Sponsors
Credit Card Debt- Find solutions to your credit card debt with our professional advice.
Obama: A One-and –Done President?
By the Editors of The Casey Report, Casey Research
President Obama promised to turn around the floundering economy that he inherited from his predecessor. He promised jobs. He promised transparency. Not only did he not deliver on those campaign promises, he has led the nation further into the abyss on all counts. Today we are less prosperous, deeper in debt, and enjoy fewer liberties than when Obama first stepped into the Oval Office. His own party is losing faith in the messiah.
You can see that loss of faith in the steady downward trajectory of Obama’s approval ratings. While Democrats can take heart from the fact that no truly viable candidate has emerged from the GOP, it’s clear that “Hope and Change” will not be sufficient to rally the electoral troops for Obama again in 2012. Voters are hurting, and Obama’s claims that the blame lies with George W. Bush no longer provide any solace.
Not only is the president’s own reelection in jeopardy, his sagging polls are dragging down other Democrat candidates as well. Republican Bob Turner handily took Anthony Weiner’s seat in New York’s 9th Congressional District, a district that had been a Democrat stronghold since 1923. New York’s 9th District has previously been represented by such Democrat stalwarts as Chuck Schumer and Geraldine Ferraro. During the special election for Weiner’s seat, Obama had only 31 percent approval in that district, although he won there with 55 percent of the vote in the 2008 presidential election.
A Democrat pollster attributed Turner’s win to “the incredible unpopularity of Barack Obama dragging his party down in the district.” Similarly, Republican Scott Brown took the Massachusetts seat that had been held by Ted Kennedy for almost 46 years. Brown’s win was attributed in large part to widespread discontent over Obama’s policies, particularly Obamacare. Continue reading
Doug Casey: Is a US-Iran War Inevitable?
Interviewed by Louis James, Casey Research
US-Iranian saber-rattling or impending shoot-out? In his usual, candid manner, contrarian investor Doug Casey talks about why he believes it’s serious this time… why the US is the greatest threat to peace today… why Iran might move towards a gold standard… and what smart investors should do.
L: Doug-sama, I’ve heard you say you think the US is setting Iran up to be the next fall guy in the wag-the-dog show – do you think it could really come to open warfare?
Doug: Yes, I do. It could just be saber rattling during an election year, but Western powers have been provoking Iran for years now – two decades, really. I just saw another report proclaiming that Iran is likely to attack the US, which is about as absurd as the allegations Bush made about Iraq bombing the US, when he fomented that invasion. It’s starting to look rather serious at this point, so I do think the odds favor actual fighting in the not-too-distant future.
L: Could they really be so stupid?
Doug: You know the answer to that one. We’re dealing with criminal personalities on both sides, and criminals are basically very stupid – meaning they have an unwitting tendency to self-destruction. One thing to remember is that most of those in power in the West still believe the old economic fallacy that war is good for the economy.
L: The old broken-window fallacy. Paraphrasing Arlo Guthrie, it’s hard to believe anyone could get away with making a mistake that dumb for that long. Continue reading
Want to Know Who’s Going to Be President? Ask the Stock Market
A recently-published, landmark research paper shows the link between stock market performance and presidential election winners.
What’s the biggest influence on the outcome of presidential elections?
Many observers would identify the role of campaign spending by super PACs, a candidate’s debate performance, and, of course, the health of the economy (“stupid”).
Yet if you want an answer backed by a large body of evidence, you’ll find one in the recently-published, landmark research paper by Robert Prechter, Deepak Goel, Wayne Parker and Matthew Lampert, titled “Social Mood, Stock Market Performance and US Presidential Elections.”
A lot of time, data analysis, and copious statistical evidence led them to this straightforward result: “Social mood as reflected by the stock market is a more powerful regulator of re-election outcomes than economic variables such as GDP, inflation and unemployment…”
In other words: If you want a good predictor for the result of an incumbent president’s re-election, look to the stock market.
Large amounts of earlier research have focused on stock performance after a presidential election. But very few scholars have reversed that order, to investigate a possible link between elections and preceding stock market performance. So reverse that order is what the authors did. What’s more, they’re the only ones to study the issue from a socionomic perspective — the premise that waves of social mood simultaneously drive the valuations of stocks and sitting presidents.
