-- Posted Tuesday, 11 July 2006 | Digg This Article
The following are some snippets from the most recent issue of the International Forecaster. For the full 25 page issue, please see subscription information below.
SATURDAY, JULY 8, 2006
THE INTERNATIONAL FORECASTER
JULY 2006 (#1) Vol. 10 No. 7-1
P. O. Box 510518, Punta Gorda, FL 33951-0518
An international financial, economic, political and social commentary.
Published and Edited by: Bob Chapman
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International_forecaster@yahoo.com
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US MARKETS
We have been looking for something positive from the elitists and we may have found it. The US, Singapore and Switzerland have proposed to the WTO that countries eliminate taxes on medicines. Presently India charges 100% and Morocco 12%. India taxes to protect its generic drug industry.
Globalization moves in a dialectical manner. Two steps forward, one step back. Three steps forward, two steps back.
The Doha round of talks are finished and were a complete failure we are happy to report. The development round pitted the third world against the first world. Well, the rich had no intention of exposing their farmers to the chill winds of foreign competition. Kamal Nath, India’s Commerce & Industry Minister, voiced incredulity that he was being asked for bigger percentage cuts in his country’s tariffs than rich countries were willing to make in their own. They said to him we’ll cut 20%, you cut 70%.
Those countries chief antagonist was the US, and when asked why their contentious position the US representative, Susan Schwab said, “Isn’t that what leadership is about.” What a stupid answer. The US and Europe refuse to budge on agriculture. The US subsidy program alone with Europe’s, especially France’s, is widely blamed for leading to over production of crops that depress prices on world markets, destroying farming in the developing world. Just look at what it has done in Mexico; free trade and globalization has been in decent since Cancun in 2003 and continues to deteriorate. Hopefully WTO is staring over the precipice and falls in.
Sales for the big 3 automakers in June were not good. GM fell 26%, Ford fell 7% and Daimler Chrysler 13%. Toyota gained 14% and sold more cars than Ford and Chrysler combined. In June, Toyota had 15% of the US market, up from 12% y-o-y. Detroit-based companies’ market share sagged to 56% from 62%. Sales of SUV’s and light trucks fell 11%. In the first half of 2006 Toyota’s sales rose 10%.
Toyota had only a 9-day inventory of the Yaris, and a 4-day inventory of its hybrid Prius, making both sellout hits. The Ford Explorer’s sales fell 36% in June and the expedition was off 46%.
Kirk Kerkorian, a major buyer of GM shares at $32, is looking to broker a GM-Nissan-Renault alliance. Nissan has been under pressure this year with sales off 19%.
Yes, the economy is slowing. The question in America and across the world is how much, and how bad will it be? America is again collectively in denial. It should be disturbing to anyone of sound mind that the Fed is raising interest rates as the economy slows. Wall Street and government say they do not know where the end is, which is more denial and lies. Each interest increase is supposed to slow the economy, but no one writes about money and credit creation’s massive increase each and every day. This is what is known as a Ponzi scheme. The Fed can’t allow deflation because if it does, once it starts it is unstoppable and they are well aware of it. The economy is slowing on its own because people are buried in debt. Yes, interest rates hurt, but copious credit is still available.
The bogus CPI for the second quarter was up 5.7% versus 4.2% y-o-y. You readers know CPI is double that. The Fed sees raising wages as the problem, which is absurd. It’s debt, inflation, energy costs that are not going to go away and a sinking dollar. These idiots can’t call a spade a spade. They’ll give the game away and goodness forbid the public will get the truth and they won’t like it.
