-- Posted Tuesday, 27 May 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Tuesday, May 27, 2008
“Phenomenally accurate forecasts”
The Fed has been attempting to stimulate the economy like never before, but will it work? Some economists and pundits say it already has worked and that the U.S. has dodged the bullet of recession. These people are either dolts or publicity-seeking liars, or a combination of both, and we’d suggest tuning out their blather, since there is no factual basis whatsoever for their assertions that the economy has bottomed.
And on what do these mountebanks base their optimism -- other, perhaps, than blind faith and/or an overweening desire to appear on television? Merely because no large banks have failed in more than a month is hardly reason to infer that our troubles are over. Far from it. And yet, the huckstering economists who would have us believe they see light at the end of the tunnel apparently have extrapolated their bullish scenarios from a recent uptick in retail sales that was due more to higher gasoline prices than any other factor. By this logic, we should expect the housing market to begin a powerful recovery as soon as gas reaches $5-$6 a gallon.
A Trillion Wasted
To the contrary, the economic recovery that more than a trillion dollars worth of Fed stimulus and bailouts has yet to engender can occur in one way only: via a resurgence in home prices. Nothing else that we can conceive of is capable of reviving consumer spending, and without plenty of it, the illusion of an economy barely creeping along that some still cling to will soon give way to the grim realities of subsistence.
How would we know if and when a recovery is under way? Look no further than the “For Sale” signs on your neighbors’ lawns. Although this is the last place a navel-gazing punditry would think to look, it is assuredly the first place where we might find a glimmer of hope. For the present, though, it would appear that the Fed’s desperate and ill-conceived tactics have stimulated inflation in just about every asset class except housing.
Denver Parcel
If it were otherwise, homes in the Denver suburban neighborhood where I live would almost surely be among the first to feel the benefits, since a giant energy company has decided to locate a think-tank on a 450-acre parcel less than a mile from my house. In fact, homes here have lost about ten percent of their value in the last year, prices are continuing to drop, and when a “For Sale” sign pops up on a lawn, it stays there until the seller either lowers his price significantly or gives up.
So if some pundit declares that the recession is over without ever having begun, don’t expect him to explain how he knows this, since he would only make a fool out of himself if he tried. To say that we are coming out of the woods is wishful thinking at best, a contemptible and brazen lie at worst.
***
Get a Chat-Room Pass
The Rick’s Picks chat room is the place to be if you’re looking for tradable ideas in real time. Gold and silver traders in particular can benefit, since the room attracts experienced traders from all over the world at all hours of the day, particularly during U.S. market hours. If you would like a free one-day pass to check it out, click here, and then on the green banner.
***
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 © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Tuesday, 27 May 2008 | Digg This Article | Source: GoldSeek.com
