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-- Posted Sunday, 20 August 2006 | Digg This Article
The following are some snippets from the most recent issue of the International Forecaster. For the full 26 page MidWeek Reading, please see subscription information below. THE INTERNATIONAL FORECASTERAUGUST 2006 (#2) Vol. 10 No. 8-2 P. O. Box 510518, Punta Gorda, FL 33951-0518 An international financial, economic, political and social commentary. Published and Edited by: Bob Chapman E-mail Address International_forecaster@yahoo.com CHECK OUT OUR WEBSITE www.theinternationalforecaster.com RADIO APPEARANCES: To check out all of our radio appearances click on this link below: http://www.theinternationalforecaster.com/radio.php US MARKETS The US economy is slowing. Official unemployment figures tell us job growth in the past four months is running 35% below average since early 2004. Unofficially employment creation has been a disaster and an official lie. If you mix in all the jobs lost to offshoring and outsourcing you are looking at more than five million lost jobs in six years. As the housing market fades you can look forward to 1% to 2% less GDP and record official unemployment. Inflation-adjusted spending growth fell to 2.5% in the spring, 1% below the past decade and worse revolving and credit card debt hit new heights. That is because many cannot pull more equity out of their homes. Economic growth from stocks and real estate is in a fading process and we will also see that even though incomes will rise, inflation is stealing the gains. Energy prices were not abating in any appreciable way, rising personal debt service has risen and no savings means either higher unpayable credit card debt or reduced consumption. That means falling growth. That means if we slow down the rest of the world will as well, due to a fall in our current account deficit, due to less buying. We expect the Fed will continue to drive money and credit into the system to keep it from collapsing, but pushing on a string has its ultimate limits. There is no country or region in the world to replace the American consumer. They don’t have the buying power nor will they assume the debt Americans have. Thus, when the US is purged beginning next year the world will get purged with it. CompEx Inc., who developed a film as a demo for the TSA, received a US Patent for the idea called “Method for Tracking & Processing Passengers and their Transported articles.” In their video, Citizen “Bob” is remotely identified and tracked via RFID devices as he enters an airport and navigates to his gate. The video ends with chilling frames of a government agent surreptitiously scanning Bob and his belongings as he sits in the waiting area. These are the spy chips our Orwellian masters want to put in our passports, which can be easily hacked. If allowed to do so your government can track you anywhere. This is Stalin or Hitler-style government surveillance that means a total end to American freedom. Just last week at the Black Hat Security Conference in Las Vegas, German researcher Lukos Grunwold showed how easily a criminal or terrorist could clone RFID tags like those in US passports using inexpensive and readily available hardware. If they are put in passports we are sure they’ll be counter devices available to neutralize the functioning of the RFID chip if you have a reason to foil government spying. We have to have the stupidest leadership in the history of the world. RFID is a menacing threat to our freedom and privacy... We and a few others continue to tell the public that government statistics are a joke. Our government keeps two sets of books, but the neocons only want you to see one of them. There is a “President’s Budget” issued by the Office of Management & Budget, and the almost-secret report “Financial Report” of the US issued by the Treasury. The budget says that the 2005 US fiscal deficit was $319 billion, but the financial reports says it is $760 billion. The budget is on a cash basis or by revenue and expenditures. The Treasury uses an accrual basis. It shows the US obligated itself to spend $760 billion more than it collected in revenues in 2005, so the net operating cost was a minus $760 billion. Congress has trouble passing a $319 billion cash deficit, can you imagine what would have to happen with a real $760 billion deficit? Budgeting would be impossible without major reforms. Cash accounting has been illegal in the business world for many years. Accrual more accurately measures our credit card economy in which debts are incurred long before interest and principle must be paid. Even accrual accounting fails to account for gigantic Social Security and Medicare benefits liabilities because they are not contractual liabilities of government. That is right; they do not have to pay them if they cannot or do not want too. Cash accounting is simply a lie. The budget says our