Special offer for Daily Reckoning Readers ONLY — Secretive Society of economists, market players, and world-class researchers and analysts reveal...
The TRIPLE TIMEBOMB That Makes Market Recovery Almost IMPOSSIBLE in 2009 or 2010... but that could still make a few people very rich!
| Elite alliance of experts warn: don't hold your breath waiting for a recovery this year or even in 2010. The three toxic timebombs they name below make a quick rebound next to impossible. Yet, they also name seven "Super Shields" you can use to safeguard against further losses... plus at least five surprising "long" plays you can still use — even now — to get very rich. |
Dear Daily Reckoning Reader,
I don't intend to buy a single stock this year.
Not one.
And not in 2010 either.
Frankly, when you see the shocking report I share below, I'm convinced you'll see why. You may even already agree.
Even so, what follows should give you more than enough proof... that even a partial market recovery is unlikely for at least the next 18-24 months.
If not longer.
This doesn't mean you can't protect yourself.
And it doesn't mean you still can't get very rich.
In fact, over the last 24 months, I've invested over $532,171 to back the research behind the stunning forecast you'll find below.
And I'm so concerned by what you're about to see, I've dedicated an entire team — including a top economist with over 20 years experience in global equity research and asset allocation — to help reveal opportunity in the midst of this unfolding crisis.
You'll discover below how U.S. shoppers can no longer "save" the world economy... and why China's economic miracle can't save us either...
You'll find out why millions of jobs are gone for good, and how millions more could disappear before we're through... plus, how long-term collapse for the dollar is inevitable...
But you'll see, it's not all bad news.
There are at least seven "super shields" you can read about right now that can help protect your money... and my team has honed in on at least five ways for you to see potentially money-doubling and even money-tripling gains over the next few months ahead.
It's all in the report that follows.
Plus a lot more, as you're about to see.
But before we get into that, let's dig into the surprising forecast my team of elite insiders, analysts, and economists just shared with me. Because I'm confident you'll be as shocked as I was by what you're about to see...
Toxic Timebomb #1:
The Total Breakdown of the
American Consumer Culture
How many people do you know who have lived through a "real bust?" No, I don't mean the dotcom bomb or the Asian currency crisis.
I don't mean the 9-11 recession or the '87 market crash... or even the '74 market meltdown or the late '70s oil crisis.
I mean a full-on social and economic reversal.
Of course we haven't seen anything on that scale since the Great Crash of '29. And many of the witnesses alive to those events are long gone from our lives.
But do you remember... how your parents or maybe your grandparents talked about those times? They never seemed to forget.
How many "Depression survivors," for instance, still save scraps of paper and bits of string... rinse off tin foil... and wouldn't dare toss leftovers?
When you grow up knowing only good times, it's easy to forget that "thrift" and "value" were bedrock American values. And harder still to imagine an America that returns to those ideals.
But see, it's not the little busts and downturns that change behavior. It's the BIG ones that do it. And sometimes in long-lasting and radical ways.
Take Japan, today.
In the late 1980s, you might forget that Japan was busy buying up American companies at a breakneck pace. They too felt pretty rich. And we were sure they were out to eat our lunch.
Then their market went through its own credit meltdown. Just like the one we're seeing now, but on a smaller scale.
They have yet to recover.
Not just economically, with a stock market that's basically flat-lined for the last nearly two decades. But culturally too.
Already high Japanese savings rates exploded... car sales plunged by half and remain as low... cabbage long ago replaced meat on Tokyo dinner tables... middle class Japanese started washing their clothes in used bathwater.
Are these the destitute Japanese?
No. This is the well-employed Japanese middle class. With good jobs and incomes. But working and scrimping as though they could lose everything all over again.
What happens if the same consumer malaise locks into place here in America? A much longer recession or even financial depression than anybody is willing to imagine.
Yet there's ample proof this is exactly the radical shift underway...
In the bedrooms and boardrooms across America, we're waking up to a very scary realization. All those big houses we bought... the cars and fancy techno gadgets... the fancy clothes and furniture... the $100 dinners and $5,000 vacations... and suddenly we're looking back and realizing... we've got so little to show for it.
Look, it's not hard to do the math. Over the last three decades, we've taken one of the greatest industrial nations in history... and traded it off piece by piece. In its place, we became the world's #1 shopping nation.
Not makers, but buyers.
Even now, we're facing an economy in which 70% of our economic output depends on consumer buying.
No buyers, no recovery.
And yet, unlike other recent minor busts and even major corrections, the lesson hundreds of millions of strapped Americans are learning all over again is that same lesson our forebearers learned after 1929.
Namely, that the law of personal and financial responsibility is as irreversible as the law of gravity. And it's the egg that no bureaucrat — no matter how popular — and no multi-billion dollar bailout — no matter how large — can unscramble.
In short, the hearts and minds of the American consumer have been thrown into reverse. And it's this total psychological "snap" that will make a back-to-baseline conventional recovery impossible any time soon.
The $2.5 Trillion Gorilla in the Room
This is vital. Because, you see, a lot of Americans — and a lot of people in the rest of the world — are counting on credit-card carrying American shoppers to jumpstart the global economic engine all over again.
