The Room – 07/10/2009

Dear Reader,

In the June edition of The Casey Report, and again in the edition that was put to bed July 2, we warned that the U.S. equities markets were on the edge of the next leg down in the slow-motion crisis now unfolding. (You can read both issues... more here).

While there is no such thing as a sure thing, the idea that the worst could be behind the economy is almost unimaginable, given the deep structural flaws and governments doing what Doug Casey correctly calls the "exact opposite" of what they should be doing.

Namely trying to solve a debt crisis by adding more debt.

Of course, as turmoil returns to the broader stock market, investors will again scramble for "safe harbor" investments, and that spells trouble for commodities and commodity-related equities, which are viewed by many as "recovery" investments.

While it often marches to its own drummer, in June and again in July, we warned that gold, too, will be affected, though more moderately so. Looking over the price charts since June for gold and oil – among other commodities – it seems clear the correction has begun.

Even so, for the record, we see any setback to the "tangible" sector as being relatively short lived. That's because commodities are the actual stuff of life – unlike, say, flat-screen televisions, which you can hold off buying indefinitely. Food for the table, on the other hand...

As prices fall, commodity producers, long accustomed to dealing with price volatility, will reduce output to rebalance the supply/demand equation and stabilize prices at a profitable level. Of course, there are circumstances under which a producer will continue to produce, even with prices below production costs – say, to avoid the cost of shutting down and eventually restarting a mine or a well. Though not for long.

    (Unless, of course, government subsidies cover the shortfall. For a glimpse at a very good documentary on that topic, check out "King Corn"... a trailer that can be viewed by clicking here.)

But for many commodities today, structural issues already make any further reduction in production a quick ticket to shortages and soaring prices: copper, gasoline, sugar, cotton, and hogs, to name just a few.

    (For the options and futures traders – or wannabe traders -- among you, you'll want to learn more about the work that Dave Hightower and the team at Casey's Trend Trader are doing to take advantage of these and other opportunities, without taking the big risks. Shortly, they will release a special report on the most pressing speculative opportunities they see in these markets. More about the Trend Trader here.)

Regardless, we see the potential for a return to a period of increased volatility in pretty much all things – including some of our favorite investments – but soon thereafter, opportunity will present itself at our collective doors.

Opportunity Knocks

Using history as our guide, after running for shelter as the next leg down in the economy unfolds, most investors will then cower there until the experts on CNBC (the same ones that completely missed this crisis in the first place) tell them it's safe to get back in the water.

Of course no one can be blamed for being extra cautious just now, and we urge you to follow the herd on that point. However, we would also urge you to remember that the herd is almost always slow to react... in getting out of fragile markets, and especially in getting back in.

At the same time that the level of risk is rising, there is a big, fat opportunity brewing as well. If you are attentive and willing to take actions that run contrary to the herd.

The source of this opportunity comes from the government's highly predictable reaction to the next wave of bad news. That reaction becomes obvious (at least to us) by asking the rhetorical question, "Confronted with steadily worsening unemployment, collapsing real estate prices, bankrupt state governments, skyrocketing bank failures, what do you think they are going to do?"

Cutting back on the spending? Letting the free market run an unfettered course? Not likely.

Instead, the president will ask the public for more patience, as his administration mans the spending pumps even more aggressively. The straws confirming that view are already in the wind; on July 7, one of President Obama's top advisors called for yet another round of stimulus.

Sure, they'll have to be increasingly clever to avoid an even stronger political backlash, but the squeeze they are now in (and, for the record, not all of it was this administration's doing) is getting tighter by the day. They have painted themselves into a corner.

And so, to use an old poker term, they are reaching the point where they'll feel they have no choice but to either fold or go "all in." You know, shoving all their chips onto the table (actually, they're your chips they are playing with, but hey...).

Given the unacceptable political consequences of folding their hand (i.e., doing nothing) and the simple truth that monetary inflation has been the default mode for handling economic downturns for many decades now, we have little doubt the government will take the "all in" approach, a desperate measure designed to buy time (at least through the next election).

And that sets up the opportunity.

Playing the Bounce

There has already been a sea change in awareness among the trading community about the seeds for monetary damage sown over the last year. And with this awareness comes increased sensitivity to further debasement of the dollar. Thus, each new announcement of stimulus lately has triggered a quicker rebound in gold and other commodities – as well as the resource-related stocks.

To be as succinct as possible, a struggle for me at all times, in the same way that we anticipated the resource sector correcting along with the broader markets, we also anticipate it to bounce back much quicker. Supporting that contention, consider the last three 25%+ corrections in the S&P versus the GDX, a gold stock ETF.

  • From Sep 19 to Oct 27, 2008, the S&P dropped 32%, but the GDX fell 57%. Deflation was then the watchword of the day.

