Category: Conservative Economic Viiews

Democrat in Jan could mean

By , June 9, 2016 4:33 pm

the US economy). Barney blocked it and called it a “Chicken Little Philosophy” (and the sky did fall!)
And who took the THIRD highest pay-off from Fannie Mae AND Freddie Mac?
OBAMA
And who fought against reform of Fannie and Freddie?
OBAMA and the Democrat Congress, especially BARNEY!!!!

So when someone tries to blame Bush… REMEMBER JANUARY 3rd, 2007…. THE DAY THE DEMOCRATS TOOK OVER!”
Bush may have been in the car but the Democrats were in charge of the gas pedal and steering wheel they were driving
the economy into the ditch.
Budgets do not come from the White House.. They come from Congress and the party that controlled Congress since
January 2007 is the Democratic Party.

Furthermore, the Democrats controlled the budget process for 2008 & 2009 as well as 2010 & 2011.

In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush
somewhat belatedly got tough on spending increases.

For 2009 though, Nancy Pelosi & Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep
government running until Barack Obama could take office. At that time, they passed a massive omnibus spending bill to
complete the 2009 budget.

And where was Barack Obama during this time? He was a member of that very Congress that passed all of these
massive spending bills, and he signed the omnibus bill as President to complete 2009. Let’s remember what the deficits
looked like during that period:  If the Democrats inherited any deficit, it was the 2007 deficit, the last of the
Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took
control of spending, and that includes Barack Obama, who voted for the budgets.

If Obama inherited anything, he inherited it from himself. In a nutshell, what Obama is saying is “I inherited a deficit that
I voted for, and then I voted to expand that deficit four-fold since January 20th.” There is no way this will be widely publicized, unless each of us sends it on!
“The problems we face today exist because the people who WORK for a living are OUTNUMBERED by those who
VOTE for a living.”

 

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Oil, Oil and More Oil

By , July 22, 2011 7:05 pm

 

OIL—you better be sitting down when you read this!!

You “will” pay $5 a gallon + again and you won’t complain loud enough
to make a difference, RIGHT!

Here’s an astonishing read. Important and verifiable information:

About 6 months ago, the writer was watching a news program on oil
and one of the Forbes Bros. was the guest. The host said to Forbes, “I am
going to ask you a direct question and I would like a direct answer; how much
oil does the U.S. have in the ground?” Forbes did not miss a beat, he
said, “more than all the Middle East put together.” Please read
below.

The U. S. Geological Service issued a report in April 2008 that only scientists
and oil men knew was coming, but man was it big. It was a revised report
(hadn’t been updated since 1995) on how much oil was in this area of the
western 2/3 of North Dakota, western South Dakota, and extreme eastern Montana
….. Check THIS out:

The Bakken is the largest domestic oil discovery since Alaska ‘s
Prudhoe Bay, and has the potential to eliminate all American dependence on
foreign oil. The Energy Information Administration (EIA) estimates it at 503
billion barrels. Even if just 10% of the oil is recoverable… At $107 a
barrel, we’re looking at a resource base worth more than $5…3 trillion.

“When I first briefed legislators on this, you could
practically see their jaws hit the floor. They had no idea..” says Terry
Johnson, the Montana Legislature’s financial analyst.

“This sizable find is now the highest-producing onshore oil
field found in the past 56 years,” reports The Pittsburgh Post Gazette.
It’s a formation known as the Williston Basin, but is more commonly referred to
as the ‘Bakken’. It stretches from Northern Montana, through North Dakota and
into Canada. For years, U. S. Oil exploration has been considered a dead end.
Even the ‘Big Oil’ companies gave up searching for major oil wells decades ago.
However, a recent technological breakthrough has opened up the Bakken’s massive
reserves….. And we now have access of up to 500 billion barrels. And because
this is light, sweet oil, those billions of barrels will cost Americans just
$16 PER BARREL!

That’s enough crude to fully fuel the American economy for 2041
years straight. And if THAT didn’t throw you on the floor, then this next one
should – because it’s from 2006!

U. S. Oil Discovery- Largest Reserve in the World
.
Stansberry Report Online – 4/20/2006

Hidden 1,000 feet beneath the surface of the Rocky Mountains lies
the largest untapped oil reserve in the world. It is more than 2 TRILLION
barrels. On August 8, 2005, President Bush mandated its extraction. In three
and a half years of high oil prices none has been extracted. With this
motherload of oil why are we still fighting over off-shore drilling?

They reported this stunning news: We have more oil inside our
borders, than all the other proven reserves on earth. Here are the official
estimates:

– 8-times as much oil as Saudi Arabia

– 18-times as much oil as Iraq

– 21-times as much oil as Kuwait

– 22-times as much oil as Iran

– 500-times as much oil as Yemen

– and it’s all right here in the Western United States.

HOW can this BE? HOW can we NOT BE extracting this? Because the
environmentalists and others have blocked all efforts to help America become
independent of foreign oil! Again, we are letting a small group of people
dictate our lives and our economy…..WHY?

James Bartis, lead researcher with the study says we’ve got more oil in this
very compact area than the entire Middle East -more than 2 TRILLION barrels
untapped. That’s more than all the proven oil reserves of crude oil in the
world today, reports The Denver Post.

Don ‘t think ‘OPEC’ will drop its price – even with this find?
Think again! It’s all about the competitive marketplace, – it has to. Think
OPEC just might be funding the environmentalists?

Got your attention yet? Now, while you’re thinking about it, do this:

Pass this along. If you don’t take a little time to do this, then
you should stifle yourself the next time you complain about gas prices – by
doing NOTHING, you forfeit your right to complain.

Now I just wonder what would happen in this country if every one
of you sent this to every one in your address book.

By the way…this is all true. Check it out at the link below!!!

GOOGLE it, or follow this link. It will blow your mind.

http://www.usgs.gov/newsroom/article.asp?ID=1911

Guess what? The democrats took control of the house and senate in
2006. Amazing isn’t it?

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TEN POOREST CITIES

By , April 17, 2011 6:25 pm

TEN POOREST CITIES

 City, State, % of People Below the Poverty Level
1.   Detroit ,  MI 32.5%
2.   Buffalo ,  NY 29.9%
3.   Cincinnati ,  OH 27.8%
4.   Cleveland ,  OH 27.0%
5.  Miami ,  FL 26.9%
5.  St. Louis ,  MO 26.8%
7.   El Paso ,  TX 26.4%
8.   Milwaukee ,  WI 26.2%
9.   Philadelphia ,  PA 25.1%
10.   Newark ,  NJ 24.2%

 What do the top ten cities

(over 250,000) with the highest

poverty rate all have in common? 

Detroit,  MI (1st on the list) hasn’t elected a Republican mayor since 1961..

Buffalo ,  NY   (2nd) hasn’t elected  a Republican mayor since 1954.

Cincinnati ,  OH (3rd) hasn’t elected a Republican mayor since 1984.

Cleveland ,  OH (4th) hasn’t elected a Republican mayor since 1989.

Miami ,  FL   (5th) has never had  a Republican mayor.

St. Louis ,  MO   (6th) hasn’t elected a Republican mayor since 1949.

El Paso ,  TX (7th) has never had  a Republican mayor.

Milwaukee ,  WI (8th) hasn’t elected a Republican mayor since 1908.

Philadelphia , PA   (9th) hasn’t elected a Republican mayor since 1952..

Newark ,  NJ   (10th) hasn’t elected a Republican mayor since 1907.

Einstein once said, ‘The definition of insanity is doing the same thing over and over again and expecting different results.’

It is the poor who habitually elect Democrats 
yet they are still POOR!

