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US MARKETS

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Foreign governments are faced with an annualized 7-1/2% loss if they hold US Treasuries at today’s rates of US inflation and dollar depreciation and that is why they are diversifying.

As an overview the value of all traded securities, that is stocks and bonds, denominated in US dollars is $50 trillion. For the world, it’s $165 trillion. The SWFs have $3 trillion, which is twice what global hedge funds manage and twice the size of global private equity. Thus far it’s all free trade, etc., but nations are getting uneasy regarding the secrecy in which they operate. The IMF is trying to put rules in place. We are skeptical as to their effectiveness. The temptation to blackmail other countries or to seriously disrupt their economies is overriding. We can promise you that some nations will try it. Nations have no choice but to only allow sanctioned investments. If that isn’t good enough then nations can always buy gold.

We cannot understand how financial institutions fell for the CDO, SIV and ABS frauds. These are professionals with a fiduciary responsibility. What could they be thinking? Didn’t they even look into these tranches – these bonds to see what they contained? They expedited the fraud and now defaults are appearing everywhere. This real estate crisis has triggered a credit crisis and the result is the breakdown of our modern-day banking system. The combination of fraud and leverage has made part of the system illiquid while other parts of the system are rolling in money and credit. The hidden system of banking of derivatives of CDO, MBS, SIV, ABS’s and who knows what else has run rampant beyond regulation for years. Now these investments are being held worldwide as part of free trade and globalization. As you can see, as usual the bankers in their greed have finally destroyed the banking system this time by globalizing debt fraudulently. This is the same thing they and the transnational conglomerates, they in part control, are doing to support our economy. This is what brought down the Lombard System in 1348, and the Hanseatic League in the 1600s, only then it was Trans-European. This banking wrinkle, beyond regulation, has not democratized debt. It has distributed financial toxic waste using fraud. The public and professionals are finally, hopefully, now realizing what frauds these banksters are. Behind the banking scenes there is chaos. Trust and confidence are gone. The commercial paper market has been cut in half, which has forced the Fed to open the discount window – wide open. Loans of all kinds have gone ballistic.

Then there are the victims of this fraud who have lost hundreds of billions of dollars worldwide. In total these financial crimes have expedited the worldwide financial system into economic depression. Make no mistake about it. This is where the blame lies, in banking, on Wall Street and within the Fed. The only way you can protect yourself from these villains is to be in gold and silver assets and Swiss franc government paper. This is for the long haul and you must be patient.

Next we have the pot calling the kettle black. The rating agencies were the centerpiece of the CDO fraud with their AAA ratings on BBB paper. Now in order to confuse and defuse blame they say fraud by subprime mortgage borrowers was rampant. They are correct but that doesn’t mitigate their criminal acts. If so much fraud went on in borrowing why is our Goldman Sachs Treasury Department trying to bail the borrowers out with the assistance of the lenders who had to know the borrowers were lying. Fitch ratings reviewed documents for 45 loans that were packaged into bonds last year and defaulted within 6 months found 2/3’s contained occupancy fraud, in which borrowers falsely claimed they planned to live in the properties. Almost every file indicated some type of fraud or misstatement of the borrower’s financial condition that was missed or encouraged by the lenders. This is massive fraud. Why haven’t criminal charges been brought against the borrowers and lenders, or at the least civil actions? Why? – Because they all were involved – that’s why. As a result 23.4% of loan balances from 20 subprime bonds created in the first half of 2006 were at least 60 days late, in foreclosure, subject to borrowers bankruptcy or were already turned into seized property. Wait until the remainder reset in 1-1/2 years. One third of ARMs in subprime nationwide were delinquent in August. If this isn’t bad enough, commercial real estate is a full-blown bubble that is near a bursting point. The cost of derivatives (insurance) protecting investors from defaults on the highest-rated bonds backed by properties, more than doubled in the past month. The prices suggest traders anticipate defaults rising to the highest level since the Great Depression. In September the commercial real estate boom ended as prices fell 1.2%. Worse yet, we are going to get a replay, the retail fiasco in commercial property, because banks are holding $54 billion of commercial mortgages they cannot sell. Does that mean another 50% loss? We think so.

