5 Min. Forecast » Deficit

Deficit Surprise, Money Havens, Renewable Energy Investing, A Conspiracy Theory and More!

Ian Mathias — Thu, 20 Aug 2009 20:46:24 +0000

Government scales back deficit projections… chart, Bill Bonner show why it hardly matters
“Cash for clunkers” to wind down… how this government fiasco could end with a bang
Switzerland coughs up client secrets… Doug Casey identifies new global safe havens
Steer clear of this renewable energy investment, says Byron King
Plus, John Williams with a worthy health care reform conspiracy theory

Here’s a small victory, worthy of breaking out some Andre Brut:

The U.S. government budget deficit is more likely to ring in at $1.58 trillion this year, not the $1.84 trillion the Obama administration reported in May. According to some purposefully leaked budget projections due out next week, roughly $250 billion that was set aside in the 2009 budget for bank bailouts will not be used by October, the end of the fiscal year.

Of course, we’ll end up with an annual budget deficit of 11.2% of GDP, the highest since 1945 and an all-time high in dollar terms. But hey (they must be thinking), now we’ll have a little extra for that $1 trillion health care reform!

Back in our grammar school, team sports days, we’d say a game ending in a tie is “like kissing your sister.” Heh, this kind of budget “victory” feels the same, or worse (like your mother-in-law?).

“So far,” writes Bill Bonner, “this money has done nothing to relieve the underlying problem: The consumer has too much debt and too little income. The government can give him a tax rebate…or give him a check for a clunker. These giveaways will produce a temporary boost. But when the giveaways give way, there is nothing left. Does the guy who bought a car with government cash in 2009 buy another one in 2010? Does the fellow who brought his mortgage up to date with a tax rebate in 2008 go out and buy a new house in 2009?

“The problems are real… at the heart of the real economy. They are not problems that can be solved by monkeying with the money supply, interest rates or even fiscal policy. They are problems that need to be solved by the real economy… in the real economy… by consumers, who need to pay off their debts, and by businessmen, who need to adjust to the realities of the real world — adapting their capacity so as to produce things for people who can actually afford to buy them. It’s a long process… with many bankruptcies and disappointments along the way.

“That process has only just begun. It will deepen and get worse, as both consumers and businessmen realize that there will be no quick recovery… and no return to the old model — ever. Look for more layoffs… more foreclosures… more cutbacks and workouts.”

The government is also expected to announce plans to wind down “cash for clunkers” this week. The $3 billion program is in danger of running out of money (again), and suffice it to say the public opinion head winds are getting a bit strong.

And it could get a little exciting… a recent National Auto Dealers Association statement warned that “It is difficult, if not impossible, to accurately project the ‘burn rate’ of available [cash for clunker] funds.” In other words, it’s completely possible that dealers have already or will soon push the program completely over budget, leaving either dealers or the American taxpayer left holding the bag.

Attention privacy seekers and tax evaders: The legacy of secret Swiss bank accounts is coming closer to an end. UBS agreed to hand over formerly confidential information on 4,450 American accounts this morning. The accounts, worth up to $18 billion, will be given to the Swiss tax authority first, and then to the IRS, which has targeted these 4,450 as potential tax evaders. Whether the are or aren’t… well… the IRS can figure that out after they’ve unearthed the secrets these clients have paid so handsomely to protect.

If you seek a private place to store your wealth, “I would recommend places that are geographically distant from the U.S., and culturally distant, as well,” says Doug Casey, a popular speaker at our Investment Symposium and perpetual advocate of “political diversification.”

“To me, the best places to be are in the Orient. That’s partially because the Chinese, and other Oriental civilizations, are much less prone to roll over and do what they are told. National pride assures that, if nothing else.

“But if you go this route, with, say, an account in Hong Kong, you certainly would not want to use a bank like HSBC. It’s got branches all over the world, prominently in the U.S. — so like UBS, they’ll do what they are told… You want a real Chinese bank. That way, when the U.S. government calls, the phone will be answered in Chinese and no one will speak English with them.

“The best places are the least obvious places. Malaysia is interesting. Thailand. These are completely nontax-haven types of places — and that might make them suitable.”