  • From Nov 4 to Nov 20, 2008, the S&P lost 25% while the GDX fell slightly less, by a 23%. Is it really deflation we fear, the traders asked, or might this whole doubling-of-the-money-supply thing be signaling inflation?

  • It was during the slide in the S&P that occurred between January 1 and March 2009 that the changing tide in inflationary expectations became pronounced. During that correction, the S&P 500 lost 26%, but the GDX lost only 14% in the first two weeks of January – then roared back 33% by February 17, while the S&P continued to fall.

Subsequently, as the S&P rallied 36% between its bottom on March 9 and July 1 due to the (false) sightings of green shoots, the resource stocks added to their head start, rallying 50%.

In other words, natural resource investors who can keep their heads about them will be able to win in both scenarios: the one where the economy is falling and the government is stimulating (a certainty on both fronts), and the one where the economy begins to recover – or the masses come to believe it is.

The only scenario, in fact, that will disadvantage natural resources is if the government adopts a posture of steely-eyed free marketers that step aside and let the worst come to pass. We would contend that to be highly improbable.

Thus, the way to play things just now, as we see it, is to be cautious, but with the full expectation of aggressively buying up resource bargains before the crowds venture back out of their safe harbors. It might take a month or two (or maybe three), but it's unlikely to be much longer than that.

Investments can be made in certain physical commodities (gold and silver bullion), leveraged commodities positions (using strategic combinations of options and futures), or in selected resource equities, especially those of deeply undervalued and well-positioned companies in the precious metals and energy sectors.

In fact, the biggest challenge you'll face will be choosing between all the many opportunities we see materializing just over the horizon. But if you begin planning now, you should be ready to act when the time for action arrives.

Of course, all of the Casey Research specialty publications will make it a point to help you prepare for the next leg up in our favorite sectors. Of these, the services most dedicated to elephant hunting – namely bagging the really big returns – are Casey's International Speculator and, for especially active investors, our premium Casey's Investment Alert.]

Speaking of Unemployment

As you can see from the chart here, compliments of the monthly Data Farm feature in The Casey Report, the trend in unemployment remains solidly intact. Unemployment is now reaching a point so dire that soon it won't be reported on as further evidence of the economic slump but rather as a driving force (among many) in the ongoing collapse.

As recently as January, the government predicted that, thanks to the stimulus, the unemployment rate would top out at 8%. Despite energetic attempts to conceal the actual numbers, the official rate has still shot up to 9.5%... but the actual number is running closer to a depression-era level of 16%.

    (Ed. Note: Despite 1.6 million jobs lost since the passage of the stimulus plan that was supposed to cure all that ails, the White House insists that, based on its calculations, the ~$60 billion in stimulus money that has been spent to date has "created or saved" 150,000 jobs. Thus, based on its own numbers, the government has spent about $400,000 per job it purports to have clawed back from the abyss of unemployment. I could attempt a witty quip here, but words defy me.)

Worsening unemployment is one of those "important" things people should be paying close attention to. That's because the duration of the crisis – and sadly, the government's many exertions will result in it going on for much, much longer – means that the clock on receiving regular unemployment benefits is running out for more and more of the unemployed.

And, other than rely on the kindness of family members and friends, once the unemployment benefits dry up, what is a person to do? Well, for starters, sign up for special extended unemployment programs. Those programs are seeing a large increase in recipients. Quoting the Washington Times on the topic...

    "... there were major jumps in two federal jobless programs. Workers collecting payments from the extended-benefits program increased by 65,000 to 347,000 for the week ending June 20. States also reported that 2.52 million persons were collecting Emergency Unemployment Compensation benefits, reflecting an increase of 81,000.

And this from Bloomberg...

    As many as 650,000 workers may exhaust even their extended benefits within three months, said Maurice Emsellem, policy co-director for the National Employment Law Project, a nonprofit advocacy group headquartered in New York.

    ... The U.S. traditionally hasn't had to deal with long-term joblessness. During the last 30 years, Americans who were thrown out of work took an average 15.8 weeks to find new positions. In June, the average duration of unemployment was 24.5 weeks, the longest since records began in 1948. The number of people collecting unemployment benefits reached a record 6.88 million in the week ended June 27.

This is a trend in motion that will stay in motion and worsen. Which means that the cost of maintaining the social safety net will only grow with each passing day. And, of course, unemployed people, no matter how willing, eventually run out of savings and have to let their debt payments – credit cards, auto loans, home equity, mortgages, etc., etc. – fall by the wayside.

In addition to exacerbating the economic downturn and, by extension, deficits, persistent and growing unemployment will soon lead to social pressure as desperate people begin to do desperate things. Riots in the streets are not out of the question.

And confronted with desperate people doing desperate things, the government will again react predictably – ginning up yet more and larger quantities of bread and circuses.

