-- Posted Monday, 1 December 2003 | Digg This Article
THE INTERNATIONAL FORECASTER
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NOVEMBER 2003 (#4) Vol. 7 No. 11-4
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US MARKETS
Senate Democrats will hold up a massive year-end spending bill if it includes a ban on Internet-access taxes that they fear would harm state and local finances. They say it infringes on the rights of state and local governments. The ban is meant to replace the moratorium that expired on 11/1/3. The replacement measure would permanently bar those taxes as well as taxes on high-speed cable and DSL not covered in the original. States say they’ll lose $9 billion a year by 2006 as phone calls, sales and other activities migrate to the Internet. We suggest they cut spending.
Christian AID is still trying to locate the $4 billion that went to Iraq’s Coalition Provisional Authority from oil revenues. It seems the Bush Administration has no interest in finding the missing funds.
The Senate blocked a final vote of the massive energy bill, potentially killing the legislation. The bill includes $32 billion in tax breaks subsidies and new spending. The bill is a giveaway to big energy companies. That will do little to reduce US dependence while harming the environment. It also would shield makers of petroleum-based gas additive MTBE from defective product lawsuits. Pork on Pork on Pork.
Freddy Mac restated more than 3 years of earnings, adding $5 billion in net income left unreported during that period. Freddie’s fair value of net assets swelled $4.6 billion during 2002, while stockholders equity grew by $6.7 billion for the three years in question and regulatory capital grew $5.2 billion. Freddie made $1.9 billion and $5.9 billion on derivatives in 2000 and 2002. It lost $1.9 billion in 2001. One of the administration top economic advisors warned that a small misstep in the risk management programs of Fannie and Freddie could have serious repercussions for other financial institutions that hold mortgage backed securities.
For the week ended 11/10 M2 rose $8.9 billion and M3 fell $8.5 billion.
The FED and central banks continue to buy US treasuries and agencies.
The latest man bites dog episode. Illegal aliens are suing the state of Iowa. The lawsuit claims banning illegal immigrants from obtaining a drivers license is unconstitutional.
General Tommy Franks says that if the US is hit with the WMD, the Constitution will probably be discarded in favor of a military form of government.
Hollinger executives continue to distance themselves from deposed CEO Conrad Black. Black who needs $14.3 million a year to service debt at Hollinger Inc. has relied on management fees from Hollinger International, to make interest payments. This past week Hollinger International ended those fees, which have reached more than $20 million a year. Doing so would give Hollinger International greater leverage over Black and force him to sell some of his equity to pay down debt. Black’s new attorney has advised him to step down as CEO of Hollinger International and to keep his arrogant mouth shut. If the company goes through with plans to sell the company, Black would be left with just $33 million worth of stock. Black would still have $90 million worth of real state, although his wife Barbara Amiel, known in social circles as Lady Black, would have to start paying her own bills, instead of them being picked up by the company. The private jet, maids, parties are all now history. Black and his Lady will also have to return millions of dollars they looted from the company. Lord Black is also criminally liable. Black and his co-conspirators, other former directors, have already agreed to pay back $32million. The SEC has issued subpoenas and is collecting data. The company has not filed financial reports, and when they do they will not be certified by either the company executives or its auditor KPMG. We have devoted print to this episode to show you how one of the world’s top elitist operates in the business world. They are simply crooks and use their money, power and connections to continue to loot the public.
Our soldiers sometimes spend months waiting for pay they have earned, due to a payroll system so primitive and error-proof, that few people really understand it. The Pentagon needs to fix the system quickly if they expect reservists to risk their lives in battle. The least they can do is pay them correctly and on time.
The latest $284 billion omnibus spending bill, a good part of which is probably the worst pork barrel ever, is threatened with a veto if George W. Bush fails to get his proposal curtailing overtime pay in the private sector. This horrible plan was previously rejected by Congress, but that does not stop Mr. Bush. Between Congress and the White House this government has to be among the worst ever.
The latest trade talks in Miami have come to an abrupt end. The US and Brazil called an end to talks on Thursday rather than Friday after concluding that was little left to discuss. The only thing they avoided was a collapse in talks similar to that which occurred in Cancun two months ago. It all boiled down to agriculture and politics. The talks were a failure and for the moment Free Trade for the Americas is on hold. One of the major stumbling blocks is orange juice. The Florida Citrus Mutual is seeking to retain a 29-cent tariff on each gallon of imported orange juice. If not maintained there could be no Florida Citrus industry.