Your hard-earned dollars are worth just a bit less today. The euro is up 2 cents this week, to $1.42. The loonie’s gains are close behind, now up to 91 cents. Even the lowly pound is up almost 2 cents versus the dollar this week, at $1.64. The dollar index is at 78.6, down about 0.8 points from Monday’s high. Why’s the greenback faltering? Look no further:

Economic optimism has regained its footing in the stock market. The S&P snapped back 1% Tuesday after Monday’s sell-off. Then yesterday, despite opening down about half a percent, the market finished in the black again. Traders got their buying juju yesterday largely from the Energy Department’s weekly oil inventory report, which showed Americans are consuming way more oil and gas than the Street had expected.

And the market opened up again today, mostly on this news:

The Shanghai Composite shot up 4.5% early this morning, taking back much of this week’s losses. As we reported yesterday, Chinese investors were a hair short of a technical bear market… seems as though they’ve rejected that notion for now.

But before you join the buying spree: “Insider selling, relative to buying, soared to a five-year high in August,” reports Eric Fry in today’s Rude Awakening. “Last month, insiders sold $3.0 billion worth of stock, or more than 33 times the $90 million they bought.

“Such outsized selling by insiders does not guarantee a market sell-off, but it argues for one. So let’s add this data point to the ‘Probably Not Good’ column.”

A weaker dollar, good market vibes, Chinese optimism and a lower-than-expected oil inventory report have all led to oil shooting up $7 from Monday’s low. A barrel of light sweet crude goes for $72 as we write.

Be wary of some renewable energy stocks right now, especially wind power, Byron King tells us. “Renewable energy — certainly electricity from windmills — has to compete against energy from other sources. The typical base line price competition for electricity is the price for a kilowatt generated in a coal-fired plant. Lately, with the price of natural gas down so low, even gas-fired electricity is competitive with coal. So where does that leave windmills?

“Wind-based electricity is still about twice the price of coal- and gas-generated electricity. The thing that’s keeping windmills in the ring is public subsidies like tax credits, as well as large-scale public policy support, like renewable portfolio standards, that requires utility companies to generate certain percentages of ‘green,’ carbon-free power.

“While we’re at it, windmill systems are extremely capital-intensive. They require lots of upfront investment in land and leases, roads, grid access, concrete foundations, steel towers and complex turbines and blades. Then you need about three windmills, in different locales, just to assure you have 24-hour power generation — due to the fact that the wind does not always blow when and where you need it.

“With the U.S. credit system still broken — and to all appearances, the economy going back into the ‘double dip’ of the Great Recession — things probably aren’t going to get much better for windmills in the next year. Maybe someday. Not now.”

There are a few renewable energies Byron still thinks are worth your attention. Here’s one of this favorites.

Initial claims for unemployment insurance shot up by 15,000 last week, to a total of 576,000. While below the 22 straight weeks of 600,000+ new claims we’ve become accustomed to, today’s jobless number topped Wall Street expectations by about 25k.

6.2 million Americans are currently filing for unemployment insurance, double that of a year ago and not too far off July’s record 6.8 million.

Today’s conspiracy theory: Has the Census Bureau bumped back the annual poverty report to help push through health care reform? The yearly report was due to be released this week, but was suddenly pushed back to September “in response to feedback that releasing the data in late August was not optimal for data users and journalists reporting on the findings.”

“I never have known competent data users or journalists to request data later, rather than earlier,” notes John Williams. The annual poverty report,” writes John Williams, “which includes estimates not only of poverty, but also national income distribution and national health insurance coverage, is based on a survey that is piggybacked on the March household survey (unemployment, etc.).

“Given the current health care program being pushed by the administration, one has to wonder if there are any politically uncomfortable results in the pending survey, where a delay could result in the data being excluded from the debate. Another possibility is that the delay would give the Census Bureau time to “get it right,” a phrase purportedly used by President Lyndon Johnson when he sent drafts of initial GNP (now GDP) reporting he did not like back to the Commerce Department, for revision.”

“Addison was much too charitable with Buffett,” a reader writes in response to our judgment of Warren Buffett’s latest Op-Ed. “It takes balls to plead for fiscal responsibility after making sure Warren ‘gets his’ via the bailouts of Goldman and Wells Fargo. Then again, maybe it doesn’t, because he knows no one in the mainstream will call him out on it.”

The 5: That’s a good one.

“I would take the ‘gold demand being down 22% for jewelry use’ with a great big grain of sand,” another reader writes, this one responding the to the World Gold Council report we cited yesterday.

“With the price of gold where it is at, and all the jewelry and pawnshops offering deals to turn in your old and unused gold pieces for cash or newer jewelry, those shops are doing a good business. So much old gold to remelt means a lower demand for ‘new’ gold. Believe me. I’m one of those buyers… and biz is good.”

