Where the Markets and Economy Will Head if Obama Has a Second Term

Phoenix Capital Research's picture


During its first term in office, the Obama Administration thus far has proven itself in favor of increased Government control and Central Planning. That is, the general trend throughout the last four years has been towards greater nationalization of industries (first finance, then automakers and now healthcare and insurance), as well as greater reliance on our Central Bank to maintain our finances.


Last year the US Federal Reserve bought over 70% of all US debt issuance. During this period we saw decreased buying from both China and Russia. That is a big problem because as noted before, hyperinflation unfolds when a country loses credibility in the global markets. The fact that foreigners are increasingly shunning US Treasuries is the first step in that direction.


If the Obama administration gets another turn in office, there is no indication that this trend will end. We must recall that regardless of what is said, it was Obama who re-appointed Ben Bernanke as Fed Chairman. And it was under Obama’s watch that QE lite, QE 2, Operation Twist 2, and now QE 3 were launched. It was also under Obama’s watch that the US reached a Debt to GDP ratio of over 100%.


Indeed, at no point in history has the US had this much debt during peacetime. And the fact that we’re overspending by this amount at the exact time that other countries are showing signs of shunning US Treasuries is a formula for disaster.


The line to watch is identified below. Whenever the 30-year Treasuries break below this line, we’re in ENORMOUS trouble as the 30+ year bull market in US bonds is over.



The Obama administration has used debt to finance its various programs and overspending. If Obama wins a second term, I see no indication that this will change. There have been no actionable plans proposed by the Obama administration on how to tackle the debt or deficit issues. And it’s highly likely that should Obama win in 2012, he will surround himself with the same Keynesian economists who believe that a country can spend its way back into growth.


With that in mind, it is highly likely that the US would enter a currency crisis during Obama’s second term should he win. In preparation for this, investors will want to focus on the following investment themes:


  1. Inflation hedges based on continued spending and money printing.
  2. Gold and Silver as an alternate currency based on the US Dollar falling further.
  3. Productive assets (foreign real estate, apartments in specific markets, businesses, essentially anything that produces cash).
  4. Preparing for an eventual US Debt Default.


These are the big picture broad strokes of what is likely to pass if Obama wins a second term. I’ll detail the impact of a Romney candidacy tomorrow.


In the meantime, if you’d like more information on inflation and protecting yourself from it, we feature a FREE Special Report detailing the threat of inflation as well as two investments that will explode higher as it seeps throughout the financial system. You can pick up a FREE copy of this report at:




Best Regards,

Graham Summers


PS. We also feature a FREE report concerning the threat of a European Banking Collapse. It’s called What Europe’s Collapse Means For You and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.


This report is 100% FREE. You can pick up a copy today at:




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droberts55's picture

man, what has happened to the zerohedge blog? its degenerated into this bunch of right wing haranging & vulgarity.  used to be a fairly technical finance blog.  seems everyone contributing is drowning in republican talking points about hyperinflation, which is counterfactual, bs about loss of 2nd amendment rights, crazy deference to the anti-intellectual Senator Inhofe, with no one raising any rebuttal comments about the lack of climate discussion by either candidate or reference to the very sobering analysis by McKibben  http://www.rollingstone.com/politics/news/global-warmings-terrifying-new... I never cease to be amazed that those with the most vocal antipathy to Keynsianism are the biggest beneficiaries, like Romney who can trumpet his opposition to big government yet in the next breath without a hint of cognitive dissonance affirm that the inequity of carried interest & extremely low tax rates for dividend & capital gains are good for the country....ie. a tiny percent of the country.   How is that giveaway not a form of keynsianism that should be vilified?  and all this quacking about "nationalization" of banks is another counterfactual sloganeering - recommendation by people as disparate as Nouriel Rubini & Sheila Bair for RTC style resolution went unheeded in favor of Paulson's partial capital acquisition & partial TARP approach.  Closest thing to nationalization was acquisition of 86% of AIG's stock, but without any meaningful constraint on exec compensation (most egegious was Casano at AIGFP who walked with $280M).  To the extent the problem is the government, its that it has become captive to the powerful who would exempt themselves, & are abetted in their wholesale frauds.  Who, one must ask, benefited from the foreclosure settlement at 10cents on the dollar? who benefits from Sen Bob Corker's effort to weaken legislation that would prevent banks from promoting loans to borrowers who don't qualify? as if we haven't seen how that storyline ends already.  all this right wing noise above accepts too many of the premises that aggravate inequality, abet those whose sole agenda is to concentrate wealth & steer the country toward the kind of dictatorship of the elite that would look like a giant version of Paraguay.  Obama may have disabled his best arguments about his commitment to change as a result of his early treasury & economic appointments, but those errors would pale if a Romney McConnell axis were permitted to press its agenda.   

