Martin Weiss - Martin D. Weiss, Ph.D.

Today GM … tomorrow America: Will we survive?

by Martin D. Weiss on June 2, 2009

Click here to post your comments …

Yesterday, the unthinkable happened: General Motors — one of America’s oldest, largest and most respected companies — went bankrupt.

This morning, this venerable, 100-year-old company …

This firm that survived two world wars … The Great Depression … the Korean and Vietnam wars … the oil shock, recession and runaway inflation of the 1970s … and scores of other shocks over ten long decades …

This great icon of American innovation and success … won court approval to begin liquidating its assets as soon as possible.

These are dark days indeed — a personal catastrophe — for GM’s employees and for hundreds of thousands of other workers at dealers and suppliers who thought they had jobs that would last a lifetime.

But the implosion of GM is more than just the guarantee of surging unemployment rates as far as the eye can see. And it’s much more than just the failure of one of our most powerful engines of economic growth.

For nearly a century, GM has served as a metaphor for the overall U.S. economy — the harbinger of things to come for the stock market, for investors and for every American family.

For nearly five generations, most economists accepted the mantra, “As General Motors goes, so goes America.” And those words were never truer than they are today.

The simple truth is, debt killed GM. The company could have easily weathered this economic storm had it not buried itself beneath a $173 billion mountain of debt.

Is America Next?

In its failed attempts to save GM, AIG, Fannie and Freddie, the entire banking sector and many other companies, Washington is now creating its own Mt. Everest of debt.

But Washington’s debt bubble makes GM’s pale by comparison — and it’s inflating the size of that bubble at the staggering rate of $3.8 billion per day.

As we’ve seen in recent weeks, Washington’s record-shattering spending binge is already crippling the economy. Treasury prices are cratering. Rising interest rates — the kiss of death in a weakening economy — are already increasing borrowing costs for companies and consumers.

Meanwhile, in what has proven to be a failed attempt to stop the surge in interest rates, the Fed is feverishly printing dollars — creating money out of thin air — to buy more than $700 billion in bonds so far this year.

So the question of the day — the single most important question any investor can answer now — is simply this:

Will America survive?

How do YOU feel rising interest rates and record-shattering money-printing will impact your income and investments in the weeks ahead?

Which investments do you expect to spin off substantial profits next? Select U.S. stocks? Foreign stocks? Currencies? Precious metals?

Your opinion is critically important to me personally and to all of us here at Weiss Research. Just scroll down and use this blog to let me know what you think.

My team and I will meet you there to address your concerns, answer your questions, respond to your ideas and help in any way we can.

Good luck and God bless!

Martin

{ 1274 comments }

Richard Perkins June 4, 2009 at 2:15 am

I am the eternal optimist about this great country of ours. We will survive, I trust, but not without some major damage to our ecomomy, our people, our government and our position as a world power. Unfortunately, Dr. Weiss, you have foretold the issues we now deal with, however, no one in positions of power have chosen to listen. I find it such a frustration that the fact you have done this for years now and our leaders don’t make the connection that your wisdom might just be proof that your solutions are valid.
My prayer for you and yours is that you will not be discouraged and never quit making the case for the salvation of this great nation of ours. NEVER QUIT!! We need you.
God bless you all!

Wil Casebow June 4, 2009 at 2:15 am

Dear Martin,

The United States should be the most wealthy country on earth, but it has forfeited that to the greed of the population for wanting the government to provide everything for them. It is just as Jefferson stated that we give you a republic – if you can keep it. Pravda article last week that “American Capitalism gone with a Whimper”, other countries recognize the problems and they need to protect themselves. If you go to the bank for a loan, you do not tell the banker what the terms and conditions will be, the banker tells you, that is the same now with the foreign lenders, they have the right to tell the US what the terms and conditions will be.

This country has all the attributes that made it the most wealthy, except the people who now demand that their every want be supplied and paid for by the producers of wealth. The only producers are those who operate and are employed in private enterprise, very few government employees and no receivers of government largess, including the pensions of government employees, is a producer and are therefore contributing to the downfall of this (should be) powerful and wealthy country. There are many others who are also destroying this country while professing to be contributing to its well-being.

The future may not be kind but we will need to get back to the basics that this country was built on, and quickly.