Cheers,

Ian Mathias

The 5 Min. Forecast

P.S. Ever heard of a covert public offering? Not many know about them, but the few that do are getting rich as we speak. Learn about CPO investing here.

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Service Sector Plummets, Wall Street’s Favorite Candidates, Investors Flee Japan, China Storm Worsens, and More!

admin — Tue, 05 Feb 2008 19:22:38 +0000

by Addison Wiggin & Ian Mathias

U.S. service sector’s monumental plunge… well past typical recession levels
Latest poll shows economic concerns as No. 1 issue heading into Super Tuesday
Are Democrats bad for business? Top Wall Street contributors give surprising answer
Hedge fund financing flees Japan… Chris Mayer on the opportunities that still remain
China’s winter weather worsens… how this harsh storm is quickly becoming China’s “Katrina”

The U.S. service sector, savior of American consumerism, and roughly 90% of the American GDP, plunged into contraction during January for the first time in five years. The Institute for Supply Management reported early this morning its nonmanufacturing index dropped from 54 in December to 41 in January. That’s a monumental change. A score of 49 or lower represents “contraction” within the sector. January’s score of 41 is the first below 50 since March 2003. And the lowest reading since 2001.

The number is so bad, in fact, the ISM released its data at 9 a.m. EST this morning, an hour and change ahead of schedule, in an effort to quell any leaks that might spook the stock market. In spite of an early release, the Dow opened down over 200 points.

The average reader of The Washington Post has a more pessimistic view of the American economy today than at any time over the past 15 years, says the Post this morning.

80% of the people selected for the poll rated the economy as “not so good” or “poor.”

30% are bearish about their investments and financial prospects in 2008

60% believe America is already in a recession.

39% of those polled cite the “economy and jobs” as the No. 1 issue in the current presidential campaign, up 10% in the past three weeks alone, and more than double those who call the war in Iraq the No. 1 concern.

Only 19% view the economy in a positive light — the lowest level since June 1993.

These numbers come out just in time for Super Tuesday. More than 1,700 delegates are up for grabs in Democratic primaries and caucuses around the country today. Over 1,000 will stand up and be counted for Republican candidates.

Yawn.

Conventional wisdom will tell you “Democrats are bad for business.” Looking at the top campaign contributions so far during this primary season, Corporate Americans are gluttons for punishment:

Oil has declined steadily this week. Light sweet crude is down around $88 this morning. The market appears to be waiting and wondering if a U.S. or global slowdown will affect consumption. Or… if the Fed is willing to crush the dollar enough to hike the price past $100.

The dollar posted some big gains this morning on news that eurozone service industries have themselves shrunk to three-year lows. The dollar index rallied over half a point, to 76, this morning, sending the euro back down to $1.46.

“$1.4684 is a far cry from 82 cents, eight years ago!” comments Chuck Butler in a reminiscing frame of mind.

The euro could “experience a problem when the European Central Bank (ECB) finally gets around to cutting rates this spring,” Mr. Butler speculates. “The dent could take the euro to 1.40. But after getting past the initial blow of having lower rates, calmer heads will prevail and use this lower level as a springboard to push the euro higher. This is when I believe we will see 1.50, but not before suffering some rough times.”

Gold continued to fall in overnight trading, too. New York opened at $888 this morning… still a fair shot higher than the $253 we remember back in 1999. Buy.

Hedge fund investors yanked $7.7 billion out of Japanese funds in 2007 – over 20% of the nation’s total hedge fund industry.

Given the poor performance of the Nikkei et al., Nipponese hedge funds shed nearly $11 billion last year. Investors in such funds are no strangers to losing money. Japan’s 2006 performance was equally disappointing.

“All that pessimism creates some nice prices,” Chris Mayer comments. “I was in Manhattan on Friday attending an investment conference. One of the speakers was Jean-Marie Eveillard, a legendary investor who runs the First Eagle Global Fund. His favorite idea was to invest in Japan. He likes the ‘world-class manufacturers’ — some of them trading for cash on the books.

“Let’s face it — people in Japan live well,” Mayer adds. “They are relatively rich and live long lives. Unemployment is 3.8%. Crime is low. Japan is still the second largest economy in the world. It’s still home to many world-class companies. Infrastructure is good. There is a large and comfortable middle class.