Zero Govt's picture

good to see you're not one to be fooled by dogma and blinded by jingoism and plump for Bumma being 'better' than Romney 

regards Bumma, "may have disabled his best arguments about his commitment to change as a result of his early treasury & economic appointments.." you obviously think the muppet chosen to head Treasury disconnected Bumma's 'change' policies.

Did Timmahwaya not follow budget orders, bad boy, which ones?

What budgeting-for-change would Bumma have altered, a budget cut or increase?

Do you think Bumma has a commitment to change (he's had 4 years, very same-as-Bush apart from the spending going stratospheric!) or do you think that was a vacuous election jingle to hook star struck muppets, er like yourself, and sell them a sucker punch for your vote? 

Do you think Bumma has major input in policy direction or do you suspect he's a bankers puppet on the golf course too much and his only required ability is to read from an autocue?

Zero Govt's picture

So Graham, a red sugar coated turd or blue sugar coated turd, same shit (banksters) underneath and you think there's a 'choice' of candidate and of policy??

You're not being in the least bit serious are you. No political journalist in America is serious either, they just juggle absolute bullshit and hope it doesn't hit them in the face.

Bumma, Rotty, Rotty, Bumma ...absolutely gripping you get an electron microscope out and try to spot the difference in policies of these two sponsored (very bought) puppets for your Rotty article.

'Democracy' has been reduced to a 'choice' of what's your favourite colour rosette, red or blue ...the rest of the 'democratic choices' have been taken/stolen/manipulated away from you/everyone. This is no longer a democracy of the people, the only part they play is some rather deranged voters vote like they make any difference and then the cabal just use the people as debt surfs (taxation) to fund their crminal monopoly enterprises.

Pure contempt for the people, the same people they expect to rob and skim their earnings off and into their pockets.

Just try choosing a 'Free Market in Oil' or Healthcare or a 'No Warmongering Deranged Thug' foreign policy ..good luck writing Rotty offers a 'choice' to Bumma, you'll need every drop and still won't get there

Grand Supercycle's picture


...says prediction markets.


These daily charts are still breaking down & overdue sell off expected after Obama victory: SPX / CRUDE / COPPER / GOLD / SILVER / EURUSD / AUDUSD

USD will rally.

uncle_vito's picture

I am a Romney voter but am afraid for the market if Bernanke is fired and QE3 dropped.   I know in the long run the economy will be the better for it.  However, I see interest rates rising big if QE3 is stopped.  Also I see the market dropping.  So both bonds and stocks get killed.


Guess I will put my money in a mattress  (aka BAC).

Adahy's picture

To me, the red vs. blue game is the same as the "stop hitting yourself" game played solo.

djcando's picture

More like the "stop stroking yourself" game!

bigkahuna's picture

I guess we'll wait and see as usual. The whole thing is poised to go bang anytime. I hope everyone is ready. If you're not by now, well - you and anyone who depends on you are done.

algol_dog's picture

What a bunch a crap. Nothings ready to go anywhere. I can't believe that any of you actually believe there's a difference in these 2 guys. I have no television and if I had no computer and never asked anyone, I'd never know that one or the other was in office. I'll wake up Nov. 6th, have a cup of coffee and put my pants on the same way I did on Nov. 5th and nothing will be any different whatsoever.

What fools you all are ...

Bendromeda Strain's picture

To say that nothing ever changes, so nothing ever will change is to find yourself with a front row seat at the shit show. Enjoy the performance...

algol_dog's picture

"the Performance" is exactly what it is and I've seen it already ...  zero stars ~

Plumplechook's picture

Phoenix - as soon as you see the by-line you know you can disregard it out-of-hand.   This clown has been consistently wrong with every single prediction he has made on the economy for the last four years.

Why the Tylers continue to treat his BS as if they are sermons from the mount is beyond me.



droberts55's picture

I agree.  bunch of hooey.  I'm surprised they don't exercise any  editorial review.  maybe the site is losing its cred, can't get better contributors, or maybe the editorial board has gone to sleep, site on autopilot, or main man is gone. 

blindman's picture

you do realize that "we" have surrendered?
or perhaps you continue to think economics
has any relevance regarding political and
power considerations? good luck to u.
perspective , beware the power of it all.

