Reply #34: Go make a fortune in commodities and make us all proud of you (Mogambo) [View All]

[54anickel]

http://www.kitco.com/ind/Daughty/aug032005.html

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"As credit contracts and interest rates surge, home prices will plunge, wiping out trillions of dollars of paper equity for millions of American homeowners. However, while the equity will vanish, the mortgage debt will not only remain, but be that much more costly to service. Imagine the implications for the U.S. economy and dollar-denominated financial assets, should this financial nightmare become a reality."

Perhaps this has something to do with Dan Denning, with Strategic Alliance, writing "Good-paying, white-collar, 'Ward Cleaver' jobs disappear." But it is not only jobs, but everything else is in danger of disappearing, too! For example, he postulates that we will also see where "Soaring health care expenses go unpaid. Property prices plunge in the wake of panic selling. Rampant price inflation sends the cost of food and energy soaring to new highs. Police, fire, and highway crews shut down services in strapped states and cities. Countless schools close for lack of funding. City and state governments default on their bonds. One 'safe' pension fund after another goes the way of Enron."

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Mr. Denning thinks I am not being forceful enough, and so he shoulders me aside, and takes over the microphone and says "Please understand that these are not alternatives. As Peter Peterson, former White House economic adviser, says, 'Absent a colliding comet or an alien invasion, this will surely happen.' There is no way for American investors to avoid this event. They can only choose how to protect themselves from the outcome."

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And the gains in corn are sown (cute pun, huh?) by Congress, as part of the new energy bill, which contains all kinds of gigantic tax credits and deductions for all kinds of things, including ethanol, which is made from the sugar in some foods. Ergo, corn will do well for three reasons. 1) The Chinese have a stronger yuan, making corn cheaper for them to buy, 2) there is a drought all over the damned place, 3) and now Congress has made it financially advantageous to also compete for corn. So, the Mogambo Tip o' The Day (MTOTD) is relayed when I reach out and place my hand on your shoulders, look into your eyes, and say "Buy corn." Fade out, and you are left with an indelible memory, so that years and years later it will pop into your mind as you are scratching around in the dirt looking for bugs to eat, and you will wail in woe because you did not follow the path of the Mogambo (POTM).


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- John Crudele of The New York Post reports that “American Auto Association calculates that gasoline prices have risen 21.5% since this same time last year. But the government swears gas prices are only 6.9% higher over the year." What a discrepancy! The upshot is “That little trick alone saved the CPI from being 0.53% points higher."

And it is not just about gas, as he goes on to write, “Despite all you’ve read, the government thinks housing is only 2.2% higher over the past year. Others, including the National Association of Realtors, calculate that housing is up at least 12.5%.”

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