(Annonimous) Wil

charles harris June 4, 2009 at 1:57 am

Our America is most likely lost

The Liberal progressives,now in charge,are not a bunch of Nuts that just don’t know what they’re doing.They know exactly what they are doing and are being very sucessful on the way to socialism.Many followers and by-standers belong to Lenin’s team of “useful Simletons”.

Do we really see what we’re dealing with?

Please advise.

Petra Groenewegen June 4, 2009 at 1:39 am

For my own preservation, I have cancelled all my Superannuation shares. I would like to find a trustworthy stockbroker who deals in metals and Asian stocks. Does anyone where I could find one!? I live in the bush in Australia and am in my 70′s.
Mr Weiss I find your opinions very refreshing in honesty. Have you got an office anywhere here in Australia?
Petra

Ronald Pool June 3, 2009 at 11:06 pm

It seriously concerns me that a stock which traded at more than $90.00 per share just a short time ago today is valued at just $.75. How is it possible that GM can survive such a downturn? They can’t even pay the light bill at that rate. The government can’t continue to bail them out forever. When will it possibly end? I think I understand the immediate and peripheral impact of GM failing but can we allow this and other companies, including banks and mortgage companies, to bring this country to ruination? I am beginning to believe that it has to be a “sink or swim” situation. `1929 may have been bad but I am beginning to believe that we may not have seen anything yet!

carol helton June 3, 2009 at 10:46 pm

Will you please explain to me why the stock market has been surging? It does not seem logical to me, because I really feel we are in financial peril – so many people un- employed and so many companies and banks going bankrupt. They are just putting bandaids on and we are bleeding profusely. Any comments on this would be very much appreciated and I hope your answer will enlighten me, because frankly I am in the dark and v-e-r-r y confused, indeed. Thank you for your input. Looking forward to your response!

Gary lockart June 3, 2009 at 10:41 pm

Even a 10 year old knows that we cannot spend our way out of debt. Germany tried to get out of their mess doing just what we are doing, and they went into a period of hyperinflation. The bailouts will only make things much worse. Thank you Washington! for absolutely nothing. I’m sure we are looking at the begining of the end for the US dollar and God help us, maybe the end of our great country.

charlotte mastellar June 3, 2009 at 10:32 pm

I am a type two and right now the bounce that I have missed is driving me crazy….I beat myself up for having missed the 2003-2007 rally and now again missing this rally. The main reason for being a type two is that almost all of my money is in a 401k and we cannot use reverse ETFs to go for profits. We must catch the bounces/rallies and then move to the treasury fund or money market fund during market crashes. I hope the market crashes again so I have another chance to buy the rally.

Rick Broquet June 3, 2009 at 10:24 pm

Will America survive? The short answer – YES.
I share the same view as Rick Jensen in the change of the corporate work culture. After SOX, many firms opted to get delisted in order to take the long term business survival view vs. the quarter by quarter performance views by Wall Street. Rick’s assessment of China buying up U.S. physical assets is also spot on. I would only add that China will be buying assets that will improve it’s countries industrial production capability along with improving it’s military capability. Selling the Hummer line to China is supporting their military build up effort and not providing cars to the people in Beijing. I too have traveled there on business and an Olds Alero would be a big car in that city.
I also agree with Dan Goebel’s historical accounting summary of the central bank’s attempts and eventual success at inserting itself between the people and government to manage both while getting a cut of the action from both. Cutting out the middle man is also spot on with regards to having a true restoration of the Republic that our founding fathers envisioned.
Robert Pretcher’s 1996 book “At the Crest of the Tidal Wave: A Forecast for the Great Bear Market” was a compelling read in 1996 and even more so today. Base on the arguements presented in this book, which has thus far been very accurate, the economic and social outlook will be grim for the remaining century. The next 40 years will be particularly painful as the excesses are purged. The final low is predicted to be around 2092-2095 time frame. On the positive side, Robert is like you with regards to using these economic charts, cycles and understanding of human behavior, society, governments to navigate through the negative trend to stay focused on reality, protect the family health and wealth.
I don’t know what form of government the U.S. will become over the next 10 years. I do expect the current direction that is being forced on the population through those currently in power will back fire, there will be some form of revolt on the raiders of the U.S. Treasury and those in government that is allowing the raid to continue. It is going to be very ugly in a multitude of ways and those individuals relying on the government or business to keep their promises will become fodder. We only need to look a Katrina or the various city riots in the 60′s to see how quickly things can deteriorate and who suffers.
When the entitlement mentaliy is erased from the population, the Robin Hood philosophy is removed from government it will be the begining of the new foundation for prosperity.
It won’t happen in my life time. It might with my great grandkids.

