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The Daily Reckoning | Thursday, February 23, 2012 Is the financial system cracking up before our very eyes? The best disruptive technology to own...just in case it is, Plus Bill Bonner marches off into the hills...but don’t worry, the reckoning will continue! ------------------------------------------------------ External Advertisement Retirees Wanted to Test-Drive Life Overseas for a Month — FREE — in the World’s Top Retirement Haven. Must be willing to relax... explore a new place... shop the local farmers and craft markets... take walks... go to concerts... attend festivals... maybe try a Spanish class... enjoy local restaurants... make new friends. Ideal candidate is of (or close to) retirement age, hails from the US or Canada, and believes that — in the right places overseas — it’s possible to live better, for less. Details here... Fuel for Krugman’s Fire How Austerity Hinders an Economic Recovery Bill Bonner Reckoning today from Buenos Aires, Argentina... This will be our last Daily Reckoning until April 17th. So, what well-chosen words can we leave you with? How about “if,” “but” and “maybe?” Yes, dear reader, if everything continues to clunk along as it is today...maybe the world financial system will hold together until we get back. We certainly hope so. We’ve been waiting years to watch the final crack up of the phony-money system. We don’t want to miss it! But you never know. For all we know, the system is cracking up now...right before our eyes. We just don’t recognize it. Take this item from yesterday’s news. It proves that Lent is bad for you: WASHINGTON (AP) — Europe has endured the pain of layoffs, wage cuts and tax increases designed to bring government debt under control. So where’s the gain? Far from falling, debt burdens are rising fastest in European countries that have enacted the most draconian austerity programs, according to The Associated Press’ Global Economy Tracker, which monitors the performance of 30 major economies. The numbers back up what many analysts say: Austerity isn’t just painful. It can be counterproductive and even make a country’s debt load grow. Many fear the cutbacks will cause Europe to sink into a self- defeating spiral: Higher debt leads to harsher austerity, growing social instability and deeper economic problems. Governments could find it even harder to pay their bills. The pain is already intense. Portugal’s unemployment rate hit a record 14 percent at the end of last year. Ireland’s economy contracted a worse-than-expected 1.9 percent in the July-September quarter of 2011. And Greece reported that its already basket-case economy shrank 7 percent in the October-December quarter of last year. “This isn’t a healthy situation,” says Peter Morici, an economist at the University of Maryland. Under a deal approved Tuesday by the 17 countries that use the euro and the International Monetary Fund, Greece will get a $172 billion bailout in exchange for accepting another dose of austerity that includes laying off 15,000 civil servants and slashing the minimum wage by 22 percent. — Portugal cut pensions, reduced public servants’ wages and raised taxes starting in 2010. Yet in the third quarter of 2011, government debt equaled 110 percent of GDP. That was up from 91 percent a year earlier. — In Ireland, middle-class wages have been reduced 15 percent and the sales tax boosted to 23 percent (the highest in the European Union). But its debt amounted to 105 percent of economic output in the third quarter of last year; a year earlier, it was 88 percent. — In Britain, Prime Minister David Cameron staked his political future on his austerity plan. Government debt ratios, though, reached 80 percent in third-quarter 2011, up from 74 percent a year earlier. And Moody’s this month cut its outlook on Britain’s prized AAA credit rating from “stable” to “negative.” — In Greece, two years of austerity programs have devastated the economy and triggered riots. Still, the government’s debt equaled an alarming 159 percent of the country’s GDP in the July-September quarter of 2011. That was up from 139 percent a year earlier. Oh, what luck! Now Paul Krugman and other spend-spend-spend economists and policymakers have the argument sewn up. Before they argued that a) additional spending and big deficits were “stimulus” measures. They were supposed to make things better. Now they can prove that b) cutting spending is bad for an economy. It makes the economy worse off...without actually reducing debt. If they can’t win on A, they can’t lose on B. We don’t want to exaggerate the importance of this. But it is as if Mardi Gras is good for you. But Lent is bad for you. Austerity doesn’t work. Spending makes things better. Not spending makes them worse. It is as if the debit side of the balance sheet has been cut off. All credits, in other words. Forget the debits. It is as if we could all have