The group published their research on January 17, and it’s already getting attention. A Washington Post columnist read the paper and got its practical usefulness, by noting that Obama should benefit from a stock market that’s been mostly higher since 2008, while a Republican challenger “should hope the Dow crashes.”
You can read the entire research paper yourself by following this link >>
Do Low Interest Rates Power Stocks Higher?
This chart debunks a long-held myth.
Back in the day, one of the first things I “learned” about investing was that low or declining interest rates are good for stock prices.
I’ve since had to “unlearn” this.
A certain market commentator recently reminded me of the “lower rates equal higher stocks” myth. He opined that stocks aren’t being kept afloat by hopes for a European debt solution, but then claimed that the real reason to be bullish is very low interest rates.
Yet is the near-zero rate on T-bills the reason stocks have held up since early October?
“[The chart below] shows a history of the four biggest stock market declines of the past hundred years. They display routs of 54% to 89%. In all these cases, interest rates fell, and in two of those cases they went all the way to zero! In those cases, investors should have traded all their bonds for stocks. But they didn’t; instead, they sold stocks and bought bonds.”
Elliott Wave Theorist, February 2010
Have a look at the chart: Continue reading
A New Reason Gold Stocks Will Soar
By Jeff Clark, Casey Research
There are a number of reasons why many of us believe gold stocks will shoot for the moon before this bull market is over – they’ve done so many times in the past… the gold price still has a long way to climb… and producers are generating record revenue and profits. But I think there’s another reason why gold stocks will soar – one that hasn’t dawned on many in the industry yet.
The premise for my theory first lies in how gold itself is viewed. Some investors see gold as strictly a commodity or the infamous “barbarous relic.” This group sees no compelling reason to buy the metal and so own little to none. Others view it as a play on a rising asset or because of supply and demand imbalances; they buy while those reasons are positive and sell when they turn negative. Still others view gold as a store of value, an alternative currency, or a hedge against inflation; they tend to buy and hold.
Ask yourself why you own gold. Is it because it’s just another asset that offers diversification? Are you buying because it’s going up and someone like Doug Casey thinks it will continue doing so? Or is it due to a genuine concern about the dilution of your currency, both now and in the future? Continue reading
The State of US Surveillance
By Doug Hornig, Casey Research
Lovers of liberty have seemingly had a good bit to celebrate recently.
First, there was an unprecedented outpouring of negative public sentiment about the Congressional bills SOPA (House) and PIPA (Senate); they are legislation that would have thrown a large governmental monkey wrench into the relatively smooth-running cogs of the Internet. Millions of Americans signed online petitions against the bills after seeing websites’ various protests. Google shrouded its search page in black; Wikipedia and Reddit went dark entirely (although Wikipedia could be accessed if one read the information available via clicking the sole link on its protest page); Facebook and Twitter urged users to contact their representatives; and many other core Internet businesses also raised their voices in opposition.
Such was the outpouring of dissent that even Washington, D.C. had to listen. The bills, which a week earlier had seem assured of swift passage, suddenly turned to poison. Supporters, forced to concede that the public really was pissed off this time, fled. Leadership in both houses tabled the legislation, pending further review and revision.
But before we get too self-congratulatory, however, it’s wise to note that this victory dish is probably best enjoyed with a serving of caution. As Casey Extraordinary Technology editor Alex Daley summed up the situation for us here at Casey Research: “Be sure this will come back again, likely post-election, and snuck through as part of a bigger package. It arrests power from the judiciary, and the legislature likes nothing more than to thumb its nose at those ridiculous judges and all their due process this and Constitution that. It will eventually pass, just not like this.” We can’t now go to sleep on this one. Continue reading
Credit Crisis: Are We Set Up for The Perfect Storm?
Robert Prechter discusses what’s backing your dollars
In this video clip, taken from Robert Prechter’s interview with The Mind of Money, Prechter and host Douglass Lodmell discuss “real” money vs the FIAT money system, and what is backing your dollars under our current system. Enjoy this 4-minute clip and then watch Prechter’s full 45-minute interview here >>
 | Watch the full 45-minute interview FREE Get even more valuable insights as Mind of Money host Douglass Lodmell interviews Elliott Wave International’s President, Robert Prechter, about how to keep your money safe, the deflation versus inflation debate, and many more topics that are critical to your financial future. |
When Will Silver Reach a New High?
