But first, we were poring over the reader e-mail last night. Many readers think we are being unfair, unconstructive, and un-brief in our critiques of Ben Bernanke, bankers, Kevin Rudd, and other economic know-nothing from across the political spectrum. So let us take a moment to be as clear as possible: policy makers and politicians are morons.

We're told Ben Bernanke is the right man to get us out of the trouble we're in. But isn't Ben Bernanke the man who got us into the trouble to begin with? Didn't he and Alan Greenspan lower interest rates so much they created a worldwide credit boom that is now deflating? Wasn't it their policies that enabled banks and Wall Street to securitise commercial and residential mortgages and send them far and wide into the balance sheets of the world as "assets"? And aren't those "assets" now falling in value, continuing to wipe out equity at the household and corporate level?

It is clear that politicians are still slovenly serving the interests of their corporate masters in the financial world. And it is clear that the financial world has every reason to encourage government stimulus, loan guarantees, and lower interest rates. This keeps the great leveraged credit machine of the Financial Economy motoring. And that machine keeps the financial industry in tall cotton.

Besides, the limits on executive compensation are window-dressing for public (voter) consumption. With bonuses limited by statute, we reckon more compensation for the financial industry will move back to stock option grants. That means for the financial industry to preserve its privileged status, stock prices have to move higher. And nothing enables that like credit. Borrow money and plough it back into stocks to line your pocket. Does that sound like something that may be happening?

Our point is that this whole interlude since the collapse of Lehman Brothers is an attempt to preserve the status quo ante. If the tools of monetary and fiscal policy (which are clumsy and theoretically flawed anyway) exist to make the financial and estate industry thrive, the real economy will continue to get screwed. We'd argue this recent recovery is nothing but an attempt to resuscitate the money-shuffling arrangement that was so profitable up until late 2007.

At least some people agree. "A UN think tank on trade has warned that the current financial market rebound is not a 'real recovery' and that any world economic growth recorded in 2010 was unlikely to exceed 1.6 per cent," reports today's Australian.

"The depth of the recession has been so important that of course there will be a rebound ... but we still do not see that this is a real recovery," says Supachai Panitchpakdi, secretary-general of the United Nations Conference on Trade and Development (UNCTAD). "The actual increase in the commodities prices is mainly driven by appetite for more risk," he says. More on this in just a second.

UNCTAD's Chief economist Heiner Flassbeck, said, "the markets had been fuelled by financial speculation that in turn was driven by expectations of recovery. 'But anticipation of recovery is just a fiction, it is not there.'"The UNCTAD report also noted that, "Tumbling profits in the real economy, previous over-investment in real estate and rising unemployment will continue to constrain private consumption and investment for the foreseeable future."

Hmm. Maybe UNCTAD is reading the Daily Reckoning. But if not, for those who have eyes to see it, the truth is plainly in sight. You cannot correct the global imbalances of a leveraged boom with more leverage. But let's tackle on specific aspect of the report that suggests commodity prices may again be the subject of financial speculation. Is it true?

Frankly it's hard to say. We're more confident that profits in the real economy - once you take away the effect of credit and government money - are regressing to an historic mean. Some companies will make more. Some less. But the average will be lower.

However we did see one interesting chart yesterday from our trader Gabriel Andre. We were discussing with him whether the euphoria about Australia - the dollar, the stock market, real estate, and commodities - was suspiciously reminiscent of June 2007. You know, right before the ore hit the fan. Is all this feel-good news a sign of worry?

We decided to tackle the question with a picture. It's the chart you see below. The chart tracks the performance of Worley Parsons - a proxy for infrastructure and capital spending in the mining industry - versus the CRB commodity index. We are asking a question with this chart. The question is, does a peak in Worley's stock presage a downturn in the resource sector generally?

