March 31, 2008               

"In the world, there is more good than evil but only by a margin of three percent." James Quillian

                                                    Price

The current economic situation is about asset prices and an unwillingness of the financial elite to allow their fortunes to be determined by free market forces. Had the price of houses continued to rise there would have been no sub prime crisis. Capital losses are being transferred to lenders. Having or not having the mortgage payment has never been the problem. The problem is not the payment or the inability to borrow. The problem is price and prices are not totally determined by the availability of money. But, with enough government intervention, any market can be turned temporarily. With a temporary market turn, there is a guarantee that economic troubles will only be shifted forward in time. Current imbalances are the result of past interventions. If current official efforts are successful in averting a recession, today's troubles will grow in magnitude and mutate into something far worse than we face today.

                          Sun Spots And Federal Reserve Policy 

I find no connection between the level of sun spot activity and Federal Reserve policy. However, the announcement of each sequential Federal Reserve stunt has an effect on financial markets similar to the way surges in the number of sunspots affect radio waves. Federal Reserve week has become a time when we all expect a new scheme designed to turn markets. Seldom is anyone disappointed. After the stunt is announced stock prices trade in bizarre, unpredictable movements throughout the next week, depending on the degree investors take or don't take the bait. Next week, we should get some indication of market direction. Sun spots distort meaningful patterns in radio waves. Count on a Federal Reserve stunt to distort meaningful patterns on stock charts. The buying is always orchestrated following a Fed decision. Next week, we should see the return of free market forces and get a handle on direction. My opinion, still, is that we will see a strong bear market rally before falling further. The efforts to make it happen are monumental

                                     A Top In Gold?  Maybe

In a real economic downturn, there really is no place to hide. Gold is often called honest money, but it is really not money at all. It is a metal that commands a price. I fully expect that gold along with other commodities will make a top and decline alongside equities for the duration of what will prove to be a very long bear market.