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Stock Shock: Why Barack Obama Is The King Kong Of Drug Dealers

June 26, 2013 by  

Stock Shock: Why Barack Obama Is The King Kong Of Drug Dealers
PHOTOS.COM

“Lesson No. 1: Don’t underestimate the other guy’s greed. Lesson No. 2: Don’t get high on your own supply.” — From the 1983 movie Scarface

President Barack Obama is worse than the corner crack dealer who tells kids, “The first hit is free.” Instead of getting a neighborhood addicted to cocaine, he has the Nation hooked on cheap money.

It all worked out perfectly well — for Obama, that is. He won his Nobel Peace Prize, gave the economy its “fix,” was re-elected President and is assured of having inner city-schools named after him for the next century. Mission accomplished for the egomaniacal President.

For you and me, the nightmare is just beginning. And we will look back and say it began on June 19, when Federal Reserve Chairman Ben Bernanke suggested he is going to wean the economy off cheap cash.

Currently, the Fed is spending $85 billion every month to buy debt that Uncle Sam can’t sell to anyone else. Bernanke had the audacity to suggest the Fed may start winding down its stimulus program because the markets are strong enough to stand on their own.

Wall Street financiers are savvy. When they heard those words, they felt the way Charlie Sheen feels when walking into the doors of a rehab clinic.

The market understands that the days of high times are over. Its sudden awakening erased 500 points from the Dow Jones industrial average, which in one fell swoop reduced wealth by a couple of hundred billion dollars.

Our Stock Market Nightmare

Sigmund Freud, the father of psychoanalysis, pioneered the understanding of dreams.  He also had a cocaine addiction. He found that cocaine helped cure depression.

In an article for CNN, Howard Markel, M.D., Ph.D., author of An Anatomy of Addiction, wrote: “Like so many others, Freud suffered from the most maddening symptom of addiction: the stealthy process by which the addict’s mind conspires to convince that nothing, nothing at all, is askew or dangerous about something that most decidedly is.”

Millions of people went on to find the ecstasy and short-term cure of cocaine. I suspect that many people (perhaps even Obama during his college days) discovered that it worked wonders until they were flat broke and even more depressed then when they started. Perhaps cocaine was Obama’s inspiration to get America hooked to an even stronger substance: cheap money.

The Independent reported in 2009:

Money works like a drug on the human brain – and even just the thought of earning a higher salary gives us a physical buzz, a study has found.

Scientists have discovered that thinking about cash stimulates the reward centres involved in pleasure and the higher the salary – even if it is just imagined – the greater the pleasure generated in the brain.

The results of the study suggest that the human brain is innately susceptible to the illusion of wealth that money can bring. This is known in economics as “money illusion” – when people get fixated on the nominal value of money, rather than on its actual purchasing power. Some economists have proposed that people behave irrationally when it comes to wages by being happier with higher salary increases in times of high inflation than they are with lower salary rises in times of low inflation.

For instance, studies have shown that people report being happier when they receive a 5 per cent increase in their salaries at a time of 4 per cent inflation, compared to a 2 per cent increase in salary at a time of low inflation.

That explains Obama-economics 101 and the basis for the feel-good economic programs he and special adviser Valerie Jarrett came up with during his Presidential campaign in 2008.

And it certainly has worked. The moneyed elite in America are richer.

But given the headline below, we should have known we were at a market top:

usatoday

I always heard there is no such thing as a free lunch, and it is true. Michael Lombardi wrote in Profit Confidential:

By creating trillions of dollars in newly printed money, the Federal Reserve inadvertently created a bubble in the bond market and spurred a big rally in the stock market.

By the end of this year, the Federal Reserve will have printed just under $1.0 trillion in new money—roughly equal to the U.S. government’s budget deficit for the year. What a coincidence.

So if the Federal Reserve stops buying U.S. Treasuries, who will step in and buy them?

It’s a rhetorical question. Nobody is going to buy Treasury debt — certainly not Russia, who is at odds with Obama over Syria, and not China, who is at odds with Obama over North Korea. That leaves the PIGS (Portugal, Ireland, Greece and Spain). These bankrupt European Union nations are desperate to sell off their own debt.

As for Obama, he is probably reviewing his blueprints to his Presidential library and his soon-to-be-purchased Hawaiian plantation, along with his bedecked Chicago mansion. The rest of us are left to deal with the financial catastrophe that he dealt us.

Don’t sweat it (pun intended). If you are starting to feel anxious and depressed and you really are sweating, it is just typical withdrawal.

In withdrawal the first reaction is loss. The second reaction is rage. And rage it will be when borrowing rates rise fourfold in the next two years.