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Hard Times for 2011/2012

By , January 5, 2011 7:13 pm

timeline for the upcoming Depression; I now believe that it will start in early 2011. By the end of 2011 or early 2012 we will be in a full blown depression. Keep in mind that if the government was listing all unemployed in their “unemployed rate” unemployment is actually close to 20 per cent. This upcoming “Depression” will probably last until 2020 no matter what party is in power. The damage this Congress and President have done to our economy will not be repairable in four years. History teaches us that the Republicans rule during times of innovation and great economic upturns; the Democrats have normally ruled the country (with very few exceptions) during recessions, depressions and otherwise slow economic growth. After the “Great Depression” the Democrats controlled the House and the Senate for 40 years. This time history will NOT repeat itself because it is not Democrats in the Congress and the White House. What few REAL Democrats still in Congress have surrendered their vote and responsibility to the demands of the extreme radical progressives and the labor unions? The only question after the “mid-term elections” will be: did Congress bring down Obama or did Obama bring down the Democrats?I wrote the above on 10 August 2010, before the results of the mid-term elections. I will answer the above question; it is fairly obvious that it was congress under the leadership of Pelosi and the spineless Reid that brought down the Democrats. Since August of last year I have closely watched Wall Street and its wonderful numbers. Two thoughts here; at 10,000 it is only the number we reached in March of 1999 and with an actual unemployment rate about 20% there is still nothing substantive in the numbers at Wall Street. I would love nothing more than to be so wrong that everyone would laugh at me; however, I still stand behind everything I’ve written in my series “Then 1929 and Now 2009” the coming depression.

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I’m still saying “Depression

By , August 10, 2010 7:50 pm

August 10, 2010Since I wrote the below nothing has changed for the good, we’ve had the Financial Bill passed which at best simply picks “winners and losers” on Wall Street and their financial giants and opens our daily financial transactions to the government. I have, however, underestimated the effect that Billions of Government Money has on the economy. I will revise my timeline for the upcoming Depression; I now believe that it will start in early 2011. By the end of 2011 or early 2012 we will be in a full blown depression. Keep in mind that if the government was listing all unemployed in their “unemployed rate” unemployment is actually close to 20 per cent. This upcoming “Depression” will probably last until 2020 no matter what party is in power. The damage this Congress and President have done to our economy will not repairable in four years. History teaches us that the Republicans rule during times of innovation and great economic upturns; the Democrats have normally ruled the country (with very few exceptions) during recessions, depressions and otherwise slow economic growth. After the “Great Depression” the Democrats controlled the House and the Senate for 40 years. This time history will NOT repeat itself because it is not Democrats in the Congress and the White House. What few REAL Democrats still in Congress have surrendered their vote and responsibility to the demands of the extreme radical progressives and the labor unions? The only question after the “mid-term elections” will be: did Congress bring down Obama or did Obama bring down the Democrats?    Now and then//1929, 2009//the coming Depression. Part XI//January 5, 2010We just lost 10 years; lost because as we come to the end of another decade it will be a decade of complete totally “negative” numbers in all areas of our economic health. I’ve been saying since May that we were heading towards a “depression” worst than the “Great Depression” of 1929. (Read all my writings on this series). As 2009 came to an end a few days ago the stock market actually ended positive and a nice 9 month upward rally; as I’ve stated more than once there is still nothing substantive about this market for it to maintain any meaningful growth. I stated back in May that upswings in the markets would be temporary, that another round of “real estate” foreclosures would precede a final “commercial real estate” bust which will result in many bank failures. I’m ready at this time to put a time table on this second round of foreclosures and the commercial real estate bust. This second blow to our economy will start in mid-march and run through September 2010. This round of real estate foreclosures, the failure of commercial real estate, office buildings and ensuing bank failures will be rapid and stunning. Now I’ve been saying that we were surely headed towards a depression since last May; now I believe that we are actually in the very beginning of that depression and would be surprised if we don’t start hearing the word “Depression” bounced around soon. Don’t be surprised if we finally hear Washington use the word “Depression” sometimes this summer. Let’s get back to the “Lost Decade”, the new millennium (2000-2009) ended with the DOW at somewhat over 10,000 (a rally of nine months) helped keep it there (but the DOW first reached the 10,000 mark in March of 1999), the S&P 500 index ended with a minus 9% and the NASDAQ took a negative to the tune of 40%; with numbers like that its fairly easy to call the last 10 years a “Lost Decade”. I also have some other numbers for you liberals out there that like to change history, manipulate data or simply spin fact with other data. During these 10 years (and particularly since Obama), our national debt has doubled, employment since Bush to Pelosi/Reid/Obama went from  4.9% to 10.2%, dollar has fallen, government stimulus efforts have failed and our leaders in Washington are doing things behind closed doors without regard to the wishes of the folks that elected them. [At the end of the “Great Depression” the 40’s ended with GDP growth of 72%, the 50’s end with GDP growth of 51.3%, the 60’s end with GDP growth of 53.1 and household net worth growth of 44%, 70’s end with GDP growth of 38.1 and household net worth growth of 28%, the 80’s saw GPD growth of 34.9% and household net worth of 42%, and the 90’s had GDP growth of 38.6% and household net worth of 58%. 2000’s end with household net worth of minus 4% and GDP only grew 17.8%] and we must remember that 14.6% was accomplished 2000-2006; the bottom line here is that things started going downhill when Pelosi/Reid  took control of Congress in late 2006 and intensified in severity during the last 12 months with Obama in office. Never in history has growth coming out of a decline (recession) been as weak as what we going through at this very moment and when you consider the Trillions in Government intervention it is more than sad and dismal, it is a disaster.

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I’ve writing of this since last May

By , March 2, 2010 6:19 pm

MONEYANDMARKETS»


Monday, March 1, 2010

 

[«] Money and Markets 2010 Archive View This Issue On Our Website [»]

Transcript:
Nine Shocking New Predictions for 2010-2012
by Martin D. Weiss, Ph.D. Dear Customer,

Nine Shocking New Predictions for 2010-2012

We have just ended an online video conference to brief investors on major events that could forever change your future.

We made nine new predictions to pinpoint, as accurately as possible, how and when that future is likely to unfold.

We showed how to build — or rebuild — an entire portfolio with a disciplined approach that gives you the specific percentages to put into each major asset class right now — stocks, gold, commodities, bonds, and currencies.

And unlike any of our prior events, we took questions from a live audience.

Here’s the transcript …

Nine Shocking New Predictions for 2010-2012
With Martin Weiss, Richard Mogey and Monty Agarwal
(Edited Transcript)

Martin Weiss: The forecasts we made last year are striking at an accelerating pace, as three new and dangerous crises have raised their heads:

First, the White House has announced federal deficits that are far worse than any prior estimates — $1.6 trillion for 2010 … $1.3 trillion for 2011 … and continuing massive deficits for the entire decade.

This is already sending shock waves of fear throughout the globe. It has prompted Moody’s to issue a stern warning about America’s credit rating. And it’s raising the specter of a global collapse in long-term sovereign debt. In a moment, we’ll take a look at the enormous implications this has for your finances and investments.

Second, global investors are attacking. They’re scanning the globe for the weakest links — the countries with the biggest deficits — and they’re dumping that country’s assets. First, they attacked Greece. Then they attacked Portugal and Spain.

Inevitably, they will also unleash their fury on the one country in the world with the biggest deficits of all: The United States of America. And in a moment, we’ll see how these attacks now threaten every dollar you have saved and invested.

Third, we have an unprecedented crisis of confidence among U.S. taxpayers and investors. For the first time in our lives, millions of U.S. citizens are taking to the streets in protest — openly rebelling against Washington! Millions of Americans are fed up with bungling politicians, bureaucrats, and bankers.