Rising wages are not the cause of inflation – fiat money creation is. Inflation can only be caused by monetary debauchery. That’s why the dollar is falling. To show you how absurd the rising wage argument is wages, adjusted for inflation, are less than they were four years ago. This is how the fed has screwed the workers of America. Worse yet, the Joe six-pack release, the home piggy bank, is about to stop supplying cash to stave off bankruptcy. The housing bubble has burst and prices can only go lower. You are about to see $8 trillion lost in housing values over the next few years. This is what was lost when the dotcom Fed engineered bubble burst. Americans will be lucky if they only have a deep recession. Americans have a minus 1.6% savings rate and the average family is three paychecks away from bankruptcy and they have no one to blame but themselves for not listening and seeking out the truth. A 5-1/2% to 6% Fed funds rate will put the 30-year fixed rate mortgage at 7-1/2%. That puts the real estate market dead-on-arrival. Even if housing prices didn’t go down we’d still have a recession. Falling house prices just exacerbates the situation.
A 5-1/2% to 6% Fed rate is plenty, but people don’t realize that foreigners are demanding higher interest rates and yields for the Treasury paper they are buying from the Fed to keep the US economy from collapsing. Look at the jobs picture. The BLS figures are all lies. The unemployment rate is over 13% not 4-3/4%. The BLS added 176,000 jobs in June for phantom companies they believe via pipe dreams had just come into business and started hiring. They also added 206,000 in May and 191,000 in April and Wall Street and Washington go right on with the fabrications. Wait until July 7 numbers are released. They should be downright nasty. The capper will be July’s numbers to be released on Friday August 4th. They should be terrible. Thus we have ongoing stagflation. Lower employment, wages, real estate, stock and bond prices and higher interest rates, the antithesis of what is needed and continued massive money and credit creation. The worst of all worlds. We are not negative, we are just reporting the truthful facts and you know how right we have been for 16 years...
GOLD, SILVER, PLATINUM, PALADIUM AND DIAMONDS
China will forcefully push to levy royalties on miners to help avoid the excessive development of its mineral resources. If you believe that we have for sale a dog that flies you might be interested in. Gold royalties have recently been instituted.
The Gold ETF has exploded on volume after the FOMC meeting last Thursday. The bottom is in and off we go again.
The Bank of Portugal sold 15 tons of gold over the past few months. Last December they sold 10 tons. The sales were carried out as part of the ECB’s agreement on gold sales, which limits annual gold sales to 500 tons up to 2009. The sellers also have the option not to sell...
Coin dealers in Iowa could receive a rise in business due to a new state law that just went into effect. The law ends sales tax collections on sales of rare coins, currency, gold, silver, platinum and palladium bullion. Thus, the result of eight years of lobbying by the Iowa Numismatic Association. All states should do the same.
We were all supposed to believe that Wednesday’s rally in gold and silver was caused by the shooting of missiles by North Korea. Well, think again. We started off up $10.50 on gold and an hour and one half into the session gold was down on the day. Gold came back in spite of the cartel attack and closed up $3.80 to $627.50, and silver was up $0.09 to $11.37. Gold had fallen some $15.00 and came back strongly. Even though all the news was pro higher gold, the metal struggled for its gain. In the access after market gold rose $2.00 only to be knocked back to a minus $0.70. All day long the producer gold and silver shares were under pressure. On the ballistic missile news from South Korea it should have been $20.00 higher. The shares were down before gold broke down, which means J. P. Morgan Chase, Goldman Sachs and Citicorp were pounding away.
Gold open interest rose 3,015 contracts to 292,295 on Friday, which means the shorts again are having trouble covering. Silver open interest took another drop to 3,967 contracts to 97,874. The shorts are covering like mad.
Silver stocks on the Comex fell again last week by 441,645 ounces to 102,267,952 ounces...
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Make check payable to Robert Chapman (NOT to the International Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. Please include name, address, telephone number and e-mail address. We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card US$129.95 for a one-year subscription. Note: We publish twice a month by surface mail or 3-4 times a month by E-mail. international_forecaster@yahoo.com
Foreigners please use foreign U.S. dollar denominated checks or Money Orders.
-- Posted Tuesday, 11 July 2006 | Digg This Article
