Another Summer Without a Recovery

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The Daily Reckoning | Saturday, June 18, 2011 A not-so-curious correlation between home prices and confidence, Reckoners chime in on redistribution, revolution and what to do with your gold, Plus, all the rest of this week's issues, archived and ready for your...umm...weekend reading... ------------------------------------------------------- Tiny Ottawa Company Discovers "New Silicon" - A $2.5 Billion Breakthrough! This massive "New Silicon" discovery could literally change the world we live in. Find out how you could grab your piece of this $2.5 billion breakthrough - right here. Joel Bowman Checking in from Buenos Aires, Argentina... If this is the economic land of milk and honey, as promised leading into last year's so-called "Summer of Recovery," most Americans want nothing to do with it. Employment is in the dumps, inflation is on the creep and the value of most people's major asset - their home - continues to fall. Eric pointed out as much in this week's feature column... "Since the peak of the housing bubble in early 2006, homeowners' equity has collapsed from $14.7 trillion to $6.9 trillion - a staggering loss of wealth equal to more than half of US GDP. In fact, homeowners' equity is even lower today than it was at the end of 1999! "Not surprisingly," continued Eric, "a very close correlation exists between the amount of equity Americans have in their homes and the attitudes of Americans toward the economy. You could say these two data series move tick for tick." Here's the chart to which Eric was referring, in case you missed it the first time around: Eerily tight correlation? Yes. Surprising? Umm...not so much. For the rest of Mr. Fry's feature column, see here: Life in the So-Called Recovery WARNING: This is Controversial. It Offends "Gloom and Doomers" Here's why it's NOT the end of America... Shocking new presentation reveals epic opportunities - viewer discretion advised for thin-skinned fear mongers. Watch the presentation right here. ALSO THIS WEEK in The Daily Reckoning... Buy Gold...or Farmland By Chris Mayer Gaithersburg, Maryland I remain a big believer in agriculture-focused investments as one of the very best "hard asset" allocations for the decade ahead. Ag investments not only provide a hedge against dollar weakness, they also stand to benefit from extremely favorable supply-demand trends worldwide. The world needs more food. It won't be easy to supply it. That's the kind of trend all investors should crave. Your Best Real Estate Investment is a Moat By Suzan Haskins Toronto, Canada There are many other markets - far more attractive markets, both economically and physically - where we should be investing. Markets with moats. Fortunately, Ronan and his team have done the hard work. He and his top lieutenant, Margaret Summerfield, find projects with huge profit potential at an early stage...when capital is critical and developers are willing to extend massive discounts to investors. Hidden Profits from These Forgotten Treasures By Chris Mayer Gaithersburg, Maryland In the 1850s, hardy Russian explorers and fur trappers traipsing about mountain ranges and sea passages noted oil seeps around what we call Cook Inlet today. These are the earliest historical references to the oil in Alaska. Over the next hundred years, a variety of fortune- seekers - lone prospectors, private wildcatters and big oil companies - took shots looking for commercial oil here. While there was some success, there were mostly setbacks and a trail of abandoned wells. The Danger of Peak Profits By Chris Mayer Gaithersburg, Maryland One of the vulnerabilities in today's market is that profit margins are near peaks. Investors tend to like companies with fat profit margins, but high profit margins are like honey pots that attract competitors. They are rarely sustainable for long. But what is more important for stock prices is not the profit margin itself, but the direction they move. Rising profit margins goose stock prices in wonderful ways, but declining profit margins are a tough anchor to overcome. Fast Gains That Can Pop Up in Just Days! Finally! Here's the secret to fast, frequent gains. 