Time to Face the Facts (Part 2)

Includes: DIA, SPY
by: Mike Stathis

For Part I click here.

Fact #5. Most of the Lost Jobs Will Not Return.

What no one seems to understand is the fact that these job losses are not temporary. Most of them simply aren’t coming back. I’ll guarantee it. The only jobs that will return are those that no one wants; the low-paying, no benefit, dead-end jobs. It’s the same situation that played out after the dotcom collapse. This is part of the reason why there’s been no real recovery since 2001. As I discussed in America’s Financial Apocalypse, it was all an illusion fueled by a real estate bubble. It was another one of Greenspan’s bubble. And now Bernanke is creating his first bubble. But all bubbles eventually burst.

If one examines the data, since 2002 the vast majority of jobs created have been from the government and military. Furthermore, millions of lost white collar workers have had to settle for jobs for which they are overqualified and underpaid. Already, this has led to an underemployment rate of around 25% by my estimates. These trends will continue due to the toxic effects of America’s unfair free trade policies. The implosion of these economic bubbles has only hastened the effects of free trade. And you should expect the cycle of economic booms and busts to persist indefinitely as long as the Federal Reserve runs the show.

Washington will keep pumping in more money; as much as it takes for Obama to stack the odds in his favor for reelection. And yes, we will see a turnaround. But it will be an illusion and it won’t last. This is why Obama’s ridiculous budget calls for funding millions of useless government jobs.

Fact #6. Washington Continues to Hide Economic Data.

As I proved in America’s Financial Apocalypse, we have not had more than two or three quarters of GDP growth since 2001. This certainly has not changed since the release of my book as you can imagine.

When it comes to employment data, Washington pulls out its full bag of tricks to paint a rosy picture, from not counting discouraged workers, part-time workers who want full-time work but who are unable to find it, and temporary workers.

The government’s latest unemployment figures came in at around 9%. But even by another data set that attempts to adjust for many (but not all) of the classifications mentioned above, the official number from Washington is around 16%. Yet, the media refuses to report that. Still, this 16% figure has been sugarcoated.

In reality, the real unemployment rate is close to 18%. While some of this includes the underemployed, the majority are not included. In total, the real unemployment rate combined with the underemployment rate is around 40%. And we have not even come close to hitting bottom.

Meanwhile, the balance sheet of the banks has continued to deteriorate, despite trillions of dollars having been shored up for the industry that destroyed the global economy. Even changes to mark-to-market won’t stop the destruction, so Washington will use more tricks. But nothing is going to work short of nationalization. Even nationalization will only salvage the banks. The remainder of the economy has yet to feel the full effects of the biggest Ponzi scheme in world history. I’m not referring to Bernie Madoff. I’m talking about the real estate and banking Ponzi scheme orchestrated by Wall Street, and facilitated by Washington and the Federal Reserve. Other than real estate and construction, the other sectors of the economy are still in the early stages of the meltdown.

Throughout the entire time, everyone from Fed Chairman Ben Bernanke to former Treasury Secretary Paulson have lied, fudged, downplayed – whatever you want to call it. If you have a good memory, you’ll recall how Bernanke continued to downplay the effects of the real estate mess. In the spring of 2008, he stated over and over that it “wouldn’t be severe” and it “wouldn’t spill over into the rest of the economy.”

Next, Paulson opened his bag of lies, first insisting “no bailouts,” then proclaiming over and over that the banking system was fine. Then the bailouts began. Paulson and company used scare tactics to pass the biggest waste of taxpayer funds in world history. Still, despite all they’ve done, it hasn’t been enough because they have gone about it all wrong. They’ve wasted as many opportunities as they have taxpayer dollars.

Fact #7. The Media is the Most Dangerous Force in America.

Throughout the mess, while you’ve been watching your retirement vaporize, the SEC has not even indicted a single banking executive for securities fraud. It’s been absolutely mind-boggling. I’m very surprised there haven’t been several violent riots across the nation. In part, Washington has the mainstream media to thank, because they’ve hidden the truth from the people, while using scapegoats like Bernie Madoff to distract from the real criminals of the Ponzi scheme; the banking executives and several politicians.

If you already haven’t done so, the best thing you can do for yourself is to turn off the TV, especially CNBC and FBN. If you want to be more proactive, I advise you to call and email these networks and ask them why they continue to hide the truth about America’s depression. Tell them you will never watch again. And then stick to your word. Let a shutdown in ratings determine their fate. You can do the same for the print media.

Many have already abandoned the mainstream media, and the results are showing, with bankruptcies galore. But you must focus your ban on the televised media because this is from where most of the deception and lies arise.

Remember, every time you watch CNBC or FBN, even just for entertainment or even so you can yell at Jim Cramer, you’re boosting their ratings which essentially hands them money. You need to cut the cable. Just do it. I did long ago. If you’re mad as Hell that the media duped you into this Ponzi scheme, you have the power to make them pay the ultimate price. Stop watching and they won’t be able to sell ads. They’ll either be forced to change or they’ll go bankrupt. But as long as you keep watching, they’ll continue to carry out deception and censorship. And when the next implosion occurs, they’ll drag you down to the bottom, just as they have in the past.

