EconomicCrisis.US

The likely default of the emirate of Dubai on its debt is a shot heard round the world – and perhaps heard nowhere as loudly as here in California. As with other countries that rode an unsustainable real estate bubble to overindebtedness and are now facing financial crisis – places like Greece, Hungary, Latvia and Ireland are just some examples – California faces its own looming debt crisis.

The collapse of Dubai is especially significant for California. Dubai was framed as a financial paradise for the wealthy and the celebrity set, built on real estate borrowing, unsustainable use of natural resources (including water), and exploitation of a laboring class that lacked many basic democratic rights and certainly wasn’t participating in the wealth creation.
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Federal Reserve officials are increasingly confident the U.S. economic recovery will be durable, but do not see employment or inflation picking up soon, minutes from their November meeting showed.

Senior Fed officials, meeting on November 3-4, also expressed concern their plans to keep interest rates low for a prolonged period could have negative repercussions, including possible speculative activity in financial markets.

“Most participants now view the risks to their growth forecasts as being roughly balanced rather than tilted to the downside,” according to the minutes, which were released on Tuesday and were accompanied by upward revisions to policy makers’ growth forecasts.
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The U.S. banking industry may have pulled back from the brink, but finance executives say they still face hurdles that will tighten credit and delay an economic rebound.

In recent months the industry has shown signs of recovery from the worst recession in 70 years, which crushed some of the nation’s biggest banks and forced others to write down tens of billions of dollars in toxic assets.

But with banks reluctant to lend and consumers afraid of borrowing, chances of a strong and quick economic recovery are slim, bankers and investors said at the Reuters Global Finance Summit this week.
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Gold has surged 60% in the past 12 months and it’s not letting up. The “yellow metal” is continuing that scorching surge into the last part of the year, establishing new highs on a near-daily basis. In fact, gold established yet another record price Wednesday when it peaked at $1,153.40 an ounce on the New York Mercantile Exchange (NYMEX).

And the records are going to keep on coming.

With the U.S. dollar in a freefall and global gold demand rising, analysts say the precious metal will likely continue its bullish trend through at least the first half of 2010. It could rise as high as $2,000 an ounce, which would represent a 73% gain from current record levels.
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