The Milkman Cometh The Daily Reckoning - Weekend Edition
March 31 - April 1, 2007
Baltimore, Maryland
by Kevin Kerr MARKET REVIEW: THE MILKMAN COMETH Milk, eggs, butter. When we think of commodities, we don't really think of these, in this day and age, as active markets. However, if you have been to the store lately, the price of milk may remind you of prices at the gas pump. Just the other day, I was in the store buying milk. I decided to scan the groceries myself in one of those self-checkout lanes. As I scanned the milk, it came up as $4.85. What? I mean, my wife likes the organic no-cow-suffered kind of milk, but even the regular good old milk I grew up on in Minnesota has risen significantly. According to an AP report, "Dairy economists predict the retail price of milk could rise as much as 30 cents per gallon, a 9% increase, by fall. The rising prices will be spurred in large part by increasing fuel and feed costs incurred by dairy farmers and a growing global demand for milk products, the economists say. "The average retail price of whole milk could rise to $3.35 per gallon by October, up from $3.07 in January, said Ken Bailey, an agricultural economist at Penn State University who specializes in the dairy industry. "A U.S. Department of Agriculture forecast also predicts an increase in the price that processors pay to farmers for raw milk. That is typically an indicator that the retail price of milk also will rise." Corn farmers, beware: Subsidies are a double-edged sword. The article continues: "The price of milk should not be so dependent on subsidies for farmers, so consumers get an accurate gauge of costs, said Phoebe Bitler, vice president of Pennsylvania Dairy Stakeholders, an industry group that includes farmers, producers and grocery stores. "'We've made it so that the farmer has to produce it cheaper and cheaper all the time,' said Bitler… 'The real price needs to be paid for the product, rather than a subsidy price.'" As this cycle continues, more and more dairy farms are disappearing. Don't be surprised if you see the picture of one on the side of a milk carton really soon. Kevin Kerr
for The Daily Reckoning P.S. There are so many ways to cash in on the commodities and natural resource market - it's close to impossible to cover all of it in just one newsletter. That's why we've decided to bundle all three of our publications that cover those subjects into one package. Find out how you can receive this trio for one low price - for life, below. But act NOW…this offer expires at midnight tonight! The Resource Reserve Closes its Doors at Midnight, April 1, 2007 --- Special Announcement --- ONLY HOURS REMAIN… This is your last chance to lock in Kevin Kerr's Resource Trader alert FREE - for life. PLUS you can get Outstanding Investments, the #1 ranked investment research newsletter for the past 5 years, FREE for life. This Offer Expires On April 1, 2007 at Midnight Learn all of the hidden benefits here… http://www.isecureonline.com/Reports/AFR/EAFRH399 --------------------- THIS WEEK in THE DAILY RECKONING: The past seven days in The Daily Reckoning have been just chock full of interesting tidbits…missed an issue? Don't worry, we have them all catalogued for you, below… Alpha Dogs 03/30/07
by Bill Bonner "When desperately seeking alpha, the average investor will buy just about anything…even if that means overpaying. This week, Bill Bonner examines the gall of the private equity industry, and how it compares to that of the hedge fund industry. Read on…"
http://www.dailyreckoning.com/Issues/2007/DR033007.html To Spread or Not to Spread 03/29/07
by Kevin Kerr "Next to options trading, spread trading confuses more new traders than any other type of trading order. Luckily, our resident commodities guru, Kevin Kerr, is here to explain. Read on…"
http://www.dailyreckoning.com/Issues/2007/DR032907.html "It's the End of the World As We Know It" 03/28/07
by Doug Casey "Anyone paying even a little attention right now can't help but notice the stunning array of problems that are menacing the global economy and threatening traditional investments. Doug Casey explains how you can profit from the unfolding crisis…"
http://www.dailyreckoning.com/Issues/2007/DR032807.html India - Now What? 03/27/07
by Chris Mayer "The emergence of India as an economic force, along with China, is one of the biggest stories on the investment landscape in recent times. And like China, India's success has come despite massive head winds. But is now the time to invest? Chris Mayer explores…"
http://www.dailyreckoning.com/Issues/2007/DR032707.html 450 Billion Twenties 03/26/07
by The Mogambo Guru "The bane and beauty of paper money is that there is no limit to how much you can print. The Treasury could pay off the entire national debt, simply by printing nine, one trillion dollar bills. Of course, if it were up to the Mogambo, he wouldn't print anything he couldn't use at the convenience store. He would much prefer…"
http://www.dailyreckoning.com/Issues/2007/DR032607.html --- Advertisement --- How You Could Turn $200 Into $1.2 Million…Or More! The CXS Money-Multiplier System finds the stocks that Wall Street ignores. Those stocks - handpicked and meticulously researched - are then passed straight on to you. The profit potential is that simple. You'll be kicking yourself if you miss this. It's all upside - and you must see it to believe it. Click here: http://www.isecureonline.com/Reports/PSF/EPSFH368 --------------------- FLOTSAM AND JETSAM: What does the global oil situation have to do with the meltdown in real estate in mortgage lending? More than you would think - James Howard Kunstler explains… In the Zone
by James Howard Kunstler
The fiasco in real estate and mortgage lending seems finally to be breaking through the reality shield of the mainstream media. Last week, for example, NPR's nightly Marketplace show actually ran a segment saying that the production homebuilders were choking on unsold houses and that (as if NPR had just discovered this) the mortgage industry was rife with irregularities in lending standards! And that this seems to have led to a lot of mischief! And that it may actually have repercussions throughout the financial sector and maybe even the economy in general! Golly!