Keep up the good work Dr. Weiss.

Best Regards,
Rick Broquet

Bill Snyder June 3, 2009 at 10:20 pm

In the 1920′s, and early 30′s the UAW provided a needed collective bargaining tool. In time General Motors, and the other 2 companies of the “Big 3″ found that they could pretend to “bargain”, and then give the UAW almost anything, and pass the costs on to the car buying public. When Japanese auto companies saw how overpriced American auto companies were, it was the beginning of the end. With labor costs of $70 per hour, bankruptcy became inevitable. I knew GM employees who referred to GM as “Generous Mother” because of its wages and benefits, including “SUB” pay. Both General Motors and the UAW must share the blame.

Tom Schaefer June 3, 2009 at 10:16 pm

The good news is that as of December 2008 the BIS bank has recently reported that the over the counter (notional amounts outstanding) value of Credit Default Swaps had dropped to $41.868 trillion dollars from Junes 2008 high of $57.324 trillion. Thats a drop of $15.456 trillion. Too bad no one knows the remaining value that does not appear on the banks books : as the large banks write this off it shows up as income. Now we have to look forward to the GM and parts suppliers default events. There has to be another leg down and and as Martin Weiss points out: If interest rates go up, more defaults and if interest rates are kept artificially low by printing money because foreign investors start pulling out, we get inflation. As the rest of the toxic assets magically appear as income gains on the books of the major banks more surprises are on the horizon. We still have a way to go as we deleverage. I believe the only way we get out of this will be to produce our way out and get back to making something of value that people want to buy. In two years or less we will be forced to correct and get back to a market economy by reversing the spending and making the cuts necessary to rebuild our manufacturing base. We need a hub and spoke system of major companies of scale supporting the communities and the small businesses that feed them. Must deal with the unbalanced taxes on our products being shipped overseas to Europe and China for example. I still believe that the American worker with good leadership can out produce anyone as long as they have a fair and balanced playing field. The question is how soon can we get back to the basics and use the creative talents and energy of the American People. In the mean time, I am sticking with ETF’s taking short and long positions. Tom

Tom Abbatiello June 3, 2009 at 10:02 pm

Martin , I’m not at all sure how this story turns out . The government intervention adds an unknown variable to the equation that attempts to model the 1929 sequence of events . Growing up with parents that were young adults during the 1929 period we practiced living within our means and I find those concepts have guided my life also . I fundamentally don’t believe you can use monopoly money to solve real and serious problems .
As far as how to navigate the financial storm we are in I must rely on organizations such as yours to provide direction. I participate in the Million Dollar Contrarian and several other subscriptions . I am sometimes confused by the diverse advice that issues forth . I am looking for precious metals and the far east to play an important role going forward . Tom

Barbara Schexnayder June 3, 2009 at 9:58 pm

I have never been afraid for and of my country the way I am right now! I always believed if I paid my taxes and led a lawful life I would succeed and live the American dream without interference from the government. I no longer feel this way and am very afraid and feel helpless to do anything about it. This government scares the hell out of me!

gwenn fischer June 3, 2009 at 9:16 pm

We are an elderly farm couple who have always kept our money in local bank and used Ed Jones Co. for other investments. On their advice, we have lost 40% of our life savings and we are too old to have any way to earn it back. Ed Jones guy told us not to buy more farm land but we did on our own and that was smart (and lucky). Then I wanted to buy a small amount of gold stock (GLD) and he laughed at me but ordered it. It is one of the few things that have gone up. Is there any way ordinary hard working people can believe anyone in this crazy world of investing? Thank you for listening.

Jean Brooks June 3, 2009 at 9:09 pm

I regret to say that our government is out to destroy the working class. Perhaps this is the inevitable goal of all governments. It seems like only Ron Paul gets it. Most unfortunate but, yeah, we’re going down.

Thomas Bradfield June 3, 2009 at 9:03 pm

I feel completely helpless as I watch what has been considered the greatest economy in the world wither and die as we spend our way into the abyss. It may be true that an unrestrained and greedy capitalist market system has brought on it’s own peril, but I cannot understand the lack of courage by our Government leaders in dealing with this crisis honestly. I don’t know if you are a God fearing man, but Heaven help us. I have completely lost faith in our systems ability to recover the damage that has been wrought on us all.

