a key friend had stubbornly resisted DoubleDip until now
he was my closest friend and colleague at Digital from 1980-1994
he is an optimistic guy by nature, but very competent
he tends to believe USGovt statistics
but I always counter that their estimates have miserable track record
his usual reponse is "we will see the revisions"
I always reply "they are always large and tilted toward the new UNRECOGNIZED trend"
my reasoning since late winter has been broad-based
the stock market was not responding to 11 Fed rate cuts
capex was nowhere to be seen
corporate bankruptcies were increasing (personals also)
rising household debt levels undermined consumer power
with the MAJOR NEW ITEM -- declining USdollar
and the entire economy seemed to be relying on two things
1. pillaging home equity
2. strong consumer
I didnt see either as sustainable
a MorganStanley economist Sullivan this morning said
"in July the economy hit a brick wall"
the latest number is 6000 new jobs created
contrasted against hapless economist estimates of 65,000
close the book on the recovery
the scarey part comes when the 90's gogo retail investor realizes this and runs like frightened sheep out of stocks
he and she have never seen a recession, since 1993
their commitment to the stock market has increased markedly since 1993
Puplava outright expects this autumn and early winter to see widespread foreign selling of USTBonds, with resulting higher rates
he thinks they sell from lack of US confidence
but also higher rates will be needed to encourage foreigners
the untold story with the revised GDP on Wednesday
with our slower economy came fewer exports
meanwhile our imports are still increasing
our trade debt now hit 5% with GDP revisions!!!
this triggers the consensus tripwire threshold of 5%
historically, when industrialized nations hit 5% of GDP on trade gap, their currency experiences a 25% devaluation
and back on the FedReserve Farm, our clown bubbleman Chairman has forgotten Econ 201, an intermediate course in Economics
he appears confused that aggregate demand is stalling
he focuses too much on productivity as a positive sign
when actually, in the current environment of excess capacity and excess capital equipment and excess product competition and excess everything, productivity should be huge, and perhaps should be even bigger than its distorted figures recently released
Greenspan has forgotten to even look at SUPPLY
Econ 201 talks at length about DEMAND & SUPPLY
he looks only at demand and its various features
I have concluded that I have become a pain in the ass
with somewhat improved forecasting vision in the last several months (from 100's of hours of personal study) has come also obnoxious attitude
friends simply dont want to hear anything about a worsening future picture
my original family wants to hear of it even less
my credibility has been lost since losing QCOM fortune
they figure forecasting and investing are the same thing
THEY ARE NOT
two conversations last night sealed my conclusion
people simply dont believe they can protect themselves
they figure if the dollar decline brings an economic hardtimes with hardship, then beggars will line the streets, chaos will reign the neighborhoods, nobody will have any money anyway, there will be no place to purchase anything anyway
so it doesnt matter
I assured them that in the chaotic 1970's, with Watergate Hearings and OPEC economic shock and a decade-long bear market, life went on
Major League Baseball continued, people went to work, restaurants served meals, newspapers went to print, and vacation resorts had people arrive
I expect the same ALMOST to be true in a couple years
just more chaos and disruption and lost pensions
with a tidal wave of shareholder lawsuits, more public outcries for blood
I see a slaughter ahead of us
somehow I must adapt and keep to myself more
I love writing on SI, engaging in conversation and debate
but I need to mind my own business more
maybe get less in people's faces
maybe I need to post less, much less
some tell me I am obnoxious on SI
certainly the OldVoltPorch nature watch thread didnt like me
my message is really the same each week
the only difference is bringing in more confirming info
my DoubleDip Recession expectation is coming to pass
its clarity is becoming very loud lately
but more denial is surely to be seen
the frightening prospect is that we are likely to witness something never seen before
like rising interest rates even with faltering economy
BECAUSE OF FOREIGN SELLING OF USTBONDS
nobody nobody nobody nobody nobody is talking about it
this is how economic depressions occur
the USdollar could decline over 30-35%
I marvel at two phenomena lately
the chart of US$ versus SwissFranc shows the US$ turning down in an historic downtrend
another chart of GOLD versus SwFranc shows gold exhibiting a strong Head & Shoulder bull pattern
conclusion: multiply the two together to get a monster bull rally in GOLD versus USdollar
a severe USdollar correction would eventually take GOLD over #1000
Puplava believes we are about to start the convincing second bull upleg in GOLD
AND THE GOLD BULL MARKET WILL LAST FOR TEN YEARS !!!
/ Jim |