debt is $8.2 trillion and it is more like $66 trillion. That includes the money that is supposed to be put away for Social Security and Medicare and isn’t. In the last six years, under Republican neocons, these numbers have doubled. This is unsustainable and it will destroy America, as we have known it. We have written about this before, but as usual few seem to be listening. We sit on the edge of a financial precipitance and no one seems to care. They are having too much fun. It took America 204 years to accumulate $1 trillion in debt – we now incur that every 18-months. The market and the currency have all the earmarks of 1987, when on October 19th, the market lost 22.6% in one day and gold surged. We have some similar problems today. A new Chairman of the Fed, a large current account deficit and unsustainable tax cuts and excessive military spending. In 1985, as a result of the Plaza Accord, the dollar was allowed to fall as the dollar has since 2002. Then the trade fight was with Germany and Japan and today it is China and Asia. Thus in 1987 markets were nervous about the economy, inflation, higher interest rates and a new clumsy Fed chairman. The Germans and Japanese were threatened and it was demanded that their currencies appreciate. Germany told the US to take a hike and the Dow crashed. Today the tension is with China, its undervalued currency and its dollar trade surplus. Goldman’s Henry Paulson’s job is to whip China into shape, before Senator Schumer brings his 27.5% China tariff bill to vote by the end of September and the Treasury has to present another China manipulation report. The economy is slowing, the incumbents are under massive pressure, and mid-term elections are increasing the protectionist mood of Congress – both for what concerns trade in goods and asset protectionism. Markets are nervous, everyone on Wall Street knows the Working Group on Financial Markets and the Fed via the repo pool, are rigging the markets and they know the derivatives markets are out of control. They all know the US has to borrow $3 billion a day and that the Fed should have continued to raise interest rates. The 10-year Treasury note yield just fell from 5.10% to 4.85% as a result, and that makes US Treasury and agency paper very uncompetitive. The real estate bubble has burst and prices are headed down. That in an election year was deemed more important than the value of the dollar. Pray tell, how will Treasury continue to draw $3 billion a day from foreigners? The direction taken by the elitist Fed presents a major risk to them. The dollar problem could get out of hand and trigger a financial meltdown on a scale much larger than October 1987. Today we have the additional mega-risk of financial derivatives, which is only the tip of a much larger systemic risk, because no one really knows what will happen in a crisis. That is accompanied by colossal debt and a burst housing bubble. We have hedge funds with more than $1 trillion that are totally unregulated. These additional problems did not exist in 1987. We are in for a big test in September and October. The markets are under great pressure and as you can see there are a multiple of nasty things that could happen. All we need is one event and the management of markets by the Treasury and the Fed could collapse. This is no time to be out of gold and silver related assets. They are cheap and you should be buying them to protect yourself... GOLD, SILVER, PLATINUM, PALADIUM AND DIAMONDS Uzbekistan looks like it is purging foreign mining interests. They have revoked the license of Britain’s Oxus Gold to develop the Khandiza deposit. The state-owned copper company will develop the gold, silver, zinc, lead and copper deposits. The gold cartel tipped us off Tuesday, by covering their shorts on the gold and silver shares driving them up as gold fell. This goes on all the time, yet no one talks about it. This could mean the cartel has driven gold and silver down as much as they care too at this juncture. A bottom could be in again. Do not forget they are shorting the shares and gold and silver bullion and much of what they do involved derivatives. Some of it is naked-shorting as well. This is how the elitists are stealing your money, not only in gold and silver, but also in all markets. Gold closed up $6.00 at $628.50 and silver moved up again as the leader, up $0.21 to $12.24. As of Tuesday’s close silver Comex stocks dropped by 594,648 ounces to 103.07 million ounces. Client owned inventory, the eligible category, increased only 10,245 ounces and 604,893 ounces was removed from dealer inventory, leaving traders only 42.69 million ounces to draw from. The Tuesday Tocom session saw big shorts increase shorts by 355 contracts to 3,544. Goldman reduced their gold shorts by 400 contracts to 38,283...
-- Posted Sunday, 20 August 2006 | Digg This Article
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