“For the first time in a long while, Japanese real estate is rising. Plus, in Tokyo, the real estate market is strong. There are few vacancies. The prospect for increases in earnings looks good as old leases roll off.”

For Chris’ favorite Japanese real estate play, see your latest Mayer’s Special Situations alert.

Moody’s proposed a new rating system for CDOs and other complex debt securities today. Good timing there.

The new system would distinguish these securities from more legitimate bonds by rating them with a system of 21 numbers — not the traditional 21 letter system of AAA, AAA-, AA and so on.

Yeah… like it’s going to make a difference now.

Congress passed a bill yesterday making the words “In God We Trust” more prominent on the nation’s new dollar coin.

The motto was formerly etched on the narrow edges of the new coin — a creative touch meant to dissuade counterfeiters and provide more room for art on the face. Now, by law, it will return to the fronts and backs of the coins.

The provision was earmarked to a $555 billion spending bill.

Hmmn. Let’s see. The dollar index is down over 10%. And by the government’s own calculations, U.S. inflation jumped 4.1% in 2007 — the largest rise in 17 years. Fourth-quarter inflation soared past 6%. Seems like Congress ought to be a little less concerned with what’s written on the darn thing… and a little more concerned with what it’s worth. Yeah?

As we reported Friday, China is dealing with a nasty squall of winter weather. But just how bad is it? Probably worse than you think… check this out:

“I cannot help but say the media are out of control,” writes a reader. “They announce that Exxon Mobil, the second largest corporation in the land, made obscene profits of $1,300 per second, or about $78,000 per minute.

“How can they not make the dramatic announcement that the federal government deficit-spent at a rate 12 times as high, or over $1 million per minute? Or that the 2007 federal spending of $2.8 trillion is over $5 million per minute?

“Talk about obscene.

“We should remember the wise words of Cicero when he said: ‘The budget should be balanced. Public debt should be reduced. The arrogance of officialdom should be tempered, and assistance to foreign lands should be curtailed, lest Rome become bankrupt.’”

“The actual deficit for 2008 will be about $500 billion more,” writes another, “than the projected deficit of $410 billion. Please take a look at the table below from the U.S. budget Web site. The Bush administration’s projection of the 2008 budget deficit of $410 billion is off by about $500 billion — if the budget shenanigans of the past few years are any guide.

“Before you write me off as another nut, look at the bottom line in the table in the column ‘Debt at start of year.’ You will see that at the start of fiscal 2007, the debt was $8.451 trillion and that the debt at the end of the year was $8.949 trillion. The difference — that is, the real deficit — was $497.1 billion.

“Yet the government announced late last year that the deficit in fiscal 2007 was $162 billion. The difference between the actual $497 billion and the announced $162 billion is $335 billion. Remember, these numbers come from the official government Web site.

“The $335 billion credit to the budget was something you might find in Oz-land: the interest on the total obligation of the government to the Social Security Trust Fund, which is about $4 trillion (the interest rate was apparently something like 8%). The government’s own stats (below) show that the actual deficits have been $498-594 billion per year since 2003, far higher than the announced deficits.

“Please tell your readers that the government includes nonexistent credits in its numbers every time it announces the budget deficit. We are in even deeper doo-doo than we thought. I thank you, and so will your readers.”

U.S. federal deficits versus increases in the federal debt

“Regarding the ins and outs of the distribution of I.O.U.S.A.,” writes a reader, “I think you should take it that your loyal fans — and I’m one of them — won’t mind how you distribute your new movie, just so long as they can view or buy/download a copy ASAP.

“This story is a universal one: As you and Bill Bonner keep reminding us, there are people in every country (just about) who’ve been spending way ‘too much money they don’t have, on stuff they don’t need.’ Here in Ireland, we’ve raised this notion to a fine art and achieved (sic) a personal income-to-debt ratio in the region of 165% — which far exceeds the borrow-and-spend orgy that’s gone on in the U.S. or U.K. Most of this debt is tied up in housing (though we’ve built up prodigious amounts on credit cards, too) that is now sharply falling in value.

“There’s a much-quoted expression here that in regard to both our style of capitalism and our social attitudes, the Irish are ‘closer to Boston than Berlin.’ I don’t think Irish audiences will have any difficulty ‘getting the point’ of your movie or applying its lessons.”

The 5 responds: Slainte! We’re working on it. We’ll keep you posted.

