Pulse of the Nation, The Great Correction, Global Debt Crises and More!

• Pulse of the Nation: Huge majorities fear debt more than terrorism, won’t rule out economic “collapse”
• What would collapse look like? Behold the “Great Correction”
• Greek, Dubai debt issues sorted out… Where the dollar goes from here
• Obama puts the kibosh on more offshore drilling… Byron King gears up to visit a rig
• Reader slams Bill Bonner for “biased” take on the French… Mon Dieu!

  Public opinion polls are a dime a dozen. But put a few of them together, and an interesting picture starts to emerge. So welcome to the Pulse of the Nation edition of The 5.

  Let’s start with the one that hits like a two-by-four: 79% of Americans polled by Fox News and Opinion Dynamics believe it’s possible the U.S. economy could “collapse.” Republican, Democrat, independent — doesn’t matter, the majorities are overwhelming.

  The same poll reveals 65% of Americans believe the national debt poses a bigger threat to the nation’s future than terrorism. Again, supermajorities of Democrats, Republicans and independents are in agreement. (But interestingly, the numbers are lowest among Republicans — 61%. That compares with 66% of Democrats and 69% of independents. Dick Cheney’s “deficits don’t matter” mantra dies hard, it would seem.)

  Buttressing those numbers is a poll by Bloomberg asking Americans for their assessment of President Obama’s performance on a host of issues. The category where he measures the worst: the deficit. Only one-third of those polled approve of how he’s dealing with that. And 80% agree with the statement “government spending is out of control.”

Those numbers wouldn’t surprise David Walker, the former U.S. comptroller general now with the Peterson Foundation. Peterson commissioned its own poll a year ago at this time. As Walker writes in his book Comeback America, “Above all, Americans told us that they want to get the economy back on track. But their second priority for the Obama administration was somewhat surprising. They wanted the president and the Congress to address our escalating deficits and debt levels.”

How confident is Walker that these voices will be heard in Washington? He’ll share his candid perspective this July at the Agora Financial Investment Symposium in Vancouver. Along with a return visit by Marc Faber and perennial favorites like Bill Bonner and Doug Casey, it promises to be one of the best ever. Discounted early-bird registration is still available, but not for long.

  On to more conventional numbers: First-time jobless claims fell last week a bit more than expected — or at least enough to drive up major U.S. stock indexes 0.6% this morning.

The gains wipe out yesterday’s losses, driven by twin bits of discouraging data. Durable goods orders rose 0.5% in February — nice, but it’s a smaller rise than the month before. Didn’t help that new home sales fell to an all-time low, either.

Tomorrow we get the Commerce Department’s final revision of fourth-quarter GDP. Will it be as rosy as the last one — an annualized 5.9%? No matter the answer, Bill Bonner has his mind made up: He’s stopped using the word “depression” to describe our present situation.

  “Now we’re calling it ‘The Great Correction,’” Bill continues — “in which we’re expecting a number of things to get sorted out — including the stock market boom from ’82-’07… the post-’71 dollar-backed monetary system… and the huge credit expansion that goes all the way back to 1946.

“But that’s not all. It could be that this period will correct the whole, extraordinary surge in Anglo-Saxon power that began in the 17th century. English speakers have been on a roll since Sir Francis Drake defeated the combined armada of Spain and France in 1588. Soon after England began putting together her empire… and then, the Industrial Revolution turned Britain and America into economic powerhouses.

“In addition to reducing asset prices and deleveraging the economy, the Great Correction could be reducing the relative power and influence of the English-speaking peoples. We don’t know… but that’s the way it looks now…”

  Day One of a two-day summit by European Union leaders on the Greek debt crisis has yielded this nugget of news: German Chancellor Angela Merkel is insisting the International Monetary Fund have a role in any Greek bailout, along with the EU. Merkel fears if the EU goes it alone, Germany will end up with the bulk of the burden.

None of this is a surprise, but the fact Merkel made her opinion known in an official forum appears to have put a floor under the euro for the moment. It’s trading at $1.336. That’s dragged down the dollar index, but not much — it stands at 81.68.

  “The U.S. dollar has been on a run since December,” says our forex specialist Bill Jenkins, “when the dollar index hit a low near 74. From there, it has climbed to almost 81. It has suffered a couple of dips… but each time it has rebounded. Its trajectory is still upward, and we look for it to exceed the recent high around 81.30.

“How high can it go? At the same time, we also need to ask how far can the euro fall?

“That’s because, as you probably know, the dollar index represents the value of a dollar compared with a basket of select currencies. But the currencies that make up the basket aren’t weighted evenly. And perhaps not surprisingly, the euro gets the most weight — accounting for nearly 58% of the index’s value.

“So the dollar may be weak, but as long as Greece (and now Portugal) stays in the headlines and the euro continues to drop, the U.S. dollar index will continue to rise. Thus, a weakening euro may be starting, or at least encouraging, a dollar bull run.”

  The government of Dubai has agreed to a $9.5 billion bailout of Dubai World, its state-owned holding company.