It's been a long slog for the dullards at NPR, and elsewhere in the mainstream media.
Meanwhile, also last week, the General Accounting Office came out with a report that acknowledges some problems ahead on the world energy scene - oil in particular - with possible adverse implications for the United States. It's the first time that any responsible party in the executive branch has acknowledged the situation, but the tenor of the report was - how shall I say - unbelievably stupid and craven - insofar as it suggested global oil could top out somewhere around the year 2030 (possibly sooner!). The poor grinds in the GAO didn't want to stick their necks out too far on that one.
Independent researchers studying the global oil situation - including retired geologists for major oil companies - have established a pretty firm consensus that we are already in the zone of the global oil production peak - meaning that whether we are just past, passing now, or passing imminently, the effects are already thundering through the complex systems we depend on to maintain advanced industrial societies. For instance, the crashing of Mexico's Cantarell oil field (60 percent of Mexico's production) means that inside of five years the United States will receive no more imports from what has been its third leading source. Being "in the zone" means that the world's oil exporters in the aggregate will see their exports drop seven to eight percent this year - because nations like Saudi Arabia, Iran, Venezuela, and even Norway are using more of their own oil and have less to send out. Being in the zone means that new pricing arrangements will be made, taking the power away from the spot futures markets in New York and London, and shifting that power to long-term deals made by nationalized producers like Russia and Iran, who may decide to embargo consuming nations who don't dance to their tune. Being in the zone means that people in poorer nations will starve because so much of the corn grown in North America will go to ethanol distilleries instead of the dirt-floor kitchens in the Third World.
The more interesting point in all this, for the moment, is that the media has still not put together the collapse of the housing bubble and the permanent oil crisis. These events will be happening simultaneously. The housing industry, so-called, will never recover because the oil crisis spells the end of the suburban build out. The cycle is over. The big production homebuilders will go down and never come back. We won't need any more retail, either. We won't be building anymore Wal-Marts and Target stores, and the thousands now running will die off just as the giant Baluchitherium of the Asian steppes crapped out in the early Miocene epoch.
The end of the suburban build-out will be a stupendous trauma for the United States because, unfortunately, we have made it the basis of our economy for a generation, as well as our living arrangement. Not only will incomes and livelihoods be lost on the grand scale, and never come back, but, as the global oil predicament deepens, the existing fabric of our vast suburbs will become increasingly useless and worthless. The people stuck in them will lose whatever wealth they have accumulated and our arrangements for daily life will become increasingly nightmarish.
This is the part of the story that the mainstream media still can't put together. Peak oil and the housing bust are a mutually-reinforcing fiasco. Editor's Note: Get Ready for the Worst Property-Led Recession of the Last 76 Years. Nobody's money is safe. The "Second Wave" housing tsunami of 2007-2011 is about to hit, and smart investors are already battening down the hatches. Read on to learn about three very simple, solid ways to "hedge" your retirement and property savings against this coming mega-bust… Housing Tsunami
James Kunstler has worked as a reporter and feature writer for a number of newspapers, and finally as a staff writer for Rolling Stone Magazine. In 1975, he dropped out to write books on a full-time basis. You can get more from James Howard Kunstler - including his artwork, information about his other novels, and his blog - at his Web site: http://www.kunstler.com/ His latest nonfiction book, "The Long Emergency," describes the changes that American society faces in the 21st century. Discerning an imminent future of protracted socioeconomic crisis, Kunstler foresees the progressive dilapidation of subdivisions and strip malls, the depopulation of the American Southwest, and, amid a world at war over oil, military invasions of the West Coast; when the convulsion subsides, Americans will live in smaller places and eat locally grown food. You can purchase your own copy here: The Long Emergency
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