Tom

Dan Ray June 3, 2009 at 8:44 pm

from the Glenn Beck radio & show today, question:

IF THE FEDS PULLED-IN SPENDING SOON, WHICH CONGRESS MIGHT GET SCARED INTO DOING WHEN THE U.k. ELECTS A NEW GOVERNMENT NEXT WEEK, WOULD WE STILL HAVE THIS DOWN-TURN IN THE MARKET THAT WE’RE WAITING FOR?

marcibulsky June 3, 2009 at 8:35 pm

I think the whole picture is depressing for everyone but the big money people who are constantly on the dole from the federal administration. Abraham Lincoln said that the only ones who can destroy America is America itself, and we are doing it. China is buying Hummer. What next?

Perry M. White June 3, 2009 at 8:24 pm

No doubt, USA is on the slippery slide to Socialism. There are too many people with their hands out. I am very disturbed about our nation and its abandonment of the Constitution, Bill of Rights, Ten Commandments and the Golden Rule. It makes for much confusion in just what to do with ones finances. Maybe its best to stay in precious metals and Oriental stocks/funds. I am with Joseph Devanzo on Dodd and Frank. I could name a few dozen more Congressmen that I would like to see put out to pasture but I hate to fund their rediculous retiremnent benefits.

theodonre griffi June 3, 2009 at 8:14 pm

wow this is really going to flip the boat . we will see and drastic change in july after the 4th . the market will take down to 6800 remember to give me cut

Charles Winfield June 3, 2009 at 7:53 pm

The simple solution is a return to the constitution. The assumption was made that only honorable men would become part time participants in the government. However a small group of dishonorable men have captured control of far too many parts of government and industry. As more and more men became dishonest and ruled by their lusts it became increasingly inevitable that the country (a constitutional republic) would cease to be. It is just a matter of time.

Sue June 3, 2009 at 7:39 pm

I think we should bring all the US. companies back to the U.S. and also do away with Gatt. The american farmers used to feed the world and you took away their supports and look what a mess you have now. Most of the small ones had to quit which is what they wanted in Washinton. Also, what about the island off the coast of Florida all the wealthiest go to to decide what they are going to do to us next and do they receive special monies? Is this true?

Jack Franscioni June 3, 2009 at 6:52 pm

To me the job market is the best criteria. Unemployment brings everything down.

After the depression–as the jobs slowly appeared things turned around. The deeper in debt we go–the longer the recovery

Albert Dietschi June 3, 2009 at 6:04 pm

Greetings,

The financial side of Uncle Sam is frightening enough. What concerns me even more is the economy. The American consumers make up (or made up) about two thirds of the GNP. With increasing amount of unemployment and dwindling of credit I can only see a shrinking economy and possibly even social disorder. I wish I had more positive comments.

camelot knight June 3, 2009 at 5:52 pm

Something interesting is happening in the gold market. Although the price of gold has risen, it does not reflect in any way its true value. Do you agree that if there were no manipulation in the market by the ROTHCHILD control cartel, the price of gold would have skyrocketed to at least $1000 per ounce?…and if so WHY?

Thuat T. Nguyen June 3, 2009 at 5:42 pm

Bravo Martin for your great work. Reverent regards to your father.
I trust you for cleasightedness in Money and Markets.
What doom the present economy system is simply human greed. Our Administration never dealt with it. G8, G20 avoided this fundamental factor. They reject God and His commandments to trust on human laws and wisdom. We are all to make our accounts with God.
Wishing you and your team the best. Thanks cordially.

William W. Thayer, M.D. June 3, 2009 at 5:32 pm

Since retirement 12 years ago, and especially after 2001-2, I realized I knew nothing about investing and spent my time reading books and newsletters and attending AAII meetings hearing hundreds of speakers. I have learned not to be greedy (risk) and to preserve capital at all risks. Methods which work in an up-market, fail in a down market.
At present I am totally invested in junk-bond funds, but check them daily and will sell without fail if they fall below a 30-day moving average.

I am not optimistic. The present economy is worse than in 1929-33, and the bear market will be as bad in the next ten years as it was then, IF WE ARE LUCKY. However, that is the best-case scenario; our present actions are almost certain to fail.

