The Commerce Department released a report last Thursday showed the Personal Savings Rate in the U.S. at its lowest rate since 1933.  In 2006, the average consumer spent 1% more than they made during the year.  Obviously, the only way that can happen is if people are spending previous savings or are living off of their debt. 

It's not a good sign for our economy, and it was combined with a report that manufacturing was contracting in the month of December, which is a early sign of recession.  It might be time to start thinking about your asset protection strategy.

I read an article recently by Peter Schiff, a CEO of Europac, who addresses the fact that all the media attention being given to the record breaking heights of the Dow Jones Industrial Average is a lot of hype.  Given the fact that we are a month before a major election, I don't know who would want to hype the stock market to give the impression that the economy has never been stronger - that is another discussion.

A study conducted by National City corp, and published in USA Today, has determined that 53 metropolitan areas in the U.S., representing almost one-third of the nation's total housing market, is considered to be "extremely overvalued".  This designation is applied when the study determines that housing prices are 30% above where they should be based on historic pricing, area income, population, and interest rates.  Interestingly, 16 out of 20 of the most overvalued markets are located in California, with Santa Barbara leading the way with a 69% overvaluation.

Link: USATODAY.com.

Research conducted by the Santa Fe Institute in New Mexico has arrived at a conclusion that many of us have always suspected:  the stock market acts like it doesn't have a brain in it's head.  Most stock market models begin with the assumption that traders have access to the information they need and then make rational trading decisions.   

However this new research started with an entirely different set of assumptions:  traders have no intelligence.  In this experiment, these brainless traders place random trades to buy or sell stock at a given price.  The demand created by these random trades moves the stock price up or down, just like in the real trading world.  When this model was used to track over 6 million buy/sell orders on the London Stock Exchange over 21 months, the surprising conclusion was that this intelligence-free model sucessfully predicted 96% of the price spread variance of the stock trades.

So, what are we paying those trading commissions for, anyway?   If you are interested in reading the complete study, you can find it here.

Apparently, Nevada's tax-happy governor is realizing that he pushed through a tax increase in 2003 that was too large.  Had he or the legislature  listened to the business community at the time, he would have avoided this mistake.  But instead, a few special interest groups were appeased, and the largest tax increase in state history was forced down the throats of Nevada residents.  Now, only a year-and-a-half later Governor Guinn is proposing a rebate on motor vehicle registration fees of up to $300 per vehicle. 
In retrospect, it is good to see the point of view of business vindicated, and politicians humbled.  But it doesn't correct the fact that even after the Governor massively increased state spending during the past biennium, the tax increase has resulted in a $300 million surplus.  That is unconscionable.
SURPLUS REVENUE:  $300 million rebate proposed

Link: The Credit Theory of Money.  An interesting read, dating back to 1914 when the only "real money" was precious metals.
- Derek Rowley