SAT 800's picture

gun manufacturers? don't you keep up with the news? Hilary and Obama are just drooling with anticipation waiting for July, 2013; when they can sign us on to the United Nations ban on small arms in all civilized countries.

SAT 800's picture

Don't you follow the news at all? Hilary and Obama are drooling at the mouth waiting for July, 2013, when if they're still in power they can sign us up for the United Nations Ban on Small Arms, for all civilized countries. World government has been around for awhile now; you need to keep up with the times. And; you need to get out and vote.

post turtle saver's picture

The UN ATT has nothing to do with bans on domestic small arms purchases. It's being considered for tightening controls around illegal international trade. Sovereign rights of the member states are maintained explicitly.

You also need to look up Reid v. Covert (1957), wherein the US Supreme Court ruled that the US Constitution supersedes international treaties ratified by the Senate. So, even if the UN ATT a) tries to override sovereign rights of the signatory states, and b) the necessary 2/3 majority of the Senate ratifies the treaty, the result will be effectively without teeth.

In summary, the scenario you spell out is impossible. You're going to have to come up with something more factual to rally the people around Magic Underwear Lad and his rag tag fringe fleet of compulsive liars. THE ONLY WAY TO REPEAL THE SECOND AMMENDMENT IS TO INTRODUCE AND PASS ANOTHER AMMENDMENT THAT DOES SO. Period, end of story.

droberts55's picture

well stated.  and...I don't think restrictions on assault rifles infringes on protected rights to own guns as much as it offers to constrain, for the benefit of larger public, the use of military hardware by persons who are disturbed or malicious.  big problem with having assault weapons available to returning vets who have PTSD but who aren't getting enough care through the VA, but whose background diagnosis isn't preventing them from getting these weapons.  didn't want to really be opining about guns on a finance blog, but there it is.

DanDaley's picture

Billary and Omojo will use any tactic anywhere and at any time to constrict, restrict, and destroy your liberties.

Translator's picture

Vote Obama (or Ron Paul) for Recovery Summer 4,5 ,6, 7 and 8!

Translator's picture

Speak up you sniveling liars cowards and pussies



A vote for Ron Paul at this point is a vote for Obama's racism, socialism and incompetence!

CrockettAlmanac.com's picture

If you believe that those who count the votes are going to fraudulently move Ron Paul votes into the Obama column then they could also move your Romney vote into the Obama column. Therefore a vote for Romney is a vote for Obama. Just stay home.

Adahy's picture


Well, that's a tactic I've never seen used before. 

<sarc off>

It doesn't matter which of the two pre-chosen puppets you choose if both their strings are pulled by the same people.

SAT 800's picture

The Obama Administration? Jesus I'm tired of people who have no idea at all what has gone on for the last forty years; listen carefully. The Ruling class, and all the puppets that have been presented to you in the form of presidents for the last forty years; arbitrarily beginning with richard M. Nixon's infamous rapproachment with the Communist Chinese, have been in "favor" of more powerful central government and greater central planning. Poliio was cured as a result of the Mother's March of Dimes which collected money for a completely private research lab. that produced an oral poliio vacine that eliminated the population of children living in iron lungs all over the United States; not one but two independent medical researchers have stated for publication that if we had to cure Poliio now; we'd be fucked. The FDA, The DEA, The EPA, The "War on Cancer'; do any of these sound familiar? A tendency towards bigger and more powerful central government? Jesus H. Christ, man Income Tax came in as a temporary measure during WWI. All of these completely useless and obstructive government agencies, and more, the Dept. of Energy, and the Dept. of Education, come to mind, immediately have contributed mightily to the downfall and paraysis of this once mighty nation. Obama is just some frosting on top of the cake.

