Despite the government’s bailout plan, home prices are falling, unemployment is rising, manufacturing is collapsing and prices are declining everywhere: For energy, food, appliances, clothing — you name it — as more Americans hold on to their money and the global economy gets worse.
The result is creating a dangerous deflationary spiral that not only will continue to crush earnings and increase layoffs but will ultimately prompt businesses to cut production, accelerate layoffs and stop expanding — further weakening demand.
And the fallout is about to result in the unthinkable: The worst deflation since the Great Depression!
And the economy could already be headed this way, with the government’s latest numbers showing: Greatest contraction in manufacturing sectors in 28 years; job losses rose to a 34-year high in November; home prices dropping 17% from the year before; foreclosure rates up 25% since 2007, and oil prices falling 67% since July 11th.
Tragically, most investors have no clue how global deflation will not only undermine the world’s markets but will make the 1980 recession look like a drop in the bucket. The reason is simple:
Unlike rising inflation that you can choke off by raising interest rates, deflation is a much more dangerous animal to tame. (See also: "Power Through the Recession With This Stock.")
That’s because falling prices make it difficult for business to expand even when interest rates are zero. As a result, profit margins decline, profits evaporate and layoffs increases…as consumers stop spending, fearing their own job may be the next to get cut.
Do you realize what this means?
The chain reaction will cause prices to fall further, making your cash not only worth more but your debts more expensive to pay off — not only for individuals but for businesses as well making it even more difficult for banks to lend money since businesses won’t show the growth needed to pay back their loans.
And the end result is about to crush unwitting investors who fail to understand the dangerous and costly situation that’s unfolding.
But once you take the simple actions I’ll point out here…
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…you’ll see your wealth rise as prices continue to fall…as the majority of investors lose their shirts.
What Will Happen When Deflation Takes the Wheel
Despite the government’s bailouts of Fannie Mae, Freddie Mac, Bear Stearns and AIG, despite the $250 billion in cash injections allocated to banks and despite the fact that Treasury Secretary Paulson claimed "the fundamentals of our economy are sound" as the country was already mired in recession, the actions the Treasury, and the Fed have taken over the past three months aren’t working, with the markets losing more than 20% since October 3rd while doubling the government’s balance sheet!
When you add up the Paulson actions to date…
- The Term Auction Facility
- The Term Securities Lending Facility
- The Primary Dealer Credit Facility
- The Commercial Paper Funding Facility, and
- The Money Market Investor Funding Facility
…it’s crystal clear that his policies have been more like Don Quixote battling windmills than guiding the economy with a sure and steady hand.
If the 34,000 businesses that went bankrupt in 2008 or the 240,000 jobs the U.S. lost in October are any indication of Paulson’s performance to date, this is a situation you simply cannot ignore.
Paulson’s economic policy hasn’t halted the slide in home prices, the rise in unemployment or the growth in bankruptcies.
The result has dampened both consumer and business spending, with both constituencies hoarding dollars, waiting for prices to fall.
The inevitable result will push stock prices down further, as falling consumer spending crushes the earnings of all but those companies on a solid financial footing. And the situation is going to get a whole lot worse before it gets better!
You needn’t take my word.
Just ask Japanese investors who lost 60% in equities between 1989 and 1992 and saw their home prices lose 70%!
And while the specter of deflation will send millions of investors to the poorhouse…
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…it could make millionaires out of anyone who understands how to take advantage of this dramatic shift by investing in a handful of companies that are locked into profits even as prices decline.
You can be one of the winners.
Since I’ve been warning my readers about the deflationary forces that have been crushing most investors, I’m proud to say that our portfolio of 32 Blue Chip stocks has continued to defy the collapse, not only posting an average earnings growth of 270% but also delivering investor gains of as much as 144%, proving definitively that you can profit by investing in those few-and-far-between companies that are locked in to profit as layoffs increase and prices decline.
For these reasons, if you can reposition your assets now, as I’ll show you, I guarantee you’ll come out of this global financial mess financially stronger than you could ever imagine. (See also: "Sell These 5 Stocks Now.")
The Only Investments That Rise During Deflationary Times
Before I name them, let me first say you can’t stop deflation by lowering interest rates. If that strategy worked, we would be out of this mess by now.
As the New Deal of 1933 proved 75 years ago, the pathway to rebuilding America — and your future — is paved by government spending on infrastructure projects that boost return on private investment.