But it isn't going to happen. And you don't want to bank your investments on the idea that it will. Or you'll risk even bigger losses than many Americans have suffered already.
Consider, right now, total private consumer debt is nearly $2.5 trillion. How serious is that? Well, with the way "trillion" gets tossed around these days, it's hard to imagine.
But you can already start seeing the massive paradigm shift taking grip when you look deeper into day-to-day details...
- On New York's Madison Avenue, shops that used to sell $2,390 bed sheets and $2,400 handbags have packed up and slapped "For Rent" signs in their windows
- Penny-pincher clubs are back. And coupon-clipping sites are getting some of the highest traffic on the Web. Discount sales and all-you-can-eat buffets have lines going out the door
- Last holiday season was the slowest in four decades. Meanwhile, luxury products are "out," showing off how budget-wise you are is back "in"
- Big "box" stores continue to close at record rates too, while department store sales are down as much as 24%. The Gap? Sales are down 23%. Other clothing chains are down 22%
- What's more, U.S. cars sell slower than in 1982. For the first time in history, China sells more cars than we do. Keep in mind, about 20% of all the retail in the U.S. comes from car sales
- Planes can't sell seats in business or first class either. Not to mention a 20% drop in airline freight shipping. Meanwhile, train and truck shippers are in absolute freefall
- Even FedEx and UPS — slammed by the double-whammy of crashing buyer demand and no-shipment digital book, document, and movie delivery — have seen overnight shipping profits vaporize.
You don't need me to tell you that adds up to trouble. But how much trouble? Total U.S. retail sales have rolled back to levels we haven't seen since 2005.
Imagine if every single retail shop opened in the last three years shut down overnight. It's already that bad.
Here's the thing. A lot of people, from Wall Street to Washington, have a great deal invested in you believing we can reverse that trend.
I'm writing you today to reveal another possibility... that the freeze in consumer spending and the consumer economy could actually take many more years to thaw.
I'm also writing to show you there's a move you can make — a surprisingly simple one that takes just minutes to arrange — that can give you back double any further downturn in consumer sales. How so? I'll explain in just a moment.
But first, let me just show the first of at least two reasons why this dangerous consumer crisis is about to get a lot worse before it gets better...
The "Multiplier" That Could Soon Double the Impact of this Downturn
Take a look at this chart...
I'm sure you've read, that since the start of the downturn on December 27, we're already out 4.4 million jobs. And we're losing hundreds of thousands more each month.
How much deeper could this go?
Well, today's crash is already bigger dollar-wise than anything that we lost in 1974. And even back then, 1% of U.S. jobs disappeared. Do that today and you're talking about a total 13.2 million Americans out of work.
That's 13 million people not buying cars or new houses... 13 million cutting back on groceries... 13 million not buying flat screen TVs or going to strip malls... in fact, it's the same number of Americans who lost their jobs during the 1930s.
You've seen pictures.
The jobs that disappeared were the "multiplier effect" that turned a stock market bust into a decade-long downturn. Today's record setting job losses could do the same.
With an average of over 650,000 jobs disappearing in each of the first couple months alone... we're on pace to lose a total of 7.8 million jobs just this year.
Boomers cancelling retirement... middle-aged workers swarming college job fairs... at one Ohio high school, over 700 people showed up for a janitorial job... these aren't people set to dive back into impulse shopping anytime soon.
In fact, just like in Japan in the early 1990s, Americans have started saving — if you can believe it — at record levels.
Just in the last year alone, we've socked away $545.5 billion. That's the biggest glut of cash going under the mattress since we first started tracking U.S. savings rates... back in 1959!
Foreboding? Very.
But there's a second "multiplier" on the way that could drive consumer spending — and any dream of a consumer-led recovery — even deeper into the ground.
Even though you're not hearing much about this at all from political publicists or the TV talking heads...
The Second Wave Property Meltdown That Nobody Wants to Talk About
You already know by now, I'm sure, that it was the first wave of defaults in "subprime" mortgages that sparked today's economic meltdown...
What you might NOT know is that there's a whole second wave of just as toxic mortgages in the pipeline... in a glut just as large... and potentially just as far reaching. You can see it for yourself, in fact, in the simple illustration below...
You can see that the first peak in subprime loan "resets" arrived smack dab in the middle of 2008. And many billions in bank write-downs... along with trillions of dollars in market losses immediately followed.
This second wave of toxic property loans, however — a flood what you call "option ARM" or "Alt-A" loans — won't hit peak resets until 2011.
What are these second kinds of toxic loans? These were the fancy mortgages snapped up by middle Americans... to buy homes nobody imagined would be worth a fraction of their selling price, just two years later.
And like I said, just like subprime, these loan contracts also carry a "reset" risk in the fine print, when already high monthly mortgage payments could as much as double — right at the height of the second biggest market meltdown since the Great Depression.
Millions more consumers will freeze up as their finances go over the cliff... more bank losses will drag down even more so-called "blue chip" retirement portfolios... and the impact of the consumer bust I've told you about will get "multiplied" yet again. Millions more Americans could lose everything.
But that doesn't have to happen to you...
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