droberts55's picture

your objections to the "ruling class" don't necessarily connect up with objections to central government.  red states are full of state's rights extremists carrying the banner for the undead civil war....which conveniently is a talking point for .01% elites like Romney to get the middle & lower classes to vote against their own interest for more wealth concentrating policies....which always involve relief from regulation, & who do everything they can to deregulate, defund oversight, vilify enforcement agencies, capture regulatory bodies with revolving door industry appointee lapdogs.  This is what has happened at the SEC, CFTC, DOD accounting departments, DOE is half weapons management, which the red statists seem to have no problem with, & if you had no FDA, which is rife with problems, but absent any oversight, the snake oil operatives would encounter no resistance at all, & they're now mega corps, JNJ, Lilly, Glaxo, Astrazeneca, or ADM, Monsanto, meat processors, etc, doing everything they can to capture & control the FDA.  Dept of Mines was embarrassingly found to be blatantly captured as the facts came out about the BP oversight being conducted by rank beginners.  If there's a "them" out there to fear, its the powerful in the dynamic of regulatory capture. And who abets them? Republicans, in lock step, on a mission to dismantle government from within.  How is that in any way about good faith? They're bought, they have bad cover stories to justify their determined self-interest, which the most uninformed buy into & elect them.   Romney serves these interests as a matter of record.  Obama at minimum looks a lot less like someone justifying wealth concentration, & may have been rendered impotent by Mitch McConnell, but doesn't take too much discrimination to detect that he is more like FDR than Romney is.

CrockettAlmanac.com's picture

Make sure to vote for Obama to continue corporate bailouts and the murder of innocent foreigners. That will keep America strong. You wouldn't want a chimp like Romney to get in there and bail out corporations and murder innocent foreigners. That would be immoral and reckless.

SanOvaBeach's picture

Your a fucking genius!  You must shit ice cream!  Your right, all government agencies are shit.  Let those Chinese export baby formula with talcom powder in it instead of milk.  Profit over health.  Go stick your head in the toilet!  That is where it belongs.

Adahy's picture

Why would anyone buy shitty, cheap, Chinese products in the first place?  Especially for their child, that's just stupid.  You know it's crap; so why expect it to be anything else?

SanOvaBeach's picture

Do you go through the world wih your eyes closed?  Have you been in Walmart lately you stupid fuck?

leftcoastfool's picture

Have you been drinking or is that your real personality coming through?  If you can't engage in intelligent debate without resorting to personal attacks then please take a hike.  We could all do with less vitriol.

TrulyStupid's picture

Because they're cheaper than the shitty American stuff.. they also have a larger profit margin for the corporations that shipped capital over there. Buy your ipod at Wal-MArt!

Long-John-Silver's picture

You will lose the ability to not to buy Chinese products. The only choice  you will be presented with will be not buying the product and pay a tax for making that "choice". 

SanOvaBeach's picture

So nice to have self-proclaimed English teachers on this blog.  If you're (your) so offended, stay off the blog you jack ass.  Try this on for size asshole, phuck you, OH! so sorry, fuck u................

CrockettAlmanac.com's picture

Is there a reason why you are reluctant to display the common courtesy of communicating in a way that is easily intelligible to those whom you would solicit as an audience?

Winston Churchill's picture

All true ,but Obummer is the shit flavoured icing on the cake.

Could have stumbled on for another 20 years had it not been for

his total ignorance/incompetence.Too late now,its over ,just waitng on

the final bowel evacuation of the corpse  before burying it.

CrockettAlmanac.com's picture

Do you recall that McCain suspended his campaign in October 2008 in order to rush to DC and ensure the passage of TARP? The man would have pursued exactly the same policies as Obama but would have used different rhetoric to sell them. McCain was either so tone deaf to the 99% of the population against the bailout or so beholden to his masters that he failed to take the easy path to election victory by siding with the people against bankers.

droberts55's picture

....and...obama unfortunately didn't do much to shift focus to homeowner relief, & what little was done, with the HAMP program, was opposed & defanged by McConnell & company.  TBTF fear & trembling was the premise to keep all the funds funneled into institutional channels.  If Obama had appointed someone totally different as Treasury Secretary, like oh maybe Simon Johnson, from MIT, or Paul Krugman from Princeton or any number of other academics.... Geithner went to Dartmouth, so the only thing differentiating his skill set is his background navigating the federal bureaucracies & interagency politics, & power bootlicking the big bankers in NYC, which Obama apparently considered an asset.  Had he appointed fresh talent, or even Volcker himself, the policy alternatives would have distinguished Obama from McCain, & would have made the recovery process a lot less ambiguous as to whether it was due to systemic corruption or not.  But alas, he hired Clinton era experts...Clinton himself may have evolved, but Larry Summers had not.