From where I sit, anything other than letting the situation self-correct in a quick and brutal crash so we can get this over and done with will result in a protracted, torturous death spiral, a negative feedback loop that will last longer than any of us can imagine.

You know what I hope? I hope I'm wrong.

    (It's been a while since I last mentioned a dramatic piece of music that has caught my ear. Nothing had really struck me as worth sharing recently. Perhaps because of its appropriately plaintive melody, this week an older song popped back to mind and has stuck there. It‘s Wicked Game by Chris Isaak. Thanks to YouTube, you can listen to it here...)

What Really Makes the World Go Round
(and How to Profit from It)

Understandably, people tend to think about energy in terms of the cost of gasoline at the pump or the electricity bills they get each month.

But energy is much more than that. It's the very juice that allowed humankind to graduate beyond being just another dumb animal. Without exaggeration, it's the critical component in most human endeavors, touching everyone and virtually everything that makes up the modern life.

Further, a solid case can be made that each discovery of new and more efficient energy sources coincides with humankinds most stunning advances: in food production, population growth, health, transportation, technology.

Case in point, consider that the rise of nearly unlimited oil and natural gas as mass energy sources began in earnest in the 1860s (unseating whale oil, which was quite limited). At that time the U.S. Civil War (1861-1865) was fought by men on horseback with swords and muzzle-loaded firearms.

Almost impossibly, just 80 years later Paul Tibbets dropped an atomic bomb on Hiroshima. And just 100 years after Lee surrendered his sword at Appomattox, man set foot on the moon.

Simply, the story of energy is step-by-step the story of the ascent of humankind.

I mention this as a circuitous route to make the point that the constant quest to maximize existing energy sources, and to find new ones, is a quest that will never end... at least not until the ultimate breakthrough occurs that allows us to, for example, efficiently harness energy from the sun.

But that is then, and this is now. And right now the energy sector is huge, diverse, and geographically fragmented.

And because of its day in, day out importance, it is also extremely rich in opportunities for investors armed with the right information.

On that front, by now you should have received an invitation to our first ever Casey Research Energy & Special Situations Summit, which is being held in Denver, September 18 to 20.

The registration site for the event, which already boasts one of our most impressive faculty line-ups yet, is now open. Access our summit site by clicking here.

At the event, you'll get concise briefings on specific opportunities in everything from green energy to lithium technology, and from conventional oil and gas in North America, to unconventional oil and gas in Europe. Coal, uranium, geothermal, hydropower, solar, and much, much more will be covered (and, where appropriate, debunked) and the very best opportunities to get positioned for energy profits revealed.

As for the "special situations" in the summit's title, that refers to first-ever programs on emerging homerun opportunities in areas such as rare elements.

All signs are that it will be one of our best – and maybe even our best – summits ever.

As always, it will be a great opportunity for you to meet members of the Casey Research team and to share notes with like-minded individuals. If you've ever attended one of our summits, you already know what I'm talking about. If you haven't, then this is a great chance to find out.

As usual, to keep these events congenial and collegial, we always limit the attendance. Every summit to date has been a sell-out... so, please don't wait to check your schedule and to register.

See you in Denver!

Statehouses in the Poorhouses

People are not the only ones feeling the pinch. As has been widely reported, so, too, have been the states. This excerpt from the Washington Post may not say it all, but it says a lot...

    CHICAGO, July 6 -- Illinois has stopped paying $1,655 a funeral to bury the indigent dead. California is issuing IOUs in place of tax refunds. Ohio's rainy-day fund has dwindled from nearly $1 billion to exactly 89 cents.

    Nearly a week into the new budget year, all three states are stymied, unable to balance their books and unable to decide whether to fill the huge gaps with tax increases, spending cuts or both. Either way, it will hurt.

    Politicians, feeling the pressure from state employees and constituents, are sniping at one another and deploying their legislative tools. California Gov. Arnold Schwarzenegger (R) vetoed a budget because it included tax increases. Illinois Gov. Patrick Quinn (D) vetoed one because it didn't.

    Mississippi used a last-minute sleight of hand to make the numbers work, passing a budget that left the state's utility regulatory agency and public service commission unfunded. Connecticut's 50,000 employees will take seven unpaid furlough days in the next two years.

    Arizona's Republican governor called the Republican-led legislature into special session on Monday after the two sides failed to agree on the fate of a sales tax hike. Ohio Gov. Ted Strickland (D) said the state is losing money every day its two-year budget goes unpassed and called on lawmakers "to bring their pizza and pillows to the statehouse."

    "For a lot of people, there is a continuing failure to recognize the severity of what is happening with this economy," Strickland said in a telephone interview from Columbus. "Programs will be reduced. Some programs will be eliminated."

