trillions of dollars that they are wearing out their printing presses, and have had to resort to offshoring the printing process. Hence, the ultimate conundrum: "Helicopter" Bern Bernanke and fellow cohort Hank "Machine Gun" Paulson have repeatedly preached about a strong US Dollar. Yet, their actions for months have been completely undermining the strength of our currency.

This indiscriminate and unconscionable monetary easing dwarfs any on record--it is essentially criminal.

Meanwhile, my long gold and long yen positions are playing out as predicted, so my portfolio is profiting handsomely. But it is bittersweet, as we will experience the second act of post-1990 Japan. Japan's Nikkei stock market index stood at 39,000 in 1990. In 2008, it stands at 9,000.

The next bubble to burst are Treasury Bonds. The 30-year maturities are yielding 2.6%. Investors by the droves are basically saying, "Mr. U.S. Government, I know your currency is tanking by the day, I know you are printing dollars like there is no tomorrow, I know your solvency is at risk, I know your balance sheet is deteriorating with trillions of debt, and I know you have to chase good money after bad money (the bailout mantra), and yeah, I know you've been beaten down. But can you please hold on to my money for 30 years, and pay me 2.6%, for the privilege?"

Once investors wake up to the reality that their allegedly "safe" investments aren't so credit-worthy anymore, they will demand higher rates of return in exchange for taking on the additional risk. And when that happens, the Treasury Bond bubble will burst, just like the residential sub-prime mortgage bubble burst. The Fed eased too much, creating a real estate bubble after the tech bubble burst. They then raised rates 17 times, bursting the real estate market. Now they are easing rates to 0%, creating another bubble--this time US Treasuries.

Is anybody seeing a pattern here?

AIG and Other Insurance Companies in this Bailout

I agree with Porter Stansberry's take on AIG's near-collapse, and its financial ramifications worldwide. Here is my take, with my own edits:

There's 3 things I learned that we need to understand before we figure out what we have to do going forward:

1) Without the government's actions, the collapse of AIG could have caused every major bank in the world to fail.

2) Without the credit default swap market, there's no way banks can report the true value of their assets - they'd all be in default. That's why the government will enact laws that require the suspension of mark-to-market accounting. Essentially, banks will be allowed to pretend they have far higher-quality loans than they actually do. AIG can't cover for them anymore. Our "recovery" plan includes false accounting.

3) Without the huge fraud perpetrated by AIG, the mortgage bubble could have never grown as large as it did. Yes, other factors contributed, like the role of Fannie and Freddie in particular. But the key to enabling the huge global growth in credit during the last decade can be tied directly to AIG's sale of credit default swaps without collateral. This went on for a decade, exacerbating the problem.

I agree with allocating at least 10% of assets toward gold. But a flight to quality means not only gold, but also to well-capitalized market share leaders who are being undeservedly punished. I have my targets, but every individual needs to find their own comfort level.