Wednesday, December 17, 2008

Economic Snake Oil!

Come one, come all, get ‘em while they’re red hot!

Doesn’t that type of come-on just sound sleazy? Well, that’s exactly what the entire stock market pump job sounds like to me, and since we have so many bottom callers out there AGAIN, I just want to remind everyone that we are simply in the eye of the storm, wave ‘B’ up/sideways that will be followed by wave ‘C’ down – at least if I’m correct about where we are Elliott wave wise. And many experts agree that’s exactly where we are:

Yesterday I saw two things that made me feel sick, as in stomach turning, gut wrenching, if I had a shoe in my hand to throw, I would, sick!

Let’s start with some comments from our hapless leader (source; CNN):
"I've abandoned free-market principles to save the free-market system," Bush told CNN television, saying he had made the decision "to make sure the economy doesn't collapse."

…"I am sorry we're having to do it," Bush said.

…"I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we're in a crisis now. I mean, this is -- we're in a huge recession, but I don't want to make it even worse."

This has got to go down as one of the most frightening quotes in the history of mankind. This is the best the country who leads the “free” world can produce?

"I've abandoned free-market principles to save the free-market system!" Can you believe that? This has got to be a shoe-in for the Darwin awards – yes, real people have and will die over this type of stupidity. Think I’m over-reacting? Look at the “events” that follow economic upheaval throughout history! It’s NOT funny, it’s deadly serious and our leaders are acting like clowns.

And speaking of clowns, I received this email yesterday that is typical of the crap being disseminated by supposed “experts.” America’s financial system is NOT about securing your future, it’s become nothing but snake oil salesmen trying to make a buck on your back! The companies that employ these snake oil salesmen are the same companies that are owned by the central bankers of the world. They also own and control a very large percentage of the mainstream media! Does saying such things make me a flake? Or, does saying such things as, “subprime is contained,” or “our economy is fundamentally sound,” make them a flake? YOU MUST DECIDE WHO IS CORRECT. Here’s a hint, read my book, research the calls of people like Dr. Robert McHugh or Karl Denninger, then make an important decision about your future!

So, here’s the email I received, I’m going to insert my rebuttal in blue:

Another Great Depression?
Or Your Greatest-Ever Buying Opportunity?

Here's why. . .
• This economic mess is nothing like the 1930s.
• Why it's time to start buying, NOW!
• What quality stocks will out-perform the coming rebound.

Buy, buy, buy! NOW! Can’t you feel the excitement? You must act NOW! Look, the underlying math simply does not work ( The debt has not gone away. This bear market is NOT over, it is an animal that is drawing in fiat money and destroying it by returning it to where it came from – the ether. The psychology here works against most investors – “how low can it go?” “I’m in it for the long haul!”

Well, it can go a lot lower and it can stay there for decades! Look at Japan's Nikkei from 1990 to today - 18 years later. Look at the fact that it was 1955 before stocks reached the same level they were at in 1929!

Don’t think this is as bad as the Great Depression? It’s NOT! It’s MUCH, MUCH worse! Per capita, inflation adjusted debt levels are 2.5 times greater than the roaring twenties!

According to the experts who have been most right, this is a “grand supercycle correction” that is on a higher level than the “supercycle” correction of the Great Depression. Are you going to risk your future based on the cat calls of a bunch of clowns, or on people with actual track records of being right, like Jim Shepherd

Hey, I am NOT writing this nor am I recommending people like these for money. I have been investing my entire life and have tracked the people who are correct and do not live in a fantasy world. Ignore them at your own risk.

Don't let the media's short-term, micro-view blind you to what's really going on in the world. Put aside fear and negativity and get set to rake in unimaginably-huge profits
as you cash in on the. . .

3 Unstoppable macro trends about to reshape the world!

Dear Reader,
First, let's get rid of the number one reason so many investors are still afraid of this market.

We're not on the verge of another great depression. The sky is not falling!

No way. Not even close, for a lot of reasons. It's worth taking the time to compare what happened in 1929 and what's going on now:
Back in 1929, investors could be on 90% margin, resulting in the most costly margin call of all time. After the crash, 8,000 banks failed vs. only 25 (be they some very prestigious names) so far. Back then, there was no FDIC insurance, so when banks failed people really did lose everything. Your bank deposits are now guaranteed up to $250,000 or $500,000 in a joint account.

Back then there was not $1.4 quadrillion worth of derivatives! People who do not understand the shadow banking system or how big and out of control it became do NOT see the real picture. Total debt levels FAR exceed those prior to the Great Depression!

After the crash, the Federal Government raised interest rates, whereas now it's lowering them, and in the 1930's the answer was to get rid of government debt whereas now, the Feds are willing to go even deeper in debt to stop the bleeding.

Raising interest rates in the year 2000 or earlier would have prevented this mess to begin with. Pouring more fuel on the fire will NOT solve the problems. Have the historic cuts to date solved them? NO, and now we are at zero. The gun is empty and all that’s left is to print, but the numbers are staggering if they wish to create growth. To do so, they would have to print larger and larger sums each year, but the world is already saturated in debt and thus does not have the income to service that debt. Game over.