Click to enlarge

Gabriel writes that, "The level of $30 looks as a strong resistance for the stock. It's a previous low where it bounced back several times in 2007 and 2008. The recent action suggests the $30 may be a new high, finding resistance, especially because the correlation is obvious with the CRB and the CRB has already started correcting.

"If you pay attention to the details on the chart, it looks like the correlation is stronger on the downside. Worley can fall when the CRB rises. But when the CRB falls, Worley generally falls too. If you were asking me to turn this observation into a trading idea, it would be to short-sell WOR at the current levels with a stop-loss at $31. A correction towards $20 is possible.

Gabriel has been working on a system to trade these chart patterns in ASX 200 stocks for the last four months. Look for more information on that later this week. And in the meantime, keep in mind that if Worley is a proxy for the bull market in Aussie resource stocks, the charts are suggesting that all the positive momentum since March may be reaching its limit. When you check in the turn down on the CRB, you should be prepared for the possibility of a correction in commodity prices too.

If that happens, it would be perfectly consistent with the tenor of the news these days. As excited as we are ourselves about certain resource projects, the level of bullish consensus about commodity prices and corporate earnings is a warning sign. But - this is important - that doesn't mean you have to head for the hills.

As Gabriel's work is showing, you can use these kinds of signals to take profits before rallies expire. It can also save you from mis-timing your entry into a blue chip share. And ultimately, it should be able to help you identify the best time to get back into the share, after the inevitable correction has done its work.

We meant to write more about gold, sound money, and unsound economic thinking. But that will have to wait until tomorrow. Until then...

Dan Denning
for The Daily Reckoning Australia

• CRB Index Correction Likely to Go Further
• Worley Parsons (ASX: WOR) Announces Pilbara Solar Energy Project
• Note to Australia: Buy Resources, Not Banks
• Government Preparing Another Stimulus
• Recovery for the Real Estate Market

Worley Parsons says it wants to build 34 250-megawatt power stations in Australia by 2020. Now that is real vision! The goal is to provide alternative power to industrial customers in WA, who are currently vulnerable to any disruptions from the natural terminal at Varanus.

Australia is the buckle on the global sun belt

Source: Worley Parsons

As you can see from the image above (taken from Worley's presentation to investors on its plan) Australia is in the world's "Sun Belt." As we've said in this space before, getting more energy from sun is one of the key challenges of Peak Oil.

By the way, our technical analyst Gabriel Andre, who has studied energy and engineering (along with currencies and trading) tells us that the X axis is the longitude (in degrees West and in degrees East from Greenwich meridian, while the Y axis is the latitude (in degrees North and South from the Equator). For the data in colours, what you see is solar radiation per annum, in KW/H per M2, which is the total amount of beam radiation that you receive from the sun on a particular area.

Got that?

One more note on this. Worley Parsons wants to use solar thermal technology, not solar panels. It's a subject we've covered in the Australian Small Cap Investigator (although the best Aussie company at it is now doing business in America and is not publicly listed). It's part of the "portfolio of energy experiments" we'll need to produce energy in the future.

The trouble with silicon based photovoltaic panels is that there's a limit to how much of the sun's light they can convert into electricity. Experiments in thin film solar panels and in materials science (a kind of artificial photosynthesis that converts more light into energy) are designed to improve the efficiencies of photovoltaics. But progress is slow.

Solar thermal produces electricity, but uses sunlight to produce heat, which then produces electricity. Solar thermal concentrates the sun's rays to superheat a fluid, which is then used to drive a turbine to produce electricity. The nice thing about it is that the superheated fluid can be stored, which means a solar thermal power station can operate at night, when the sun is not shining. It's a great idea, and great to see Worley Parsons moving on it.

Dan Denning
The Daily Reckoning Australia

• CNOOC Signs Agreement With Altona (LON: ANR) for Coal to Liquids Project
• Note to Australia: Buy Resources, Not Banks
• Crude Oil Becoming Much Harder to Find
• Increased Oil Production Won’t Solve the Energy Crisis
• Electricity Crisis is Coming