In the worst-case scenario, the United States will follow the course of Rome in the year 476 A.D. (total collapse), and will carry the rest of the world down with it. Rome’s Vandals will be replaced by the Taliban and like groups, and intellectual activity will be suppressed for a thousand years, as it was then. My reason for this latter opinion is that the problem is not just financial, but much broader. Already, 20 countries cannot govern themselves or feed their people and are on the verge of collapse [Lester R. Brown: Could Food Shortages Bring Down Civilization?, Scientific American, May 2009, pages 50-57].

WE HAVE A LOT TO THINK ABOUT AND MOST PEOPLE ARE NOT THINKING CLEARLY AND ON A BROAD ENOUGH SCALE. AGGRESSIVE ACTION SHOULD HAVE STARTED YEARS AGO.

William W. Thayer, M.D., Pasadena, CA

Jerry C. Scott June 3, 2009 at 4:59 pm

I’m conflicted about whether we are headed for inflation or deflation. Either way spells trouble.

I feel the safest investments at this time are precious metals and foreign (oriental)stocks.

Several months back you recommended/suggested two gold dealers. Could you please repeat them for me. Thanks

George Hessling June 3, 2009 at 4:53 pm

America will survive, but in a different form. Every new generation must learn its lessons, and few members of those generations ever learn by listening. Most must learn through the hardest lesson of all – personal suffering. Nevertheless, people do eventually accomodate themselves to new situations and even search for solutions to problems created by past mistakes and abuses. Not everyone will want to travel in a new direction, so some never learn the lessons, no matter what amount of suffering must be endured. We are in the midst of great change and while it brings instability it too will bring great opportunities for those who are open, vigilent and not affraid to move in a different way.

Larry C. June 3, 2009 at 4:51 pm

Yes, we will survive but our standard of living is going to drop significantly. I have been completely dismayed that our government stood by silently when American Corporations moved their headquarters off shore to avoid taxes, when those same corporations exported millions of jobs (and technology) to somewhere else, and our government looked the other way while millions crossed our borders illegally to take our jobs.

Our markets are going to be tough to make money in for a long time. Maybe like Japan for the last 15 years. My favorite trend is the World’s growing population and shortages of life’s necessities: water, oil, natural gas, copper, wheat, corn, uranium, alternative energy, etc. I think natural resource companies are going to be the place to invest for a long time.

Marilyn June 3, 2009 at 4:47 pm

If the “government” thinks it can run an auto company, remember Yugo?

Rich June 3, 2009 at 4:26 pm

I agree that the economey continues to weaken abiet at a slightly slower rate , at present. I also agree that the the money printing and spending is only going to destroy us down the road. None-the-less, the market continues on this bear rally. It seems the volume is slowing but momentum is still indicating on the upside. I’ve been trading small positions on the up side with tight stops while buying down inverse etfs. Any advice here would be geatly apprieciated. Thanks, Rich

Dan Goebel June 3, 2009 at 4:16 pm

I recommend reading the book “Meltdown” by Tom Woods. As a Senior fellow at the Ludwig Von Mises Institute I think he has a pretty good handle on what created this mess. The Federal Reserve is to blame. This private banking cartel has been illegally given the power to create money out of thin air by the Federal Reserve Act of 1913. Indeed Congress was given the power to coin money and to regulate against counterfeiting by the Constitution, but they were never given the power to delegate these powers, much less additional powers, to a group of private bankers. These private bankers control our entire monetary system behind closed doors. They are not required to comply with the Freedom of Information Act, and have been found to be a private institution by the U.S. Supreme Court. So, why does the United States Government barrow money from the “Federal Reserve” at interest when the United States Treasury could, and has prior to 1914, print money without paying interest to a private banking cartel? It is because some rich bankers got together in 1910 and set up a plan to control the United States currency. They financed both major Party candidates in 1912 and thus were able to get the Federal Reserve Act passed in 1913. The Federal Reserve is a Privately run Central Bank very similar to the First Bank of America which Jefferson was able to kill, and the Second Bank of America that Jackson was able to kill. The difference is that the other two Private Central Banks lasted less than 20 years while the Federal Reserve has been controlling our economy for 95 years.
It should not surprise anyone that the Second Bank of American created a Depression in the 1830′s and blamed it on President Jackson who was trying to abolish the private Central Bank. In his retirement Jackson was asked what his greatest achievement was and he responded that he “beat the bank”. Indeed he served our country well as we had a free market economy for over 70 years before another private central bank took control of our monetary system in 1913.
The Federal Reserve created the current mess by artificially keeping interest rates down while they created more money out of thin air. They have created period of booms and busts by controlling the interest rates. This has allowed their member banks to unjustly Capitalize during periods of bust. We are not even allowed to know the names of all the member banks of the Federal Reserve. Many of them are foreign bankers who have little interest in the welfare of America, yet they control our entire monetary system. It is my guess that the Federal Reserve has planned the destruction of the U.S. dollar so that it can be replace with a new world currency controlled by a new, privately run, World Bank with many of the same members.
Can America survive this?? Not if we let it happen! We have already seen gross violations of our Constitutionally guaranteed rights implemented by people that have been sworn to protect these very Rights. This is not the America I grew up in, nor is it anything like what was envisioned by those who created the U.S. constitution. However, I do think that we can restore the Republic if we can get Congress to Repeal the Federal Reserve Act of 1913 and require that all money be issued by the U.S Treasury. NO more “Federal Reserve notes” and things will get better for real people.

