-- Posted Monday, 4 May 2009 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Monday, May 4, 2009
“Phenomenally accurate forecasts”
With swine flu panic receding somewhat, mail from readers over the weekend gravitated toward other, less urgent matters, including the seeming now-and-again cynicism of Rick’s Picks. “I follow your commentary regularly,” wrote one reader, “and it sometimes seems like you actually want the economy to collapse. Do you?” Guilty as charged! How else can the economy get back on track, if not from such ruinous depths as might force us to confront the root causes of its sickness? Otherwise, as long as we continue deceive ourselves about the nature of wealth, and of the economically crucial role of savings in creating wealth, no sustainable recovery is possible.
To judge from the actions of our political leaders, one might think the way out of a debt deflation is to stimulate yet another credit boom – one powerful enough to cause all prices, most particularly home prices, to rise. Why anyone would believe in this flim-flam is baffling. An estimated $12.8 trillion worth of attempted stimulus, bailouts and loan commitments have been tried already, to no avail. All of that funny money has produced no inflation whatsoever, much less a discernible benefit. What it has achieved, mainly, is to put Americans inextricably deeper in debt.
Inflationists ‘All Talk’
We note that even those who consider themselves inflationists do not seem to believe deep down that promiscuous monetization will raise the price of anything besides groceries. If they felt otherwise, why aren’t they putting their money where their mouths are, plowing what remains of their nest eggs into real estate? What better way to bet on inflation right now than to jump headlong into the very depressed housing market? And maybe if we all do it, we can get rich together, perhaps recouping the biggest and most obvious piece of the American dream that has been lost so far – i.e., the promise of a “golden” retirement.
This is one aspect of the economy’s collapse that no amount of self-deception and political lying can conceal. Most Americans over 50 understand this. Having seen a significant portion of their net worth vanish over the last several years, they have done the math and concluded that retirement to a life of ease and luxury at age 65 is no longer within their grasp. Many are wondering instead whether they will have to continue working until they are 75 just to make ends meet. And the idea of living off a nest egg that generates steady 6 percent returns has been supplanted by the harsh reality of preserving one’s capital against further, perhaps total, loss.
What Recovery?
And yet, we persist in believing that recovery is just around the corner. Recovery of what, one might ask? Surely not the banking sector, the success of which came entirely from leveraging schemes that are likely to be dead for the next fifty years. Realize that this was America’s premier industry that has all but vanished, and that we do not have a manufacturing economy to fall back on. Yankee know-how may ultimately get us out of the hole, but the uncertainties of this are a far cry from whatever allegedly hopeful signs of recovery the punditry has glimpsed in the big banks’ most recent earnings reports. If the trading-desk profits that those banks just reported are what passes for economic vitality these days, then, clearly, more economic pain is needed to bring us back to reality.
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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. 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 © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 4 May 2009 | Digg This Article | Source: GoldSeek.com