    Billions in federal stimulus dollars have kept cuts from being worse, Strickland said, but there is no magical cure for budget ills largely caused by plummeting tax revenues. The combination of a sour economy and balanced-budget requirements is forcing states to live with smaller budgets at a time when demand for services is increasing.

    Ohio's unemployment rate is 10.8 percent "and going upward," Strickland said. For the next two years, he projects a $3.2 billion deficit that would be met with $2.4 billion in cuts and $933 million in estimated revenue from new video lottery terminals at racetracks.

David again. I can well remember the sense of incredulousness I felt back in 2005 when watching state governments, flush with tax loot as a result of booming real estate and investment markets, passing lavish new spending programs. The financial rationale for the many new programs at the time could best be described as "Happy Times Are Here Forever!"

Well, now they are learning the hard way that they are not, leaving the government worker unions scrambling to retain their grips on the public purse. In California, where a pitched battle has been going on over the soaring deficits, the government unions are taking the stance that their backs are up against the wall. That they have pretty much cut all they can cut and still provide the services that the helpless public demands of them. A contention that someone with a brain and a lot of time on their hands answered by assembling the following list of California state agencies.

    California Academic Performance Index (API) * California Access for Infants and Mothers * California Acupuncture Board * California Administrative Office of the Courts * California Adoptions Branch * California African American Museum * California Agricultural Export Program * California Agricultural Labor Relations Board * California Agricultural Statistics Service * California Air Resources Board (CARB) * California Allocation Board * California Alternative Energy and Advanced Transportation Financing Authority * California Animal Health and Food Safety Services * California Anti-Terrorism Information Center * California Apprenticeship Council * California Arbitration Certification Program * California Architects Board * California Area VI Developmental Disabilities Board * California Arts Council * California Asian Pacific Islander Legislative Caucus * California Assembly Democratic Caucus * California Assembly Republican Caucus * California Athletic Commission * California Attorney General * California Bay Conservation and Development Commission * California Bay-Delta Authority * California Bay-Delta Office * California Biodiversity Council * California Board for Geologists and Geophysicists * California Board for Professional Engineers and Land Surveyors * California Board of Accountancy * California Board of Barbering and Cosmetology * California Board of Behavioral Sciences * California Board of Chiropractic Examiners * California Board of Equalization (BOE) * California Board of Forestry and Fire Protection * California Board of Guide Dogs for the Blind * California Board of Occupational Therapy * California Board of Optometry * California Board of Pharmacy * California Board of Podiatric Medicine * California Board of Prison Terms * California Board of Psychology * California Board of Registered Nursing * California Board of Trustees * California Board of Vocational Nursing and Psychiatric Technicians * California Braille and Talking Book Library * California Building Standards Commission * California Bureau for Private Postsecondary and Vocational Education * California Bureau of Automotive Repair * California Bureau of Electronic and Appliance Repair * California Bureau of Home Furnishings and Thermal Insulation * California Bureau of Naturopathic Medicine * California Bureau of Security and Investigative Services * California Bureau of State Audits * California Business Agency * California Business Investment Services (CalBIS) * California Business Permit Information (CalGOLD) * California Business Portal * California Business, Transportation and Housing Agency * California Cal Grants * California CalJOBS * California Cal-Learn Program * California CalVet Home Loan Program * California Career Resource Network * California Cemetery and Funeral Bureau * California Center for Analytical Chemistry * California Center for Distributed Learning * California Center for Teaching Careers (Teach California) * California Chancellor's Office * California Charter Schools * California Children and Families Commission * California Children and Family Services Division * California Citizens Compensation Commission * California Civil Rights Bureau * California Coastal Commission * California Coastal Conservancy * California Code of Regulations * California Collaborative Projects with UC Davis * California Commission for Jobs and Economic Growth * California Commission on Aging * California Commission on Health and Safety and Workers' Compensation * California Commission on Judicial Performance * California Commission on State Mandates * California Commission on Status of Women * California Commission on Teacher Credentialing * California Commission on the Status of Women * California Committee on Dental Auxiliaries * California Community Colleges Chancellor's Office, Junior Colleges * California Community Colleges Chancellor's Office * California Complaint Mediation Program * California Conservation Corps * California Constitution Revision Commission * California Consumer Hotline * California Consumer Information Center * California Consumer Information * California Consumer Services Division * California Consumers and Families Agency * California Contractors State License Board * California Corrections Standards Authority * California Council for the Humanities * California Council on Criminal Justice * California Council on Developmental Disabilities * California Court Reporters Board * California Courts of Appeal * California Crime and Violence Prevention Center * California Criminal Justice Statistics Center * California Criminalistic Institute Forensic Library * California CSGnet Network Management * California Cultural and Historical Endowment * California Cultural Resources Division * California Curriculum and Instructional Leadership Branch * California Data Exchange Center * California Data Management Division * California Debt and Investment Advisory Commission * California Delta Protection Commission * California Democratic Caucus * California Demographic Research Unit * California Dental Auxiliaries * California Department of Aging * California Department of Alcohol and Drug Programs * California Department of Alcoholic Beverage Control Appeals Board * California Department of Alcoholic Beverage Control * California Department of Boating and Waterways (Cal Boating) * California Department of Child Support Services (CDCSS) * California Department of Community Services and Development * California Department of Conservation * California Department of Consumer Affairs * California Department of Corporations * California Department of Corrections and Rehabilitation * California Department of Developmental Services * California Department of Education * California Department of Fair Employment and Housing * California Department of Finance * California Department of Financial Institutions * California Department of Fish and Game * California Department of Food and Agriculture * California Department of Forestry and Fire Protection (CDF) * California Department of General Services * California Department of General Services, Office of State Publishing * California Department of Health Care Services * California Department of Housing and Community Development * California Department of Industrial Relations (DIR) * California Department of Insurance * California Department of Justice Firearms Division * California Department of Justice Opinion Unit * California Department of Justice, Consumer Information, Public Inquiry Unit * California Department of Justice * California Department of Managed Health Care * California Department of Mental Health * California Department of Motor Vehicles (DMV) * California Department of Personnel Administration * California Department of Pesticide Regulation * California Department of Public Health * California Department of Real Estate * California Department of Rehabilitation * California Department of Social Services Adoptions Branch * California Department of Social Services * California Department of Technology Services Training Center (DTSTC) * California Department of Technology Services (DTS) * California Department of Toxic Substances Control * California Department of Transportation (Caltrans) * California Department of Veterans Affairs (CalVets) * California Department of Water Resources * California Departmento de Vehiculos Motorizados * California Digital Library * California Disabled Veteran Business Enterprise Certification Program * California Division of Apprenticeship Standards * California Division of Codes and Standards * California Division of Communicable Disease Control * California Division of Engineering * California Division of Environmental and Occupational Disease Control * California Division of Gambling Control * California Division of Housing Policy Development * California Division of Labor Standards Enforcement * California Division of Labor Statistics and Research * California Division of Land and Right of Way * California Division of Land Resource Protection * California Division of Law Enforcement General Library * California Division of Measurement Standards * California Division of Mines and Geology * California Division of Occupational Safety and Health (Cal/OSHA) * California Division of Oil, Gas and Geothermal Resources * California Division of Planning and Local Assistance * California Division of Recycling * California Division of Safety of Dams * California Division of the State Architect * California Division of Tourism * California Division of Workers' Compensation Medical Unit * California Division of Workers' Compensation * California Economic Assistance, Business and Community Resources * California Economic Strategy Panel * California Education and Training Agency * California Education Audit Appeals Panel * California Educational Facilities Authority * California Elections Division * California Electricity Oversight Board * California Emergency Management Agency * California Emergency Medical Services Authority * California Employment Development Department (EDD) * California Employment Information State Jobs * California Employment Training Panel * California Energy Commission * California Environment and Natural Resources Agency * California Environmental Protection Agency (Cal/EPA) * California Environmental Resources Evaluation System (CERES) * California Executive Office * California Export Laboratory Services * California Exposition and State Fair (Cal Expo) * California Fair Political Practices Commission * California Fairs and Expositions Division * California Film Commission * California Fire and Resource Assessment Program * California Firearms Division * California Fiscal Services * California Fish and Game Commission * California Fisheries Program Branch * California Floodplain Management * California Foster Youth Help * California Franchise Tax Board (FTB) * California Fraud Division * California Gambling Control Commission * California Geographic Information Systems Council (GIS) * California Geological Survey * California Government Claims and Victim Compensation Board * California Governor's Committee for Employment of Disabled Persons * California Governor's Mentoring Partnership * California Governor's Office of Emergency Services * California Governor's Office of Homeland Security * California Governor's Office of Planning and Research * California Governor's Office * California Grant and Enterprise Zone Programs HCD Loan * California Health and Human Services Agency * California Health and Safety Agency * California Healthy Families Program * California Hearing Aid Dispensers Bureau * California High-Speed Rail Authority * California Highway Patrol (CHP) * California History and Culture Agency * California Horse Racing Board * California Housing Finance Agency * California Indoor Air Quality Program * California Industrial Development Financing Advisory Commission * California Industrial Welfare Commission * California InFoPeople * California Information Center for the Environment * California Infrastructure and Economic Development Bank (I-Bank) * California Inspection Services * California Institute for County Government * California Institute for Education Reform * California Integrated Waste Management Board * California Interagency Ecological Program * California Job Service * California Junta Estatal de Personal * California Labor and Employment Agency * California Labor and Workforce Development Agency * California Labor Market Information Division * California Land Use Planning Information Network (LUPIN) * California Lands Commission * California Landscape Architects Technical Committee * California Latino Legislative Caucus * California Law Enforcement Branch * California Law Enforcement General Library * California Law Revision Commission * California Legislative Analyst's Office * California Legislative Black Caucus * California Legislative Counsel * California Legislative Division * California Legislative Information * California Legislative Lesbian, Gay , Bisexual, and Transgender (LGBT) Caucus * California Legislature Internet Caucus * California Library Development Services * California License and Revenue Branch * California Major Risk Medical Insurance Program * California Managed Risk Medical Insurance Board * California Maritime Academy * California Marketing Services * California Measurement Standards * California Medical Assistance Commission * California Medical Care Services * California Military Department * California Mining and Geology Board * California Museum for History, Women, and the Arts * California Museum Resource Center * California National Guard * California Native American Heritage Commission * California Natural Community Conservation Planning Program * California New Motor Vehicle Board * California Nursing Home Administrator Program * California Occupational Safety and Health Appeals Board * California Occupational Safety and Health Standards Board * California Ocean Resources Management Program * California Office of Administrative Hearings * California Office of Administrative Law * California Office of AIDS * California Office of Binational Border Health * California Office of Child Abuse Prevention * California Office of Deaf Access * California Office of Emergency Services (OES) * California Office of Environmental Health Hazard Assessment * California Office of Fiscal Services * California Office of Fleet Administration * California Office of Health Insurance Portability and Accountability Act (HIPAA) Implementation (CalOHI) * California Office of Historic Preservation * California Office of Homeland Security * California Office of Human Resources * California Office of Legal Services * California Office of Legislation * California Office of Lieutenant Governor * California Office of Military and Aerospace Support * California Office of Mine Reclamation * California Office of Natural Resource Education * California Office of Privacy Protection * California Office of Public School Construction * California Office of Real Estate Appraisers * California Office of Risk and Insurance Management * California Office of Services to the Blind * California Office of Spill Prevention and Response * California Office of State Publishing (OSP) * California Office of Statewide Health Planning and Development * California Office of Systems Integration * California Office of the Inspector General * California Office of the Ombudsman * California Office of the Patient Advocate * California Office of the President * California Office of the Secretary for Education * California Office of the State Fire