The media only reports the problems after it’s too late; after you’ve lost your home or your job, after you’ve lost 50% of your retirement savings. This is how they try to cover up their tracks. Sadly, most Americans are fooled by this cheap tactic. And instead of realizing the media is largely to blame, they are fooled into thinking the media is on their side. If you really think the mainstream media is working for you, take a look at your retirement account.

When I first made my predictions in 2006, very few listened. Others were not aware of me because the financial media shut me out. But some of the best hedge fund managers listened. Today, they come to me for guidance because I’ve been spot on. I suggest you start listening too, because if you’ve been following anyone else, chances are you have been led astray. Ask yourself if you’re still watching CNBC or FBN. Ask yourself if you’re still watching Jim Cramer or the meatheads on Fast Money. Ask yourself if you’re still watching the “boob crew” on FBN. If you are, you really need to take a cold hard look into the mirror and ask yourself “why.” Let your retirement or investment account balance decide whether you’ve been listening to the right people.

Finally, we have the heros; the guys on your side like the “Mark Levines” the “Jon Stewarts” and “Glenn Becks” of the media. Sorry but you’ve been had yet again. The fact is they’ve fooled you into thinking they’re on your side. These are the same guys who have black-balled me.

Regardless how they may have positioned themselves, there’s not a single person in the mainstream media who’s on your side. You really need to wake up to this reality. There are no exceptions. I know this for a fact. If they’re somehow tied into the mainstream media, whether as hosts or guests, they are liars, shills, or idiots. They all have their own agendas. And they certainly aren’t the same as yours.

The media controls the distribution so whatever they report becomes your reality. And if they keep others out of the picture, like me, you won’t ever know I tried to warn you; not in some rinky-dink incredulous way like the media hams that preach doom and gloom, but in a real way with no agendas. What they don’t realize is that more people are finding out about me. And I’m building a very loyal following, not only because I’m right, but because they can see who’s really on their side and who’s screwing them.

If you truly want to understand what’s going on, I advise you to get a copy of America’s Financial Apocalypse: How to Profit from the Next Great Depression; preferably the original extended version released in 2006. This is not some fluff book with generic bologna like you see on the New York Times Best-seller’s list. It’s the real deal. It’s the leading book used by the top investors. Once you read it thoroughly, you’ll see why the media has black-balled me. The truth is too difficult for them to reveal, for it would threaten their financial and political agendas, and those of their partners; Washington and Wall Street. This book will continue to serve as a valuable resource for many years to come because it wasn’t pumped out like most of the books on this topic.

Fact #8. Most of the “Experts” Are Absolutely Clueless.

I’ve already highlighted how Bernanke, Geithner, Summers, Paulson, and others have been completely wrong from day one. They’ve lied over and over. But they’ve also had the help of hundreds of Wall Street and Washington hacks - economists.

By God, if the media says they’re experts, then Americans believe it. In the end, if you’ve lost a great deal of wealth, it’s your own fault for being so naïve. If you verify what the media says and examine the track records of these economists and other so-called experts, you’d realize that they’re here to screw you. And that they have. No doubt, the same game will be played in another few years, just as it was during the dotcom collapse. And if you don’t learn from this now, they’ll take you out again.

Not only am I talking about the economists, but also the hacks on TV and the journalists who treat them as if they’re always right, as if this was the Bizarro World. Furthermore, I’m also talking about the bloggers and self-proclaimed financial gurus. Simply do one thing and you will know who to trust. Examine their track record. See what they were saying one, two and three and ten years ago. As an extreme example, research what Jim Cramer was saying a year ago.

The same goes for Larry Kudlow and the other incompetent bozos and hacks on CNBC and FBN. This also includes the guests they like to position as experts. Determine for yourself if they’re experts by checking their track records. It’s that simple. Also find out if they have been preaching doom and gloom since the 1990s. If they have, they have no credibility. They are either snake-oil salesmen pitching their investments to you, or they’re simply trying to manipulate the market.

The vast majority of these so-called experts are NOT intellectual leaders. They usually repeat what they read from others, or else they are extremists who stick to a doom theme throughout their careers as a way to pitch investments onto you.

Some of the more informed experts (and there are very few) are simply hiding the truth. You can bet that absolutely no one in Washington truly understands the full scope of the problems that lie ahead. And they certainly have no idea what the solutions are. These are the same goofballs who failed to see this catastrophe coming. And they’ve continued to underestimate the severity each month, causing YOU to lose much of what you worked so hard for your entire life.

Sure, now everyone is an expert in this crisis, including the guys who had no idea it was coming, and especially the guys who have been predicting doom for twenty years. But of course, eventually it rains in the dessert. In the meantime, you’ve missed several years in tremendous gains. So the lesson is that yes, timing IS important. But these doomers are also dangerous because they are extremists. And extremists are just as dangerous than clueless individuals. A real expert will know when to sink, when to swim and when to stay out of the water altogether.

