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-- Posted Wednesday, 21 May 2008 | Digg This Article | Source: GoldSeek.com
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. ... We ask the US public to consider all the above while the dollar continues its collapse on Wednesday to below 72 and while oil simultaneously tops $130 per barrel for the first time ever. So much for any recovery of the US economy as consumers, which drive seventy percent of our economic activity, get blasted into oblivion, and as all the added costs for fuel drive inflation across the board to new and unheard of levels. This transpires as our Bureau of Lying Statistics moves on to its next Paul Bunyan tale that April's core PPI (without food and energy), was actually higher than regular PPI (which includes food and energy), and would have us further believe that core PPI was only .4%, while regular PPI was an even more incredulous .2 %. You just can't make this stuff up, but somehow the BLS has managed to do so anyway. There must be a revolving door between the Fiction Writers Guild and the BLS. Our government officials must think that we are oafish cretins. They will do and say anything to downplay future inflation so they can avoid having to raise rates to combat what is, in reality, rampant inflation. Bailing out their deceitful fellow pirates on Wall Street and preventing the destruction of the bond market is far more important than telling the truth. On Tuesday, gold and silver went on the rampage once again while the Dow developed another case of yellow fever and swan-dove for a 200-point plunge to keep the liquidity drain going so the precious metals could be kept under pressure while oil skyrocketed. A stronger yen is the culprit once again, helping the cartel cash in on 200 out of about 1,000 points of market-crashing power. The weakening of the yen over the coarse of the day on Monday, and which was intended to boost the Dow past 13,000 again, also aided the gold and silver rally on Monday. The cartel therefore had to shift gears and strengthen the yen to generate the 200-point crash. Soaring oil and higher-than-expected core PPI were given as the excuse, like oil wasn't already soaring and inflation wasn't already running rampant. The blather we get from the fane-stream media is nothing short of surreal. Hope you specs have been buying protective derivatives at an ever-accelerating pace as the Dow crossed 13,000. What a wonderful opportunity to de-leverage and plow the proceeds into gold. After you finish eating the rally candy from the PPT and drive the stock markets down, you can then sell your various protective derivatives and plow the proceeds into gold again to keep the rally going. We expect that if gold goes high enough, oil prices will be brought down, so be ready for that also. Gold topped 920 on Tuesday as silver soared well above 17 on its way to threatening 18, probably due to short-covering, unstoppable oil and the need for both a safe-haven and hedge against inflation. Gold is about to go head to head with treasury bonds in the competition for available liquidity as the stock markets explode and go down in flames. Treasury bonds are going to lose. How can they win with the USDX dipping just below 72, a rate of return below 4% and actual inflation running at 12.625% while the real GDP is at best minus 2.5%? Do you really think traders will want to take an 11.125% haircut on their money? In April, gold was at its current level while oil ranged from 110 to 120 and the USDX was around 72. Now oil has hit 130, the USDX is back down to 72, and gold continues at the same level. So what gives? We'll tell you what gives. Rampant manipulation by the cartel is what gives. And we note that lease rates are starting to move down once again for gold and silver. ...