How can this be?
Because government-sponsored infrastructure spending not only creates new jobs but also generates private businesses profits.
The situation we face is remarkably similar to the rebuilding of the U.S. economy in 1933. Back then you could have made a fortune investing in the companies that were the beneficiaries of the 8,000 parks, 40,000 public buildings, 72,000 schools and 80,000 bridges the New Deal of 1933 created.
However, today, rebuilding the U.S. economy that’s been devastated by the housing collapse, the banking collapse, and the stock market collapse is providing you with an even greater opportunity to profit.
Where the Big Money Will Be Made
Infrastructure contractors, alternative energy providers and green transportation companies will be take-it-to-the bank winners. (See also: "Don’t Say No to Energy.")
The reason is simple…
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President-Elect Barack Obama’s first course of business is to create a stimulus package that includes more than $150 billion for "green" energy jobs.
In fact, as I write, the National Governor’s Association has outlined more than $18 billion worth of "ready-to-go" projects that would give local and state economies a jolt, not only putting people back to work but handing local contractors windfall profits.
Those numbers don’t include the 2.5 million jobs the President-Elect wants to create over the next two years through his massive Economic Recovery Plan.
Nor do those numbers include the estimated 3,100 road projects identified by the American Association of State Highways and Transportation that could break ground within three months of receiving federal funding.
The result: hundreds of thousands of more jobs and windfall profits for those companies on the ground floor of Obama’s stimulus spending.
As I look at my list of five companies poised to profit from this the government’s cash infusion, I feel like a kid on Christmas Eve, excited about all the great profits I’m about to receive. And I’d like to help you grab your share.
How to Profit From the Rebuilding of America
I’ve just put the finishing touches on a Special Report that I’m sending my new Blue Chip Growth readers that will give you an in-depth look at this new wealth-building opportunity. It’s called How to Profit From the Rebuilding of America.
In it, you’ll discover the five biggest profit-takers of Obama’s New Deal along with my proven method of investing that’s beaten the market by $3-to-$1 for the past 10 years. Our favorite companies include:
Opportunity 1: This NYSE company could be one of the biggest beneficiaries of government infrastructure spending. Here’s why: This heavy construction company is one the world’s leading infrastructure builders, whose expertise not only includes building roads, bridges, railways and airports but also building renewable energy plants and natural gas processing facilities.
When you consider the company has booked $1 billion in new government business over the past 90 days, you can only imagine how profits and earnings will grow when the government begins to spend $150 billion on new infrastructure projects.
Opportunity 2 is already a "green giant" of the solar industry, as one of the lowest-cost manufacturers of thin-film solar energy panels in the United States.As a result, this company should have a leg up in securing its share of the more than $150 billion President-Elect Obama wants to spend on creating a new renewable energy future.
Buy this one now, before Obama takes office and passes his first renewable energy bill, and…
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…you could be looking at a 50% gain in the next six months.
Opportunity 3: As you’ll also learn in your free report, a number of natural gas companies will also benefit greatly from infrastructure spending, as the Obama administration pushes its goal for energy independence in the next 10 years. The biggest winners will be those that build our nation’s gas pipelines. REASON: In 10 of the past 11 years, our nation’s proven natural gas reserves have jumped. Get more details here.
Opportunities 4 and 5 are in one sector that’s been overlooked by the analysts and the media — and yet maybe one of the biggest items on Obama’s infrastructure agenda — development of a world-class, high-speed rail transport system. The end result would not only create thousands of jobs but would also take thousands of high-polluting trucks off the highways.
Our two top rail transporters, with 42,000 combined miles of track, access to all major eastern ports and $21 billion in revenues, will be among the biggest beneficiaries.
In all, in this Special Report (yours online instantly), you’ll read about my five top infrastructure stocks to buy now — high-growth companies, all terrific buys waiting for you now, along with your 100% guaranteed subscription to Blue Chip Growth Letter.
Blue Chip Growth has become one of the most respected and largest-circulation investment advisories in America. Even now — as most investors have lost money — Blue Chip Growth stocks have continued to be an oasis, not only by continuing to beat the major market indexes by $3-to-$1 but also by handing subscribers gains of up to 144%. Join now, at 50% off the regular price, and put yourself in superb position to pyramid your wealth as Obama’s infrastructure spending boom takes off and the economy recovers. Click here now.