Investors are saying:

“You tricked me once — into buying tech stocks with no earnings; those stocks crashed and cost me a bundle. You tricked me twice — into buying real estate and that cost me even more.

“Now, I’m madder than hell and I will never trust Washington or Wall Street ever again! I must have an objective scientific, unbiased way to protect myself and make money.”

So, the questions we must address now are twofold:

  1. How can you know, with confidence, which asset classes offer you the greatest profit potential moving forward?
  2. How can you create a bullet-proof portfolio that gives you world-class profit potential no matter what Washington and Wall Street do next?

For the answers, I turn to the Foundation for the Study of Cycles, a nonprofit research think tank, founded 70 years ago in the wake of the Great Depression.

This Foundation was sponsored by the head of the Smithsonian Institute, by the chairman of the Carnegie Institution, by the founder of the National Bureau of Economic Research, and by the founder of Fidelity Investments. Former President Hoover and former Vice President Charles Gates Dawes also supported the Foundation.

Since 1940, the Foundation for the Study of Cycles has studied the recurring patterns of history — cycles.

Since 1950, it has identified cycles that predicted — well ahead of time — nearly all major market turns in stocks, bonds, and commodities.

And since 1971, when the gold standard and fixed exchange rates ended, it has done the same for foreign currencies and gold.

Joining us today is Richard Mogey, Research Director of the Foundation.

Richard Mogey

Richard, you are the Research Director of the Foundation and have been with them for many years.

Richard Mogey: Twenty-two years!

Our research is based on the simple fundamental principle that all of nature — and most of history — is driven by regular cyclical patterns.

Martin: But identifying those cycles is not so simple.

Richard: No. We have sorted through historic data going back 5,000 years, and we have put together data series on most major markets going back at least 300 years.

Martin: And back in the 1960s, long before Microsoft and PCs, you used Fortran programs on mainframe computers to find the most critical cycles for each major market — all of which you’ve published, starting a half century ago.

Richard: Yes. And you asked me recently how accurate the Foundation’s cycles have been in forecasting stocks, gold, etc.

Martin: But to answer that question, you didn’t have to recreate hypothetical scenarios or engage in 20/20 hindsight.

Richard: No. I just went back to the archives of our printed publications. They were all published in real time. I have them right here.

Martin: Great. So what’s your answer?

Richard: The Foundation’s cycles have accurately identified nearly every major shift in market direction … in every one of these asset classes … in advance … since 1971.

Monty Agarwal

Martin: We’ll look at those in a moment. But right now, let’s focus on the main questions readers are asking on our blogs: What are the major market turns ahead? And how can investors build a sturdy portfolio designed to convert those market turns into wealth?

Richard: I will answer the first question. But I am a scientist — not an investment analyst. So I’m not the right person to answer the second question.

Martin: Which is why I’ve also invited Monty Agarwal to join us. Monty has run three global hedge funds, and he has done so without a single losing year. He has just written a book on what the hedge funds have done wrong — and what they must do to get it right.

Foundation Cycles chart

Monty Agarwal: Martin, the key is to buy the right market research. And of all the Doubting Thomases in the world, I am probably one of the most skeptical. I always conduct my own personal due diligence before I buy anything. You’ve asked me to analyze the Foundation’s research, and I’ve done so with great interest.

The Foundation’s accuracy rate is far superior to any other approach I’ve ever seen. Its work is not perfect, of course. There are a few misses. But the Foundation’s cycles pinpointed, well ahead of time, the onset of the giant bull market that began in 1980.

Martin: You’re talking about the stock market.

Martin Weiss

Monty: Yes. The Foundation predicted the timing of the Crash of ’87. It predicted the timing of the bear market of 2000-2002. It predicted the market’s rise through 2007. And it nailed the top of the market prior to the big plunge in 2008 …

Richard: which, by the way, was a market call we published in Barron’s online.

Martin: Is this the Barron’s article where you called the big plunge in 2008?

Richard: Yes.

Monty: Not many people caught that decline, let alone to the month.

Plus, in March of 2009, the Foundation’s cycle work anticipated an intermediate rally.

Prediction #1
Starting this year, most U.S. stocks are

likely to fall in a zigzag pattern for

nearly three long years!

Richard: And now, we have a new signal. Most U.S. stocks are likely to go down. And they are likely to fall — in a zigzag pattern — for nearly three long years.

Monty: In the past, almost every recession and bear market in this country delivered solid values to investors. We saw price-earnings ratios (P/Es) in single digits. We saw great stocks selling for five or six times earnings. But this time, the government was so panicked, it never let that happen. And now P/Es are already back up again to grossly overvalued levels.

Richard, you’re talking about giant swings. For a long-term buy-and-hold strategy, those swings are a disaster. But with a more flexible strategy, they can generate giant profit opportunities — in both directions.

Martin: Can you be more specific?

Monty: Go back 10 years and assume you had been following the Foundation’s cycle research before 2000. You could have sidestepped the Tech Wreck that destroyed so much wealth. Plus, you could have pulled out a 37 percent profit from that decline. Then, if you followed its research in 2003, you could have moved back into the S&P and come out with a 146 percent gain from 2003 to 2009.

Martin: What about more recent years?

Monty: Same pattern. If you had used its research published before 2008, instead of the wipe-out losses that most investors suffered, my data indicates you could have made a 37 percent profit. And in 2009, based on the Foundation’s call for an intermediate rally, you could have made another 42 percent profit.

Martin: And going forward?

Monty: Do not expect a similar pattern.

Martin: Why not?

Richard: Because if our cycle work is even halfway right, conditions will change, and investors could make as much — or more — money in other asset classes.

Martin: Instead of stocks?

Richard: Gold! Never before in the history of civilization have we seen a world power like the United States with its finances in such disarray as they are now.

Martin: We’ve seen world powers rise and fall — from Rome to Spain to Britain. And we’ve seen them incur big debts after their decline.

Richard: Yes, but now we have a country that is both the dominant world power and the world’s largest debtor at the same time. This is a massive force that could propel the price of gold.

Martin: When and how far?

Prediction #2
Gold will skyrocket far higher than
$2,000 per ounce by the end of 2011.

Richard: By the third or fourth quarter of 2011, the price of gold should be far higher than $2,000 per ounce.

Martin: Why is this so shocking?

Richard: Because it’s going to happen in the midst of a sinking stock market and economy.

Monty: I don’t think that should come as such a surprise, either. In the last few years, despite two big stock market declines and despite the worst recession since the Great Depression, gold quadrupled in value.

No one knows for sure what the future will bring. But I would take the Foundation’s gold forecast very seriously.

Its cycle work predicted the great bull market in gold of the 1970s.

It predicted gold’s downturn starting in the 1980s.

And it would have got you back into gold in 2001 … urging you to hold on ever since.

Richard: This has been — and should continue to be — one of the greatest profit opportunities of all time.

Martin: We have a question on this that’s very relevant …

Audience: My name is Elizabeth and I am from Fort Lauderdale. My question is: Much has been talked about gold, but what is your opinion on investing in silver?

Richard: In terms of timing, it never ceases to amaze us how closely all precious metals track gold — not only silver, but also platinum and palladium. The differences are strictly an issue of how far each metal rises or falls. Between now and 2012, there will be periods when silver and other metals do better than gold. But when all is said and done, you will find that gold is, by far, the single best performer because of its value as a hedge against the dollar.

Martin: What’s behind this cycle in gold?

Richard: It parallels the cycles in the U.S. dollar. And for the dollar — or for proxies of the dollar — we have cyclical data going all the way back to 1680.

Foundation Cycle chart

Martin: Before the dollar even existed!

