Labour lost the Glasgow East by-election which was the third safest Labour seat in Scotland in the early hours of this morning, this was by far the worst election result in Labour's history and suggests a collapse in Labour's vote and thus puts Gordon Browns Premiership in the firing line, strongly suggesting an leadership challenge will occur this year possibly at Septembers conference. Following hard on the heels of abysmal election result the government released GDP growth data for the second quarter today which gave hard evidence to an economy teetering on the brink of recession by registering GDP growth of only 0.2%, this follows the poor first quarter growth of 0.3% and thus GDP growth so far for the year stands at just 0.5%. This weakness is a far cry from economic forecasts late last year that had forecasts ranging from between 2% and 2.5% for 2008, in the midst of which the Market Oracle forecast was for growth of between 1% and 1.3%, which is starting to look optimistic.

For the most part, this summer has not been kind to precious-metals investors and speculators. While gold did rally rather sharply from mid-June to mid-July, up 12.6%, it could not challenge its $1005 March high. And soon after this retest failed it plunged $47, 4.8%, in just 2 trading days this week. And silver hasn't fared much better. As usual it paralleled gold's mid-June to mid-July advance with its own rally, a healthy 16.3% surge. But this really wasn't all that much better than gold's own run, discouraging silver traders looking for outsized gains. And then this week silver mirrored gold's fast selloff with a steep 5.8% plunge of its own.

"...Just like everywhere else, Indian consumers face the problem of too much money chasing prices too high and becoming worth less each day..." IT'S HARD TO OVER-EGG the importance of Indian jewelry demand in the physical gold market. Between 2000 and 2007, gold jewelry sold in India accounted for one ounce-in-nine sold worldwide. One ounce in every five wound up as an Indian import (its domestic mines produce less than six tonnes per year), ready to be hung off young brides as 24-carat dowries or worked into bracelets and necklaces for the international market.

With President Bush no longer threatening a veto, the subprime mortgage and Fannie and Freddie “bailout” bill is now sailing through Congress.  In anticipation of its enactment, Congress had the foresight to raise the national debt limit to $10.6 trillion.  Who says that politicians don't plan ahead?

Anyone with uninsured deposits (those exceeding FDIC limits) at Washington Mutual are begging for trouble. If you work for a corporation that has its payroll or large corporate account (above the FDIC limit) at WaMu and you want to get paid, you better get this message to corporate headquarters right away: WaMu Slumps as Gimme Credit Cites Liquidity Concern .

This week, the US Congress overwhelmingly passed HR3221. Perhaps as early as today, this measure will be taken up in the Senate. The President has pledged his blessing of the measure as well. While I am sure that there are many folks who are happy to see this relief package, I am not one of them. Touted as cornerstones of this bill are tax credits for first-time homebuyers and reduced property taxes for select others. However, this is just window dressing. Potential recipients of the ‘benefits' of this package must understand that they are not getting anything for free. What is given to the left hand will be taken from the right perhaps through higher taxes or perhaps through inflation. Most likely, though, it will be both.

The upcoming week will be defined by two closely linked US macroeconomic data that will frame the debate about which direction the economy is poised to take during the latter half of 2008. Yet, these two data are likely to paint two very different portraits regarding the condition of the economy. On Thursday the market will observe the preliminary estimate of economic growth during the second quarter of the year, followed by the publication of the July non-farm payrolls the next morning.

Long-Term Investors Need Trends to Make Money - Most of us would prefer to be investors instead of traders. Investors, with an intermediate to long-term time horizon, must be aligned with a positive trend in order to make money. This is true even for value investors who focus on a company's valuation rather than a trend that can be seen on a chart. For the value investor to make money, eventually the position must turn up. The chart above is not designed to convey that spotting a trend reversal is easy. It is not, but as more evidence gathers as to the probable legitimacy of the new trend, the less risk you need endure to participate. If the stock or market does not trend upward for a significant period of time, long-term investors do not want to participate.

THE SPOT PRICE OF GOLD BULLION rose early Friday in Asia before slipping 0.5% from a two-day high to head for its second weekly loss on the run in London . Crude oil ticked 75¢ higher to break above $126 per barrel. Stock markets worldwide fell sharply, sinking 2% in Tokyo and sliding to a six-session low in Frankfurt , Germany .

Albert Einstein described compound growth as the eighth wonder of the world. Although he may have passed away in 1955 – coincidentally the year when yours truly saw daylight for the first time – the concept of compounding remains the single most important principle governing investment. Back to basics: Compounding simply means that you can earn interest on your principal investment amount, as well as earn interest on top of interest. The power of compounding can make an investment grow much faster than would otherwise have been the case, and is obviously based on the assumption that interest or dividends are reinvested in the same asset.

In a bull market, everyone ignores the greed and fraud that running rampant. No one wants to take away the spiked punch, even after it is perfectly clear that everyone is drunk. The party continues long after any reasonable person might have expected the party to end. Eventually the party goers all pass out on the floor and the pool of greater fools exhausts itself. In a bear market, there are more distinct, readily observable phases.

Gold finished trading in New York yesterday at $922.20, down 50 cents and silver was down 16 cents to $17.22. Gold has rallied in Asia and in early European trading. While oil is up slightly and the dollar is down slightly, gold is likely to be up on bargain hunting and safe haven buying. The 100 day moving average at $916 appears to be good support and the summer low is likely to be around these levels although a brief dip below $900 is possible.

Martin Hutchinson writes: The federal budget deficit hasn't received a lot of press lately, what with all the worries about the U.S. financial system, the home mortgage market, and the rescues that might be necessary to save both.  In fact, it's a bad sign, since the Bush administration and the Democrats in Congress have joint responsibility for keeping the budget deficit under control, so they would both be crowing about it if they were doing a good job.