The rest of this email is just drivel. As you get things like this, and you will be bombarded, please do yourself a favor and remember that the largest credit bubble in history will not be undone in one year! My conservative timeline says that equities are about half way through their correction time wise. It could be longer and I DO NOT expect a roaring rebound that amounts to anything more than the destruction of your currency.

They will try to “inflate” growth under the false belief that you can “inflate” away debt. You cannot, that is a myth. Attempting to do so will simply rob you of your earning power and purchasing power of your currency and thus you will pay the debt back via stealth. That is their game plan, but it will fail as all attempts to do the same throughout the history of mankind have likewise failed.

I believe wave ‘B” will last a little while longer, then wave ‘C’ will come. You have a decision to make… who are you going to believe or trust? But let me ask you this? What is the risk if you are out of the market? You miss a few percent more of rally? What if I am right again and you’re in? Then the risk is severe! Logic dictates being conservative. There is NO PANIC TO GET BACK IN. We have long term indicators that will tell us when that time is truly here. NO, you will not catch the exact bottom, it would be most foolish to try.

I have a theory… when bricks are falling from the sky, I do not want to stand under them and try to catch them! I think it’s far more wise to stand off to the side and watch them land. Once they have safely landed, THEN I go over and pick them up, not before! Now, if this logic doesn’t work for you, I simply remind you who is asking for your money and who is not?

Yes, I think the market goes a little higher, but it is short term only. Buckle up, don’t believe the lies. It’s time to cut the crap. You are welcome to visit the download section of my site at to learn about unbiased reality, not fantasy…

Say what you like about Paulson and Bernanke and the bailout, the fact is that, imperfect as it may be, the government is taking huge and aggressive steps to keep the U.S. and world economies from falling off the cliff.

So what can we learn from a comparison of then with now?

Lesson #1 we're due for a 50% rally!
From its October 1929 highs, stocks nosedived approximately 50 percent before bottoming the following month. From that November, low share prices then staged a rally on the order of 50 percent, erasing about half of the losses from the prior decline.

Lesson #2 What Obama must not do.
It was only after the market rebound that the real bear market of the Great Depression began in earnest as the government's ill-conceived actions started to take their toll on the economy. These moves included trade restrictions, tightened credit, higher taxes and balancing the budget. The new Administration has already backed down from its campaign rhetoric and made it clear it won't be raising taxes anytime soon.

Lesson #3 What's different this time.
We've learned valuable lessons from the 1930s (and Japan in 1990s). Say what you like about the leadership (old and new) in Washington, in the wake of this market's 40%-plus meltdown, a lot has been done to avoid a prolonged period of deflation. Governments worldwide have slashed interest rates and are spending heavily to stimulate their economies.

The message from the latest G20 meeting in Washington and from recent Barack Obama interviews is that governments will take whatever steps are necessary to jump start the economy. The new administration shows few signs of curtailing deficit spending.
Lesson #4 the rubber band effect.

Get ready for a spectacular and sudden rally. Markets typically bottom when the news is at its worst. Clearly the economy is in terrible shape. As a result, we're very likely in the sweet spot in terms of the stock market's upside potential relative to its downside risk. And that ratio isn't likely to ever get better than it is right this minute. Investors look over the horizon and our view is that things will get better sooner rather than later.
While we think stocks are close to a bottom, we won't discount the possibility of the Dow slipping a bit further to say the 7,500 region in a worst-case scenario. We're not expecting that to happen, but we acknowledge this is the downside risk.

$4 Trillion side-lined cash could send the
Dow soaring to 12,000!

That said, the powerful rally we expect to unfold, be it today or at some point in the next few months, could carry the Dow back to 11,000, if not 12,000. What's needed is a spark to unleash the record amounts of liquidity locked up in the banking sector and the $4-plus trillion in cash on the stock market's sidelines waiting for a bit of stability.

Once market starts to rally, money managers aren't going to be content earning 11 basis points on their cash. Instead, they're going to come flooding into the stock market again.
Lesson #5 Look at the "Big Picture."

One thing is certain, this market has been and will continue to be totally unpredictable for the short term. I mean when crude hit $147 a barrel this past summer, who would have thought that it would trade below $45 a barrel by Thanksgiving?

But, while in this crazy market, it's difficult to say with certainty what individual stocks will lead the near-term market charge, we know with absolute certainty that an all-encompassing, wide-lens view of the world situation will help us identify the major trends and paradigm shifts that will dictate the long-term shape and direction of the impending recovery.

That's what The Complete Investor is about. If could join me as we examine the fundamental and unstoppable changes taking place in the world's economy. . .you'll discover the keys to long-term profits that will erase the pain of the recent stock market massacre.

Click Here To Learn More

Get it while it’s hot = Snake oil!

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