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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Gold is selling for close to $1,500 an ounce, up from $258 in 2001.

Jewelry and industrial applications absorb at least 80% of new supply. The economic expansion of the 2000s and the recent recovery have boosted commercial demand, but this alone cannot explain the persistent surge in gold prices.

The cost of bringing new deposits on line has been less than the market price of recent years–investors see in gold what they cannot find in interest-bearing securities.

Exchange traded funds (ETFs) have made storing wealth in gold or simply speculating easier. These store bullion for investors who have lost confidence in the dollar, euro and yen, and may be a precursor of a new gold standard.

In 1944, the International Monetary Fund established a system of fixed currency exchange rates. The dollar was fixed to gold and other currencies fixed to the dollar. This system failed because rising production costs pushed the industrial price of gold above its monetary value, and fixed exchange rates among currencies proved unsustainable.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Economists expect the Labor Department will report the economy added 185,000 jobs in April, after adding 192,000 in February and 216,000 in March. While stronger than in prior months, jobs growth remains too weak, and the economy is in danger of slipping into a second recession. Longer term, the nation faces fundamental structural problems that neither political party seems willing to address in a comprehensive and systemic fashion.

In the first quarter, bad weather slowed construction activity, rising gas and health-care prices tapped off consumer dollars and weakened demand in other sectors, and defense and state and local government spending slowed. GDP growth was a paltry 1.8%–much less than economists forecasted in January and well below the minimum sustainable rate.

Growth less than 2% to 2.5% is not sustainable, because many businesses can meet such modest growth in demand by improving productivity and laying off workers to maintain margins in the face of rising energy and other commodity prices. Layoffs slice household income, and a negative cycle of reduced spending begins.

Indeed, the four-week moving average for new unemployment claims moved up to 408,000 for the week of April 23 from 390,000 the week of April 2. A rate below 350,000 is consistent with a strong economy and above 400,000 is perilously close to recession levels.

Without stronger growth in the second quarter, the economy will cycle down into recession–it can’t likely continue to drag along at about 2%.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Crises in the Middle East and Japan threaten to thrust the U.S. and global economies into a second recession.

Since the economic recovery began in July 2009, GDP growth has averaged only 2.8%, a pace insufficient to bring unemployment down to acceptable levels. And that rate of growth leaves the economy too vulnerable to the slightest hiccup and a deceleration into recession.

Prior to the turmoil in the Middle East, economists were forecasting 3.5% growth for 2011, but the surge in oil prices and gasoline will likely shave half a point–perhaps more–from that rosy outlook.

Should oil surge to $140 a barrel, gasoline prices would pierce $4.00 a gallon and U.S. growth could slow to a mere 2.5%. That would be barely self-sustaining and not enough to create many jobs–likely many fewer than the 1.5 million needed each year just to keep up with population and labor-force growth.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The toll in human misery wrought by the tsunami and earthquake in Japan tests the imagination of economists but the effects on Japan’s gross domestic product and wealth are a different matter.

GDP, which measures goods and services produced, will immediately dive in Japan and stay lower through the second and into the third quarters of 2011, but will then surge as construction and spending on capital equipment to rebuild drives up growth.

Overall, however, Japan will be poorer for this disaster. Lost infrastructure, factories and the like will be replaced, but wealth is the sum of what citizens and governments own–those include physical assets like those just noted and financial wealth, namely securities and cash. Rebuilding will run down Japan’s financial wealth to replace lost physical assets.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

President Barack Obama’s State of the Union address and Rep. Paul Ryan’s Republican response offered few new ideas and weren’t forthright about what needs to be done to get America thriving again.

The November elections plainly established voters want less government and a focus on jobs, and they don’t believe Americans have to choose between the two.

President Obama proposed freezing domestic discretionary spending to reduce the deficit by $400 billion over 10 years, but he offered no substantive changes to Medicaid, Medicare, Social Security and other entitlements. That simply doesn’t cut it.

In 2007, the year before the recession, government spending was $2.7 trillion–less than 20% of gross domestic product–and the deficit was a manageable $161 billion. In 2011, with the economy recovered, spending will top $3.8 trillion–more than 25% of GDP–and the deficit will be about $1.4 trillion

Simply, the Democrats took control of the Congress in 2007 and used the recession as cover to permanently increase spending on the regulatory bureaucracy, entitlements and industrial policies by $1.1 trillion, and the leading edge of the Baby Boomers has begun to tax the Social Security and Medicare trust funds.

Now, the president proposes to address about 40% of the gap over the next decade. Essentially, he is laying a trap–daring Republicans to solve runaway health-care costs and Social Security, knowing how Americans react to the bearers of bad news.

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By Michael Casey

A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–With the global economy caught in a giant debt trap, some pundits are thinking about a radical new world financial order.

The way things are headed, some say, the International Monetary Fund could evolve into a de facto global central bank, armed with its own currency for doling out loans to advanced and emerging economies alike. It’s a politically unrealistic idea over the medium term, but the force of history behind a shifting world power balance could eventually overwhelm such obstacles.

The Catch-22 for the advanced economies of Europe, the U.S. and Japan is that to bring down their excessive future liabilities and placate nervous bond markets, they must slash spending even though this would undermine the global recovery and possibly worsen their debt ratios. Having borrowed to bail out indebted businesses and consumers, governments have reached the end of the line.

There is no one to help them out–not with the IMF organized as it is.

For now, advanced countries don’t need outside help. Despite the massive debt outstanding, markets continue to finance the governments of the U.S., Japan, Germany and the U.K at super low rates. Continue reading…

These are the personal views of Mike Splinter, president and chief executive officer of Applied Materials:

On the horizon is the next great global industry, and “American Power Act,” the climate and energy bill introduced by Sens. John Kerry (D., Mass.) and Joe Lieberman (I., Conn.), is an important first step in making this happen. If we make the right decisions today, the country can be the beneficiary of what I believe will be the biggest creator of jobs and economic development this century–energy technology– innovative technologies that will revolutionize the energy landscape. The proposed legislation would use market-based solutions to establish a price for the carbon we emit and drive a real commitment to renewable energy in this country.

These kinds of policies would help spur the energy technology industry in the U.S. and build the foundation of a long-term economic engine, much like the space program did for integrated circuits in 1960 when two government programs, the Minuteman missile and the Apollo space program, jump started today’s $300 billion semiconductor industry. They will help create scale, which will drive down prices, expand access and ultimately create a low-cost domestic energy industry that will solve the environmental, national security, economic challenges we face today.

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These are the personal views of Axel Merk, president and chief investment officer of Merk Investments, a currency-focused firm based in Palo Alto, Calif.:

Forget about the flight to the dollar at the peak of the financial crisis: the yen was the ultimate beneficiary. The endlessly quoted unwinding of the carry trade was a factor, but there may have been a more important force at play. As that force may now be under increased pressure, the yen may be in trouble. The force we are talking about is the free market.

How can market forces drive up the yen when Japan has been a leader in quantitative easing, the “art” of printing money? Japan epitomizes the battle between market and government forces. Left to its own powers, Japan’s economy would have imploded after its asset bubble burst in 1990. While painful, the good news about a deflationary collapse is that you can rebuild; a collapse is also a brutal way of weeding out those with too much debt. Instead, the government has, to varying degrees, been fighting market forces ever since. However, as of late, the Japanese have relaxed their attack on free market dynamics, in large part as a result of weak leadership.

Fighting market forces can be extremely expensive. If market forces ultimately win–i.e. the collapse ultimately happens–it’s possible for a country to destroy its currency along the way. Left to market forces, those with debt likely go broke. Left to policy makers, everyone may eventually go broke.

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