The Perfect Way to Avoid
Financial Turbulence

By Charles Delvalle

Dear Reader,

Is there any argument that housing is going down the drain?

According to the latest data from the Mortgage Bankers Association, the number of mortgage loans entering the foreclosure process in the second quarter set another record.

The National Association of Realtors pending home sales index, which measures contracts to buy existing homes, fell 12.2 per cent to a reading of 89.9.  Financial Times says that this is the second-lowest reading on record for the seven-year-old index.

Upon doing some more research, I discovered that …

According to RealtyTrac, more than one million homes are expected to enter foreclosure this year

Bloomberg says we’re going through the biggest increase in late loan payments in 17 years.  And it’s expected to keep rising until at least next summer!

In the next year, more than $1 trillion worth of adjustable rate mortgages will readjust to drastically higher rates – forcing many homeowners into foreclosure!

This shows that for all intents and purposes, the worst in the housing markets isn’t quite behind us.  And you could smell the fear on Capitol Hill as Mr. Bush, our most socialist president, announced a plan to bail out homeowners facing foreclosure.

If you think this liquidity crisis, or whatever you want to call it, is over with, you’re going to end up losing money in the markets.

You see, the reason why so many people lost money was because they ignored the fundamentals affecting our economy.  They simply paid attention to the leveraged buyouts, the awesome earnings, and the one or two companies that were doing phenomenally well.

Never once did they think about runaway inflation, or a negative savings rate, or a deficit-laden economy, or the impact of bad lending.

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Most people never wondered why the government took away the M3 money readings, and most didn’t determine the implications runaway money creation would inevitably cause.

My thought is that we need a recession.  We need some of the money thrown into bad investments to leave those investments and get into parts of the economy that would benefit the most from it.

After all, what do you think is more important - a granite counter top in every house or a change from gasoline to hydrogen?

Clearly, the second would not only benefit consumers more, but also the entire world.

And these reallocations of money are exactly what happens in a recession.  It’s what they’re for.  Don’t get me wrong, I know why recessions aren’t popular.  And I understand why the government would want to avoid them at all costs.  But that doesn’t make it right.

Truth is, the government runs on the old Keynesian theory that says “in the long run, we’re all dead.”

In other words, they have a fixation on short-term solutions, even regarding the economy.  But with the economy being so large, it takes more then a day or a year for all that money to be allocated efficiently.

In the process, people will lose jobs, but better jobs will be gained.  And in the long run, the economy will be better off for it.

Just remember, the economy works in cycles.  If we artificially prolong a part of the cycle because it suits us, then once we finally hit the other end of the cycle, it’s going to be much worse.

We’ve been trying to avoid a recession for God knows how long.  We should have had a longer-lasting recession a few years ago.  But instead, Greenspan dropped interest rates to absurdly low levels.  In the process, he eliminated the technology bubble and replaced it with a real estate bubble – which when popped would hurt far more people.

Now we’re starting to feel the effects of that and I hope that Bernanke doesn’t replace the real estate bubble with another one.

We need a good recession to reallocate our money in a way that makes sense.  In other words, we need to let the market figure this whole situation out.  We can’t just legislate it away.

Regardless of the outcome in the U.S., what’s amazing is that the rest of the world has been running at full steam.  Not only that, but they seemed to be unaffected by what’s going on here (except for Europe).

All the high-growth economies of Asia, Australia, Russia, and South America are still growing strong.  And that’s something that won’t change for years.

Andrew Gordon has talked for the past few weeks about the importance of the global middle class.  Some countries have a new middle class that is larger in size than the entire U.S. population!

Think about that for a minute … more than 300 million people all wanting what we have.  And they’re getting it.  In the process, the companies that can meet the demands of this new middle class are going to grow wealthier than you or I can imagine.

That’s why Andrew and I fine-tuned a strategy to profit from this inevitability.  This strategy protects you while dishing out profits regardless of whether or not the U.S. is entering a recession.

We use this strategy in IDE’s Global Profits Hotline.  And one of the most amazing things about this strategy is that it lets you take advantage of both the winners and losers in this new global economy.

In addition to that, this service lets you trade long-term stocks or short-term options.  And there will be some hedging going on to protect you from any sudden market falls.

So if you’re looking for a way to reduce your risk in the U.S. market while opening yourself up to great gains, then give IDE’s Global Profits Hotline a look.  I promise you wont regret it.

Until next time,

Charles

[Ed. Note:  Charles is the editor of IDEs Global Profits Hotlne, a service dedicated to protecting your portfolio while letting you have the chance to make gains of 90%, 109%, even 133%. To learn how you could make consistent gains by betting on the winners and losers of our new global economy, click here.]

Market Watch

The iPhone Losing Reception

By Charles Delvalle

Apple’s (AAPL) iPhone was probably the most hyped phone I’ve ever encountered.  And after making huge sales during their first month, it looks like that hype is dying down.

I can’t say I’m shocked.  After all, it was an expensive phone that was available on only one carrier.  I personally love the phone, but I’m not about to switch to AT&T for it.  But now it looks like Apple is admitting that there is a problem.  Just yesterday, they announced a $200 price cut on their iPhone.

This is crazy!  I’ve never seen a phone cut in price so quickly after its debut.

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