7 predictions for 2007

#1. Don't be amazed as we enter the "Theatre of the Absurd..."

     Back in the 1960/70's, there was a movement in theatre led by Ionesco, Beckett, Albee and Pinter whose works espoused the theory that human interaction/motivation/will was not determined by cool, logical judgment but by frenetic, emotional irrationality. This, however, provided too great a contradiction for a public mollycoddled by Big Education, Big Politics and Big Business to grasp. Therefore, after a brief stint of notoriety supported by a diminishing Avant Garde, this movement was dismissed as just another brief craze in the world of Art...However...if we trace the history of Mankind, how much is rational and irrational?  How many wars are absurd?  How many rulers are absurd?  How many marriages? How much of the Media and Entertainment are absurd? Don't expect anything that transpires in 2007 to make a whole lot of sense: the Buildup in Iraq (in order to diminish US role)...the rallies in the dollar and stock markets (facing bankruptcy and overvaluation respectively)...the debt-laden consumers treating their financial futures more like poker games/casino gambling/lotteries where there is practically no chance of surviving vs. saving for the future.  The Absurd can continue beyond all points of comprehensibility-until Reality is forced to intercede.

#2, Technicals Will Rule

     Fundamentals eventually rule, however, we are not living in a sane, rational world but one of manipulators, ideologues and power-brokers who rig markets for as long as they can convince others that what they have done is for the Common Good...Thus, don't be astounded to see the dollar rebound against all odds, gold crash to new 52 week lows, banks continuing to finance  the real estate bonanza...Cycles control Destiny.  The rhythms, waves must unfold.   I once saw two boars fight.  Had they had any sense, they would have quit after the first major puncture. No, they had to continue the carnage until one had died and the other was mangled beyond future "service" to the community...Stupid me. I tried to break it up and wound up with torn tendons in my knee.

#3: Desecration of the Middle Class

     Less than 10% control over 70% of the wealth in the US. Does this smack of "Democracy?"  Not that I am advocating a Cesar Chavez (with crotons) socialization remedy, for those who do not educate themselves, develop a work ethic and care for others do not deserve equal footing on the economic front. However, a travesty occurs when the "Monetary Elite" decide to bend rules, bilk stockholders, use political influence for their personal avarice.  It is obscene how CEO's can bankrupt companies while still awarding themselves stock options and bonuses.  Is there a solution?  Possibly there will never be a solution for Greed, but we can put the brakes on it by returning to the Graduated Income Tax with a salary cap of say, a million dollars. If a person cannot live on a million dollars in relative comfort, then commit suicide and cede your Estate to people far more deserving. 

#4: Lies and More Lies by Our Favorite Government

     The Democrats claim they have a mandate from America to halt corruption and return the power back to the People. Noble words, noble intentions, however, the System is so innately corrupt that, to use my Daddy's favorite adage, 'Can a leopard change its spots?'  The very basis of our banking system, the Federal Reserve, the Treasury is corrupt.  The statistics we are given are "altered" to convince the gullible ones, both domestically and internationally, that we have a sound, strong economy and that just because you have lost your job, can't pay your bills, have watched your paycheck deteriorate, stats will show the rest of America is prosperous!  Hedonic CPI's, Birth/Death Employment figures, Federal Deficits, to name but a few, are based on grains of sand disappearing into a vast ocean.  Talk about the Theatre of Absurd and how people still believe in Uncle Sam-ta Claus!  

#5: The Japanese Juggernaut

    We have an impasse in Asia.  As a hangover of US might in World War II, the Japanese still revere the US Atomic Phenomenon of the 1940's where, after victory, we showed both compassion and help in bringing Japan not just to its feet but delivering it to the forefront of Capitalism.  Japan still feels beholden, failing to realize that the Empire of 2007 is a far cry from that of McArthur and Truman. In accommodation, they provide the world's inflation-mongers with the Yen Carry Trade which, translated, means any trading partner to Japan can borrow at 1/2%, then buy another currency yielding higher rates of return.  Even knowing the US dollar is headed to the Road of Insolvency, wouldn't even a fool take a chance of a Two Year Treasury yielding close to 5%.  Only when they realize we are the New Banana Republic will they stampede the nearest dollar fire exit for reprieve!

#6: The Leftist Pendulum

     The Iraq War may or may not have deterred Terrorism, but one facet that has evolved: the World in general is swinging back to Leftist Regimes.  Venezuela, Nicaragua, Ecuador, Chile--just to allude to the Americas--are populace movements shadowed by the vigilant eyes of superpowers China and Russia. Wouldn't it be ironic if the world's riches were controlled by the Communist Bloc?

#7: Gold Will Advance Under the Radar

     Here is a gold corollary: those countries printing money or running deficits will be the enemy of gold; those countries with a favorable balance of trade and with a stake in commodities to insure growth will embrace gold.  It behooves US printing presses to undermine any strength in gold and since the gold market lacks the liquidity of the hedge markets, any number of shenanigans can cause disruptions in the supply/demand equation.  Eventually, gold will assume its true value relative to fiat currencies...but there will be hell to pay... Remember that back in the 1970's when gold exploded to reach its zenith in the 800's, every up-cycle was followed by a vicious down-cycle. People were throwing up their hands, giving up, shorting gold in exasperation...Remember this: we have not even entered the second phase of the gold bull market. The longer we stay in the corrective phase (B) of the first movement, the stronger the Second Movement, the ultra-bull phase (C) where the big money will be made, will be.  Be strong of heart and hope gold stays under the radar so that dishonest currencies do not wage a blood-thirsty war!

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