-- Posted Thursday, 31 May 2007 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Thursday, May 31, 2007
“Phenomenally accurate forecasts”
The chart below shows why we are dismissive of those, even Nobel laureates, who would argue that the U.S. economy is “healthy.” Clearly, household savings, a crucial economic component, has not kept pace with the allegedly robust economic conditions that are said by many to obtain. Mr. Greenspan et al. would argue – have argued, actually – that charts such as the one below do not take into account other important forms of saving – particularly the swelling in home equity. But in making this argument, and a related one that views inflated real estate valuations as “wealth,” the former Fed chairman and his acolytes only demonstrate how ignorant they are of freshman economics. Any Econ 101 student understands why inflation does not produce real wealth, only the illusion of it. Did Mssrs. Greenspan and Bernanke perhaps sleep through this important lecture when they were undergraduates?
Such dumbfounding ignorance is not dangerous per se, but when it becomes the entrenched thinking of the nation’s, and world’s, central bankers, and their delusional thinking spreads to the masses, then it becomes cause for concern. Even so, we long ago stopped wondering why Wall Street has shown no concern whatsoever, only exuberance in the face of statistical evidence that would sink an Austrian economist into the depths of despair. For we recognize that this is simply one of those periods in history when mass psychosis holds sway, feeding on the always appealing idea that we can all get rich without having to work very hard.
Homeowning Beats Pay
This is certainly true for workers who punch a time clock. In real terms their pay has been stagnating for more than a generation. But this would not be true for the value of the houses in which they live. Home prices long ago left wages in the dust, perhaps causing the wage earner to wonder why he should even bother to work. The answer, of course, is that he works in order to secure a mortgage – and a shot at capital gains that typically dwarf any pay raises that will have been received over the last 30 years.
But Joe Sixpack is an exemplar of caution when compared to his Chinese counterpart. There, it is reported, investors are pawning their valuables in order to participate in China’s first stock-market boom. Margin accounts are not permitted the individual Chinese investor, so he must hock physical goods to raise cash for investing. Will America’s eventual collapse into economic depression have to wait until China’s genuinely booming economy goes over the edge? If there is a bullish case to be made for U.S. stocks over the next 12-18 months, that’s it: China is the fat lady this time, and her final aria is still one act removed from the world’s economic finale.
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Seminar Geared to Aussies, Kiwis
For Australians, attending past online Hidden Pivot seminars has been made difficult by the 14-hour time difference between Sydney and New York. The Saturday/Sunday morning course usually begins at 11 a.m. Eastern, which translates to 1 a.m. Sunday in Sydney. However, at the end of June I will be offering the six-hour course, as well as a two-hour Q&A followup several days later, at hours that are geared to the convenience of students from Australia and New Zealand.
Specifically, the course will be offered on June 30-31, Saturday/Sunday, from 8:30 a.m.-11:30 a.m. Sydney time. If you have been waiting for such an opportunity, please click here (then click the “Upcoming” tab) to reserve a place in the classroom, or here for detailed information about the course itself. Since I will not likely be returning Down Under for an on-site seminar any time soon, this will probably be the last chance you will have in a long while to take the online seminar during morning hours. Incidentally, these hours will work for anyone in the U.S. who would prefer to take the course in the evening. The hours, in Eastern U.S. time, are from 6:30 p.m. to 9:30 Friday and Saturday, June 29-30.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 31 May 2007 | Digg This Article | Source: GoldSeek.com