Just to show you how expensive these bankruptcies are: 189 major mortgage companies have gone bust. New Century Financial, the biggest subprime lender in bankruptcy, faces $34.9 billion claims from creditors.

In the third quarter house prices fell 1.7% qtq and 4.5% yoy. The 20 big cities were off 4.9%. The bloodbath continues and has a long way to go.

The question is, where are we? The encouraging news is that the Illuminist Carlyle Group’s Blue Wave hedge fund lost 9.3% since being started in March.

The Fed extended today’s problems in 1991/92 when they had the best opportunity to purge the system and have a recession. Real estate had bottomed and by 1995/96, they would have had a clear, clean start. No, their greed knows no bounds. They started the blossoming leveraged speculation game, as we know it today. As interest rates fell, leverage increased. They pushed it as far as they could and now they have destroyed the structured credit products market. All the trust and confidence is gone. This was the force behind the stock market bubble, the real estate bubble and finally the credit bubble collapse. That will collapse the stock market again and send us from recession to depression. As you can see there was no genius in our financial and economic achievements since 1992. It was cheap money, low interest rates, negative interest rates, a massive current account deficit, and, structured derivatives, a massive increase in money and credit and fraud. Now they do not have securitization and derivatives to help them out, which means all that leverage will be lost. In 1981, the 30-year Treasury bond was 8-3/16%. In 2000, the rate was 6% and today the long bond, the 10s, are under 4%. The Fed had lots of room on the downside in 1991 and 2000 to lower rates and gain momentum for recovery. That opportunity isn’t there today. In addition, the Fed has been increasing money and credit for four years at over 10% annually. This year it is 14.3% or perhaps 15% by yearend. No matter how much they lie about it they are flooding the economy with aggregates. The bottom line is the fed is in the worst position to defend the economy in 20 years. Wall Street, banks and hedge funds are dangerously extended and have serious balance sheet problems after several years of wild, reckless speculation. The recent Ohio court decisions making banks show standing and ownership of loans is going to be devastating for lenders. They will have to dig each loan out in order to prove ownership in order to repossess. In the latest attempt to stall foreclosures who is going to shoulder the losses? If the banks do they will go under. Whoever heard of a 4 or 5 years moratorium? What happens when negative equity happens on these loans? Do lenders really believe that these “homeowners” with FOIC’s of 500 and 550 will keep their payments up? In a recession many of these people will lose their jobs. We just saw a $92,000 two-month drop in California median prices. Does Washington and the bankers really believe they can stop the momentum generated by this housing collapse, which is really just getting underway? Stopping subprime resets won’t work. The equity won’t be there. First the homeowners, then the banks and then Fannie and Freddie will all go under whether it takes three years or six years. All the while the Fed will be increasing money and credit, perhaps 20% or 50%, who knows. We do know that there will be hyperinflation and gold and silver will be headed for the stars. This time what the Fed is doing won’t work, and will send us headlong into a perilous situation and a collapse of the financial system.

As you know our government has an official strong dollar policy. As you also know that is not the case as the dollar has fallen in value over the past seven years. It is just another official lie. This false policy is accompanied by again falling interest rates and the injection of massive amounts of money and credit. As a result, the economy is headed for its just reward – deep recession and depression. The expansion will go forward until speculators will choose not to borrow to leverage or the public will have no further ability to borrow. Both are currently in process and that is sure to cause a global crisis. You cannot devalue your country into prosperity.

