No Way Out

No Way Out
April 30, 2008

You are receiving this e-mail because you have subscribed to receive your free e-mail Newsletters and special offers from Dr. Stephen Leeb's Market Forecast.                             No Way Out                       U.S. Facing Possible Collapse by 2012                          15 Major Problems Set to Strike Simultaneously                                                                 By Stephen Leeb, Ph.D.                                                  Senior Editor, The Complete Investor                                                           Chairman, TCI Enterprises   It was a great run, but after 232 years, we're on the ropes and getting wobbly in the knees.            As late as 1965, we could have made some better decisions and kept the country on course, but we were too short‑sighted, too madly in love with free government benefits, and frankly, just too pathetically dumb.  Now we're in the hole $81 Trillion, and no one in either party has a clue about how to pay it off.            Yet we urgently need to find another $10 Trillion or so for roads, defense upgrades, and most urgent of all, inventing a replacement for gasoline.  I'm sorry to be the one to tell you, but it's not going to happen.            It's twilight in America, and suddenly we find ourselves fighting to keep the lights on:            ! The dollar is dying, and the world will likely dump it.  Soon!            ! The planet is almost completely out of some essential metals.            ! Within ten years, the trading floors of Wall Street will dwindle by 70%‑80%, becoming a bit like ghost towns.            ! AGlobal warming (real or not) is turning into a fiscal black hole that could suck in every spare dollar for the next century.            ! Worst of all, the traditional fixes for these problems simply aren't working anymore.   For the past 20 years, I have been optimistic and bullish, and perhaps I’ll be a bull again someday.  But for right now, you can call me the Bad News Bear.  Most of the long-term financial indicators are going absolutely in the wrong direction.          As a bull, I looked on gloom & doom scenarios with scorn all my professional life.  They usually had holes you could toss your hat through.  In the past, the country has always been able to muddle through.            Not this time.  We are heading straight for the Crash of 2012 which we may never fully recover from because we no longer determine our own destiny.  For the first time since the War of 1812, exactly 200 years before, we will face a world almost totally out of our control.  I am about to show you or at least mention 15 major problems that now threaten to put America into a kind of Areceivership.  Any one of these problems might be manageable by itself, but please note that they will erupt almost simultaneously, and that is what makes this situation so different from any in the past and so catastrophic.            I wish this were not true.  I'm appalled, and I honestly regret that no one on Wall Street has been able to point out any flaws in my numbers.            I know this sounds like scare mongering, but let me be clear:  You may be seeing the last great years of prosperity of Western Civilization.  It's the end of the line, and there is no way out for the U.S. and the West apart from some very painful repair work on our budgets, our government, and our lifestyles.            But is there any hope for you as an individual, a careful investor seeking shelter from a possible collapse?  Yes, there is hope.  Plenty of hope.  This article will pinpoint a simple way for you to exploit the coming misery and become wealthy (insanely rich, actually) while the rest of the country languishes or suffers terribly.            Though most investments are trapped in a blind alley, there is a very safe class of assets that will actually explode in the coming disaster.  We'll give you details in a moment, but right now you still haven't heard enough to convince you that I'm right.  So here is the proof, in one quick summary . . .                         The 15 Calamities We Have to Face                               Why Life Will Never Be the Same Again            Past crises were largely invented by the media.  Today’s are real and intractable.            Here is a brief survey of 15 reasons why there is no longer a way out, no way to detour around our problems.  From now on, we must learn to face every challenge, whatever it takes.   The Actual Facts            1.  We're almost out of 12 essential minerals.  At present consumption rates, the Earth would completely run out of indium, lead, silver, antimony, tin, uranium, and tantalum in the next 4 to 20 years.  Within 40 years, we'd be out of zinc, copper, and chromium.  Platinum and nickel would soon follow.            2.  By about 2025, gas and diesel fuel will not be made available for cars or trucks.  We won't run out of oil, but eventually gas won't be worth the time and effort to retrieve it.  