Monty: I have scrutinized the Foundation’s dollar research just as closely as its stock market research.

Its cycles predicted the dollar’s plunge from 1971 to 1980 … the dollar’s surge peaking in 1985 … the dollar’s decline bottoming in 1992 … the dollar’s rally through 2001 … and then, the big plunge since.

Richard: And now, the dominant cycle in the dollar is forecasting the next major move.

Prediction #3
The U.S. Dollar Index will begin to sink in 2010

and will not hit bottom until early 2012.

Richard: A major, new dollar decline, beginning in the third quarter of 2010 and ending in early 2012.

Monty: Currencies are not a beauty contest. They’re an ugly contest. And among many ugly currencies, the dollar usually wins the prize — as the ugliest.

Richard: The real decline in the dollar — and all currencies — will show up more clearly in the doubling of the value of gold we just talked about. Measured against gold, the dollar’s purchasing power will fall by half or more, depending, of course, on the intensity of the global selling that hits the greenback.

Martin: What about oil and other commodities?

Prediction #4
Most commodities will not

make new, all-time highs!

Richard: Oil will not return to its all-time highs. Unlike gold, it is driven less by currency disasters and more by consumer or industrial demand. And we simply do not see high demand being sustained through this period.

Martin: So it would be a mistake to overinvest in commodities right now.

Monty: I agree.

Martin: Most commodities won’t surge because …

Prediction #5
The U.S. economy will suffer a severe
double-dip recession in 2011!

Richard: Because the U.S. economy will sink into another recession.

Martin: Similar to the recession of 2009?

Richard: Probably worse!

Martin: Again, the timing question: When?

Richard: Not right away. Our cyclical data on GDP and on consumption points to a material improvement in the U.S. economy through the first two quarters of 2010.

But starting in the second half of 2010, GDP growth will start to sink fast and we could see negative growth by the beginning of 2011. The worst period for the economy will hit in the fourth quarter of 2012.

Monty Agarwal

Monty: You don’t have to look very far to see the reasons: You have unemployment holding at extremely high levels. You have scarce capital, with lending to households and corporations drying up. You have consumers, businesses, and now even governments strapped for cash.

Martin: That’s an understatement! Look at what’s happening in Greece, Spain, Portugal, and even the UK — and that was despite all the stimulus and bailouts …

Monty: No! Because of all the money they’ve spent on bailouts!

Martin: Right.

Monty: Remember. These are no longer just private banks or automakers going under. They are entire countries!

Martin: Plus, you don’t have to connect many dots to see the consequences of a recession. Right now, the Obama administration says the 2010 federal deficit will be $1.6 TRILLION. Care to guess what the government forecast was for this same deficit back in 2008?

Monty: A lot less, I presume.

Martin: Mike Larson looked back at the forecast made by the Congressional Budget Office (CBO) just two years ago, in 2008. The CBO predicted that the U.S. deficit for this year — for 2010 — would be $249 billion. Now, it’s coming in at $1.6 TRILLION, or over six times more than they forecast.

Monty: They didn’t expect the deep recession that struck in 2009.

Martin: Much like they’re not expecting a double-dip recession to strike next year! My point is that, just like their forecast was dead wrong for this year, it could be dead wrong again in coming years.

Prediction #6
The U.S. budget deficit will
surpass $2 trillion in 2012!

Look at 2012! For that year, the Obama administration is making some aggressively optimistic assumptions for the U.S. economy and forecasting a deficit of $828 billion. Instead, with the economy sinking, it could be over $2 TRILLION!

Monty: Some people may think these huge blunders merely reflect the government’s forecasting errors. But it’s much more than that. Politicians know they’re rigging the numbers. And they’re swearing on a stack of Bibles that it’s an honest estimate.

Prediction #7
Bond prices will plunge because of
out-of-control deficits and a sinking dollar!

No matter what, the big risk is that global investors will sell U.S. dollars wholesale. And they can’t sell them in a vacuum.

Along with the dollars, they also have to sell the assets where they’re holding the dollars — especially long-term Treasury bonds. So you could see a massive plunge in bond prices.

Martin: Translate that into bond yields.

Monty: You’ll see a major spike upward in yields. That could give investors a huge buying opportunity to lock in those higher yields for years to come — provided, of course, price inflation does not run rampant and the U.S. government is still a safe bet at that time.

Richard: The U.S. government — and, indeed, America — faces a great historic test: A test of our power — and our willpower — as a nation.

Martin: Please explain what you mean by that with respect to cycles.

Prediction #8
2012 will be the year of maximum

turmoil in markets and
peak tension in society!

Richard: The great test for our country — an Armageddon of sorts — will come in the year of maximum turmoil in the financial markets, the time of peak tension in society: 2012.

Martin: I assume this has nothing to do with the movie by that name, based on ancient forecasts.

Richard: Of course not! We’ve had 2012 pegged as the year of the “Perfect Storm” since 2002.

Martin: What’s the basis of the perfect storm?

Richard: A convergence of cycles! We have the dollar cycle, stock market cycles, consumption cycles, and GDP cycles all bottoming in this same approximate time frame — between late 2011 and late 2012. Plus, 2012 is also smack dab in the middle of a sweeping transition already under way in our longest term and probably most important cycle of all.

Martin: Which is?

Richard: The 500-year geopolitical cycle. We’ve mapped it all the way back to 670 BC. It is a broad, far-reaching shift in power, wealth, and money — from East to West, or, as is the case now, from West to East.

Martin: We’ve talked about that before.

Prediction #9
2012 will bring a massive wealth shift

from old fortunes that are destroyed
to new ones that are created!

Richard: Yes, but I want to add that we’re not only talking about a power shift from West to East. We’re also talking about a major wealth shift from old fortunes that are destroyed to new ones that are created … from countries, companies, and families that were dominant for many decades to new ones that replace them on the other side of this massive upheaval!

Martin: Provided they are well prepared ahead of time.

Monty: And provided they use reliable signals with prudent risk control. No matter what you invest in or how you invest, the real possibility of losses is something you always have to be aware of.

Martin: Yes! On our blog, though, many readers tell us they make decisions largely based on gut, which implies not only analysis, but also intuition — and emotion. They admit that, more often than not, that’s their basis for deciding how much to invest in each asset class and when.

What would be your standard allocation to those five asset classes, based on your analysis of the Foundation’s work?

Step 1
Diversify Across All FIVE Asset Classes

Step number one is to diversify across all FIVE asset classes — stocks, precious metals, other natural resources, bonds, and currencies.

Martin: Years ago, it would have been virtually impossible for the average investor to do that. You’d need a lot of money or you’d have to take a lot of risk — with futures, in the currency markets.

Monty: Today, all five of these asset classes are readily available to average investors through hundreds of exchange traded funds — ETFs.

Martin: And, of course, you can also choose from thousands of mutual funds, tens of thousands of individual stocks, hundreds of thousands of bonds.

Monty: Yes. But this step alone — diversification — puts you heads and shoulders above investors stuck in stocks or bonds alone.

Audience: The subject is diversification. The more I hear that, the more it bothers me. Because that tells me that if I am investing in, say, five different major areas, I will probably have four losses and only one win.

Monty: Let me address that by telling you how Wall Street works. Wall Street touts diversification as if it were a panacea. But their notion of diversification is spreading your money among several different U.S. stock sectors. That’s not going to work because nearly all stocks are linked in some way. In a truly diversified portfolio, stocks are just ONE of five asset classes.

Martin: Plus, Wall Street still seems to assume we’re back in the 20th Century when bull markets were long in duration and bear markets were short. That’s not the case today.

Step 2
Take Advantage of DOWN Markets!

