My face was melting. It was on fire.
It felt like someone was giving me a root canal, sans anesthesia, in every tooth on the right side of my jaw. It was a white-hot-poker kind of pain, so intense it was completely paralyzing. Massive open sores were erupting from my chin to my right ear. All of these symptoms came on within 24 hours, beginning on an overnight flight to Zurich. The lymph nodes in my neck had swollen to such an extreme size I appeared deformed, like the right side of my body was too large for the left.
I imagined I'd gotten a staph infection from a straight-razor shave I'd gotten in Miami about a week earlier. Ever since the shave, the right side of my face had felt... strange... like a mild sunburn. And now, I thought the infection was raging out of control, spreading all the way to the top of my head, through my scalp. I was in so much pain it was hard to breathe, and impossible to think clearly. I was worried I might die.
Obviously, I lived. But it was a difficult experience. It's a story I think you should read. It's about a serious medical problem doctors don't want to talk about. And it's becoming more prevalent every year. But... I know this is primarily a financial journal. And the world's markets are undergoing some critical changes. So let's talk about money first...
The recent disclosures about the Fed bailouts are an important milestone in the ongoing global currency/sovereign-debt crisis. The American people are slowly beginning to realize the people who control the value of their money can't be trusted.
Remember... we were told the Fed's trillions of dollars in bailouts were an emergency measure... only temporary... and only done for companies that posed a "systematic" risk to the global markets. It turns out none of that was true. Instead, the printing has become permanent policy. The bailouts have continued – and gotten bigger. And the rescued companies were politically sophisticated, not crucial to the economy.
What's next? The next most important thing that will happen is true political rage over the idea we should bailout Europe – which is exactly what's happening. I was interviewed in the Gold Report this past July about the building crisis in Europe. Everything I predicted has come to pass...
7/9/2010
PS: From my perspective, nothing Europe has done so far is anywhere in the ballpark of allowing them to pay down the principal on their obligations. They haven't massively devalued their currencies, although Hungary is in the process of doing so with its florint. They certainly haven't lowered the structural costs of their economies, and I don't know that they will be willing or able to do that.
Let me be very clear. I am not at all in favor of competitive devaluation. That's one of the big weaknesses of the world's paper currency standards. Every country gets out of trouble by basically robbing its citizens by taking away their purchasing power, but that is what has to be done in the world as it exists today. For Europe to get back on its feet and to have real growth, it's going to have to massively devalue the euro, and I expect the euro's structure to change significantly. These governments can cut their budgets and live under "austerity," but all that's really going to do is slow down their economies even more and make them even less competitive globally. That's why gold and silver are such important hedges for people to have.
The Gold Report: So austerity won't work.
PS: No, I don't think the European model is going to work. And because it's the world's largest economic bloc, you're not going to see global growth rebound until some kind of drastic restructuring of Europe's sovereign debts takes place, or until the euro massively devalues. As more creditors come to doubt these debt structures, you're going to see a really big problem because Europe will be forced to monetize a lot of debt. That eventually will result in a lot of devaluation and a lot of inflation. Investors see all this coming, and of course are withdrawing from that currency zone....
I think eventually you'll see some global solution to the sovereign debt problem... What I foresee is the Fed opening big swap lines with the ECB, and the European Central Bank buying sovereign debts of all these garbage states as they did with Greece. They're just going to do their very best to inflate it away.
Will they be successful? I can't say; this is a huge experiment in central banking. But if and when the Fed starts buying up Spanish debt, the American people will go haywire. They won't stand for it. I don't want to be long in stocks that day, I'll tell you that.
As longtime readers know, I've been warning about the current crisis since 2005. I saw it coming by looking at the books of the world's major corporations – GM, GE, Fannie, Freddie, etc. Since then, central bank bailouts and off-balance sheet arrangements – like the U.S. bailout of Fannie and Freddie – have passed on these debts to sovereign borrowers.
Here's the key point to remember: Bailing out the banks and the corporations didn't make the debt go away. It merely socialized it. And the only way to actually pay it back is through an enormous inflation. That's what is underway right now. That's why energy prices are soaring. That's why agricultural prices are soaring. And that's why precious metals prices are soaring.
It doesn't take a financial genius to realize we can't all get rich through inflation. Sooner or later, this thing is going to crack. When it does, there will be hell to pay. What do you think will happen when the 40 million Americans on food stamps can't afford to buy bread anymore because it costs $10 a loaf? Can't happen here? It already is.
I don't think another analyst in the world has spent as much time as I have studying these bad debts and the coming crisis. I urge you to watch the video I've made about these issues. I caution you, it's about an hour long. There's still time to protect yourself from the crisis that's about to take our country by storm... But not much... All I can do is warn you. You have to educate yourself. And you have to take action.
Now... what about the other side of the coin? While bad debts and inflation are destroying the Western democracies, the so-called "Middle Kingdom" of China is growing richer and more powerful every day. So I wondered, what would happen if we sent our best small-cap analyst to China and told him to come back with the single best investment opportunity in the country? That's what we did.