Plinio A. Iglesias June 3, 2009 at 4:08 pm

Financial Hurricanes,once continuity of production of goods & services is lost we are back to square one again, you can’t suite talk fundamentals.

joseph davanzo June 3, 2009 at 4:07 pm

I do not understand why there is a general lack of scrutiny by the press of President Obama. Is the press afraid of being called racist. I do not mean criticizing for the sake of wished for failure on the part of Obama. Rather, healthy, genuine and informative scrutiny. I don’t understand why Senator Dodd is untouchable, as is Barney Frank. Why complain about bonus’s at AIG, when they were also given out at Fannie Mae and Freddie Mac. NO one ever mentions that Congress gave themselves a cost of living increase. So who is sharing the Obama pain. Too much lying and no counter opinions.

Tarun June 3, 2009 at 4:06 pm

Dear All and Martin:

IMO, thigns are changing faster than we can keep up with them … A lower dollar is going to fundamentally change stock valuations to the point where the Markets can go uo to unheard of levels .. thus, using short strategies are going to be extremely dangerous … I follow the work of Jim Rogers a lot and I have learnt over the years NEVER to bet against JIm Rogers …. he was shorting housing stocks in 2005 …. P E R F E CT Timing …. and now what?

Jim Rogers: S&P Could Go to 50,000

http://finance.yahoo.com/tech-ticker/article/258129/Jim-Rogers-S&P-Could-Go-to-50000?tickers=dia,spy,xlf?sec=topStories&pos=8&asset=&ccode=

Martin: What do you think? This is a very plausible sceanrio …. in that case …. betting on a market downtun is suicide … which is leading me to the next point …

2. Use of LEVERAGED ETF’s and dangers of drawdowns –> Brutal math …

If your on the wrong side of the trade with a leveraged ETF … don’t expect to get your money back in linear way if the market returns to the level where you bought them:

The main problem with short ETFs is that as the underlying indexes get lower, small dollar moves become large percentages, especially in 2X funds. This math works against you as the market exhibits volatility on its way down. A dollar of loss in an index wins you a smaller gain in your short fund than a dollar of gain in the index from that lower level gives you a loss in your fund. Here’s an illustration:

Imagine if XLF (a financial index ETF) goes from 20 to 19 one day, and SKF (SKF’s 2X inverse) goes from 100 to 110.

$1 out of $20 is 5%, so SKF goes up 10%

$1 down = $10 up

The next day XLF goes from 19 to 20, so SKF goes to $98.42 . $1 out of $19 is 5.26%, so SKF goes down $11.58.

XLF is back where it started, but SKF is down 1.42%.

As many have learned in the bounce from the March 15 lows, this math can be brutal with larger percentage swings, and these moves will only get wilder as the market goes lower.

SO –> When using SKF or SRS … trade for SHORT TERM ….

Martin: Please advise accordingly … many have been burnt becuase of the LACK of knowledge ….