Marshal * California Office of the State Public Defender * California Office of Traffic Safety * California Office of Vital Records * California Online Directory * California Operations Control Office * California Opinion Unit * California Outreach and Technical Assistance Network (OTAN) * California Park and Recreation Commission * California Peace Officer Standards and Training (POST) * California Performance Review (CPR) * California Permit Information for Business (CalGOLD) * California Physical Therapy Board * California Physician Assistant Committee * California Plant Health and Pest Prevention Services * California Policy and Evaluation Division * California Political Reform Division * California Pollution Control Financing Authority * California Polytechnic State University, San Luis Obispo * California Postsecondary Education Commission * California Prevention Services * California Primary Care and Family Health * California Prison Industry Authority * California Procurement Division * California Public Employees' Retirement System (CalPERS) * California Public Employment Relations Board (PERB) * California Public Utilities Commission (PUC) * California Real Estate Services Division * California Refugee Programs Branch * California Regional Water Quality Control Boards * California Registered Veterinary Technician Committee * California Registrar of Charitable Trusts * California Republican Caucus * California Research and Development Division * California Research Bureau * California Resources Agency * California Respiratory Care Board * California Rivers Assessment * California Rural Health Policy Council * California Safe Schools * California San Francisco Bay Conservation and Development Commission * California San Gabriel and Lower Los Angeles Rivers and Mountains Conservancy * California San Joaquin River Conservancy * California School to Career * California Science Center * California Scripps Institution of Oceanography * California Secretary of State Business Portal * California Secretary of State * California Seismic Safety Commission * California Self Insurance Plans (SIP) * California Senate Office of Research * California Small Business and Disabled Veteran Business Enterprise Certification Program * California Small Business Development Center Program * California Smart Growth Caucus * California Smog Check Information Center * California Spatial Information Library * California Special Education Division * California Speech-Language Pathology and Audiology Board * California Standardized Testing and Reporting (STAR) * California Standards and Assessment Division * California State Administrative Manual (SAM) * California State Allocation Board * California State and Consumer Services Agency * California State Architect * California State Archives * California State Assembly * California State Association of Counties (CSAC) *0ACalifornia State Board of Education * California State Board of Food and Agriculture * California Office of the Chief Information Officer (OCIO) * California State Children's Trust Fund * California State Compensation Insurance Fund * California State Contracts Register Program * California State Contracts Register * California State Controller * California State Council on Developmental Disabilities (SCDD) * California State Disability Insurance (SDI) * California State Fair (Cal Expo) * California State Jobs Employment Information * California State Lands Commission * California State Legislative Portal * California State Legislature * California State Library Catalog * California State Library Services Bureau * California State Library * California State Lottery * California State Mediation and Conciliation Service * California State Mining and Geology Board * California State Park and Recreation Commission * California State Parks * California State Personnel Board * California State Polytechnic University, Pomona * California State Railroad Museum * California State Science Fair * California State Senate * California State Summer School for Mathematics and Science (COSMOS) * California State Summer School for the Arts * California State Superintendent of Public Instruction * California State Teachers' Retirement System (CalSTRS) * California State Treasurer * California State University Center for Distributed Learning * California State University, Bakersfield * California State University, Channel Islands * California State University, Chico * California State University, Dominguez Hills * California State University, East Bay * California State University, Fresno * California State University, Fullerton * California State University, Long Beach * California State University, Los Angeles * California State University, Monterey Bay * California State University, Northridge * California State University, Sacramento * California State University, San Bernardino * California State University, San Marcos * California State University, Stanislaus * California State University (CSU) * California State Water Project Analysis Office * California State Water Project * California State Water Resources Control Board * California Structural Pest Control Board * California Student Aid Commission * California Superintendent of Public Instruction * California Superior Courts * California Tahoe Conservancy * California Task Force on Culturally and Linguistically Competent Physicians and Dentists * California Tax Information Center * California Technology and Administration Branch Finance * California Telecommunications Division * California Telephone Medical Advice Services (TMAS) * California Transportation Commission * California Travel and Transportation Agency * California Unclaimed Property Program * California Unemployment Insurance Appeals Board * California Unemployment Insurance Program * California Uniform Construction Cost Accounting Commission * California Veterans Board * California Veterans Memorial * California Veterinary Medical Board and Registered Veterinary Technician Examining Committee * California Veterinary Medical Board * California Victim Compensation and Government Claims Board * California Volunteers * California Voter Registration * California Water Commission * California Water Environment Association (CWEA) * California Water Resources Control Board * California Welfare to Work Division * California Wetlands Information System * California Wildlife and Habitat Data Analysis Branch * California Wildlife Conservation Board * California Wildlife Programs Branch * California Work Opportunity and Responsibility to Kids (CalWORKs) * California Workers' Compensation Appeals Board * California Workforce and Labor Development Agency * California Workforce Investment Board * California Youth Authority (CYA) * Central Valley Flood Protection Board * Center for California Studies * Colorado River Board of California * Counting California * Dental Board of California * Health Insurance Plan of California (PacAdvantage) * Humboldt State University * Jobs with the State of California * Judicial Council of California * Learn California * Library of California * Lieutenant Governor's Commission for One California * Little Hoover Commission (on California State Government Organization and Economy) * Medical Board of California * Medi-Cal * Osteopathic Medical Board of California * Physical Therapy Board of California * Regents of the University of California * San Diego State University * San Francisco State University * San José Stat e University * Santa Monica Mountains Conservancy * State Bar of California * Supreme Court of California * Teach California * University of California * University of California, Berkeley * University of California, Davis * University of California, Hastings College of the Law * University of California, Irvine * University of California, Los Angeles * University of California, Merced * University of California, Riverside * University of California, San Diego * University of California, San Francisco * University of California, Santa Barbara * University of California, Santa Cruz * Veterans Home of California