Monty: That’s the key to step number two. In today’s era, especially as we head toward 2012, if you want to make money, you must not rely exclusively on up markets. You must also take advantage of down markets.

Martin: That also used to be very hard for the average investor to do. You had to sell short.

Monty: Not anymore! In every one of the five asset classes, ETFs are readily available whether you want to profit from rising prices or falling prices. You never sell stocks or commodities short. Your goal is strictly to buy them low and sell them high, like any ordinary stock.

Step 3
Diversify Dynamically!

Step number three is to diversify dynamically. Don’t just keep a fixed amount of money in every asset class all the time. Sometimes, you’ll want a lot more; sometimes, a lot less.

For example, if the Foundation’s signals say gold is going to greatly outperform stocks and bonds, you may need to double the percentage of the portfolio in gold. Or let’s say we see a major decline coming in long-term bonds. You’ll probably want to clear out of long-term bonds entirely.

Step 4
Periodically Rebalance Your Portfolio!

The next step is to periodically rebalance the portfolio. Hypothetically, let’s say you go ahead and double the gold allocation from 10 to 20 percent. Then, let’s say gold itself doubles in value. You could find yourself with 40 percent of your portfolio value in gold.

Martin: That’s a good problem to have.

Monty: Yes, but you still have to DO something about it! You can’t sit back passively while a major market move — up or down — upsets the balance in your portfolio. That’s where periodic rebalancing comes into play. You sell on strength and you buy on weakness. But you do so intelligently. Not based on a whim.

Step 5
Risk Protection

Step five is risk protection.

Martin: Don’t you get a good measure of risk protection with the broad diversification across the five asset classes and with the portfolio rebalancing?

Monty: You do. But for an additional layer of risk protection, you also need stop-loss mechanisms. If you’re wrong about a particular stock, bond, or ETF, you have to set a clear limit on how far you’re willing to be wrong. If it surpasses that limit, you need to get out right away.

Plus, let me say one more very important thing: I respond promptly to major market turn signals. And I don’t shift just small amounts of funds. Gradual, incremental shifting is the right thing to do in a conservative, slow-moving model portfolio. But that’s not what I do, especially when I have clear, strong signals like these we’re getting from the Foundation. When I get a major signal, I move, and I do so very quickly.

Martin: Assume you used the Foundation’s signals and your five steps for building a portfolio. Please share with us now what the results could have been.

Irving and Ike

Monty: Let’s say you started at the beginning of 2000 with $100,000.

The black line on this chart shows the results you would have achieved simply by buying and holding the S&P. Result: You would have lost $14,000.

Martin: And that’s despite tying up your money for 10 years, despite all of Washington’s efforts to save the economy.

Monty: Correct. Now, assume you took this one step further. You blindly invested 20 percent in each of the five asset classes we’ve been talking about. No intelligence. No change. That step alone could have transformed a 14 percent loss into a 61 percent gain.

Martin: The red line in the chart.

Monty: Right. But it’s the green line that I want you to focus on. It shows what happens when we add the intelligence from the Foundation and the simple steps I just talked about. In this scenario, instead of a 14 percent loss, you could have seen a 111 percent gain. While investors in the S&P 500 were losing $14,000, you could have made $111,000.

Martin: That’s past. What about the future?

Monty: What happens in the next 10 years will inevitably be different from what happened in the last 10 years. That’s all the more reason you must not lock yourself into a blind, fixed allocation that cannot adjust to changing conditions.

Martin: Please also show us your analysis going back further in time, including all kinds of market conditions.

Monty: Sure. Overall, since 1971, our approach could have multiplied your money more than 25 times over — enough to turn $100,000 into more than $2.5 million. That’s four times better than the S&P 500.

Moreover, since 1992, we’re talking about 18 consecutive winning years, in a wide range of conditions — in inflation and deflation, in bear markets and bull markets, during economic booms and busts. All with no debt! No options. No leveraging.

Martin: Don’t you like leverage?

Monty: I do in other circumstances. But in this program, I assume none whatsoever. If you can achieve relatively rapid and consistent growth without leverage, why be greedy?

Martin: I agree. Let’s talk about what we’re doing for viewers.

First, to underscore my confidence in this program, I have put my money where my mouth is. We have just deposited $1 million into a brand new brokerage account. This new account will serve as a model portfolio to be dedicated exclusively to following the Foundation’s long-term signals.

Second, we have invited Monty and Richard to also invest their own money in their own dedicated accounts — so that both individuals making investment decisions have skin in the game.

Third, Weiss Research has entered into an exclusive joint venture with the Foundation for the Study of Cycles for full access to its vast databases and use of its signals. The Foundation’s research helps strips out the emotions involved in investing and, instead, helps you grow your money dynamically and objectively, through thick and thin, using history — not Wall Street or Washington — as your guide.

It gives us the confidence to invest fully, broadly, and without hesitation.

Fourth, we have hired Monty Agarwal to receive the signals from the Foundation and translate them into specific investment recommendations. He will follow the Foundation’s long-term signals. Plus, he will draw from his experience to diversify across the five asset classes, adjust the allocations, maintain balance, control risk, and choose the specific investments.

Most important, we are launching a new service called the Million-Dollar Rapid Growth Portfolio. This exclusive publication and website not only lets you track everything happening in my account … but it also gives you the opportunity buy and sell before we do.

Of course, you don’t have to invest a million dollars. You could invest any amount you’re comfortable with. Also please understand that this not a money management program. Unlike our affiliate, Weiss Capital Management, we do not customize actual portfolios and advice to meet your individual needs. Rather, we’re investing our own money and will let you see exactly what we do — with total transparency — in our Million-Dollar Rapid Growth Portfolio.

Every purchase, every sale, and every statement will be promptly posted on our members-only website. Every profit, every loss, every dividend earned, and every commission charged will be an open book to you.

Monty: I will buy no penny stocks, illiquid investments, or exotic instruments — just widely traded, mainstream stocks, bonds and ETFs that any investor can put into any account. Therefore, I do not anticipate any issues as to who can get their order in first.

Martin: Still, I want to make absolutely sure that if anyone has an advantage, it’s going to be the investor — not us. So, two full business days before we buy or sell, Monty will send you an email telling you precisely what we intend to buy or sell and how.

Monty, let’s assume, hypothetically, that you are sending that email out today. What would be the standard amounts you would allocate to each asset class?

Monty: I would allocate 30 percent of the money to the asset class “stocks,” with a very substantial allocation to inverse ETFs to profit from a decline in stocks.

Martin: What about bonds?

Monty: 10 percent, mostly short term.

Martin: Gold?

Monty: 15 percent.

Martin: Energy and other commodities?

Monty: Also 15 percent — but carefully selecting the commodities most likely to benefit from growth in major emerging markets.

Martin: What else?

Monty: The last asset class is currencies. That’s very important and has a very clear long-term trend. I’d bet against the dollar with 30 percent of my money — but not in the euro or any country with oversized deficits.

Bear in mind that some major new forces are now ready to hit markets. So these allocations may change pretty significantly when I release them.

Audience: With the declining value in the dollar, what are the best currencies to invest in?

Monty: The currencies I would pick are the currencies that benefit from the growth in the emerging markets. For example, I like the Aussie dollar and the Canadian dollar.

Audience: I understand that the Foundation has a great track record and an impressive history. My question is: Why haven’t we heard of you before?

Richard: For 60-plus years, we have been studying cycles without any marketing. We are terrible at marketing. But I think we are great scientists.

Martin: Overall, I think benefits of the service are many. But let me summarize the main ones: Cycle signals that could have beaten the S&P 500 four to one, with 18 consecutive winning years through 2009. Plus a hedge fund manager with 12 years of experience and without a single losing year to his name.

