Archive for July, 2010

The 2nd Half of the W-shaped Recession

Sunday, July 4th, 2010

3 out of 8 people on earth live in China or India.  Both countries are growing whereas the countries of the “West” are having severe economic difficulty.  With the arrogance of ignorance displayed by leaders, economic stimulus tactics are not working.  But wait,  Stimulus Package 2 is in the works.  At the same time, a massive tax increase will kick in next year- the kiss of economic death.  Politicians can’t seem to figure out that a tax increase hurts job creation.  Ronald Reagan figured that out and cut taxes.  The result was substantial job creation.

The Federal Reserve will continue printing money a/k/a quantitative easing.  The President’s Budget Director resigned in June.  The new budget will be withheld until after the November election.  Look for a budget with huge deficit in the $1.4-2.0 Trillion category.  If made public before the election, incumbents would lose more seats than currently projected.

The Economic Desperation Index is increasing.  On a recent trip to Padre Island, the local economy was at risk of loss from Hurricane Alex.  The mayor decided against a mandatory evacuation even though the brunt of the storm would hit the island.  I am sure his decision was economic based, not safety based.  Beaches were closed, businesses were closed, the one and only bridge to access the island was closed, but no mandatory evacuation was mandated.  Money vs. life… focus on life, lost.

Worldwide conventional oil production declined 2 million barrels declined last year.  Expect the same this year.  Natural gas inventories are down from last year and the storage levels no longer appear to be at a surplus level.  This bodes well for natural gas prices in the coming months.  The export market from OPEC is shrinking due to more internal consumption and countries like China are tying up the export oil through contracts.  At some point, the spot price for oil will be pressured in an upward direction.  Higher energy costs dampen any attempt of recovery in the West.  Those in power will attempt to suppress energy prices in the short run which will ultimately hurt us in the long run.

We’re on borrowed time.  Gold has increased in value nine years in a row.  The financial storm clouds continue to build in the sovereign debt crisis.  History shows us that when countries accumulate substantial debt, hyper-inflation follows.  The problem is that nobody pays attention to financial history.  We were close to hyper-inflation in the 1980’s but Paul Volcker, the former head of the Fed, was able to raise interest rates and arrest the inflationary pressures.  Asset inflation is occurring in the commodities.  It precedes price inflation.  China is using U.S. Dollars to buy commodities around the world and is reducing its supply of Dollars through this conversion to hard assets.

On top of all of this is the “Cardinal Climax” occurring August 1st, 2010:


Arch Crawford, financial technician states: “On August 1, give or take a week, we’ll have the most five-planet alignments in perhaps thousands of years. Known as the “Cardinal Climax,” this is the meanest, nastiest, most challenging and most transformational of any planetary phenomena in all of written history!”  If planetary alignments do indeed affect the emotional energy state, this could signal a catastrophic fall in global markets.  Will this happen?  Only Our Heavenly Father knows!  If this does happen, food will be the most valuable commodity.


How bad is bad?

“Well, when something is worse than the Revolutionary War, World War I, the Great Depression, and World War II, that’s bad – it’s the worst I’ve seen the charts in over 200-years.

As he explains it, there’s Mars conjunction Saturn which will be in opposition to Jupiter conjuncting Uranus all squaring Pluto.

Do I believe this?  I don’t have an answer but I am led to share those views that show past success.  Crawford’s investment newsletter rank #1 between 2007 and 2009.  He has 50 years of investing experience.  It’s better to be prepared and wrong than unprepared.