Best,

Addison Wiggin,
The 5 Min. Forecast

P.S. As we write to you this morning, the Dow is down well over 200 points…today’s ISM reading has brought recession woes back to full force. While U.S. investors seem to spend every trading day “waiting for the other shoe to drop,” our international investing adviser Chris Hancock has found a global niche immune from the credit crisis… one that he thinks “could be the most persistent and reliable market boom in a decade.” You can learn about it here.

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Trade Deficit Soars, U.S. to Lose Credit Rating, Countrywide Gets Bought, The $2,500 Car, and More!

admin — Fri, 11 Jan 2008 20:04:40 +0000

by Addison Wiggin & Ian Mathias

Trade deficit soars… how the latest reading is all the more remarkable
Moody’s threatens to downgrade U.S. credit rating… Mayer on how the loss would be “far from symbolic”
Bernanke speaks… equities, currencies and commodities react. Details below…
Countrywide’s big bailout… World’s biggest bank to the rescue
Plus, the $2,500 that might just change the world…

The U.S. trade deficit widened by a greater-than-expected margin yet again in November, the Commerce Department reported this morning. U.S. trade deficit rose by $63 billion, over $5 billion more than expected by economists.

That’s a 9% jump from the last month — the highest level since September 2006. Much of November’s deficit rise was attributed to record high oil prices — up 53% year over year.

The annual trade gap through the end of November swelled to $650 billion.

This huge deficit is made all the more remarkable by one fact: The U.S. has also enjoyed the ninth consecutive month of record high U.S. exports. Arthur Laffer and a slew of neocon economists would argue that growing exports and an expanding deficit are both symbols of economic prowess.

Either that, or the dollar is falling off a cliff and the oil price is skyrocketing.

“The U.S. credit rating is at risk,” reports Chris Mayer this morning.

Citing a Moody’s report yesterday, Mayer suggests what we’ve tried diligently to document in our documentary. According to Moody’s, unless the U.S. can curb booming health care and Social Security spending, it could lose its AAA credit rating by 2017. If the government were to lose the ranking — which it has held since 1917 — confidence in the U.S.’s ability to pay back debts will be seriously damaged, and the U.S. economy could face a ginormous slowdown.

“The loss of the AAA rating is far from just symbolic,” warns our Chris Mayer. “Current holders of U.S. government debt include foreign central banks, huge pension funds and sovereign wealth funds. Some of these investors will invest only in AAA-rated securities.

“When I read stories like this, it makes it harder than usual to stomach election-year politics. Is anyone paying attention to how much the government spends? Maybe with the market tanking, people will start to think about money again… and look less graciously on those who spend it so carelessly.”

Ha. It ain’t a problem until it’s a problem… then it’s a really big problem. And that’s what history labels a financial crisis.

“We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,” said Fed chairman Ben Bernanke in prepared remarks yesterday. While Bernanke reiterated that the Fed does not believe the economy will slip into recession, few could disagree that this was his most bearish outlook to date.

“Downside risks to growth have become more pronounced. Notably, the demand for housing seems to have weakened further, in part reflecting the ongoing problems in mortgage markets. In addition, a number of factors, including higher oil prices, lower equity prices and softening home values, seem likely to weigh on consumer spending as we move into 2008.”

And for what it’s worth, “substantive additional action,” was completely interpreted by Wall Street as at least a 50 bps rate cut. Futures listed on the Chicago Board of Trade now price a 92% chance that the Fed cuts by 50 bps on Jan. 30.

Bernanke’s comments saved the market yesterday. Within seconds of the breath leaving his yap, the Dow recovered from 100 points down… and ended the day 1% higher. Wall Street sure loves an accommodating Fed chairman.

The S&P 500 gained 0.8%, and the Nasdaq closed up 0.5%.

Another bit of news helped spur the rally, too. Bank of America will buy Countrywide for $4 billion, or about 7 bucks per share, the bank confirmed this morning. By acquiring Countrywide’s portfolio of mortgages, BoA will become, by far, the biggest mortgage lender in the country. According to third-quarter origination stats from MortgageDaily.com, the bank now controls $142 billion in home equity financings. Wells Fargo takes second place, at $68 billion.

BoA had already lost $1.4 billion of its $2 billion “bailout” of Countrywide back in August… we’re getting the sneaking suspicion that Countrywide will bleed Bank of America for billions more before it returns to profitability.

Should Countrywide CEO Angelo Mozilo leave the company (or get fired), he’ll pocket a $115 million severance package.