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GOLD, SILVER, PLATINUM, PALLADIUM AND URANIUM

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One of the largest secrets to understanding financial markets can be found in one of the smallest of these markets.  This tiny key market which must be analyzed and understood in order to comprehend what is happening in all other markets is the market where the "barbaric relic" is traded.  This is the market where the canary is caged in the large and extensive coal mines of financial markets.  You probably have already guessed that we have been referring to the gold market as the key market, a market which consists of spot gold (bullion), coins, futures and options which are traded worldwide, but which are a tiny percentage of total dollar volume when compared to stock, bond, derivative and currency markets.  The gold market is the key because it is the financial barometer by which all other market conditions are measured.  Whenever things start to go wrong in one or more market sectors due to a wide variety of potential negative circumstances such as inflationary monetary policy, political or social upheaval, an overvaluation of assets (i.e. a bubble) and/or just plain greed, speculation, fraud and/or stupidity, gold, the canary in the coal mine, being the only real currency and the ultimate safe-haven, store of value and hedge against inflation, climbs in value due to an increase in demand caused as investors flee to the safety which only gold can uniquely provide.  Gold is always where the smart money goes when trouble starts to brew.  For this reason, the gold market has become one of the most highly manipulated markets in the world.  Gold is like an alarm bell that sounds whenever the financial reprobates start to weave their next Ponzi scheme or shell game to bilk the public out of their money.  These swindles almost always involve some sort of bubble which the elitists use first to suck in their dupes with some sort of carrot which they have contrived and then to exit through the back door with all the money just before the bubble breaks while everyone else is left holding the bag.  This has been the modus operandi of the Illuminati for centuries.  For this reason, the evil and arrogant Illuminists have a love-hate relationship with gold and they have come to view it as a sort of "stool pigeon."  To them, gold is okay only when they own it.  When anyone else owns it, it is a constant headache and irritation to them because it threatens to blow them in before they are able to complete their criminal venture and their conspiracy to rip off the public.  Consequently, they will do anything in order to discourage others from owning gold, on rare occasions by having it confiscated and by making it illegal to own, but mainly by suppressing its price using a variety of diabolical methods which they have come up with over the centuries, with new twists on the same theme always coming down the pike.  They are not dumb.  They have a pretty good handle on what they are doing when it comes to gold suppression, having perfected their methods via repeat performances during various eras and in many different locations.  But they are also humans, and all humans can and do make mistakes.  The Illuminati are no exception to this rule, and this time, the mistakes, which they have made are some real "doozies!"

Unfortunately for them, and very fortunately for us, these major miscalculations have most likely occurred due to the complex interconnection of world markets, which now exists on a scale never seen before.  There are simply too many factors to keep track of and too many players with too many different agendas for the Illuminati to go on with business as usual in their game of gold suppression.  With poetic justice that could not have been more perfect, their own greed has gotten in the way of their plans for world dominance and has made gold suppression more and more difficult for them.  Soon, it will be utterly impossible.

This wanton greed caused these sociopaths to use gold, which was supposed to secure the deposits of their banking customers and the indebtedness of various national treasuries under Illuminist fractional banking schemes as if it were a carry trade currency.  They loaned (leased) these gold reserves out at ridiculously low rates of interest called "lease rates" to provide a cheap source of reserves and to provide liquidity for investments at rates of return much higher than the lease rates. The price of gold was kept low by selling it after it was leased, and then using the proceeds for reserves and for investments secure in the knowledge that these sales would be ongoing and would keep the price of gold down and the gold carry trade intact.  The major producers also used this leased gold as a cheap means to finance their production by what is known as hedging.  Between the bullion banks and their gold carry trade and the large producers and their hedging, the gold reserves of central banks worldwide were very nearly sucked dry, to the point where the central banks of the cartel were forced to ration out what was left over a period of years so they would not run out too quickly and thereby lose the ability to suppress gold before their diabolical plans for world, or at least regional, government were complete.  Hence the Washington Agreement was made.  They claimed it was to limit the amount of gold they could use to suppress the price of gold in any given year, but this was just window-dressing to cover up the real reason which was that they were running out of gold far more quickly than they had planned and were forced to "slow the bleeding" in order to make sure that enough was kept in the system for suppressive purposes.  And now they have very little left, and because of other mistakes, what little is left is not available for sale.  The sale of gold during this credit-crunch could well doom the seller to a trip to bankruptcy court, especially when the seller, an insider, knows that gold is about to triple in value.  Nothing could possibly be more dumb than for any of these loss-laden, reserve-short central banks to sell their gold.  Most of the reserves showing on their books are paper gold, because all the rest has been leased, swapped out, auctioned off at bargain basement prices or stolen outright by the Illuminists.  There are only a few crumbs left in deliverable form.  All the large specs have to do now is to demand physical delivery of their gold under their futures contracts from this point forward instead of cashing out and rolling them over.  Just keep doing this consistently and the cartel will quickly run out of gold.  And when they do, it will be "GAME OVER" for the Illuminati and their gold suppression.  There are now about 250,000 February contracts which represent nearly 800 metric tonnes of gold.  A demand for that amount alone could put the once dreaded cartel deeply underwater in the gold department. They might well have to scramble to buy gold in the open market, thereby driving its price into the ozone, because they do not have enough left for sale in deliverable form as required by their futures contracts in the event delivery is demanded.  Wouldn't you just love to liquidate Goldman Sachs if they couldn't deliver, as would be your right under your futures contract in the event of default?  And won't they think twice before they pile up another mountain of shorts if they know that delivery will be demanded! It's time to call their bluff!