CrockettAlmanac.com's picture

Seriously, Krugman? I would not take advice from a guy who say that gold -- some fifty percent of which is purchased in Asia with less than ten percent being purchased in North America-- has been rising because Glenn Beck said people should buy it. Does Krugman think that Chinese and Indians have the slightest idea who Glenn Beck is?

droberts55's picture

I'd guess you're not a serious reader of Krugman, if that's the policy point you fixate on.   kind of a strawman argument, even for a gold bug.  Yes, seriously, Krugman.  send me the link to his Glenn Beck comment....odds are, I'll probably agree with it, & find that your interpretation is a misread. 

CrockettAlmanac.com's picture

Here's Krugman's post. As you read it remember that less than ten percent of gold is purchased in North America whereas over fifty percent is purchased in Asia. In light of that his claims that Glenn Beck and his advertisers have managed to significantly move the gold price is absurd. But you go right ahead and agree with him anyway. It's important to defend the Keynesian religion against the facts concerning actual market dynamics.


The Glenn Beck / DeBeers Connection

Kash, at the Street Light, has a very good post on the price of gold and its relationship or lack thereof to inflation fears. He points out that the market for gold is surprisingly small, so that it would take only a relatively small number of extra buyers to push the price way up, even when other, more direct measures of expected inflation remain low. And he draws a parallel with diamonds:

It’s also conceivable that a good advertising campaign by gold producers could be enough to move the price of gold. Imagine that an effective, sustained advertising campaign, targeted at wealthy, conservative individuals in the US, is able to persuade 25,000 of them per month to switch a portion of their financial assets into gold. (Note that the target audience would be those roughly 3 million US households that have over $1 million in financial assets.) Suppose for the sake of argument that each of them is persuaded to shift just 5%, or $50,000, of their portfolio into gold. Such an advertising campaign would have the effect of pushing $15 bn per year into the market for investment gold — very possibly enough to have a significant impact on the price of gold, given how small the overall market for gold is.

Note that a very similar thing happened to the market for diamonds in the middle of the 20th century. The DeBeers diamond cartel used an incredibly successful advertising campaign in the 1950s to cement the idea of the diamond as the premier gemstone, and in so doing permanently changed the value of diamonds.

Surprisingly, though, Kash doesn’t say explicitly that this parallel is not at all hypothetical. Glenn Beck was financially intertwined with Goldline, and therefore had a financial stake in pushing fears of hyperinflation. And he had many, many viewers. So there was a direct channel through which conservative Americans were being pushed into buying gold.

Market prices almost always tell you something useful. But sometimes what they tell you is that there’s a marketing scam in progress.



falak pema's picture

not if but when...if u believe nate silver.

Winston Churchill's picture

Or John Williams , and he puts a year on it he is so sure.

Another 25 months max and the dollar dies.

Use that time wisely.

CrockettAlmanac.com's picture

I have far more confidence in JW's figures and analysis than I do the government's. His warning is better heeded in my opinion.

boogerbently's picture

We don't need other countries....we buy our own debt.....

(the sound you hear is that of the can being kicked down the road)!

mikeadamson's picture

There aren't enough goldbugs and survivalists and assorted odd ducks to move the markets as Phoenix suggests. Despite Obama's transformation of America into a budding People's Republic, the stock markets are up and the dollar appears quite healthy. There's nothing wrong with speculation and preparing for the worst but when paranoid ravings represent the most probable outcome then perhaps it's time to return to the real world and reassess the situation.


JMHO of course.

droberts55's picture

agreed, not enough gold bugs & survivalists to move the market...but budding PRC? only in the sense that both are moving in their own ways to a sort of capitalist elite dictatorship.  I won't believe that there has been any sort of redistribution until I see the inequality pie graphs start to spread out a little.  otherwise, the only people for whom it has been budding has been a smaller & smaller group of lagacy families. 

Global Douche's picture

Actually, you're correct for the primary reasoning that the USD remains the reserve currency. Add to that, trillions in derivatives which are based on what? The USD, you say! Ahhh. So that means to unwind those, the demand for the USD will likely remain for several years. Sometimes becoming unnaturally strong due to said demand. In the years to come, "derivative" may become the "d-bomb" of cuss words. It has to some I know.

Now in playing Devil's Advocate, I have to consider if the Buck gets trashed that even the derivatives may be considered of way less value. I have to consider that angle, although I'm doubtful it'll come to that unless we're looking at QE 50 or greater.

max2205's picture

So when you were wrong on Greece and the eurozone , you want to show us how wrong you'll be on the US bond market.

You need to take up something other than writing