That is, a dollar's worth of gas will cost $1.01 in salaries and drilling rig fuel to locate, drill, pump, refine, and transport it to market.  At that point, the global pinball machine will flash its final message, GAME OVER, and (by international law) remaining pools of oil will be used only for goods like plastics and polyesters, whose price can be bid up infinitely.            3.  China and India have become a juggernaut.  With billions of U.S. dollars in hand and an annual growth rate of 8% for India and 11% for China, they can no longer be dismissed as minor players in the worldwide bidding war for commodities.  The total savings rate for Indians is 28% of GDP, and for the Chinese it's 42%.  How on earth are we going to compete with them when they outnumber us eight to one and out-save us by an average of 35% a year?  They're going to eat our lunch and the rest of the developing world will dine on our dinner.            4.  Inflation will reach 25%-30% a year.  Causes:  the commodity run-out, massive Third-World competition, federal and personal debt, the trade deficit, runaway Medicare growth, the always-nagging threat of a mega-depression, and other multi-trillion-dollar necessities I'll mention in this bulletin.  Inflation will touch levels Americans have never seen before.  For example, if the S&P 500 were to rise by 8 percent a year over the next generation, your purchasing power would decline by nearly 98 percent.  Losses in the purchasing power for investors in bond market and T‑Bills would be as bad or worse.  For the foreseeable future, unless you are willing to think far outside the box, you are facing utter financial ruin.            For the past 20 years, I have been known on Wall Street as a rather consistent bull, but the above factors have changed the world picture drastically.  So with the mailing of this bulletin, I am going on record as a bear.  I wish it were not so, but until some miracle happens, the raw numbers give me no choice.   Eleven More Problems That Won't Go Away Anytime Soon            5.  Total future federal obligations (debt + Medicare, etc.) are now over $60 trillion.  We don't have it, and there's no way to get it.            6.  The 5 billion people in the developing world now want TVs, cell phones, cars, and computers . . . and they're going to get them, come Hell or high water.            7.  The U.S. trade deficit has rocketed to $6.8 trillion.  These dollars have been coming home to buy U.S. Treasuries, but that will end shortly.            8.  As soon as the dollar grows weak enough, OPEC nations will cheerfully dump it as the world's reserve currency.            9.  The delicately interlaced derivatives market is an unimaginable $681 trillion house of cards.            10.  The stock markets will fade to gray.  Within ten years, the nation's major exchanges will become a shadow of themselves as trading volume falls by 70%-80% simply because investors won't be able to make much money.            11.  Iraq or no, defense spending must rise to guarantee our access to vital minerals in unstable countries.            12.  We must immediately find and begin spending $2 to $5 trillion to locate alternative energy sources for cars and electricity plus $500 billion more for highway repairs and LNG projects.            13.  For the next century, any remaining money will be sucked up by Aglobal warming (real or not), which is turning into a fiscal black hole.            14.  Our complex, information-based economy will flatten badly and revert to a more industrial one.  EventuallyCassuming that our civilization survives at allCthe social order will morph into simpler forms in which income differences shrink dramatically.  Simply put, money will be scarce; $900-an-hour lawyers and S&P 500 CEOs (who now average $15.2 million a year) will find themselves on much the same level as skilled blue collar laborers.            15.  We can't buy our way out of the above problems because we are fatally overloaded with both private and corporate debt.   How to Profit from the Inescapable Inflation Inferno            Your only chance of financial survival for the next 20 or so years will be following the advice in this bulletin.            You might think that investing in any random boatload of today's dwindling commodities would be your best bet.  Not quite true.  The problem with most commodities even scarce ones is that they go down in recessionary times.  You need an array of investments that are thoroughly proven as all-weather, safe havens for the worst of times.  We can provide that for you.            One precious commodity in particular will be the backbone of your portfolio because it reliably goes up in deflationary times and skyrockets during inflation.  Taken together with the other commodities, they can not only keep you out of hot water, but make you incredibly, insanely rich. click here to continue …   Sincerely, Stephen Leeb, Ph.D. Editor The Complete Investor This message was delivered to LEMMETRY@GMAIL.COM. as either a newsletter or an advertisement from Stephen Leeb's Market Forecast. 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