As hundreds of thousands protestors took to the London streets, Mr. Bush, Mr. Blair and Europe’s black nobility were getting the Islamic message in spades while they had tea and crumpets together. That came in two terrible blasts in Turkey against British objectives. We expect London to be next because it is really much more vulnerable than the US. We can sum up street politics by demonstrations by those who have no voice. Today’s political systems in most countries have two dominant parties that exclude 25 to 30% of an electorate.
In case you had not noticed Japan is buying $1 billion in US Treasury’s a day, that finances two thirds of the $1.5 billion daily needed to fund the current account deficit. How long can the financial and political absurdity last? By the looks of their foreign reserves probably 50 to 80more days and then its game over.
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GOLD, PLATINUM, PALLADIUM, DIAMONDS
In Monday’s slaughterhouse December silver contracts rose 2993 contracts with just over a week to go. It could be many will demand delivery. If that happens silver could fly. We believe inventory could just about be gone.
Those who have leased gold since the beginning of the year are getting it stuffed. Gold is up 21% and carrying costs are 0.02% so they are out 21.02%. Silver lease rates are 13.5 times higher than gold, Ted Butter says there could be 150 million ounces of silver in stockpile. Ted we think you are great, but we believe they are much lower.
We are happy to report that at $400. - gold, Barrick Gold is offside $1.5 billion on 16.1 million ounces hedged.
We have heard there is a systematic effort by a number of gold buyers to take delivery of as much gold as possible. The problem is there is no physical gold in size for delivery. The Treasury and the FED, as we know, have been capping rallies, but we are also told they are buyers on dips, because next year they intend to return to a partial gold standard as a method of, keeping the dollar from totally collapsing. If these e rumors are right $512.00 is a lock, $680.00 is probable and $840.00 is possible in 2004.
Barrick announced a continuation of its hedging program and two days later said they were going to aggressively liquidate their book. We now suspect Barrick has been getting marginals from their friendly bankers. It could also be that Blanchard and Company could have strong evidence against Barrick and JP Morgan Chase. Whatever the reason, it’s good for gold.
Silver has broken out. $5.41 was the highest closing level since 2/2000 when it was revealed that Warren Buffett had accumulated a large hoard of silver. At that time silver reached $7.50 an ounce. Silver’s consolidation is over and $7.50 is not far away. The three billion ounce inventory of silver from 1965 is gone as is most all above-ground non-governmental inventories. The silver run we are about to enter will revisit the 1979 high of $52.50 an ounce and may go much higher, especially if gold breaks $840.00 and moves to new highs. Silver’s supply deficit is the driving force and it will prove explosive. Silver and silver shares at current levels are an extraordinary buy. The leverage is many times more than in the late 70’s so the upward move will be far greater. The short position in silver is greater than any other commodity, which of course is the work of our government. Our government can no longer sell silver because they have sold it all and today they are buyers in order to mint Silver Eagles, which are in great demand. Gold is going to do very well in the years ahead but even more money will be made in silver.
The geniuses at Barrick Gold are finally getting the message. It is changing its hedging policy, and is no longer committed to selling the metal on forward markets as it is now cash rich. They have seen the light as gold is about to break $400.00 an ounce. This is absolute proof that the elitists now are sure that gold is going to break out over $400.00 an ounce.
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ENGLAND
The UK had growth of .07% in the third quarter, the best this year.
Britain saw the largest march in a mid-week day that the country had ever seen. Over 200,000 marchers demonstrated against George W. Bush and the Iraq war. Its obvious Bush and Tony Blair are on their way out.
In the process they proved what really gifted liars they are. The UN would be given political control and the Europeans would get a piece of the rebuilding contracts, oil concession contracts and take part in the dispersion of revenues from oil production. That will really destroy George’s party. What goes around comes around. In another development that seems to fit, a Korean subscriber tells us that Japan has ordered the North Korean Embassy to shut down and all N. Korean personnel were told to leave the country. Is George W. Bush planning to open a second front with N. Korea? We hope not because it will be nuclear.
Home Secretary David Blunkett has refused to grant diplomatic immunity to armed American special agents and snipers traveling to Britain to protect George W. Bush. Bush was also turned down on a request to shut down all Tube lines under parts of London, to be visited by Mr. Bush. Demands for the US air force to patrol above London with fighter aircraft and Black Hawk helicopters have also been turned down.
Red Ken Livingston, the mayor of London, has denounced President George W. Bush as “the greatest threat to life on this planet that we have most probably ever seen”. This is a stinging attack on PM Blair and the Royal Family, as the Labor Party decides weather to readmit Mr. Livingston to the party, after his 5-year exile. Last Easter, he was denounced for an attack he had made on what he called “the most corrupted and racist American administration in over 80 years”. He also does not recognize Mr. Bush because he was not officially elected.
