It is with profound disgust that we report the following. Over the past six years, some 22,500 soldiers have been discharged on grounds of personality disorder,” a condition alleged to have existed prior to their tour of duty, thus absolving the Pentagon of its obligation to provide their medical care and pay their benefits. Many of these cases are among the wounded and prevent the collection of benefits. The military’s purposely misdiagnosing soldiers to cheat them out of a lifetime of disability and medical benefits, thereby is saving billions in expenses. That is a savings of $8 billion for the life of the soldiers. Needless to say, it is all about money. Our government is betraying our veterans and we are not surprised. This is the worst government in the history of our country.
Although our government, Wall Street, CNBC and corporate America won’t admit it, we have had stagflation (stagnation + inflation together) for the past three years.
Due to substitution and hedonics, the CPI has nothing to do with inflation. Big Brother commands you to believe, but as we all know that is not reality.
CPI statistics have been constructed to not show inflation and to deceive Americans concerning their declining standard of living due to the massive transfer of wealth to Asia and to the Illuminist elites via the promiscuous credit creation of the Fed. Eventually there will be an adjustment. That is when the professionals throw their hands in the air and the public totally ignores and ridicules the ridiculous statistics. Fed Chairman Bernanke recently admitted that the government data is erroneous, particularly in regard to the CPI. He said globalization is no longer providing inflation relief and might be exacerbating inflation due to the squeeze on commodity and resource prices. Mr. Bernanke is admitting there is additional inflation via these two sources, yet official inflation is falling via the CPI not rising.
Everything they tell us is a lie. It is managed by emphasizing what they want you to hear with the negatives not mentioned or relegated to the footnotes. Things such as: trust us NAFTA, WTO, CAFTA, FTAA and SPP are good for you. They will bring more prosperity, moderate the trade deficit and foster job creation. After look back over the past 12 years we knew the statement regarding these agreements were nothing but lies. We are looking at the results and they are dreadful. Transnational conglomerates have done great and the Mexican and US citizens have gotten screwed. On top of it all taxes on these elitist corporations have been reduced as profits skyrocketed. Truth is a stranger in Washington, Wall Street, in our media and in corporate America.
From the 2003 low to the 2006 high, industrial commodities increased more than four fold; oil more than tripled and the CRB Index rose more than 60%. Yet, this inflation barely showed in government data. Healthcare costs increased at double-digit rates by private measures, including major companies whose pension and benefits programs expenses soared, but CPI kept those costs near 4% for the year. The years of double-digit housing prices were not even counted. So where did the increased costs go? They didn’t show up in the CPI. They were there, but no one reported them except the IF and a few other publications. Americans you had best wake up. If you do not you will pay a steep price.
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Unlike the residential market, commercial property values are still rising. But, Fitch says the recent downturn in the market for subprime residential mortgages, should caution investors about the dangers of mixing aggressive underwriting with reliance on continued price appreciation.
In the nation’s 79 largest markets, excluding New Orleans, rents rose 2.8% in the first quarter. This is the biggest jump since the peak in the last office boom nearly seven years ago. Prices might be higher, but absorption was only ten million square feet up from 8.1 m/s/f in the fourth quarter and an average of 15.7 m/s/f in the last two or so years.
Manhattan median apartment prices rose 1.2% in the first quarter from a year earlier, the smallest quarterly gain in five years. The median price rose to $835,000. Units under four-bedrooms or more surged 11% to a median $6.45 million, while studios – two and three-bedrooms fell 1.2% and 2.8%.
In the fourth quarter the median price for a single-family home fell in 73 of 149 metro areas and the median price of an existing home was $219,300, off 2.7%.
Sales of collateralized debt obligations (CDOs) jumped in the first quarter, but issuance will slow in the future amid rising delinquencies in the subprime mortgage business and downgrades of mortgage-backed securities. In March spreads on CDOs have widened considerably. Spreads refer to the difference between yields on riskier assets and interest rates on less risky measures of borrowing, such as the London Interbank Offered Rate, LIBOR. Spreads have widened from 65 to 250 basis points dependent on their rating. CDO issuance continued strongly during the first quarter, up 60% yoy. There has been damage in the CDO market and we believe it will get much worse.
