Thursday, September 8, 2011

Three Key Facts You Must Know

We live in extraordinary times. Here are three vital facts to understanding perils and opportunities ahead.

First, the record low interest rate of 1.9% for a two-year US treasury bond this Tuesday underlines that investors view Uncle Sam as the safest haven and signals that we are threatened by deflation, not inflation. This interest rate and the August job numbers are strong evidence that the US economy is spiraling into contraction or recession.

Second, the US population is growing at the rate of 0.9% per year or a bit more than 3 million people. We need 100,000 plus new jobs every month just to keep up with population growth. Since May job growth has not come close to that benchmark.

Third, in August 2011, the US imported 11% less oil than in August 2010. Why? falling demand for gasoline as high prices trigger reductions in use, increasing biofuels production, including a tripling of biodiesel fuel, and rising domestic oil production. A record number of oil rigs are drilling today in the USA.

These facts flash both promise and peril. Now is an ideal time to push hard for infrastructure and an end to foreign oil.

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