everlasting life without ever dying. Maybe they could show that it works the same for dieters. Maybe they could prove that cutting back on their eating actually causes them to gain weight. From there it would be only a hop-skip-and-jump to concluding that they should eat more! More thoughts, after today’s column... World oil production is about to be shaken to its core... You won’t believe which nation analysts at Wall Street’s biggest banks expect to become the world’s biggest energy producer by 2017 — or the effect it will have on America... our economy... our future... Click here to see who is set to become the new king of oil — and how you can use the news to go for big profits as early as this MAY! The Daily Reckoning Presents A “Nutraceutical” Game-Changer Patrick Cox A while ago at a party, I was talking to eight or nine friends about the biggest events of the last year. Despite the fact that we are currently suffering a financial crisis of the same magnitude as the Great Depression, half of the people around the table agreed that the discovery of anatabine citrate, Anatabloc, ranked among the most-important developments of the year. Imagine! Not a single one of them mentioned Ashton Kutcher’s break- up with Demi Moore. Anatabloc is a dietary supplement for anti-inflammatory support of the immune system. Since many disorders, like coronary artery disease, diabetes, asthma, Alzheimer’s, and rheumatoid arthritis, are caused by chronic low-level inflammation, Anatabloc is a potential preventative treatment for these diseases. Not coincidentally, those friends at the party who did not rank the emergence of Anatabloc as one of the most important events of the year are younger, not yet suffering from the inflammation-related medical conditions that set in during middle age. Some of them take Anatabloc anyway because it is a safe monoamine oxidase inhibitor, or MAOI. MAOIs are antidepressants that aid in focusing and task accomplishment. The term “MAOI,” by the way, is often pronounced like the Hawaiian island of Maui. I’ve seen emails from a number of my subscribers who report similar dramatic improvements in inflammation-related conditions. Typically, I also hear that they have started giving Anatabloc to friends and family, who also report improvements in inflammatory conditions. Then the cycle repeats. For older men, one of the most commonly reported impacts of Anatabloc is improvement in urinary tract or prostate problems. As men age, inflammation of the prostate leads to reduced bladder capacity, which is more than an inconvenience. Not only do prostate problems interfere with sleep, requiring multiple trips to the bathroom at night, but they usually precede prostate cancer. Not coincidentally, recent research shows that statins are associated with reduced risk of prostate cancer. The reason, I think, is intuitively obvious. If the cells of an organ — whether it is the prostate or the thyroid — are swollen, they are not functioning as they should. Moreover, they become the targets of the immune system’s inflammatory axis, which worsens cell health. In time, this vicious circle cascades to the point of organ damage, failure or cancer. This is important because the anti-inflammatory effects of Anatabloc have been shown by the Roskamp Institute to be greater than the leading statin, Lipitor. The name of the study is, “Statin Use and Fatal Prostate Cancer.” Moreover, the world-class scientists who are researching anatabine citrate continue tospeak regularly to large numbers of health professionals at scientific conferences as well as less-formal events. Here, by the way, is a summary of the important research done at the Roskamp Institute. It is not chance that Anatabloc is arriving outside the realm of FDA control. The FDA was set up to minimize patient risk from new therapies — even though it slows access to newer and more-effective therapies. This institutional wet blanket has motivated many brilliant scientists and innovators to look for effective compounds in nature, which is unregulated by the FDA. Anatabloc, therefore, illustrates one of the most poignant ironies of our time. On the one hand, we are seeing the inevitable collapse of utopian political fantasies implemented in capitals ranging from Sacramento, Calif., to Madrid, Spain. On the other hand, we are witnessing astonishing breakthroughs that are actually being accelerated by the downfall of out-of-control government. Anatabine citrate is only one such breakthrough, but you shouldn’t underestimate it. The reduction in inflammation-related illness will not only deliver dramatic improvements in the quality of life for hundreds of millions of people, but will change our entire demographic picture. Anatabloc, by the way, will not be the last disruptive and lucrative therapy to come from the application of modern scientific investigative technologies to the uncountable molecules that exist in