Al's Insights – Mon 9 Jul, 2012
The Ship of State Is Rudderless
America is like a fleet of oil tankers or warships, adrift at sea with no rudders and no
experienced fleet commander giving orders. Rather, we have a community organizer,
a neighborhood PTA-type rabble rouser, sitting in the supreme commander’s chair
with hands on the controls (sometimes) crashing ahead without a clue. As we move
inexorably toward economic and foreign relations disasters, we have an inexperienced,
arrogant kid playing God while attempting to drive the mightiest nation in history.
Americans prefer to be led – not driven with threats. This is not going to end well at all.
Numerous modern political observers offer that President Ronald Reagan was one of the best
presidents in the history of the United States. Obviously, others would argue against that
statement but we think his success was attributed to simplicity of purpose. He believed in the
sanctity of the United States Constitution, Bill of Rights and the Ten Commandments. We heartily
agree. All the rest is just nonsense and the work of busy bodies trying to re-arrange the lives of
others to suit their old, stale agendas and paradigms. President Reagan had very specific goals
for his presidency and he was successful in all of them including getting the Russians to back
down and repairing an economic mess that he inherited from others.
Our current chief executive by comparison has no concrete plans to deal with American
joblessness. He is promoting the erosion of our liberty and he takes no steps to promote free
enterprise. Having come from a background where the structural foundation is one of government
entitlements, he thinks this is the path for our future. We saw a report some time ago saying
Lyndon Johnson’s Great Society cost the United States $44 billion over time. Look how well that
has worked out for us all.
Johnson’s $44 billion mistake is now peanuts compared to Obama’s $5 trillion tragedies (and
counting). The way things are going now, Obama will probably waste more than $44 billion on his
bankrupt solar companies, General Motors and a handful of insolvent banks (who claim they are
making money on the tax payer’s dime…) all before breakfast.
Many observers are too worried about the Supreme Court’s Obamacare approval. Initially, we
were too. Now, however, we see the wisdom of Justice Robert’s approval: he has attached a
caveat and is calling it a TAX. This will be a key discussion point in the forthcoming elections but
beyond that… America cannot afford it anyway, so who cares?
We expect some of the intermediate and larger-sized corporations would eliminate all medical
benefits under the new plan; if it ever made it to first base, which we sincerely doubt. So, the end
result is Obamacare is defeated by the congress as a bad tax or, alternatively, there is no money
to pay for it as Great Depression II deepens into economic darkness.
In his speeches before the 2008 election, Obama was truthful to the extent he told us he would
spread it around. As in, rob Peter (the working man and woman) to pay Paul (the ne’er-do-wells/
gimme-gimmes, who sit upon a for-life structural welfare nest, promoting communism under the
guise of “social welfare fairness”). That idea sure worked well in Europe, didn’t it?
In the Great Depression of the 1930s in the United States, there was no welfare nest, no
unemployment checks and no food stamps. Either you found a way to feed yourself and your
friends and family or, you starved. There is no way to count the dead who had starved in the
1930s, but it was reported that over 250,000 little defenseless American children were tossed out
of their homes by parents who could not feed them. These kids went on the road in desperation
and most of them were never heard of again— ever.
We are not saying this sad event happens again, but keep in mind there are thousands of
underage kids living on the streets as they departed dysfunctional homes for many reasons.
Along with his plans for a nanny-state welfare paradise, Obama is using the presidential Executive
Order as a demonic tool to circumvent the will of the people without congressional approval.
Obama has 38 czars and czarinas on his staff and they are seated with super powers and never
attained approval from any insiders or, for that matter, outsiders.
These major government department heads are running amuck, showering US citizens with
a truck load of nanny-state rules and illegal takings. We can clearly see a monstrous staff of
socialistic-communists bent upon imposing their personal rule and will upon the American
people…all this with no legal authority.
Being “politically correct” is censorship, but just without burning books in the streets like the
Nazi’s did in that era. Our new capital controls, border controls and mail censorship forces
compliance where you have difficulty moving money for normal commerce and in some cases,
cannot use paper documents. For example, if you are sending a gift overseas, the documents
are filed on the internet or, you cannot send the gift. This is just a warm-up. The real fun starts
later on, after Obama is re-elected by those needy welfare voters who receive all the government
checks he promises to deliver…forever.
This is the way it started in Germany in the 1930s and of course after the Russian Revolution
in that nation in 1917. I think the nasty old Russian men like Stalin, Trotsky, Lenin and their
henchmen are rolling over in their graves laughing at America and what she is doing today to
create self-inflicted socio-economic wounds.
Some of those old dictators and murderers predicted this would happen and they are proving to
be correct. This is happening despite their forecasts being decades old. They clearly understood
human nature. When a society floats on a sea of handouts, the mess multiplies in the dark until it
all dies and drowns.
Our economic and market forecasts signal a “kick the can” situation not only in Europe but all
over the world until September 23-25, 2012, or in the alternative, after the voting on November 6 in
the United States.
