The Harry Schultz Letter, which last year predicted the "financial tsunami" that eventually washed out the American economy, now has forecasted a major shakeup in the nation's banking system.
The Schultz letter has warned of "a confiscatory Franklin D. Roosevelt-style bank holiday" of indefinite length imposed by the Obama government to allow insiders to "sort out the bank mess."
During the Great Depression, President Roosevelt declared a four-day bank holiday, closing all banks to stop the panicked withdrawals and to restore calm in the wake of hundreds of bank failures.
Roosevelt's strategy worked and Congress passed the Emergency Banking Act giving the president power over bank dealings and financial transactions.
If Obama imposes a bank holiday, it could provide an opportunity for additional banking nationalization, according to the Schultz letter.
"(It could also) lead to a formal U.S. dollar devaluation, as FDR did by revaluing gold (and then confiscating it)," the letter said.
Peter Brimelow, writing for MarketWatch, said he picked the Harry Schultz Letter as Letter of the Year in 2008 for its accurate prediction of the economic calamity.
"But it's performance in 2008 was still terrible, albeit arguably for technical reasons," Brimelow said.
But the letter has regained its credibility this year, and so its predictions must be taken seriously.
"Over the year to date through May, (HSL is) up a remarkable 81.7 percent by Hulbert Financial Digest count, compared to 4.1 percent for the dividend-reinvested Wilshire Total Stock Market Index," Brimelow wrote.
Market advice from the Schultz letter: "Take profits constantly and rebuy on mini pullbacks."
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