123 of 127 tracked moves showed gains during a recent test of this secret. Now, all the gain-making power is open to you. Find out how to get the next gain chance as soon as it goes live on Wednesday - right here. But you must act fast... The Weekly Endnote: And now, a few words from our Fellow Reckoners: First up, this from Reckoner P.M... There is a natural law about societies where, over time, the rich end up with just about everything ($13 trillion more wealth in the past 10 years) while the rest keep loosing until society falls apart and there is Revolution or some form of Redistribution. This is one of the big factors that is eating away at our society and economy now and knocking out the middle class, the consumer and it is accelerating. These rich have no interest in helping with their added wealth but would rather have the elderly, middle class, poor and sick pay up. This is like a cancer eating up our economic health that few people understand. And it will end badly, soon. And here, a few questions from Reckoner Anthony: A question many people must be puzzling over. To buy gold seems logical; paper money has become a big con. So you exchange it for something that has stood the test of time, like gold. But then what? Say it goes to $10,000 an ounce. Or even $100,000. Do you turn it back into paper money? Don't think so. Do you use it to buy, say, land? If so, surely that would cost a huge amount as well. In the early 1930s, distressed land in England went for next to nothing. But we had returned to a gold standard then, so the same number of gold sovereigns now wouldn't make it a good deal; you might as well use paper money at paper prices. Or do we just wait for the return of a gold standard (official or de facto) and hope that it's going to create some bargains? I'm just throwing out some questions/ideas to see what others might think. Using the land analogy, is land massively over-priced or gold massively under-priced? I'm not inclined to sell any gold, or silver, for that matter; at least they've kept their purchasing power, plus a bit, for most things. And finally, this boots-on-ground musing from Reckoner E.D. in Pa... Your advice about selling in metropolitan areas and moving to less expensive areas is solid advice, even today. In 2003, I sold a house in Virginia I had bought for $56,000 in 1976 for $375,000. My new home is in Western, PA and cost us $70,000. With improvements of about $70,000, it is now worth about $150,000 despite the current housing market. So what are we rich boomers doing with all that cash and income from Social Security? Well, like others, our children are not so well off as they raise their young families. Our retirement funds and income help to support three other families. Cut my Social Security income as in "no inflation" for the last two years and it now affects four families. I doubt that the Federal Government cares anything about us as it just takes! I am fed up with hearing about how the new and better medical program will help me. Frankly, the government is my beneficiary. If they can get me to die at a younger age, they can then have more for all those "poor" people who have manipulated the system. I have worked three jobs at one time just to help my self and my three children. The government is full of fools who are totally oblivious to the real world outside of the DC area. Our government is no longer trusted and respected by its middle class. We have heard too many lies. The statistics offered every week to the general public have been so manipulated that no one trusts them anymore. Unemployment is only 9.1%!!! Do they think we are fools? Well, yes I guess they do or they would not be continuing to tell us the lies they do. --- Got an answer for Anthony, or some other thoughts or reckonings of your own? Send us an email at the address below. And, as always, enjoy your weekend. Cheers, Joel Bowman Managing Editor The Daily Reckoning ------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com Why You Shouldn't Fear the Markets' Next "Lehman Moment" Avoiding disasters hasn't worked. At least, not avoiding debt disasters. No matter what tricks the authorities do – monetary, fiscal, or unconventional – the debt is still there. And since all those tricks cost money…it gets bigger and bigger. Slow Economic Growth and Other Costs of Avoiding Disaster The Likelihood of a US Default China: Where Money Is Treated Best I am sure that Mr. Pento is right because every country on the Face Of The Planet (FOTP) is desperately creating more and more money, and the money will eventually find its way to the place where it is treated best and/or has the best prospects, which is, in this case, Bob. Oops! I meant "China." Buying Gold on the Price Inflation Guarantee Awaiting the "Zero Hour" of Available Credit A Greek Resolution...For Now Front and center this morning... There was a story that hit the newswires in the European session that claimed the bailout of 150 billion euros was close to being agreed on by all parties... The euro (EUR) shot up on this news, and is back to 1.42, after spending most of yesterday with a 1.40 handle... The Corruption of Capitalism China is World's Largest Energy Consumer The Daily Reckoning: Now in its 11th year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists. 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