China has experienced eight months in a row of sliding, negative economic numbers. They can
tinker with several central planning tools, tweaking their problems until in the end their created
messes turn on them like a rabid dog. Mother Nature will not be denied and not just in China
either. Watch Europe first followed by other poor, emerging nations; then the larger ones fall.
However, for now the game goes on; the accurate numbers are hidden and we see regular name
calling between Obama for votes (I’m a tough guy vote for me) and China. These are just school-
yard bullies spouting meaningless crap.
Do you really think the Chinese, the Germans or, that little unwashed creature
in Iran care really about what Obama thinks or, says? Hardly…
If you want to see some real excitement, watch what happens when the German citizens vote
against the ECB-ESM Euro-land bailouts for their neighbors in a fall referendum. Now that is
going to be very interesting. One observer told us the vote is coming quickly. We say the German
Supreme Court stalls it until at least until after Obama is re-elected in November, 2012.
While the German justices may think that the 4th quarter may be a peaceful post–election period,
we predict it goes absolutely wild with a host of other problems including but not limited to: (1)
lawsuits for voter fraud, (2) impeachment proceedings, (3) other criminal lawsuits against the
administration, (4) white house scandals involving women, (5) grand theft by staff and numerous
other charges relating to current and expanding investigations.
This is going to be better than an Academy-Award-Winning Movie and we all get a ring-side seat.
Great fun! Watch for stupendous market moves giving us super-duper trading, and all the other
neato scandals the liberal, lefty newspapers and TV media so dearly love – wowser!
Now that Greece has cooled-off for the next ten minutes, our attention has turned to Italy and
Spain where those prime ministers and economic leaders told the world first that: “We do not
need the money”, and next: “We might need the money” and finally, “We need all your money as
we can only cover 20% of our bad debts!”
Today, all of these turkeys are now telling us there is not enough money in the world to solve their
problems and pay their bills. Gosh, what a big surprise!
Next we have the Queen of the IMF, Madame LeGarde, tut-tuting aloud saying, “You European
boys just have to get your act together and very soon.” Or what? Is she going to put out the
European credit fires with the IMF’s garden hose, a good chunk of which is US taxpayer’s money?
There is not enough credit and cash on the planet for that one. Their game covers 850,000,000
people with the USA being only 1/3rd of that size for comparison.
She got that job as she is very smart, as in “street smart”. You do not become the Chairwoman
of the mammoth Baker & McKenzie law firm unless you are a powerful rainmaker (sales lady
bringing in the big deals and clients) while making all those monster egos behave themselves.
Now, however, Madame LeGarde is stuck with a problem even superman cannot fix. How can they
pay a gazillion dollars in worldly bills when they have so little left with which to pay? And, all of
this exists despite her ability to access/print currency and bonds with wild impunity. She has met
her match and all the yelling and cajoling ain’t going to cut the mustard. Europe goes crack-up-
boom…they just happen to be first in line among several larger nations throughout the world.
The USA is and will be the continuing recipient of Euro-land’s troubles. America is receiving a
mountain of cash and bond transfers from suspect European paper, most of which is landing
in long bonds, T- Bills and money market funds. Today, it got even more interesting as interest
rates were lowered once more on money market funds in Europe, which makes the funds virtually
useless. A Big Boy Bank closed 15 of their European funds on that news and returned the money.
Next, we say that pile of cash lands in USA paper as it’s the best of the worst (at least this week).
In summary, the 3rd quarter of 2012 will be a set-up quarter for those traders and investors moving
into positions that can profit from all this forthcoming excitement arriving in the 4 th quarter.
We strongly suggest that if you are not experienced in managing big, faster moving messes, it
would just be easier to go and buy physical gold and silver and take possession. This way you
eliminate any counter party risk and if you need some cash later on, the metal brokers are more
than happy to buy it back and very quickly, too. This trade is safe and liquid.
Most of our readers of these essays and in our Trader Tracks Newsletter are primarily stock
traders and investors. At this juncture they are wondering and worrying as to when markets will
return to new rallies, pulling-up their beaten down stock positions. The precious metals stocks
(the best of the best) will begin to react almost immediately when gold and silver begin new
rallies. However, most of them usually take 2-4 weeks longer in a precious metals reaction before
any substantial shares movement. This past week in Trader Tracks, our list of recommendations
week-over-week moved from negative to almost all positive.
Follow monthly charts first and discover the best time of year for your favorite markets. Then,
work backwards using weekly charts followed by dailies. For the most part, we have learned that
swing trading (a few days to a few weeks) is easier to manage for us. However, some traders
enjoy the scalping game doing 150 trades each day finishing the session and then going flat
overnight. Find what suits you best and above all control risk first. The balance of your earnings
will often take care of themselves –Traderrog
Roger Wiegand is the writer and editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. See www.webeatthestreet.com for more information. Listen to Traderrog reports and editorials on the Daily Market Close on the Korelin Economics Report website www.kereport.com.
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