By Andrey Dashkov, Casey Research
In last week’s Metals, Mining, and Money from Casey Research, Jeff Clark estimated that given the magnitude of the correction that started last September, it may take until May 2012 for gold to reach a new high. Let’s take a look at how long it may take for silver to rebound.
It’s a commonly known fact that silver is more volatile than gold. Already in this decade, silver has risen by a factor of 12 from its ten-year low ($48.70 vs. $4.07), while gold has seen about a sevenfold climb ($255.95 vs. $1,895).
This volatility – as you’ll see in a minute – holds for corrections as well. On average, silver’s retreats have been deeper and longer than gold’s. The three big gold corrections we looked at last week averaged 22.8%. Take a look at the three biggest for silver, along with how long it’s taken to recover and establish new highs. Continue reading
When Will Gold Reach a New High?
By Jeff Clark, Casey Research
Some investors are frustrated and a few are worried that gold seems stuck in a rut. This stall in price has happened before, of course, but since 2001 it’s always eventually powered to a new high. Unless one thinks the gold bull market is over, it’s natural to wonder how long might we have to wait before seeing another new high.
Absent some sort of global shock that sparks another rush into gold (easily possible in today’s climate), I think the answer may lie in examining the size and length of past corrections and how long it took gold to reach new highs afterward.
It makes sense that big corrections would take longer to reach new highs than small ones, but I wanted to confirm that assumption with the data. I also wanted to determine if there were any patterns in past recoveries that would give us some clues that we can apply to today.
Gold set a record on September 5 at $1,895 an ounce (London PM Fix) and to date has fallen as low as $1,531 (December 29), a decline of 19.2%. In order to determine how long it might take to breach $1,895 again, I measured how long it took new highs to be mounted after big corrections in the past.
The following chart details three large corrections since 2001, and calculates how many weeks it took the gold price to a) breach the old high, and b) stay above that level. Continue reading
Trying to Eliminate Subsidies is a Losing Battle
There is an old story about a rich gentleman who was walking down the street one day when he comes upon a homeless man. The rich man felt pity for the man and decided to help him. He asked the homeless man how much he collected in a good day. The homeless man replied $50. The rich man told the homeless man that since he walked that way to work every day, if the homeless man were there on that street corner at 8:00 AM he would give him $50. And so that is what happened. Naturally the homeless man was happy to get the money. He no longer had to stand on the corner all day to get his $50. This went on for quite a while, every day the rich man would give the homeless man $50. But one day the rich man became ill and could not go to work and the homeless man did not have his $50 for the day. The next day when he arrived the homeless man demanded $100. since he hadn’t received his $50 from the day before. After all he was there at the appointed time it wasn’t his fault the rich man was sick. The rich man refused saying, he hadn’t been able to work so he didn’t earn any money the day before either…
The homeless man became angry and hit the rich man and took $100 from him.
The rich man called the homeless man ungrateful and decided walked to work a different way from then on.
History tells us that once a subsidy is instituted there will be riots if you try to remove them. Once people become used to getting something they feel entitled to it. If you try to stop the “entitlements” people become angry and riots ensue. We saw this in Greece and more recently in Nigeria. And it may become more widespread as governments try to cut back on expenses. In the following article our friends at Casey Research shed some additional light on the subject.
Tim McMahon~ editor
The Telling Tale of Nigeria’s Fuel-Subsidy Riots
The series of events that just transpired in Nigeria makes for a familiar tale – and a telling lesson. The tale tells of a poor, developing nation endowed with oil riches that, on the advice of international economists, tries to eliminate gas subsidies. The lesson is that the populations of oil-producing nations will inevitably erupt in rage against any such notions.
Nigeria is the biggest oil producer in Africa, pumping out 2.2 million barrels of crude oil a day to sit 10th in the global crude-production standings. But the average Nigerian gets little benefit from his country’s oil riches. There is an enormous gap between rich and poor in Nigeria, mostly because 80% of the economic benefits from producing all that oil flow to just 1% of the population. Politicians in the country’s infamously corrupt government have pocketed billions in oil profits, while three-fourths of Nigeria’s 160 million people live on about a dollar a day. Continue reading