Thank you very much for joining, and have a great day!

Editor’s note: The Charter Enrollment Period for the Million-Dollar Rapid Growth Portfolio ends March 8, after which the membership cost will be significantly higher. Click here for details.


About Money and Markets

For more information and archived issues, visit http://www.moneyandmarkets.com

Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Marci Campbell, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

From time to time, Money and Markets may have information from select third-party advertisers known as “external sponsorships.” We cannot guarantee the accuracy of these ads. In addition, these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our terms and conditions.

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I’ve been writing about this since last May

By , February 22, 2010 8:45 pm
MONEYANDMARKETS»


Monday, February 22, 2010

 

[«] Money and Markets 2010 Archive View This Issue On Our Website [»]

Armageddon
by Martin D. Weiss, Ph.D. Brace yourself, Customer!

Martin D. Weiss, Ph.D.

If you thought Wall Street’s debt crisis was traumatic, wait till you the see the consequences of Washington’s debt crisis!

Never before in history has a world power like the U.S. been so utterly buried in debt! And never before has that debt been financed so massively by foreign investors!

Nineteenth century Mexico, Spain, and Argentina accumulated so much debt, they were forced to default.

In the 20th century, a similar fate befell Germany (1932) … China (1939) … Turkey (1978) … Mexico again in 1982 … Brazil and the Philippines (1983) … South Africa in 1985 … plus Russia and Pakistan in 1998.

Argentina kicked off the 21st century with a default in 2001. And barring a euro zone rescue, Greece, Spain, and Portugal are prime candidates for debt defaults this year.

But in NONE of these examples did we — or do we — see the debt crisis striking a dominant world power! In ALL cases, the debts represent little more than a small fraction of the total debts outstanding worldwide.

Not so in our case today!

In the entire world, the United States government and its agencies have, by far, the largest pile-up of interest-bearing debts ($15.6 trillion), the largest accumulation of unsecured obligations (over $60 trillion), the largest yearly deficit ($1.6 trillion), and the greatest indebtedness to the rest of the world ($4.8 trillion).

In proportion to the size of its economy, one important country, Japan, does have more debt than the U.S. But unlike Washington’s debts, nearly all of Japan’s are financed by its own citizens — loyal, long-term savers who are far less likely to pull out in a storm.

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Washington’s debt crisis represents a unique, unparalleled, and unimaginable convergence of circumstances. Because no one can answer this simple question being asked by former GAO chief David Walker:

Who will bail out America?

Not you, not me, and not 300 million Americans! Not China, not Japan, nor all the powers on Earth put together! They’re simply not big enough. They don’t have the money.

Yet, despite the utter gravity of our plight,
nothing is being done to change our course.

In recent weeks, Congress could not even agree to study the issue. They could not vote on a deficit commission.

The president has just appointed a separate commission. But even after moons of deliberation, it will have no authority to bring its recommendations to a vote in Congress — let alone get them passed.

The president says that the effort must be bipartisan, that all options must be on the table, and that no cows can be sacred.

And indeed, this song sounds good. But it’s more out of synch with political reality than rap rock at the Bolshoi Ballet:

  • Democrats vow never to cut to Social Security or Medicare …
  • Republicans vow never to accept tax hikes, and all the while …
  • Economists swear that only a full-court, frontal attack on the deficit has any chance of making a dent.
Irving and Ike

My family and I — plus many others more illustrious than us — have been warning about this danger since 1960.

That was the year my father, J. Irving Weiss, founded our Sound Dollar Committee, organized a nationwide grassroots movement, and helped prompt 11 million telegrams, phone calls, and letters of protest to Capitol Hill.

That was the effort which persuaded Congress to vote for a balanced budget and helped give President Eisenhower a victory the likes of which has never been seen again.

In subsequent years, Dad and I nagged, cajoled, and testified before Congress so often I lost count.

Irving Weiss

I think we gathered more evidence and made more phone calls than a telethon phone bank.

But our warnings have typically been given little more than the time of day.

And always — ALWAYS — the so-called “solution” has been the same: more borrowing from Peter to pay Paul, more can-kicking down the road, more smoke and mirrors, more lies.

The Consequences of This
Complacency Are Catastrophe

To whit …

Consequence #1. Due to the avalanche of government borrowing to finance the deficit, there is no power on Earth that can avert sharply higher interest rates.

Irving Weiss

Already, despite the weakest post-recession recovery in memory, bond prices are plunging and their rates are surging.

Just a few weeks ago, the yield on 30-year Treasury bonds busted through a declining trend that had not been penetrated in more than 20 years.

And just last week, it came within a hair of its highest level in over two years.

With just one more, ever-so-slight nudge to the upside, all heck could break loose in the Treasury-bond market. You could see a surge in long-term interest rates that will make your hair curl.

If the U.S. economy could boast a booming housing market or low unemployment, this would not be such a shock.

Or if consumer price inflation were surging, it would also not be so unusual.

What’s so damning about this action in the bond market right now is the fact that it’s coming at the worst possible time.

That’s why Washington and Wall Street fear it so much. That’s why they’re so anxious NOT to tell you about it.

Consequence #2. All long-term bonds — whether issued by other government agencies, corporations, states, or municipalities — will also collapse, driving their yields through the roof.

Reason: When Uncle Sam has to pay more to borrow, they inevitably have to pay more as well.

Consequence #3. Rates on mortgages and car loans will surge. Why? For the simple reason that they’re also tied at the hip of long-term Treasury rates.

If you want to take out a 30-year fixed mortgage (now close to 5 percent) on a median-priced home ($178,300), and you can afford a 10 percent down payment …

  • Just a 1 percent rise in rates will drive your monthly payment from $861 to $962 …
  • A 2 percent increase will drive it to $1,068 …
  • And the kinds of rate increases possible in a bond-market collapse could drive it to levels only Midas could afford.

Worse, if you go for variable-rate mortgages, balloon mortgages, or other now hard-to-get alternatives, the impact of surging interest rates will be even more traumatic.

Consequence #4. The fledgling recovery in housing and auto sales — the pride and joy of Washington’s bailout brigades — will be toast.

Consequence #5. Institutions and individual investors holding piles of lower yielding long-term bonds will get killed. That includes:

  • U.S. households stuck with $801 billion in Treasuries, $979.5 billion in municipal bonds, plus a whopping $2.4 trillion in corporate bonds.
  • Banks and credit unions holding $199 billion in Treasuries, $228 billion in munis, $1.066 trillion in corporate bonds and, worst of all, $1.408 trillion in government agency (and GSE) bonds.
  • Insurance companies buried in Treasuries ($196 billion), munis ($444 billion), agency bonds ($469 billion) and a TON of corporate bonds — $2.180 trillion.
  • Private pension funds, state and local governments, and even their employees’ retirement funds — all loaded with similarly vulnerable bonds.

Not all of these holdings are of the long-term variety. But most are.

Investors and institutions who own them on behalf of millions of retirees will suffer shocking declines in the market value of their portfolios.

They could suffer a chain reaction of defaults, gutting their income stream.

And worst of all, they now have some reason to fear the de facto default of the biggest debtor of all — the government of the United States of America.

I doubt very much we will see THAT happen. But two events are very possible, even likely:

  • America will lose its triple-A rating. And if the Wall Street rating agencies don’t have the moral fiber to announce downgrades, the marketplace will do it for them.
  • Our leaders will face an Armageddon unlike any since the Civil War: Either muster the courage — and the support of the people — to accept the pain and make the sacrifices of a lifetime … or face the downfall of America.

They will no doubt seek every other alternative and try every other trick. But alas, no printing press can run faster than our foreign creditors can sell their U.S. bonds. No one will bail out America.

