Wednesday, April 23, 2008
Shiller’s Chilling Prediction: FED Cuts Rate To What?
by Dr. Mark Skousen, Advisory
Panelist, Investment U
“The financial crisis is far from
over!”
~ Robert Shiller, Yale University
Dear Investment U Reader,
Yesterday was a beautiful day at Yale University, where I spoke
before a standing-room only crowd of MBA students about my new book, “EconoPower:
How a New Generation of Economists is Transforming the World” (Wiley &
Sons, 2008).
http://www.amazon.com/dp/0470138076/ref=nosim/?tag=wwwinvestme00-20
The discussant for the book was Robert Shiller, the most
in-demand professor of economics in the Yale School of Business, and for good
reason. Shiller has had an uncanny ability to forecast the direction of
both the stock market and real estate.
In early 2000, he predicted the collapse in the Nasdaq stock
market, and in 2005, he warned of an impending implosion in the U.S. real
estate market.
I devote an entire chapter of
“EconoPower” to Shiller’s remarkable ability to see into the future. But
it wasn’t that chapter that Shiller talked about…
Is Another Great Depression Possible?
He focused on the chapter called, “Is Another Great Depression
Possible?” In it, I make the bold claim that we are no longer “depression
proof,” and that there are three potential scenarios that could threaten the
foundation of our monetary system.
The third scenario is “a
series of unexpected events that could trigger a major financial accident – a
run on the dollar, a real estate crisis, a major terrorist attack, or a natural
disaster that could overwhelm the monetary authorities.”
Shiller, who publishes the famous Case-Shiller Home Price Index,
stressed that the real estate crisis could be so severe that the Fed would soon
have to take additional measures to counter the collapse. He told me that
he is writing a book about the subprime lending scandal, and how it will affect
the economy. In his view, the housing crisis is far from over. Take a
look…
He notes with no particular surprise that the headlines keep
rolling in: Housing sales plummet, prices fall, inventories grow and
foreclosures skyrocket. According to Shiller, there is still no evidence
that the bottom has been reached.
Then he shocked the entire audience
when he predicted “the Fed will be forced to cut rates to ZERO!”
Shiller is convinced that the real estate market is so big and
potentially unstable that it will test the will of Ben Bernanke to the extreme,
and that all previous efforts – the aggressive cuts in the Fed Funds rates, the
injection of new liquidity (M2 is growing at 16%!) and the bailout of Bear
Stearns and other major financial institutions – are just not enough.
Great Depression-like actions will be necessary to keep the
economy afloat.
Will the Fed be able to turn the tide? Shiller believes
another Great Depression is still “unlikely,” and that the tools to stabilize
the monetary system, albeit artificial, are sufficient to keep a collapse from
occurring.
But it won’t be easy.
Fasten your seatbelts, friends. The most recent financial crisis
won’t be the last. I wouldn’t be selling your gold, silver, or oil stocks any
time soon.
In liberty, AEIOU,
Mark
----------------------------------------
'Pilbara Profit Secret' Turns $5,000
Into $1,025,150 In 4 Years
Starting no later than June 30, 2008, the
"Pilbara Profit Secret"
could propel SEVEN unknown small caps to
stratospheric highs.
It's already sent one 27 cent stock to
$55.63...
Bloomberg reports: "Even the tech boom of
the late 1990s
pales in comparison..."
Read on to get a 'ground-floor' piece of the
action...
%%track
{http://www.portphillippublishing.com.au/research/AUS/eausj409.html?o=[messageid]&u=[memberid]&l=[urlid]}
-name {GadT01-AUS-EAUSJ409}%%
----------Sponsored Link---------
Today's
Investment U Crib Sheet
Here’s
a look at Robert Shiller’s index on the History of Home Values. It’s striking:
Looking at the current run up
in prices, compared to the historical record, it’s easy to see why economists
are concerned with inflated home values.
The
current boom in housing prices is larger than the last three combined.
Caution
is the guideline for investing in real estate this year. With the markets as
volatile as ever, commodities such as gold should still be considered as a
hedge against inflation and negative market returns.
Mark wrote
about gold in January, (http://www.investmentu.com/IUEL/2008/January/price-of-gold.html)
and gave us three good reasons to own it. At the time, gold had just hit a
record $850 an ounce. Today it’s hovering around $906 – 10% off its record high
of $1,029. But, as Mark suggests, the Midas Metal could move higher still.
Announcing “World Economic Summit” on the Growing Financial Crisis
Given the gravity of Prof. Shiller’s future scenario, Mark’s
holding a World Economic Summit at FreedomFest this July 10-12, with
world-class economists and financial analysts, including Steve Forbes, Jeremy
Siegel (Wharton School), Steve Moore (The Wall Street Journal),
Congressman Ron Paul, John Mackey (CEO of Whole Foods Market), and our own Alexander
Green, the Chairman of Investment U and the Investment Director of The
Oxford Club. (The Club is a co-sponsor of FreedomFest.) To
attend, just call Tami Holland at 866.266.5101, or visit the website.:
http://www.freedomfest.com/oxfordclub
Recommended Resources
Secrets of the Masters: 31 Wealth-Build Strategies
of the World’s Most Successful Investors
One small circle of investors is consistently booking
gains of 119%, 190%... all the way up to 4,001% a year. Made up of
independently wealthy investors and former money managers, they can turn every
$10,000 into $56,300... $410,889... or even $9 million. Over the last couple of
months, Investment U has set out to learn exactly how they make their
money. And we’ve just made our research public. In all, this special report
includes more than two dozen opportunities. Learn more.
%%track {http://www.oxfonline.com/IU/secrets0308GEN.html?pub=300SMSTR&code=E3MSJ305&o=[messageid]&u=[memberid]&l=[urlid]}
-name {Cad02H-300SMSTR-E3MSJ305}%%
Also of Interest:
Hot! Commodities
Guru Jim Rogers: How to get all of his “power play” picks for free right now
%%track {http://www.oxfonline.com/MMR/ROG0108.html?pub=MMR&code=EMMRJ412&o=[messageid]&u=[memberid]&l=[urlid]}
-name {GadT01-MMR-EMMRJ412}%%
The Credit Crisis: Just How Bad Is It?
http://www.investmentu.com/IUEL/2008/March/credit-crisis.html
The Biggest Risk Investors Face
http://www.investmentu.com/IUEL/2008/March/inflation.html
4 Investing Lessons Profit During a Financial
Crisis
http://www.investmentu.com/IUEL/2008/March/4-investing-lessons.html