We note in passing that the most recent US CPI reading offers a very misleading picture of consumer inflation trends. The vagaries of seasonal adjustment produced a fall in gasoline prices in a month during which actual gasoline pump prices rose 10%. Bizarrely, the - month annualized rate of actual gasoline inflation to the end of April is 66%, whilst the - month annualized rate of gasoline inflation reported in the seasonally adjusted CPI index is minus 10.4% (non-seasonally- adjusted gasoline CPI is up 60% on a 3 month annualized basis). All of which tends to suggest that the BLS’ seasonal adjustment process might be a fruitful line of research for string theory physicists looking for evidence of parallel universes. Master trust data show card credit continues to deteriorate sharply, with BAC worst positioned among peers. Y/Y delinquencies are up 42- 78bps and m/m losses are up 15-37bps, pointing to rising card losses in 2Q08 vs. 1Q08. April's monthly credit card master trust data came out recently. BAC, C and JPM's trusts continue to show rising y/y delinquencies and charge-off rates… • BAC charge-offs increased to 6.9%, up 149bps y/y and 36bps m/m. Delinquencies of 5.8%, up 69bps y/y, down 5bps m/m. • C charge offs were 5.7%, up 165bps y/y and 37bps m/m. Delinquencies of 3.9%, up 78bps y/y, down 3bps m/m. • JPM charge offs were 4.5%, up 66bps y/y and 15bps m/m. Delinquencies of 3.2%, up 42bps y/y, down 5bps m/m. Banks and securities firms are failing to acknowledge in their income statements at least $35 Billion of additional write downs included in their balance sheets, regulatory filings show. So earnings are worse than reported, including for the S&P 500 Index. The municipal finance industry is contracting. That's happening because municipal bond underwriting on its own, without swaps and derivatives and without auctions, is less profitable, and securities firms tend to de-emphasize the areas of business that don't make money. Sometimes they even get rid of them… That process will only accelerate after the government brings its case concerning anticompetitive practices in the industry, laying bare all the secrets of the reinvestment-of- precedes business. Unlike past actions, when securities firms were allowed to pay money without admitting or denying guilt, this time around the government is targeting both firms and individuals, with ``50'' and ``100'' being the number of individuals I hear. This means there won't be as many bankers out there pitching issuers on putting together big refunding deals that may or may not produce any actual savings, or infinitesimal savings at best. Or ridiculous deals with the inevitable interest-rate swap. This implies higher interest rates. Paul Volcker also told the committee that the Consumer Price Index may understate the actual rate of inflation. For example, during the real estate boom, the housing component of the CPI rose only slightly. And to consumers, 'when food and energy are running high, not for a couple of months and dropping, but running high for years, it doesn't sound quite right, it doesn't feel quite right.' Mr. Volcker again voiced agitation at Bernanke’s direct lending and credit promiscuity: “The creators of the Federal Reserve could be rolling over in their graves knowing the Fed is buying mortgages.” Paul said Fannie Mae should have handled the mortgage problem. In his analysis of the credit crisis, Volcker said the mathematical modeling and financial engineering behind the structured investment products involved are inherently incapable of accounting for the human element of market behavior. Saving the nation’s financial system from reckless banks and brokerage firms is an enormous job, heaven knows. But somebody’s got to do it, so the Federal Reserve Board with its taxpayer-funded balance sheet, stepped in. …How much of the collateral posted at the Fed by brokerage firms is triple-A solely because of financial guarantors’ insurance, which is known as a wrap? The Fed won’t say. But Mr. Rosner said it only stands to reason that much of the mortgage and asset-backed collateral posted at the Fed falls into that category. “Investment banks who are posting the collateral know if the securities are natural triple-A or only triple-A because of the wrap,” he said. “Obviously the incentive would be for them to post triple-A collateral of lower quality to the Fed.” To be sure, crisis times call for creative measures. But as long as Wall Street is allowed to swap trash for Treasuries on the taxpayers’ dime, don’t try to tell me this horror show is over.
The Federal Reserve on Thursday, May 15, 2008 added $42.75 billion in repurchase agreements. This action caused the repo pool to pop up to $396.366 billion. The BLS has hit a ‘seasonal’ low by having gasoline down 4.6% in the PPI for April. The BLS admits that ex-seasonal adjusting gasoline prices increased 3.2% in April. The NY Post’s John Crudele: A top government official who helps calculate the nation's inflation rate says gasoline costs in the consumer price index will surge in a couple of months - even if prices at the pump don't. "We are going to show huge increases," predicted Pat Jackman in a telephone interview with me last week. "If gas prices are stable from May forward, we are going to end up showing roughly a 16.3 percent increase [for the period] between May and December." Jackman said the [seasonal] adjustments will "mute" gasoline inflation for one more month. But it's downhill from there. "Beginning in June," Jackman said the seasonal adjustments "will start adding in" inflation, which will be reflected in July's CPI. .. THE INTERNATIONAL FORECASTER WEDNESDAY 5/21/08 (052108(6)_IF 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 Addresses: international_forecaster@yahoo.com if_distctr@yahoo.com CHECK OUT OUR WEBSITE www.theinternationalforecaster.com 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 RADIO APPEARANCES: To check out all of our radio appearances click on this link below: http://www.theinternationalforecaster.com/radio.php
-- Posted Wednesday, 21 May 2008 | Digg This Article | Source: GoldSeek.com
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