This jewel came from a recent Daily Reckoning Newsletter:


It is just a hunch, though. Perhaps not as worthless as a

CIA briefing, but still, we give fair warning: we don't get

tomorrow's paper any sooner than Alan Greenspan.

Yesterday, the National Bureau of Economic Research said

the recession that began in March of 2001 ended in November

of the same year. But it was unlike any recession the world

has ever seen. Like a hanging, there was the rope of

negative GDP growth... and the gallows of falling

employment... and the fresh-dug grave of excessive debt. But

when it was over, there was no dead man to put in it.

Instead, consumers had just kept digging deeper holes for

themselves. Debt rose - when everybody knows debt is

supposed to go down in recession. They bought more SUVs and

houses and boatloads of shiny new stuff from China. And by

the end of the recession, they had more things than they

had ever had before, and owed more money to more people

than ever before, too.

This is not the way it is supposed to work, dear reader.

Any recession worthy of the name is supposed to reduce

consumer spending and debt. And it's supposed to leave the

consumer with 'pent-up demand' for the things he didn't buy

while he was cutting back. It was this pent-up buying

pressure that was supposed to lead the nation out of

recession to 'recovery.'

"No decent recession, no decent recovery," we recall

guessing two years ago. Since, we have seen a recovery as

bizarre as the recession. No plume of smoke belches from

the nation's factories. No overtime pay increases the

purchasing power of its employees. Nor does any pent-up

desire increase their ardor.

Jobless claims are still over 400,000 per week. Corporate

profits are still weak. Yesterday, for example, GM

announced a 30% decline in profits in the 2nd quarter.

Consumers still dig deeper and deeper graves for

themselves, while buying and selling houses to each other.

And yet, few people bother to ask what is going wrong. Most

accept the fact that the recovery is underway... and thanks

to the easy money policies of the Fed, all will soon be

well. Almost no one believes that there is a serious

problem with the Dollar Standard system.

But here is our hunch: the recession may be over, but it is

not finished. The current rally is drawing to an end. The

Nasdaq lost 3% yesterday, with Nokia down 20%.

Meanwhile, the dollar's rise seems to have stalled at $1.11

to the euro... and the price of gold seems to have bottomed

out at $343.

Our advice (no better than our hunch, we remind you): use

this opportunity to unload dollar-based assets. Buy gold

and the euro.