This same greed has also caused the subprime debacle.  The subprime disaster is the direct result of the cartel's attempt to delay the recession of the US economy after the bursting of the dot.com bubble which they used to rip off hundreds of billions from high-tech-buying dupes who threw all investment wisdom to the wind in wild, profligate speculation, bidding up companies to ludicrous levels with no proven assets, business plan or income flow, companies that were literally flying by the seat of their pants.  The Illuminists thought they could get away with this fraud by postponing its consequences through the perpetration of yet another   swindle by creating an asset bubble in the real estate market.  To do this they had to create demand for real estate.  So they lowered the lending standards and interest rates to levels that any banker worth his salt would call absolute insanity.  The Fed, our "beloved" government and the Wall Street pirates arranged all this in collusion with one another.  The resulting mortgage loans were as toxic as unshielded, weapons grade plutonium, and the cartel knew this.  So they laced them in with good paper that they thought would act as a lead shield and gave them phony AAA ratings so they could spread them to banks, insurance companies, pension plans and hedge funds around the world, thinking that by spreading out the risk, which they grossly underestimated, they could prevent a systemic failure from occurring.  It didn't work.  And now we have the ongoing credit-crunch, which is growing worse by the minute as the real estate market and asset-backed derivatives continue to implode on a worldwide scale.  All this financial terror is creating a situation where only gold can thrive.  Hanky Panky Paulson is scurrying around like a rat on a sinking ship, and he has about as much chance of saving the ship from sinking as a rat would.  They think they can delay or reduce losses by freezing interest rates for two to five years on some two million exotic subprime mortgage loans (loans of exceedingly high risk due to no money down, negative amortization, extremely low teaser rates, extra high adjustments, etc.)  There are about 890 billion dollars worth of subprime ARM's resetting in 2008.  The average interest rate increase is about 4%, which the knuckleheads would shave off with a freeze.  That would be about 36 billion in lost interest to investors, yearly.  While that might not sound too bad compared to the hundreds of billions that might result from defaults and foreclosures if rates are not frozen, there is only one problem.  Most of the CDO's and other real estate-related derivatives that would be affected are leveraged due to the rampant speculation brought on by moronically low interest rates. At an average leverage of 10 to 1, the 36 billion becomes 360 billion, yearly.  And some are in at 100 to 1.  What if one of those players at 100 to 1 is a key player who could bring the system down.  And no one is talking in our opaque, unregulated system, so no one knows who is about to go under if they try to institute this mortgage welfare.  They are also thinking of trying to target debtors who are current and who cannot afford mortgage payments if their rates go up, however that inability to pay might be defined.  How do you determine who can pay at the higher rate and who has to get the lower rate to keep from going under?  What is the standard that will be used and what if use of this standard results in some kind of unintended discrimination among various groups of borrowers on a prohibited basis?  And that still leaves all those who are already in default and the losses to leveraged investors on the mortgages which have their rates frozen?  What about all the other foreclosures that will result from the recession?  Will we start reducing fixed rates as well so people can stay out of default?  Who in their right mind will ever invest money in real estate loans again, especially adjustable rate loans, until the whole system is cleansed and confidence is restored?  This whole thing is foolishness, pure and simple, and could have been avoided if lending standards had not been thrown to the wind several years ago.  As we have said, why not just give these troubled borrowers the homes and cancel the mortgages?  What morons.