The yen carry trade unwound as Martin Crutsinger Associated Press related the National Association of Realtor Report that sales of existing homes fell more sharply than expected in June. Sales dropped by 2.6 percent last month to a seasonally adjusted annual rate of 4.86 million units which left sales 15.5 percent below where they were a year ago. The drop in sales pushed inventories of unsold single-family homes and condominiums to 4.49 million units. That represented a 11.1 month supply at the June sales pace, the second highest level in the past 24 years.

I know it's hard to believe but Treasury Secretary Hank Paulson is a Republican. It was especially hard to keep that in mind during his appearances on the Sunday talk shows this weekend. His stated mission was to garner support for the bailout plans of Fannie Mae (NYSE: FNM ) and Freddie Mac (NYSE: FRE ). I hoped that he, being of the party that supports free markets, would have instead asked why the government is involved in the real estate market in the first place. I preferred that Treasury would have repudiated any further association with the GSEs and cease to allow them to raise new capital with the backing of the government.

Flooding last month interrupted rail traffic in the Midwest , disrupting ethanol production and shipments. Shipments of low-sulfur Power River Basin coal needed for many power plants has also been impacted. Coal inventories are already lean at many generating plants. Barge traffic has come to a standstill in many areas on the Mississippi River . The impact of the floods on the global agricultural and energy markets in our opinion will be much larger than expected. We think the extent of these impacts will become evident quite soon, and will be reflected in the markets.

For nearly 30 years, long before it was a charter member of the "Axis of Evil," Iran and the US have been locked in a hate-hate relationship. Walk down the street any Friday afternoon, and you're as likely to hear "Death to America!" as "Hi Ali, how are you?" Three decades of animosity, an externally opaque society, and no trade relations between the two countries mean that many of us have just the barest understanding of what's really going on over there. But whether it's a negotiated settlement with the US over Iraq, or a war-risk premium for crude oil, to threats and counter threats with Israel and the US, Iran's decisions have enormous impact on the global economic system. All of the sudden, the picture of the "mad mullahs" you get from the papers seems expensively inadequate.

The financial system will collapse before "zero-hour" actually occurs. I think we are seeing signs of it in the desperate measures being employed to nationalize companies which trade on market exchanges as private enterprises. There is simply no way to defend the SEC's decision to selectively enforce the prohibition of naked short selling for 17 ‘fragile' financial companies and to not enforce it for the over 5000 other companies which trade on US stock market exchanges. And plans to rescue Fannie Mae and Freddie Mac breathe of a sort of corporate nationalism. Over time this will deal a massive psychological blow to financial markets. They are currently rallying on the sense of relief that the efforts to prevent Fannie and Freddie from dragging US financial markets into the abyss have succeeded and the inevitable day of reckoning has been postponed once again.

For the second time in the last several weeks, the gold market has been on the receiving end of ambushes. Leading up to their July 3rd announced rate hike, the Euro Central Bank strong hints prompted the last ambush. The gold futures contracts bear this out easily, as the big cartel players sold down the gold price with heavy paper supply simultaneously. They had to do so. When physical is in reduced supply, resort to trusty paper. After stabilizing in the 920 to 925 range, gold promptly rose to exceed 980, only to be ambushed yet again. The ambush consists of an unexplainable sudden $20 decline in midday , cheered by the majority but without any analysis of where the decline originated. The motive for the early July ambush was simple.

Since its July 15 low, the iShares Brazil ETF (AMEX: EWZ) was up 2.5% through yesterday's close whereas the SPY was up 6.7%. In addition, the pattern carved out by the EWZ has taken the shape of a bearish coil, which warns me to expect another bout of weakness.

In a sad twist of irony Shelia Bair is accusing blogs of being "out of control". Sadder still is the fact that San Francisco Business Times writer Mark Calvey agrees. Please consider the incredibly inane article FDIC learns it ignores bloggers at its peril . The federal agency insuring bank deposits learned that it can't afford to ignore the blogs following its seizure this month of IndyMac Bank, the largest bank failure since the 1980s.

In this time of difficult credit conditions, it could make sense to evaluate companies with plenty of cash.  One way to measure cash is to subtract all liabilities and see if there is any cash left (Net Cash). If a company has Net Cash, they could pay off any and all debts and other reported liabilities, and have money left over.

The Ford motor companies stock price fell sharply by more than 10% following news of a worse than expected second quarter record loss of $8.7 billion, this follows a first quarter profit of $100 million. Ford has been witnessing a near meltdown in sales from a year earlier with auto sales down 28%, and truck sales down 36%, as following the surge in gas prices the once profitable SUV's have now become a liability by clogging up dealer forecourts with unsold inventory and thus contributing to the sales meltdown.

UK Retail Sales for June fell by a record 3.9% inline with the evidence of a rapidly slowing UK economy which is hitting the retail sector hard. Many mainstream market commentators have been taken by surprise by the released data as it follow hard on the heels of Mays surprise jump of 3.4% which was taken by many commentators at the time as the signs of a mini high street spending boom despite mounting evidence of a distressed retail sector which has witnessed literally crashing share prices on the back of earnings warnings as witnessed by Marks and Spencer's 20% crash at the start of this month.

Imagine the following: The price of oil falls back to $107 ... gas prices drop to say, $3.50 a gallon or lower ... and food prices decline 10% or even 20%. Simultaneously, the real estate market stabilizes. Foreclosures peak ... new and existing home sales pick up ... and consumers start spending again, opening up their wallets and purses.