As America continues to squander trillions of dollars of its wealth in foreign wars maintains fiscal irresponsibility and personal and corporate debt and leverage reach new heights, we are within sight of losing our global financial and economic preeminence. Our government supposedly controls 80% of the world’s gold reserves. There hasn’t been an audit since 1954, so we do not believe all the gold is where they say it is. We are about to suffer the same fate as England did after World War II. Our collapse will, of course, take most of the world down with us. It is hard to maintain the preeminent world position as the predominant source of capital and investment as all facets of the economy goes deeper into debt and our country is ravaged by free trade and globalization. Debt has grown and America has no savings left. Worse yet, they need $2.5 billion a day in investment to keep from going bankrupt. Many nations have far more to offer. A world depression probably isn’t reversible, but with the proper leadership we can get out of this mess but it will be painful.
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As you know we are in a recession and the very best we can expect is a very severe recession. This will be the fallout from the collapse of the real estate bubble and the injection of massive amounts of money and credit into the economy. But for the abnormally low interest rates and money and credit creation we would have been in recession and depression over these past six years. The recession/depression we entered in 2000 was papered over and temporarily put on hold with the assistance of two foreign invasions and occupations. We have witnessed an enormous consumer-spending spree propped up by equity extraction from real estate wealth, a wealth that is now disappearing with lower equity and real estate values. Exotic mortgages are becoming a terrible burden and some three million people could lose their homes. These buyers should have never had loans to begin with. For these misled borrowers civil rights groups have demanded a six-month moratorium on foreclosures resulting from ARMs and other exotic loans. The idiotic demand is for lenders to carry borrowers and refinance their mortgages for them. As we said before, why don’t they just demand that the homes be given to them free of charge? The loans were reckless and unaffordable and lenders share 80% of the blame, but borrowers have to remember it was the lenders funds that they borrowed irrespective of the terms. These groups and people do not get it. They cannot even afford sustainable loans. They just do not have the income. La Raza and the NAACP again have it all wrong. No one forced these people to take out these mortgages. In 2005, more than 50% of all subprime mortgages were taken out by black borrowers, 40% by Latinos and 19% by whites.
All of this was not legitimate economic growth. It was a fantasy created by the Federal Reserve and pursued by greedy lenders and borrowers who knew they did not qualify. The result is recession and high unemployment and no one should be at all surprised at the outcome, especially professionals, they should have known better. The Fed is still pouring in money and credit and inflation is pushing the cost of everything higher. While the economy stagnates, inflation will rage and interest rates will rise. Eventually we will have hyperinflation, asset values will collapse, and gold and silver will head for the stars.
The above is only the first phase. The second, phase, depression will be far worse.
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GOLD, SILVER, PLATINUM, PALADIUM AND DIAMONDS
On Wednesday, gold, silver and copper started well and finished with a powerful surge. Gold rose $7.90 to $671.90 and that is a breakout. The big seller or sellers between $666 and $669 have been taken out in the physical market as we predicted they would be. Silver rose again, up $0.17 to $13.53. The June gold contract rose $7.70 to $677.40, silver was up $0.19 to $13.62 and copper surged again, up $0.07 to $3.39. The access aftermarket was up $2.60 as gold continued to surge. We might add the access market is very thin and is prone to manipulation by the gold suppression cartel. On Wednesday, gold had moved higher during the day but was punched back and only allowed the conservative gain it ultimately settled for. It was a great day but a bit disappointing because London’s second fixing came in at $672.25. That was before the Comex and CBOT opening and the beginning of the paper market. As we said before the only way these creeps will be beaten is in the physical market. We should though be thankful that gold between 3/15 – 3/27 was up 6 straight days. This has only happened 11 times in six years. We could see a move soon to $740. On Wednesday, gold open interest fell 429 contracts to 347,817 and silver OI rose 782 contracts to 112,170. Swiss banks are reporting rising moderate demand out of India in the physical market.
On Tuesday in Tocom the large gold shorts reduced their short position by 862 contracts to 111,806 and Goldman increased their short position by 149 contracts taking their net short to 31,776. The big shorts reduced their net silver short by 375 contracts to 4,574. The XAU gained 1.86 to 142.98 and the HUI surged 6.61 to 356.02. The HUI is looking to break out over its downtrend line. That could happen on Thursday, it will set up a breakout for the XAU and a powerful gold rally next week.
This week two European central banks sold gold and one bought for coining purposes. 273 million euros worth was sold or 17.04 tons, the largest volume since September. Last week they sold 12.17 tons. They have sold 45.7 tons over the past three weeks. It looks like we can expect more selling as we move forward.
Global gold production fell to a 10-year low last year, when output registered a substantial 3% decline of 79 tons.
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