That amounts to about 40% of Dubai World’s total debt of $23.5 billion — an amount so crushing that you’ll recall last November, the firm asked its creditors for a six-month delay in payments. With this new government pledge, Dubai World has now put together a payment plan. The bulk of the bailout will go to creditors of Nakheel, the property arm of Dubai World that developed those palm-shaped islands.

Just in case you forgot what a real property bubble looks like…

As for the rest of the money owed, creditors would still have to wait as long as eight years to be paid in full.

  The momentary dollar weakness noted earlier translates to momentary gold strength. The spot price is up a little over $5, to $1,094.

  Thus, gold stands 321% higher than it did when Gordon Brown was selling off nearly 400 tons of Great Britain’s gold stash a decade ago. Now the U.K. Treasury is under orders to reveal documents and memos that could finally shed light on the question, “What was he thinking?”

Better yet, the deadline to release the information is the end of next month — before parliamentary elections. Could be fun…

  The Obama administration’s six-month delay on new offshore oil drilling leases in federal waters is now stretching to nearly three years.

You may recall the Bush administration proposed, and Congress approved, an offshore drilling plan in 2008 that was supposed to clear the way for drilling to start this summer. But Interior Secretary Ken Salazar quietly scrapped the plan a couple weeks ago in favor of a new one under which drilling won’t begin until 2012. Just great.

Of course, we’re under no illusions around here that more offshore drilling will solve all our energy problems. But without it, the transition from oil to whatever the transportation fuel of the future is going to be just got a little more bumpy. And offshore oil plays, potentially more profitable.

  As it happens, Byron King is in training in Louisiana this week to climb aboard a deep-water offshore rig in the Gulf of Mexico.

A deep-water drill ship nearly identical
to the one Byron visits next week…

The purpose of the training? “It’s so I can get a particular energy industry certification that allows me to travel out over the open Gulf of Mexico to a working deep-water drill ship,” Byron explains.

“The safety training is much like what I went through back in the Navy. There’s helicopter safety and water survival, in case something bad (you-know-what) happens to the helo. There’s also shipboard safety training that’s specific to an offshore drilling vessel, with all the moving parts and potential explosive hazards. The word ‘whoops’ takes on a whole new meaning on an oil platform.”

This is just one example of the lengths to which our editors research their investment ideas. You read Chris Mayer’s dispatch from Central America on Monday, for another example.

And now for the first time, we’re packaging all of our stock-picking services in one tidy bundle. Actually, it may be the only time. And even if we do offer it again, it will never be at the current price. If you haven’t checked it out already, do so now — before the offer expires next Tuesday.

  “Wow… sometimes I am amazed at the bias found even in Agora products,” a reader scolds Bill Bonner.

“Quote: ‘The French system works as well as it does because the French are very critical, intolerant and demanding’

“You are kidding, of course? In general, the French are passive, tolerant by political mandate and no more demanding than the normal welfare recipient in the USA. They are happy to take their generic plant-based medicines, and are willing to wait a few days or weeks for treatment of anything serious… Or are you perhaps talking about the strikes that close down a TGV in the middle of the run, forcing passengers to walk a mile with their baggage to the next taxi stand? Those really hurt only the citizens.

“Quote: ‘It is still rare to see a very fat person in France’… perhaps less so than in the USA, but have you even traveled to a working-class HLM and seen who lives there? And it is indisputable that the French are fast approaching our weight class, and have with a high propensity to smoke Gauloises or Gitanes.

Quote: “They do not drink to excess”…. maybe that is why France has the highest vehicle accident rate in the world, and why more French people die of cirrhosis of the liver than anyone else?

  Responding to our item yesterday about 11% of California’s state budget going toward the penal system, a reader writes, “Legalize weed and you take out half of the inmates, and with the proceeds from tax revenue on the weed, you might even pay for the rest of the inmates… problem solved.”

“But the powers that be in their sanctimonious and self-righteous ways just can’t bring themselves to legalize ‘drugs.’ Yeah, as if coffee, cigarettes, booze and all the prescription happy pills out there aren’t drugs. Pharisees, Sadducees, hypocrites and a brood of vipers is what they all are.”

The 5: Funny, just as we went to press yesterday, California’s secretary of state certified a referendum that would legalize pot. It’ll be on the ballot this November. How the feds will react if it passes will be, well, interesting.

Regards,

Dave Gonigam

The 5 Min. Forecast

P.S. A program note: Addison remains in Nicaragua, and out of pocket, with a number of Reserve members for our “chill weekend” at Rancho Santana. And Ian has stepped away from The 5 the rest of this week so he can dive into some critical research on how you can execute our new “Trade of the Decade” for maximum profit. Look for the results in the next issue of Addison’s Apogee Advisory.

If you haven’t already signed up for the chance to take part in Apogee’s shakedown cruise by reviewing and critiquing the “beta” issues, it’s not too late.

P.P.S. Greg Guenthner just added four more stocks to his Bulletin Board Elite watch list. If you want to learn more about how to spot the most explosive penny stock opportunities, “Gunner” is still taking your questions for an upcoming webcast. Give him your best shot, here.