New York, NY (PressExposure) July 26, 2011 -- Please follow my story this morning.
Far away from North America, in Madrid, Spain, thousands of protestors are marching to protest high unemployment and poor government. They have marched for weeks.
The unemployment rate in Spain is 21%. According to The Associated Press, unemployment among those aged 16 to 29 in Spain stands at 35%. The thousands in the march are very well organized, accompanied by physiotherapists and masseurs (The Globe and Mail, 7/24/11).
Back to America...
On Thursday of this week, the U.S. may have its largest municipal bankruptcy ever in Jefferson County, Alabama. The county, with a population of 660,000, has struggled for three years under $3.0 billion of sewer bonds that have matured and that the municipality cannot repay. Creditors, led by JPMorgan Chase & Co., want their money. About 500 county employees are on unpaid leave.
The road from Madrid, Spain, to Birmingham, Alabama, is a long one. The problems in Greece, Portugal, Spain and Italy are mature and are only getting worse. How do citizens survive with 21% unemployment?
In America, I believe our problems are only starting. Remember, the government and the Federal Reserve have done everything in their power to keep the economy going. We are starting to see stress on municipalities and states that cannot balance their books or repay their debt.
Imagine the havoc that higher unemployment, a rapidly devaluing greenback, higher interest rates and higher inflation will play with municipalities and states? I really wouldn't be surprised to see large, organized citizen protests become the new phenomenon in America in 2012.
Michael's Personal Notes:
Wrong, wrong, wrong. They've called it all wrong.
The financial news sites this morning are reporting that gold is hitting a new record high on fears about the debt ceiling for the U.S. government not being raised. "Gold surges to record as U.S. debt impasse threatens default, AAA Rating," is a headline that Bloomberg ran this morning (7/25/11).
In my humble opinion, gold is not rising in price because Congress will not raise the U.S. debt ceiling. It's actually the opposite-gold is rising because the debt ceiling will be raised. And when it's raised, the official U.S. debt will run up from its current $14.3 trillion to maybe $16.0, $17.0 or even $18.0 trillion.
That's what gold is really worried about...spiraling national debt, which brings about a devaluation of the U.S. dollar and possibly inflation.
It's a forgone conclusion that the U.S. debt ceiling will be raised. Politicians-both sides of the house-would not dare to have the U.S. default on its obligations.
Where the Market Stands; Where it's Headed:
It's more of the same for the market as far as I'm concerned. The assault toward Dow Jones 13,000 is on. The bear market last gasp will be bringing the Dow Jones into 13,000 territory, as it attempts to lure more investors back into stocks.
As the Dow Jones plows through 13,000, inexperienced reporters and analysts will tell us that the agreement between Obama and Congress to raise the debt ceiling is causing stocks to rise. Rubbish.
The higher the national debt, the greater the risk for higher interest rates. We are near the end of a Phase II bear market.
The Dow Jones Industrial Average opens this last full week of the month up 9.5% for 2011.
What He Said:
"I personally expect the next couple of years to be terrible for U.S. housing sales, foreclosures and the construction market. These events will dampen the U.S economic picture significantly in the months ahead, leading to the recession I am predicting for the U.S. economy later this year." Michael Lombardi in PROFIT CONFIDENTIAL, August 23, 2007. Michael was one of the first to predict a U.S. recession, long before Wall Street analysts and economists even thought it a possibility.
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