Next we have the greed that engendered the fractional banking system, which was started in the US in its current form in 1913 with the creation of the privately owned Federal Reserve System and the supposed passage of the income tax in the Sixteenth Amendment of the US Constitution.  This has been one of the greatest Ponzi schemes of all time, where interest is earned on money created out of nothing, as is typical of these schemes to swindle the public.  This is the source of all the inflation you see around the world as central banks inflate the assets of the middle class into the pockets of the elitists by increasing the supply of money and thereby the amount of interest, which they can earn on the increased amount of money created out of nothing.  This system is coming to a head.  Hyperinflation is on its way as the supply of money and credit is drastically increased to keep the system afloat as the credit-crunch threatens to bring it down.  Nothing could be more bullish for gold.

Then of course we have peak oil, another outgrowth of greed.  The Illuminists wanted to control people by controlling the amount of oil production and gradually bringing it to very high and very profitable levels.  They have squelched alternative energy patents, have failed to explore for more oil and have failed to build any new refineries for over 30 years and have funded environmentalism to kill competing energy supplies such as nuclear power and coal, all the while knowing that worldwide production was waning rapidly.  That has pushed oil to almost $100 per barrel, creating yet another incredibly bullish factor for gold, which is used to hedge against high energy costs.

Finally, although we could go on forever, we mention the yen carry trade, which out of their incessant greed was created to provide incredible arbitrage profits and to control financial markets by having a liquidity spigot that can be turned on and off and which is used continually to hit gold by creating liquidity drains whenever gold starts to rally.  But now they have really gotten themselves into trouble!  This is because all the other negative factors impacting stock markets are now so great, that the PPT can no longer support the stock markets and keep them from plunging into financial oblivion without the support of the carry traders, which are mainly hedge funds and other institutional investors.  People have no idea that the stock markets have become victim to gold suppression.  This is why it is so important to know what is going on in the gold market, because it affects just about everything else.  That is because gold suppression is JOB ONE for the Fed and for the cartel which the Fed is an integral part of.  Stock markets have been subject to one yet hit after another in the cartel's recent efforts to put an end to the current gold rally, and this may be what finally puts the markets over the edge.  The stock markets were too fragile to be buffeted around in this way, and the creation of liquidity using the yen carry trade to support stocks to keep them from going the 1929 route could send gold rocketing skyward as much of the newly found liquidity wisely finds its way to the ultimate safe-haven.  Gold has just retaken 800.  The cartel's days are numbered.

Lease rates for gold and silver have soared now that the pressure is off the commercial shorts for a short while.  Anyone who does not believe that gold and silver are leased to suppress their prices are just plain dumb.

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1-YEAR $159.95 U.S. Funds

US AND CANADIAN SUBSCRIBERS: Make check payable to Robert Chapman (NOT International Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. Please include name, address, telephone number and e-mail address.

Or:

We accept Visa and MasterCard charges.  Provide us with your card number and expiration date.  We will charge your card US$159.95 for a one-year subscription.

You can email us in two separate emails (1- the Credit Card Number with full name, address and your telephone number and (2- the Expiration date on the card.

NON US OR CANADIANS SUBSCRIBERS:

Due to the time that it takes for your mail to arrive to us from a foreign country, we would like for you to email us as above the CC information in two separate emails.

Note:  We publish twice a month by surface mail or twice a week by E-mail. international_forecaster@yahoo.com or if_distctr@yahoo.com

                                                                        *****

-- Posted Thursday, 6 December 2007 | Digg This Article