Reagan Just Said No

The days of wine, roses and excess money took off during the Jimmy Carter Presidency. We got lucky because two things happened that saved the Nation. Paul Volcker, a fiscal-tough-love economist, was appointed Fed Chairman and Ronald Reagan was elected President.

America was weaned off of cheap money. It meant tough times for a spell, because the cure seemed worse than the disease. The Nation had to endure a rolling recession that cut deep into America’s agriculture and the resource sectors. Yet Reagan risked his political career because he knew it was the right thing to do.

If you are in your 50s or older, you will recall the early 1980s when interest rates shot through the roof.  We can look back on it and know it saved the U.S. dollar, but it was painful.

Consider what happened to the 30-year mortgage rate. It stood at 10 percent during the last year of the Carter Administration. Because the Fed squeezed the excesses from that economy, the 30-year mortgage rate reached 18.5 percent by 1981.

Reagan and Volcker understood that too much money and too much debt would kill the dollar over the long term. Kill the dollar, and in time you kill America.

Quantum Killer

Fast-forward three decades. Obama and his Fed Chairman did the exact opposite of Reagan and Volcker. Instead of pulling easy money out of the economy, they injected trillions of dollars more through three series of quantum easing. Obama and Bernanke didn’t care what America needed. (Of course, the claim is that the Fed acts independent of the White House. If you believe that, you probably believe that the National Security Agency isn’t spying on us).

The President and Fed Chairman have given the Nation copious amounts of ever cheaper money. And for five years, the Nation has believed it was doing better because the President and the Fed were injecting greater amounts of cash into our veins.

I have been looking at charts for more than 30 years, and I probably find them just as boring as most of you do. Yet the chart below really is worth looking at. It shows that Obama has been running the printing presses faster than a Latin dictator hopped-up on his own supply.

chart0625

Whatever previous Presidents have done regarding the printing of greenbacks doesn’t compare to what Obama has done. And stopping that tidal wave of money that the markets have become addicted to is going to cause a sickening withdrawal.

Prediction: Interest rates began to take off last week. The rates on three-month Treasury bills are rising. This is just the first indicator that, across the board, rates on mortgages, car loans, student loans and such are climbing. That is bad news for Big Board stocks, which have been soaring because bonds have been paying such a paltry return. Bad news for stocks means a falling stock market, and this market could easily lose half its value in the next 24 to 36 months.

Action to take: Lock in any loans you need for as long as you can. Sell all bonds and all stocks with the exception of special resource plays. Retain your physical gold and silver, but let’s see where prices go these next couple of weeks before adding to your position. Meanwhile, move money into cash — I mean cold, hard currency stored in a dry, safe place. Guns, ammo, canned foods and water should always be fully stocked, especially now.

Obama has written a huge check for us all, and the tab has come due.

Yours in good times and bad,

–John Myers

John Myers

is editor of Myers’ Energy and Gold Report. The son of C.V. Myers, the original publisher of Oilweek Magazine, John has worked with two of the world’s largest investment publishers, Phillips and Agora. He was the original editor for Outstanding Investments and has more than 20 years experience as an investment writer. John is a graduate of the University of Calgary. He has worked for Prudential Securities in Spokane, Wash., as a registered investment advisor. His office location in Calgary, Alberta, is just minutes away from the headquarters of some of the biggest players in today’s energy markets. This gives him personal access to everyone from oil CEOs to roughnecks, where he learns secrets from oil insiders he passes on to his subscribers. Plus, during his years in Spokane he cultivated a network of relationships with mining insiders in Idaho, Oregon and Washington.

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  • kent zastrow

    John, the TRUTH is going to be very painful this time. We have the vast majority having little economic understanding of our world. What will playout as you correctly alluded to is self-preservation on a scale previously unknown in our history. Prepare for a new way of life that won’t be pretty!

  • Lillian Mills

    whow! I have read your article with interest.
    I sure won’t argue with you I believe everything you said . I’m about to hit my 80th birthday and I’ve never seen anything like what is going on.I love America and our Military .My husband spent 26 years in our wonderful airforce and i stood by him all the way .
    Today everything has changed and it is not the same I feel so sorry for everyone’s grandchildren and great-grandchildren because I am so afraid they will never see a firm foundation.May God take us all by the hand and lead us thru in the right direction..

  • http://lisaandrews1968.wordpress.com lisaandrews1968

    Reblogged this on lisaandrews1968.

  • Ron r

    But John ,don’t all black men deal drugs or are in some how related to the drug trade. Meaning if you John and so called patriots /reich wingwrs like you want to single out a black man just mention drugs. Great attention getter for your article John ,a black man and drugs, no matter what the real lie you wrote. BTW I bet your finances have not suffered one bit, in fact you crack game is in high gear and you are raking in the cash off the drug of lies,hate,and deceit.

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