Allan M. Harris June 3, 2009 at 3:34 pm

Martin, I am a member of your contrarian account and am following your direction very close. However, about one year ago I purchased about 12 Master Limited Partnerships that pay dividends on average of about 9% and have continued to do so year over year.
As you know these are mainly Pipeline companies whose revenues are very stable. I have also bought your suggestions as I believe that my country is heading for a major fall. My downside should protect my upside. While I lose on one end, I make on the other. Not very productive, but certainly safer. What do you think about MLP?
Allan M. Harris

Jonathan Schwartz June 3, 2009 at 3:34 pm

Dear “weiss research Inc.” as always superb, great reading material, keep it comming.
keep us informed and well educated to counter the “dummying down of America” of recent past.
p.s. I read your articals on “newsmax.com”

Jonathan Schwartz June 3, 2009 at 3:32 pm

Dear “weiss research Inc.” as always superb, great reading material, keep it comming.
keep us informed and well educated to counter the “dummying down of America” of recent past.
p.s. I read your articals on “newsmax.com”

Richard June 3, 2009 at 3:30 pm

Article 21 of UN Resolution 217 The Universal Declaration of Human Rights should remove democracy and elections as a human right and replace it with good government where governments are judged by how good a job they do not the political system they use. The US legislature encumbancy of evil supported by their attack voters is the global engine of crimes against humanity occuring on our home planet and in deep underground military bases. They are using the plutocracy to advance their fanatical agenda of forced democratic fascism and left unchecked will destroy both america and our republic and may start and loose world war three in the process.

HERMIE STRIDE June 3, 2009 at 3:30 pm

DEAR MR. WEISS,

I UNDERSTAND THAT THE HOUSE WILL CONTINUE TO FALL DOWN. I STILL OWN ANOTHER HOUSE WHICH I BOUGHT IN 1990. I INTEND TO RENT IT TO A FAMILY BUT AFRAID OF THE CONSENQUENCES. I AM LEANING TOWARD SELLING IT, I MAY JUST BREAK EVEN WITH MY INVESTMENT. WOULD RECOMMEND TO SELL IT OR TO RENT IT?

I AM SO UNDICISIVE. PLEASE HELP.

THANK YOU,
HERMIE

KAREN WARFIELD June 3, 2009 at 3:27 pm

MARTIN, BLESS YOU AND THANK YOU SO MUCH FOR KEEPING US INFORMED.

A GOOD QUESTION WAS ASKED ABOVE ABOUT A “BANK HOLIDAY.” IF YOU HAVE SOME CURRENT INSIGHTS ON THIS POSSIBILITY, PLEASE SHARE THEM WITH US.

I’M WONDERING WHEN, OR IF, THE GOV’T WILL DECLARE OUR CURRENT USD TO BE OBSOLETE AND REPLACE IT WITH A NEW FIAT CURRENCY. HOW MUCH WILL WE END UP WITH? WILL WE BECOME IMPOVERISHED OVERNIGHT? ONE CENT ON THE DOLLAR? TEN CENTS? WILL IT BE MORE OR LESS DIFFICULT FOR PEOPLE TO PAY THEIR CURRENT CREDIT CARD AND OTHER DEBTS IF A NEW CURRENCY IS IMPLEMENTED?

Frank Ellisor June 3, 2009 at 3:05 pm

It could happen? The government could devalue the dollar. Today you could have $10.00 in your pocket, and tommorow only $5.00 inbuying power. This has happened in Mexico and other countries, and may happen in America. The future is not looking the best at this time.
In time America will recover, but at my age it may be too late.

Mary Shields June 3, 2009 at 3:01 pm

I applaud your outstanding efforts in helping investors cope with the current financial tsuanmi that’s hit our country, and I agree, that “as goes GM, so goes the the US economy.” We haven’t seen anything yet, with unemployment figures. The ramifications of the GM bankruptcy are yet to be felt by the general population and economy. I believe that capitalism works, and I believe that the “silent majority” feels the same way, but we have a president and Congress that seems hell-bent on destroying our country and our way of life. The silent majority must be slient no more, if we have any hope of saving our country from socialism and fascism.

leet denton June 3, 2009 at 2:55 pm

GM will exit from bankrupcy and become a very suprisingly profitable company. If we can create value in the auto industry by inovative products that everyone wants-like the I phone_ we will be better than alright.Unleashing this creativity in the auto and other US businesses is the key to survival and prosperity. Our large companys are now burocracys like our government with too many commities and consultants needing to aprove every move. We can and will do better