Ultimately, there is NO choice.

We must bite the bullet. We must make the sacrifices. Like California and Greece … like every household and any company … our government MUST cut back and accept the rest of the consequences:

#6. Declining home values.

#7. Falling stocks.

#8. The end of the recovery!

And many, many more.

My recommendation: Watch our video.

Good luck and God bless!

Martin

 


 About Money and MarketsFor more information and archived issues, visit http://www.moneyandmarkets.com

Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Marci Campbell, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

From time to time, Money and Markets may have information from select third-party advertisers known as “external sponsorships.” We cannot guarantee the accuracy of these ads. In addition, these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our terms and conditions.

View our Privacy Policy.

Would you like to unsubscribe from our mailing list?

To make sure you don’t miss our urgent updates, add Weiss Research to your address book. Just follow these simple steps.

© 2010 by Weiss Research, Inc. All rights reserved.

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BANK FAILURES AHead

By , January 18, 2010 4:26 pm

YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON’T GET FROM WALL STREET

 

[«] Money and Markets 2010 Archive View This Issue On Our Website [»]

200 Bank Failures Expected in 2010
by Martin D. Weiss, Ph.D.

Dear Customer,

Martin D. Weiss, Ph.D.

Washington has so thoroughly botched its supervision of the banking industry that 200 banks are likely to fail this year — easily surpassing last year’s 140 bank failures … inevitably involving the greatest bank losses in history … and already costing the FDIC ten times more than the great S&L and banking crisis of the 1980s did.

I am not basing these conclusions on conjecture. They come straight from official sources. Specifically …

In her testimony before the Financial Crisis Inquiry Commission on Thursday, FDIC Chairman Blair attacked the Fed under Greenspan for causing the housing bubble and subsequent debt crisis with its highly stimulative, low interest rate policy of the 2000s.

She slammed virtually all of Washington for allowing banks to establish a huge, high-risk “shadow banking system.”

And she made it abundantly clear that, without sweeping, far-reaching reforms, we risk another devastating debt crisis.

Each of her conclusions is abundantly obvious and thoroughly documented. What she did not mention, however, are the following equally obvious facts:

Obvious fact #1. The Fed under Bernanke is now pursuing an even more stimulative, lower interest rate policy than it did under Greenspan, threatening to create even larger bubbles and more devastating busts …

Obvious fact #2. In just the last two years, between bank bailouts and easy money, Washington has done more to encourage the growth of the shadow banking system than in all previous years combined, and …

Obvious fact #3. Despite all the talk and testimony, the nation’s powerful banking lobby virtually guarantees that, in the absence of another Wall Street meltdown, the chance of sweeping reforms is virtually nil.

So here’s America’s financial dilemma in a nutshell:

Without sweeping reforms, the nation is doomed to repeat history with another debt disaster. But without another debt disaster, the nation’s political will for sweeping reforms is dead or dying.

In the meantime, the aftershocks of the 2008 debt crisis are getting worse, as the latest news clearly illustrates …

171 actual total failures: In addition to the 140 banks and S&Ls that failed in 2009, 31 credit unions went under, bringing the total tally to 171.

Worse than the 1980s: If you’re among those who think today’s banking crisis isn’t nearly as bad as the great S&L and banking crisis of the 1980s, think again. The average bank failing today is six times larger than it was back then, producing far greater losses. Moreover, each bank failure is costing the FDIC about TEN times more than it did in the 1980s crisis, according to the Meridian Group of Seattle. As a result …

Worst FDIC losses of all time: The FDIC lost more money in bank failures ($36 billion) than it lost in the ENTIRE five-year banking crisis from 1987 through 1992 ($29.6 billion). And in 2010, with the number of failures likely to increase, the losses will be even larger.

Big banks still losing billions with consumers: Until last week, the consensus opinion on Wall Street was that the troubles at the BIG banks were over; that to close this chapter in history, the only task remaining was a mop-up operation at smaller regional and community banks around the country.

That theory was shattered on Friday when JPMorgan Chase revealed it was forced to add $1.5 billion to its consumer loan loss reserves. The big problem: When it took over Washington Mutual last year, the biggest failed S&L of all time, it inherited a cesspool of mortgages that are now going bad at an accelerating pace. Other big consumer banks — like Citigroup and Bank of America — likely face similar woes.

The trading profits of big investment banks are a bubble: What most Wall Street bank analysts still don’t seem to recognize is that the giant trading profits they’ve been so enthusiastic about are generated by the same low-interest Fed policy that created the housing bubble — and is now in the process of creating MORE bubbles.

Without the Fed’s largesse, without the low-cost financing, and without the big risk appetite it generates, most of the big bank trading profits would have been impossible. More to the point: Just as soon as the Fed finally executes an exit plan, the bulk of those profits are likely to turn to losses.

What To Do

First and foremost, do not let up your guard when it comes to keeping your money safe. Yes, I know. With all the talk of the “end” to the crisis and Treasury bills paying virtually nothing, it’s tempting to venture away from safe harbors.

But how much more yield can you get by doing so? If you switch from Treasury bills to bank CDs, for example, the most you can gain is a small fraction of a percent. And if you switch from bank CDs to low-rated corporate debt, the extra yield you get is even less attractive.

In sum …

At this early stage so soon after the worst debt crisis since the Great Depression, the TRUE RISK of putting your money in higher yielding savings vehicles is still very high. Nevertheless, banks and other borrowers are asking you to take that risk WITHOUT paying you more than pennies for it.

My recommendation: Tell them to go fly a kite!

For your keep-safe funds, use strictly short-term Treasuries or equivalent.

Second, if you do other business with a bank or if you still want to keep some part of your savings in bank CDs … at least be sure to avoid the banks most likely to fail and stick with the ones most likely to survive. (For the latest Weiss Lists of the weakest banks and S&Ls, click here. For the strongest, click here.)

Third, bear in mind that, when it comes to your investment decision-making, TIMING is everything.

Last year, the stepped-up pace of bank failures did not derail the weak-but-continuing recovery in the U.S. economy. And for now, that’s bound to remain the case. As soon as we see signs that’s about to change, we’ll do our best to alert you. Until then, we stick with our current posture: Continue to invest, but do so with great caution.

Good luck and God bless!

Martin

 


 About Money and Markets

For more information and archived issues, visit http://www.moneyandmarkets.com

Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Marci Campbell, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

From time to time, Money and Markets may have information from select third-party advertisers known as “external sponsorships.” We cannot guarantee the accuracy of these ads. In addition, these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our terms and conditions.