If you want to know what’s really going on, what to expect and what the real solutions are, you should look only to the small handful of experts who detailed these problems and warned of them in advance; not ten or twenty years in advance, and not just about a real estate bubble. If you fail to conduct a prudent search, you’re likely to remain deceived just as most always are. This explains why most people get blasted when bubbles pop.

Fact #9. The Only “Change” Obama is Capable of is a Change of Face.

First, you need to understand that I didn’t vote in 2008 because I knew it wouldn’t matter who won the election. So my statements aren’t to support some right-wing agenda. There is no right and no left in Washington. There’s only the middle. America has only one real political party but the media has fooled them into thinking there are two so that you will always have the opposing party to blame, whether it’s the president or Congress. It’s all part of the game and you’re being taken to the cleaners.

America’s unified political party ultimately answers to the Federal Reserve and corporate America. Once you realize this, you’ll stop wasting your time being distracted by the talking heads on radio and TV, who want you to think that America’s real problems are due to bipartisan politics.

But Obama won the election because he promised “change” and hope for the future. It was a PR contest as always. But apparently Obama has a different definition of change than me. To me, “change” means you bring in fresh new faces that aren’t already part of the political mafia. Isn’t that what Obama promised? It also means you mandate real accountability, by sending the criminals who carried out this Ponzi scheme to prison. Isn’t that what Obama promised?

Furthermore, “change” means you uphold the highest standards for yourself and those whom you appoint to serve on your staff. Isn’t that what Obama promised? Instead, he appointed tax cheats to his cabinet and downplayed their fraudulent behavior. To me, “change” not only means you keep Wall Street insiders and lobbyists out of your staff, but it means you get rid of all lobbyist activities. Isn’t that what Obama promised?

Ultimately, “change” as I define it means you do what’s right for the people. America sure could use a heavy dose of “change;” not by Obama’s definition. The only change Obama has brought is a change of face, promising one thing and delivering the exact opposite. He’s been the typical “bait-and-switch” presidential puppet. Meanwhile, most Americans are still caught up in the Hollywood glamour of Obama as they fail to see reality.

Clinging onto false hopes serves no purpose. Rather, you should accept the reality of America’s depression and use it to fuel your calls to Washington. Perhaps if the people unite and protest together as a single force, we just might get some real “change” instead of lip service from Obama.

Fact #10. There is Much More Risk than Opportunity.

Stop looking for opportunity and start looking for safety. Unlike decades before, today most people search for opportunity because they’ve been brainwashed into thinking that it’s always the best time to get rich. This shift in mentality - from wisdom to recklessness - has been propagated ever since online trading began. Who does the brainwashing? Online brokerage firms and guys looking to sell you gold and other investments. And they’ve seized the media as their partner, from CNBC and FBN to the infomercials.

Now, I’m not a gold basher by any means. In fact, I predicted gold at $1400 by 2012 and higher thereafter. And I did so in 2006. But that doesn’t mean you should buy gold now. As you should be aware by now, the gold market is being manipulated so economics will not necessarily drive up the price.

Despite my opinion that gold is headed significantly higher, the reality is that buying gold at $1000 or above is very risky, especially if you do not or cannot trade the volatility. Why might his be? Because no one knows when it will surge, or even if it will for sure. More important, no one knows when it will come crashing back down. And you must understand that the higher gold rises, the harder it will fall eventually. So, regardless what do, make sure you have an exit strategy in place.

And for those of you who might conclude that I’ve made a great case for investing in the banks due to their support from the Fed, you need to think again. If I refuse to touch the banks, why would you? Is there something you know that I don’t? Stop fooling yourself.

In general, the best thing for most Americans to do is stay clear of the carnage. This is especially true for those who expect to retire within the next eight years. It’s much more important to ensure you have adequate savings to handle a layoff or medical illness. If your covered by your medical insurance, I suggest you research the cost of cancer and see if you can come up with a 10 or 20% co-pay on a $2 million bill.

Only the most experienced and skilled investors/traders should generally be looking for investment opportunities. You aren’t going to hear this bit of wisdom elsewhere because most of the people preaching to you about investment opportunities are looking to make money from you. These are the same guys who were saying there were great buying opportunities each month in 2008.

The best way to play this collapse is to buy when you’re scared as Hell, as you should have done a few weeks ago when the Dow hit 6500. Then sell after the rally as I did a little over a week ago. Most people aren’t able to do this because they don’t know how to read the market. If that’s the case, simply stay clear and wait for more certainty.

Now, for those willing to deal with downside risk, if you are going to buy any securities, you need to accept the fact that they will fall lower. If you don’t know how to gauge risk, if you don’t understand valuations, if you don’t understand the full spectrum of what’s happening, you need to be extremely conservative, sticking only with the best stocks that pay dividends. And you need to accept the possibility that even with the strongest companies, dividends may be cut or eliminated.

Finally, if you plan to retire within the next few years, your options are very limited. But the last thing you want to do is gamble. Gambling includes dealing with uncertainty. You may have lost a lot so far, but you could still lose a lot more. Liquidity should be one of your main concerns. Always remember this. Most people lose money in the stock market either because they are forced to sell when they need the money or they panic. You should always keep these things in mind prior to investing.