David again... finally. I wonder how many of those agencies existed 50 years ago? And I wonder, really, what would happen if they closed half of those agencies and cut the budgets of the survivors by half?

We may find out.

Report from CYCLE

A few weeks back I mentioned CYCLE 2008 (Casey's Youth Conference for Liberty and Entrepreneurship), the week-long camp for young entrepreneurs that we sponsor in Lithuania. Louis James of our team organized this year's event, and the reviews have been very positive. Happily, even though we mentioned CYCLE at the last moment, a couple of Casey subscribers were able to arrange things to have their own children participate. Here's an excerpt from the notes of one, Natalie.

    This past week I had the unique opportunity of attending CYCLE 2009 in Trakai, Lithuania. Only finding out about it the week before it started, me and my father (a Casey subscriber and the one who first learnt about the conference) spent the last part of the week rushing to get everything set for me to leave 4 days later. The short notice actually turned out to be a lovely blessing in disguise, because I went into the experience with no expectations and an open mind.

    From the moment I landed in Vilnius, I felt immediately welcomed into the conference as Louis James and Jeff, two of the teachers from the conference, were waiting for me with huge smiles to drive me to the campsite in Trakai. I soon learnt that all of the teachers were just as friendly, and all of them truly want to get to know you as a person so they can tailor or even change their lectures to give you the most valuable experience. In our discussion groups, my two group leaders Matt Smith and Simon Black would always start with "So what do YOU want to talk about." This gave us the chance to hear from incredibly successful international entrepreneurs about how to trade currencies, the countries they believed had the most investment potential, and little tricks to start a profitable web business with virtually no start-up costs.