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Now and then//1929, 2009//the coming Depression. Part XI//January 5, 2010

By , January 5, 2010 8:56 pm

Now and then//1929, 2009//the coming Depression. Part XI//January 5, 2010We just lost 10 years; lost because as we come to the end of another decade it will be a decade of complete totally “negative” numbers in all areas of our economic health. I’ve been saying since May that we were heading towards a “depression” worst than the “Great Depression” of 1929. (Read all my writings on this series). As 2009 came to an end a few days ago the stock market actually ended positive and a nice 9 month upward rally; as I’ve stated more than once there is still nothing substantive about this market for it to maintain any meaningful growth. I stated back in May that upswings in the markets would be temporary, that another round of “real estate” foreclosures would precede a final “commercial real estate” bust which will result in many bank failures. I’m ready at this time to put a time table on this second round of foreclosures and the commercial real estate bust. This second blow to our economy will start in mid-march and run through September 2010. This round of real estate foreclosures, the failure of commercial real estate, office buildings and ensuing bank failures will be rapid and stunning. Now I’ve been saying that we were surely headed towards a depression since last May; now I believe that we are actually in the very beginning of that depression and would be surprised if we don’t start hearing the word “Depression” bounced around soon. Don’t be surprised if we finally hear Washington use the word “Depression” sometimes this summer. Let’s get back to the “Lost Decade”, the new millennium (2000-2009) ended with the DOW at somewhat over 10,000 (a rally of nine months) helped keep it there (but the DOW first reached the 10,000 mark in March of 1999), the S&P 500 index ended with a minus 9% and the NASDAQ took a negative to the tune of 40%; with numbers like that its fairly easy to call the last 10 years a “Lost Decade”. I also have some other numbers for you liberals out there that like to change history, manipulate data or simply spin fact with other data. During these 10 years (and particularly since Obama), our national debt has doubled, employment since Bush to Pelosi/Reid/Obama went from  4.9% to 10.2%, dollar has fallen, government stimulus efforts have failed and our leaders in Washington are doing things behind closed doors without regard to the wishes of the folks that elected them. [At the end of the “Great Depression” the 40’s ended with GDP growth of 72%, the 50’s end with GDP growth of 51.3%, the 60’s end with GDP growth of 53.1 and household net worth growth of 44%, 70’s end with GDP growth of 38.1 and household net worth growth of 28%, the 80’s saw GPD growth of 34.9% and household net worth of 42%, and the 90’s had GDP growth of 38.6% and household net worth of 58%. 2000’s end with household net worth of minus 4% and GDP only grew 17.8%] and we must remember that 14.6% was accomplished 2000-2006; the bottom line here is that things started going downhill when Pelosi/Reid  took control of Congress in late 2006 and intensified in severity during the last 12 months with Obama in office. Never in history has growth coming out of a decline (recession) been as weak as what we going through at this very moment and when you consider the Trillions in Government intervention it is more than sad and dismal, it is a disaster.

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Economy not getting well in 2010

By , January 4, 2010 12:35 pm

MONEYANDMARKETS»


Monday, January 4, 2010

 

[«] Money and Markets 2009 Archive View This Issue On Our Website [»]

Advance warning:
Danger of bond market collapse!
by Martin D. Weiss, Ph.D.

Dear Subscriber,

Martin D. Weiss, Ph.D.

If you think 2010 is going to bring investors a carefree, nonstop ride to glory, think again!

Profit opportunities abound, and we intend to be among the first to lead you to them.

But we’re also here to give you advance warnings of threats that can sneak up from behind and catch you by surprise.

Case in point: The danger that Treasury bonds will fall sharply in price, drive up long-term interest rates and ultimately threaten the U.S. recovery.

This is an advance warning because long-term interest rates are still very low. Even if they rise from here, their impact on the economy may not be felt right away.

But if you hold medium- or long-term bonds, you need to get out NOW — before you suffer further damage.

10 year and 30 year charts

Using nearest futures contracts as the metric, the price of a 10-year Treasury note tumbled from a high of 130.09 on December 18, 2008, to a low of 114.98 on June 18, 2009.

It then spent most of the year’s second half trying to recover from that debacle.

But just in the last few days of December, while most traders were away or asleep, a renewed plunge in Treasury-note prices erased nearly all the gains since June … threatening new lows, paving the way for a new plunge in prices, and driving a new surge in 10-year yields.

The price decline in 30-year Treasury-bond prices has been even more dramatic: An historic 27-point plunge from 142.62 on December 19, 2008, to 115.67 on June 18, 2009 … followed by a feeble recovery … and now, as with Treasury notes, a new, ominous price decline and surge in yields.

The impact on consumers is unmistakable:

Even while Washington seeks to flood mortgage markets with easy money, 30-year fixed-rate mortgage rates are moving sharply higher. And even as the Fed does everything in its power to get Americans to spend, U.S. banks are tightening their credit standards and slapping on new fees.

The causes of the bond market troubles are equally obvious:

We have …

  1. The biggest and most permanent federal budget deficits in our country’s history — $1.4 trillion of red ink in fiscal 2009 and AT LEAST another $7 trillion in deficits over the next decade.
  2. The biggest government borrowing binge of all time. Just in the last week of the year, the Treasury Department borrowed $44 billion with the sale of 2-year notes, $42 billion with 5-year notes and $32 billion in 7-year notes, for a total of $118 billion — a new record. Expect more of the same throughout 2010.
  3. The most inflationary monetary policy of all time, including a sudden, record-smashing DOUBLING of the nation’s monetary base in 2009.

And most ominous of all …

A Government Gone Wild!

This is not a matter of personal opinion or political philosophy. Regardless of your particular persuasion, you cannot deny the folly of Washington’s escapades …

  • The U.S. Federal Reserve has tossed its traditional rulebook in the trashcan. It has opened its credit window to brokerage firms, guaranteed trillions of junk credit of the private sector and bought up over a trillion in junk mortgages.
  • The U.S. Treasury has bailed out the nation’s largest and most outrageous risk-takers — not only institutions like Fannie Mae, Freddie Mac, Citigroup, Bank of America, AIG, and GM … but, indirectly, also high-rollers like Goldman Sachs and JPMorgan Chase.
  • And now, adding madness to insanity, the U.S. government is opening the gauntlet to even more of the same:

On Christmas Eve, the Treasury Department announced it will remove the limits on any and all aid to Fannie Mae and Freddie Mac for the next three years.

The intended consequence was to allay investor concerns that these two mortgage giants will exhaust the available government bailout funds.

Treasury officials know that an estimated 3.9 MILLION U.S. homes went into foreclosure last year … and, they know that they can expect more of the same in 2010. So they’re literally pulling all stops to funnel funds into this market.

But the unintended consequences are potentially greater concerns:

  • An even deeper hole in the federal budget,
  • An even larger avalanche of Treasury borrowings,
  • Still lower bond prices, and, inevitably,
  • Far higher long-term interest rates.

Most Financial Institutions Highly Exposed

If America’s financial institutions were prepared for higher interest rates, this might not be quite as serious. But as I demonstrated here two weeks ago, nothing could be further from the facts. (See “Three Government Reports Reveal New Looming Risk.”)

Specifically …

  • The Federal Deposit Insurance Corporation (FDIC) reports that many more banks are now taking on higher levels of interest-rate risk, leaving them overly exposed to rate rises at precisely the wrong time. They’re stuffing their portfolios with long-term mortgages, which invariably fall in value when interest rates rise. And they’re relying too heavily on short-term financing, which will inevitably be more expensive when rates rise.
  • The U.S. Comptroller of the Currency (OCC) reports that America’s largest banks now hold $172.5 TRILLION in derivatives that are directly linked to interest rates, the most of all time. That’s over THIRTEEN times the amount they hold in credit derivatives — a primary cause of the 2008-2009 debt crisis.
  • And the Federal Reserve reports that banks aren’t the only ones vulnerable to higher interest rates. Also exposed are credit unions, life and health insurance companies, plus property and casualty insurers.

Bottom line: Don’t march into 2010 as if the word “risk” had been stricken from investment lexicon like four-letter words in a grammar school dictionary.

It hasn’t been; it’s still there. And it mandates continuing caution — to buy excellent values … with strong fundamentals … prudent risk management … and plenty of cash in reserve.

Good luck and God bless!

Martin

 


 About Money and Markets

For more information and archived issues, visit http://www.moneyandmarkets.com

Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Marci Campbell, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

From time to time, Money and Markets may have information from select third-party advertisers known as “external sponsorships.” We cannot guarantee the accuracy of these ads. In addition, these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our terms and conditions.

View our Privacy Policy.

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© 2010 by Weiss Research, Inc. All rights reserved.

15430 Endeavour Drive, Jupiter, FL 33478

 

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