our biological biosphere. In the past, I’ve been a relentless debunker of so-called natural products. This is due to widespread quackery in the natural-products industry. That, however, has changed. There are just as many scams as ever being sold in health food stores, but true innovations like Anatabloc are also arriving. Most are still generally unknown to the public, but in the next few months, I’m going to be telling you about additional breakthroughs in this field. So don’t be discouraged by the “directionless” financial markets. Instead, pay attention to the astonishing number of revolutionary scientific and technological breakthroughs that are coming our way. As these breakthroughs dramatically improve many aspects of our lives, they will also provide “life-changing” investment opportunities. Regards, Patrick Cox, for The Daily Reckoning P.S. While we can’t know for sure what breakthrough technologies we’ll be discussing at dinner parties in 2013, I have a quiver of solid contenders that I’m following right now. For instance, I’m keeping a close eye on a tiny California-based company, priced under 80 cents per share, that has the exclusive rights to a patented new stem cell technology. This technology could have the power to “cure” many of the world’s most dreaded diseases...by rebuilding damaged cells and generating new tissue...without the use of controversial human embryos. It’s exactly the kind of breakthrough technology we look for...the kind that could deliver multi-generational profits to early, ground floor investors. Forward-thinking investors can join us here and follow along as this story unfolds. Just don’t wait too long. When the mainstream really latches onto this, my sense is that it’ll already be too late. Patrick Cox’s Technology Profits Confidential Presents... Only 62 People Know Exactly Why These Four Companies Could Change the World Now you’re #63 “on the inside” — and you’re on the verge of raking in lasting wealth. This could go down in history as the story of our era. Click here for all the details. And now back to Bill with more thoughts... Bill Bonner Sometimes it seems as if the whole progress of the 21st century has been used to remove the impediments to catastrophe — good sense, prudence, tradition, rules, principles, and the lessons — learned at such great cost over so many centuries. Like unread copies of The Wealth of Nations or The Decline and Fall of the Roman Empire, they are tossed into the trash bin. No stain of history is left on the spotless mind of the new century. The century began with George W. Bush’s ‘pre-emptive war’ doctrine — contradicting everything nations had learned over at least 2000 years. Even the Romans new better than to go to war unprovoked. Not that the attacker can’t win from time to time. But an aggressor nation sets the gods against himself; eventually, he is punished...often brutally. We saw that as recently as 7 decades ago, when the aggressor nations of WWII — Germany, Italy and Japan — were crushed. But now the US is the aggressor. Can good guys be bad guys? We don’t know, but we think we see the gods edging over to the other side. So too was it long established that the rule of law was more comfortable and agreeable than the rule of men. Law was predictable. Law was fair. Men were given to prejudice, perfidy, and power-struggles. Especially in a matter as important as war, the highest authority in the US — the Constitution — makes it clear that the law must be followed. Congress had to consider, debate and decide. But that law went out the window long ago. In the 21st century it was forgotten altogether. Now, the president can decide for himself how and when to waste the nation’s treasure and the lives of its young men and women. Iraq, Afghanistan, Libya...Sudan...Pakistan...where were the declarations of war? Who needs them? Besides, they just got in the way of catastrophe. And what about Habeas Corpus? That’s gone too. Established hundreds of years ago, to protect citizens from the arbitrary power of their own government, habeas corpus is...well...history. Now, the president can decide who lives and who dies...who gets sent to jail...and who lives at taxpayer expense. But our beat is money. And in the world of money, too, the constraints that kept people from going into bankruptcy and ruin have been removed. Once government leaders were ashamed of deficits. Now they’re proud of them. Once, economists, finance ministers and heads of households tried to avoid debt; now they welcome it. Once, a central banker who created money “out of thin air,” had his private parts cut off; now his manhood grows with the money supply. Once, a banker who lent money at less than the inflation rate was regarded as a fool; now he is seen as a hero. Once, we were happy...young...handsome...and now...oh, never mind. That’s all for us...we’re headed for the hills. Regards, Bill Bonner, for The Daily Reckoning