    The majority of the students at the camp were Eastern-European (specifically from Belarus), and despite all of them speaking Russian as a first language and only learning English, we were able to develop close friendships and hold discussions into the night. Writing this on the plane home, I already miss my roommates and lovely Belarusian tour guides, who would be sure to start speaking in English as soon as I showed up. Being the only Canadian, I was able to share my experiences and views, and on Canada Day every single student in the camp was more than eager to support me and wear Canada tattoos and stickers all day.

    The week has truly been an eye-opening one. I would consider my university an amazing place to study, and the skills we learn there are important, but at CYCLE, we got to develop the practical skills we need through various opportunities throughout the week.

    We debated real-life business deals and decided the best route to make profit by looking at how to establish distribution chains, enhance profits, and serve the customers. The largest part of the week was the business plan. Each student could submit a small business plan at the end of the week to be reviewed by top investors. The winning plan will be completely financed, and the student will get assistance in implementing their plan. Additionally, each student gets specific feedback about their report, as well as things to consider and support should they choose to develop it themselves.

    Although the mornings were early, and the travel was certainly long, I can confidently say that anyone who has the opportunity to go to this conference should. I have come out of this week with professional contacts, a business idea I plan to implement, a thorough understanding of international investing & politics, and amazing friends.

Up to this point, these camps have only been held annually, in Eastern Europe, but we are considering holding them more frequently and in other areas of the world, including North America. While there may be some commercial gain to be made by expanding this initiative (and no apologies for that), the reality is that there is a dearth of opportunities available to young people these days to learn about the free market and how to succeed in it. Maybe we can do some good.

So, what do you think? Good idea or not? Do you know a kid that could benefit from an immersion course in freedom and free markets? Drop us a note at [email protected] and let us know. We'll keep you posted on any developments.

Too Funny

I have to share this, because it is classic Doug Casey, and I laugh every time I think of it.

The setup is that the nation's media fell all over itself to say kind things in obituaries about Robert McNamara, the former defense secretary who presided over Vietnam and who shed his mortal coil this week.

Louis James, who does the interviews for our new free e-letter, Conversations with Casey, thought that McNamara's passing was something that might have caught Doug's attention and so asked him about it. The result, in addition to being spot on, included some memorable lines, my favorite coming as a result of a follow-on about why the media was so complimentary of the man.

    Q: Do you really think it's political correctness of sorts about respecting the dead, or is it that the journalists of today, being largely products of the U.S. public education system, are simply too ignorant or too biased to see the man for what he was?

    Doug: That's a very good question. It could be that the average person writing these editorials – and they are the establishment now – basically agrees with his views and methodology. So they can only nit-pick technical issues around the edges, while they should be attacking the very core of what he stood for.

    Anyway, I'm sorry he died... before I had a chance to ask him that question.

    I blame myself: I consider it one of the great omissions of my life.

    Q: Maybe you'll have a chance if there's such a thing as reincarnation.

    Doug: Yes, perhaps. He'd come back as a cockroach, and I might have a chance to squash him.

If you aren't signed up for Conversations with Casey, it gets very high reviews, and I guarantee you'll never find it dull. Sign up for it here, and don't forget to pass it along!


  • Casey Phyle News.

    • Bend, Oregon, Up and Running. A group of Casey subscribers have started meeting regularly in Bend, Oregon.

    • Kansas City Phyle will be having their first meeting very soon.

    • SoCal Phyle's Next Meeting Set for July 18, from 1:30 to 5:00 pm. The largest and most active Casey phyle is hosting a program with a speaker reporting on his recent trip to Uruguay, and another from Italy who will be discussing the European perspective on the crisis. The meet-up is at the Steelhead Brewing Company in Irvine California, and space is limited.

    If you are in any of those neighborhoods and want to join in the fun, drop us a note at [email protected] and we'll get you connected.

  • Big Changes Coming. Watch your email inbox for an announcement on some exciting and significant changes here at Casey Research. One of those changes will be that this weekly experiment in musing will be going daily (at least for a trial period, likely beginning July 20). The name of the publication will change, too... to Casey's Daily Dispatch. That's just the tip of the iceberg, but I wanted to let you in on the new name now. Watch for the announcement of additional changes soon...

And That's That for This Week

As I sign off this week, the S&P 500 is off 62 points, a slight improvement from earlier in the day, but still well established on a negative down slope, exacerbated, no doubt, by the latest news that the sentiments of consumers are growing less cheery (gee, I wonder why that could be?).

With duty calling, I must now sign off, thanking you for reading and for being a Casey Research subscriber.

Until next week, remember... good things can happen in bad times – if you are sufficiently prepared and have the right attitude.

David Galland
Managing Director
Casey Research, LLC.

Posted 07-10-2009 12:59 PM by David Galland