Rick Jensen June 3, 2009 at 2:52 pm

Will American Survive?
Yes, but in a form my generation won’t recognize! Traveling overseas extensively on business for 25 years, it was obvious countries lacking modern manufacturing capability were the poorest – failure of GM and countless others is driving us down the same path. A service economy is an unsustainable myth. When I entered the workforce in 1963, CEOs and company executives worked their way up from manufacturing, engineering and marketing groups within the companies – they knew the company, products and markets inside-out. Over time outsiders with primarily financial and legal backgrounds were brought in – with short-term objectives to further “their” career and move to more powerful positions in larger companies. This resulted in short-term planning – making them appear successful – at the expense of long-term planning. This also resulted in excessive debt, inefficiency, severe reduction in internal R&D spending (lifeblood of a company) and eventual loss of market share. At the same time, graduates from our top universities focused on “quick riches” within barely-regulated Wall Street, Investment Banks and other financial institutions – “quick riches” usually meant flogging investment instruments which previous generations would have recognized as “fraudulent”.

Wall Street and associated rating organizations substituted “easy to apply” complex math formulas for reliable but laborious in-depth research – resulting in derivatives too complex to understand – a major contributor to our current financial crisis. Many of these derivatives are fraudulent in nature, but disguised by complexity. The total value of derivatives in our financial institutions is SHOCKING – but never mind, capitalism has been suspended by removing “mark to market” – the only way an asset can truly be valued – extending the life of failed institutions.

Government bailouts are “always worse” than bankruptcy – which capitalism demands. Creeping Socialism is a fear, and rightly so if Government involvement is not short-term – we’ll see. I don’t see bailouts helping, even in the midterm – miniscule compared to the size of the problem.

I see a probable end result – China is currently buying resources, technology firms and key assets with borrowed money using their huge surplus of U.S. dollars as collateral – greatly increasing their wealth over the long run. Eventually China will be buying U.S. assets in quantity, and the majority of us will work for them!

I only see two probable future paths for the U.S:

1. Eliminate legalized payoffs from K Street Lobbying Firms to our representatives – returning us to Democracy from an Oligarchy of Bankers – will never happen unless there is blood in the streets.
2. Drift into true Socialism under pressure from organized voters suffering in a long-term economic crisis.

In either event, the Dollar is toast – when hyperinflation takes hold after a deflationary period that “could” last years. China comes out the winner.

MKMac June 3, 2009 at 2:45 pm

I’m a longterm investor and am interested in your opinions on longterm trends and the investments that would profit from them rather than short-term investments.

I enjoy hearing your investment advice. Thanks for the help!!!

don adams June 3, 2009 at 2:37 pm

i have very much injoyed your e-mails. Im a small contractor and have been in business for 15 years, I made a good living not getting rich but enjoyed having the material things I desired but my problem is this some of my employs call for my support either financial or emotional, they have been making it on unemployment but that is running out. I had a back surgery three years ago and havent recovered physically so im not in a position of help emotional or financial this winter is going to be a long winter our economy is like the seasons spring everything blossoms and winter everythings dies, I dont have any answeres. I will also loose everything its easy to find green shoots when your employed I have no money to invest we had money put away for the rainy day but the rain hasent stoped. Im a dirt under your finger nail kind of guy but in this economy I cant find any work! no bail out or construction work to keep the wheels turning please let me know what direction I should be looking. Is there any hope? What do I tell my guys? Thanks for telling it like you see it.
Thanks Don

Linda Goorigian June 3, 2009 at 2:35 pm

Dear Dr. Weiss & Claus,
You have great wisdom and pegged this recessionary/depressionary market correctly. We are in for a long rough economic ride. I would love to be more opportunistic, but the jobless numbers tell the story. Please do not sway from your strategies; they have worked in the past and they will continue to work.
I know many people are looking for instant wealth and for the market to give back what it has taken away from so many folks. I wish the for same, but I know the markets are not stable. The number/volume of investors are low. In fact, I believe the market volatility is due to very wealthy (Megabucks)investors nudging the markets one way or the other. How else would you get swings like we are seeing. The megabucks investor starts the swing and then the optimistic (small) investors bite, in all, getting the markets to move. I am not a gambler ready to risk my money on market sucker moves(short, swift, and fleeting). I am a small investor looking for direction. Your insight and recommendations for investments have given me opportunities I would have probably missed. Thank you for the opportunity to join the Contrarian group of investors.
Respectfully,
Linda

Bill Hirschfelt June 3, 2009 at 2:31 pm

My greatest fear is the potential devaluation of the dollar. Outside of gold and metals how can we best protect ourselves?
Bill Hirschfelt

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