Mozilo’s reward for stewardship of Countrywide into the head winds of subprime hell will include $87 million in salary advances, two separate pensions worth $24 million, health care for life for him and his wife, three free years of “financial planning benefits,” free trips on the company jet and his country club bills until 2011.

In the last year alone, CFC stockholders are down over 84%, and about 11,000 Countrywide employees have lost their jobs.

Hmnnn…

Merrill Lynch will announce an additional $15 billion write-down in its earnings statement next week, reports The New York Times. Even the bravest of Wall Street analysts had predicted no more than $12 billion in additional fourth-quarter write-downs for the bank. Don’t be surprised when Merrill announces worse-than-expected fourth-quarter losses as well.

So… coupled with third-quarter write-downs of over $46 billion, total industry losses — by the end of the fourth-quarter earnings season — will easily surpass the $100 billion mark… ouch.

Rumors abound that Merrill will seek at least $4 billion more in sovereign wealth fund (SWF) investments on top of the $4.4 billion it received from Singapore’s Temasek in December.

Currency traders heard Bernanke’s speech too… and sold the dollar off in droves. The dollar index, seemingly on the verge of a small rally, fell off a cliff:

Aided by the European Central Bank’s decision to hold rates steady, the euro marched from $1.46 back to $1.48. The yen crept up to 108. Even the Swiss franc enjoyed the ride… it’s heading toward parity with the U.S. dollar too. Currently, the creamy chocolate franc trades for 91 cents.

The pound has broken ranks with the dollar entirely.

Since November, the pound’s gone nowhere but down, falling a dramatic 16 cents in about two months. As our friend Chuck Butler put it in today’s Daily Pfennig, the pound “has been beaten like a rented mule lately.”

Gold saw the last visible effect of Bernanke’s comments yesterday. Speculators drove the spot price as high as $897… it has since steadied, trading between $890-895.

Indian automaker Tata unveiled the Nano yesterday, quite possibly the world’s least expensive car. For a about $2,500 bucks, this beauty could be yours:

Labeled “the people’s car,” the Nano will be made and produced almost exclusively in India. Tata estimates seven of every 1,000 Indians own a car. With 1.1 billion people in the country… looks like the market could be huge.

Make no mistake, Indians will get what they’ll pay for… the Nano comes equipped with a 0.6 liter engine, a top speed of 60 mph, no air bags, no passenger-side mirror, no power steering, no radio, no A.C. and one windshield wiper.

Tata plans on making 250,000 Nanos by July 2009, and if successful, plans to market the car in Latin America, Southeast Asia and Africa. In a related note, Tata is also a leading candidate in line to take Jaguar and Land Rover off Ford’s hands. Heh… interesting times.

We’ve been in and out of Tata a few times for good money. With this news hitting the major media and the Indian market as frothy as it is, we’d be wary of buying again right now. But it’s definitely a stock worth watching.

“Beats me,” writes a reader, “why any firm would want to pander to Tony Blair’s vanity and egomania by employing him part time to the tune of a (reported) $500,000 per year. Doesn’t JPM have enough so-called experts?”

The 5 responds: Hmmn… we invited Tony Blair to be in our movie, too. It wasn’t necessarily for his expertise.

As an aside, we learned yesterday that the premiere for the movie at Sundance on Jan. 19 is sold out. We’re not sure, but we think that’s a good sign. There are several other screenings that still have tickets, if you or someone you know is interested.

“Wall Street’s biggest brat, Jim Cramer,” writes a reader “was on the Today show in Fluff-merica yesterday wearing his biggest pouty face. His latest railing? We should be as indignant as he is because Fed governors aren’t elected officials. All this, I suspect, because his pals on the Street haven’t been bailed far enough out by more and more rate cuts.

“Funny, I don’t remember hearing about the need to turn these into elected positions when rates were dropping precipitously.

“Meanwhile, in the midst of daily declines in the Dow, I saw the congenitally bullish Larry Kudlow on some show bellowing, ‘Goldilocks is alive!’ He reminded me of that Iraqi military propagandist standing on a pile of rubble shouting, ‘We are defeating the Great Satan’ as U.S. tanks were about to roll over him.

“What’s with these people? They act like they’ll lose their jobs if the Dow goes down.”

Have a good weekend,

Addison Wiggin
The 5 Min. Forecast

P.S. You’ve got just a few more days to take advantage of our three-month trial offer of Energy & Scarcity Investor. ESI features the fast-moving small-cap energy plays of our oil adviser Byron King. Check it out now,
before we hike the prices on Monday.

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