The Great Depression Online




Great Depression Online Archive Issue:

The Curse of Time

Great Depression Online
Long Beach, CA
December 18, 2009

Inside This Issue You Will Discover…

*** Take What You Want
*** Harry’s Christmas Present
*** The Curse of Time
*** And More

Take What You Want

On Wednesday single payer health care expired in the Senate and Federal Reserve Chairman Ben Bernanke was named Person of the Year by Time magazine.  We’re not sure what this all means.  Nonetheless, we’re convinced that somehow they’re worth considering.

We’ll pause to ponder them in a moment, but first…yesterday’s markets…

The DOW was down 132 points.  The S&P 500 was off 13 points.  Yields on the 10-Year Treasury Note dropped to just 3.48 percent.  And oil edged up slightly to $72.98 per barrel along with gold to $1,107 per ounce.

The lowly dollar climbed to a three month high against the euro and new jobless claims rose to 480,000…up 7,000 from the previous week.

~~~~~~Free Report~~~~~~

The following article is adapted from a special report on “Popular Culture and the Stock Market” published by Robert Prechter, founder and CEO of the technical analysis and research firm Elliott Wave International.  Although originally published in 1985, “Popular Culture and the Stock Market” is so timeless and relevant that USA Today covered its insights in a recent Nov. 2009 article.

Read More 

~~~~~~~~~~~~~~~~~~~~~~~~~

Take what you want from yesterday’s action.  Remember, your opinion’s worth as much – if not more – than the next guys.

Harry’s Christmas Present

Government-run single payer health care appears to have finally caught a snag in the Senate.  What took so long?

Quite frankly the idea was pure lunacy from the get go.  Why in the world would anyone in their right mind want to turn over their health care to the government? 

We’ll be the first to admit the insurance companies successfully made a mess of things.  With all the forms, paper work, and physician restrictions, it’s no wonder the costs keep going up.  But good grief.  The notion that a gazillion government paper pushers could do a better job for less money is absurd.

Still, that didn’t stop the President from pretending it was so…

“Anybody who says that they are concerned about deficit, concerned about debt, concerned about loading up taxes on future generations, you have to be supportive of this health care bill because if we don’t do this, nobody argues with the fact that health care costs are going to consume the entire federal budget.”

Not long after, Senator Bernie Sanders admitted the proposal lacked the votes to pass and withdrew it.  Regrettably, that won’t be the end of it.  Senator Harry Reid’s mystery bill is scheduled to be dumped on the populace over the weekend.  If he gets his way, the Senate will vote on it Christmas night.

The Curse of Time

Poor Ben Bernanke.  Just when he thought things were looking up Time magazine did him the disservice of naming him Person of the Year.  Now he’ll be lucky to make it through the next year with what’s left of his dignity still intact.

Last year, if you remember, the ignominy went to Barack Obama.  Not long after he was sworn into what must be the worst job in the world…President of the United States.  Now he can hardly stop for a slice of pecan pie without it becoming front page news.

The year before that, Vladimir Putin garnered the humiliation.  Since then the bull market in Russian corruption has gone parabolic.

What does the curse of Time have in store for Bernanke?  Here we’ll conjecture a guess…

Over time, all things regress to the mean.

For example, in 1994, Pope John Paul II was the Time magazine Person of the Year.  Yet in 2005 he up and croaked.  In a grim sort of way, his death, in the context of the time and breadth of the universe, represented a regression to the mean.

Bond prices regress to the mean…and stock prices too.  So, too, the hot days in July regress to the mean come the cold days of December.

When the financial markets froze up in late 2008, Ben Bernanke turned up the monetary gas.  He lowered the federal funds rate to practically zero and added a trillion dollars to the Federal Reserve’s balance sheet…doubling its liabilities in less than a year.  What’s more, he traded cash to banks for the trash of mortgage backed securities.

To the casual observer it appears to have worked.  The sky is no longer falling.  No more of the big Wall Street banks have gone bust.  And along with it, Ben Bernanke’s reputation has enjoyed a bull market.

But reputations, like bond prices, regress to the mean too.  The true acid test for Bernanke’s monetary policies will come when the economy starts to heat up.

In central bank parlance that’ll be the mop up phase of the operation where Bernanke will have to mop up the funny money by contracting the money supply.  If he pauses a moment too long inflation could go hyper.  And if he acts too soon or too strong, the economy will again depress.

We wish him well in his endeavors.  But as he goes about it, he is cursed by Time.  For, over time, all things regress to the mean…2010 may be the year Bernanke’s reputation gets clobbered.

Sincerely,

M.N. Gordon
Great Depression Online

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