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Tuesday, September 6, 2011

Post Labor-Day Articles on Economy and Investing

UPDATED 9/8/2011 3PM

1.  What would it cost whom if the Euro Monetary System tanked ?

UBS has made an educated guess, and James A. Kostohryz gives us a Reader's Digest version in his recent SEEKING ALPHA post. Some excerpts :

...a weak euro country leaving the euro would incur a cost of around EUR9,500 to EUR11,500 per person in the exiting country during the first year. That cost would then probably amount to EUR3,000 to EUR4,000 per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.

If Germany were to leave, we believe the cost to be around EUR6,000 to EUR8,000 for every German adult and child in the first year, and a range of EUR3,500 to EUR4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over EUR1,000 per person, in a single hit.

Fragmentation of the euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless).

For another perspective on the UBS report, which is reproduced therein, check out Tyler Durden's post at Zero Hedge.

2.  How to play gold yet avoid federal collectibles tax ?

Investment U advises us not to invest in SPDR Gold Trust and other precious metals ETFs which are exposed to collectibles tax. Gold mining stocks aren't similarly exposed, but they aren't keeping pace with gold ETFs' performance. What to do ? IU discusses 2 alternatives, Royal Gold Inc. (Nasdaq: RGLD) and Central Fund of Canada Limited (AMEX: CEF).

For the details check out IU's post, Playing Gold With A Lower Tax Burden

3.  UPDATED : Is an American Industrial Renaissance on the horizon ?

That's what Tom Eslin argues in his SEEKING ALPHA piece, based on, among others, the following premises:

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