Getting back to my medical crisis... When you are delirious with pain, you don't make sound decisions. All I could think about was getting home. I wanted to see my wife. I wanted to see my son. That I was in Zurich, which houses Europe's best hospitals, never even crossed my mind. That I was supposed to be hosting nearly 300 of our company's best customers and contacts didn't matter to me, either. I had to do something to stop the pain. Within about an hour of landing, I booked an immediate return flight home. I remember getting on the plane. And then I passed out...
They had to shake me to wake me up. I wish they hadn't. The pain had escalated and expanded, reaching the top of my head. Blisters were erupting all along my jaw line, moving up to surround my right ear. I was beginning to look like the elephant man. I was in so much pain it literally took my breath away. I was afraid they wouldn't let me back into the country.
Amazingly... they said nothing... And a half hour later I crawled into Will Watkins' (my longtime driver) black sedan. He took me directly to the hospital, where my wife was waiting at the emergency room. A friend of a friend was an ER doctor there and arranged for us to be bumped to the front of the line. The looks on the doctors' faces told me my wife needn't have bothered with asking for the favor... I was clearly an emergency case. Suddenly, half a dozen nurses surrounded me, pulling, injecting, and staring at my face the way you might look at a huge jigsaw puzzle. I knew right away they had no idea what was wrong with me. Then I passed out again.
A few hours later I woke up to the amazingly pleasant feeling of pain meds. They put me on a variety of super-power antibacterial drugs, and thankfully, some kind of narcotic. After 30 hours of blackness, my mind began to function again. I cannot explain to you how scary it was not to be able to think clearly. It was worse than the pain. I make my living with cognition. It was terrible to have it stripped away from me. But now it's back...
I don't trust doctors. In fact, I despise them. Why? Because at the heart of medicine's culture lies a vast deceit: that doctors really understand how the human body works and interacts with nature. They don't. The limits of human knowledge are profound and enormous. Finding a wise, experienced, and humble doctor is as rare as finding an honest stockbroker.
In my business, you make or lose money based on what you think you know. And therefore, there's an enormous focus on risk. Doctors, on the other hand, are dealing with real life and death. And yet, risk is almost never mentioned. They never, ever acknowledge the limits of their knowledge. My doctors decided I had a bacterial infection. They made this diagnosis primarily because it's the thing they can admit me into the hospital for and treat. But to make this diagnosis, they had to ignore a few obvious facts. I didn't have a fever. My symptoms had "erupted" with fantastic speed. And perhaps most important, all of my symptoms were focused on precisely one side of my face... a portion of the anatomy that's completely analogous to the trigeminal nerve.
You don't need a medical degree to know bacterial infections don't precisely follow individual nerves. On the other hand, perhaps the most common virus in human beings often does: chicken pox. I was suffering from what's called "shingles," an outbreak of the chicken pox virus in an adult. It's relatively rare because most people, myself included, acquire immunity to this virus in childhood.
Interestingly, there's been a huge increase in the incidence of shingles over the last decade. It's a rise that corresponds with the launch of a chicken pox vaccine for children. You see, before "modern" medicine, chicken pox was constantly being passed around in kids. Adults would be exposed to the virus routinely. That exposure served as a "booster" to their immune system, keeping their system primed for fighting the virus they had as children.
But today? Without exposure to chicken pox, your immunity fades... Until... one day you encounter the virus again. Maybe you're overseas where they don't commonly administer the vaccine. However it happens, without any protection, you're suddenly going to be very, very sick.
I am permanently in the debt of Dr. David Eifrig, who, via text message with my wife, suggested I might be suffering from shingles and urged me to pursue that possibility with my doctors. The doctors at the hospital got it all wrong and would have continued stuffing me full of antibiotics until I popped had Doc Eifrig not come to my rescue.
There are such things as honest stockbrokers. And there are such things as experienced, wise, and humble doctors. I am lucky to call one of them my friend. Thanks, Doc.
(Coincidentally Doc warned readers of his old Health Blast about this agonizing disease. You can read his nearly four-year-old essay here.)
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In today's mailbag, an alliance member who has made money on our recommendations... and isn't complaining. How are your portfolios doing? Which editors are doing the best for you? feedback@stansberryresearch.com.
"I am always amused by the letters from subscribers who complain that they couldn't buy a security they wanted, at the price they wished to pay, at the exact moment they wanted it. Anyone who thoroughly reads the published advice from S&A knows that the very small cap stocks often spike violently upon publication of your recommendations and usually return to test the previous levels within a few days or a week. While it is true that some simply run away for good, those can be chalked up to the old adage: You can't have it all.
"As a long time Alliance member, I can assure your readers that there will be a steady stream of executable recommendations coming from S&A and the home runs come along about as regular as the buses; if you miss one, there will be another along shortly. The three portfolios I run have 1-year returns of 66%, 109.96% and 31.69% and are driven by my particular application of S&A information.
"For every Ken Van Gheem, surely there are a plethora of those, such as myself, who paid for their Alliance membership 8 fold last month! Thanks for all the great work and educational benefits provided by the Stansberry team." – Paid-up subscriber Ken McGaha
Regards,
Porter Stansberry and Sean Goldsmith
Baltimore, Maryland and Miami, Florida
December 3, 2010