Saturday, October 3, 2009

Over 1 Million Bankruptcies for 2009

Celebrating A Decade of Reckoning
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The Weekend Edition - October 2-3, 2009

  • Consumer bankruptcies topped 1 million for 2009...
  • The Mogambo on the world's most powerful reserve currency...
  • Puru Saxena declares that inflation is our future...
  • A look at strategic oil reserves from Marin Katusa...
  • Jim Nelson explains a new way to collapse an industry...
  • Bill Bonner looks on the brighter side of the depression...

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    The Daily Reckoning's Highlight of the Week:
    Over 1 Million Bankruptcies for 2009
    Baltimore, Maryland

    Yikes - consumer bankruptcies for 2009 topped 1 million - the most since 2005. That's up 35% from the same time last year.

    "Bankruptcy filings continue to climb as consumers look to shelter themselves from the effects of rising unemployment rates and housing debt," said ABI executive director Samuel Gerdano.

    Weird... Isn't there supposed to be a rally going on? Well, not the kind of rally most people are used to. Bill Bonner explores, below...

    Another important part this bull market is missing is the retail stock market investor. Hey, this rally has no legs at all!

    We have insisted - with no proof, up until now - that the mom and pop investor is no longer counting on the stock market for his retirement. He's seen what can happen. At the low in March, adjusted for inflation, he was back to where he was 40 years ago. That is, in real terms, he had not made a dime from the stock market (aside from dividends) during his entire adult lifetime.

    We guessed that he was not buying stocks.

    Now, here's the evidence: according to TrimTabs, only $2.5 billion has gone into equity mutual funds in the last six months. Bond funds have attracted 13 times as much money as equity funds, says a Morningstar report.

    "US retail investors...have watched this rally from the sidelines," the
    FT concludes.

    Wait a minute. Someone is pushing up stock prices. If not the retail trade, who? We don't know. Maybe hedge funds. Maybe institutional speculators. The pros have a different outlook. If this rally turns out to be real, and they miss it, their jobs and reputations are in danger. If it turns out to be phony, on the other hand, they risk clients' money. On balance...they are better off getting in than staying out.

    But just as the pros jump like lemmings into equities...they could all scramble out fast. Give them a fright...and this rally is over.

    Where might the fright come from? We can think of several possibilities. One is the housing sector. If foreclosures begin to increase...and prices fall...even the pros may put two and two together.

    Likewise, a shocking unemployment number could cause them to connect the dots.

    Then, look out below...

    [But luckily, when the bottom falls out of this 'recovery', you'll already be prepared - because you were smart enough to take advantage of our free 'Rescue and Recovery' bundle. This package outlines the financial defense strategy you'll need to protect your assets (and even build wealth) while everyone around you are losing their shirts. Get all the details here.]
    The above is just an excerpt from Bill's standout essay from this week. You can read it in its entirety on The Daily Reckoning site - it's an essay you don't want to miss. Get it here.

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    ALSO THIS WEEK in The Daily Reckoning: Did you miss an essay from the DR this week? No worries, we have them all for you, below...

    The World's Most Powerful Currency
    by The Mogambo Guru
    Tampa Bay, Florida

    "Another reason that I cry so piteously and drink so abusively is that all this new government borrowing will create so much new money that it will destroy the dollar's buying power..."

    Inflation is Our Future
    by Puru Saxena
    Hong Kong, China

    "...when macro-economic uncertainty was high and inflationary expectations were running out of control, gold turned out to be a fantastic asset to own. If my take on the macro-economic situation is valid, then we are in such a period now and gold must form a part of every investment portfolio."

    A Look at Strategic Oil Reserves
    by Marin Katusa
    Vancouver, British Columbia

    "Thus, a concerted effort by the worldwide reserves can definitely keep prices down in the short term (within a year, two at best), but cannot make for a paradigm shift in the supply/demand model of oil or the Peak Oil argument."

    A New Way to Collapse an Industry
    by Jim Nelson
    Baltimore, Maryland

    "GM was dead long before Obama grabbed the defibrillators. The same has been true with television and print. That's about to change."

    Hooray, It's a Depression!
    by Bill Bonner
    London, England

    "But if you want to live an extra six years, nothing works like a slump. When it comes to economic health too, nothing beats a depression."


    Our own Addison Wiggin talked to Ron Lieber for a New York Times podcast this past week. They discussed why this next bubble is going to be worse than any before it, and what you can do to protect your investments.

    Tune into this podcast for alternatives to the US dollar, how to avoid investment pitfalls and learn how you can prepare yourself before the next crisis hits...

    You can listen to it here.

    Enjoy the rest of your weekend,

    Kate Incontrera
    The Daily Reckoning

    P.S. Tomorrow, Addison is heading to a country that has been insulated from the shocks that have been rippling through the global financial markets - a true 'wealth refuge'. He'll send us reports in the next couple of weeks, but in the meantime, check out how this country could bring you a play with zero downside risk...but you must act on it before Wednesday, October 7. Get all the info here.

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    The Daily Reckoning - Special Reports:

    History of Financial Disasters: Will you be Wiped Out?

    US Recession: By far the Weakest Recovery

    "THE GREAT AMERICAN RECOVERY RP-OFF" Brace yourself for what's about to go down as the BIGGEST FINANCIAL SWINDLE in world history.

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    About The Daily Reckoning: Now in its 10th anniversary year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists.

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