US MARKETS

          Commentators cannot yet wrap their minds around what really drives our markets.  Not only are our various stock, bond, derivative and commodity markets no longer free due to their 24/7 molestation at the hands of the PPT, they are manipulated in diabolical ways to hide the destruction of our economy, and also to throw people off the trail of cause and effect.  Take the recent dollar rally for example.  Everyone seems to think that the dollar is rising based on statements from Fed Head Bernanke that he is worried about inflation and that this might mean future Fed actions will support the dollar.  No one who is informed really believes this.  The true cause of the dollar rally was a gargantuan increase of 14,393 contracts of open interest in USDX futures in one day, this Tuesday.  This had "PPT" written all over it, and resulted in a single day increase in open interest of 37.35% from 38,127 contracts to 52,520 contracts, the highest level of open interest since March 18, almost three months ago.  This was the true cause of the dollar rally.  Ben's comments were just a pretense to give credence to the dollar rally and to throw people off the trail of the real culprit, the PPT, that was behind the phony dollar rally.  The PPT is the only market "fundamental" lending strength to the dollar.  And the phony dollar rally, supposedly based on Helicopter Ben's phony jaw-boning, was used to justify the PPT's sales and leasing of gold and silver as well as their naked-shorting of resource stocks which sent gold down by 26+ dollars per ounce and the HUI down by 25+ points, all in a single day.  This was not normal market action, this was PPT-manipulated action.

          While we are certain that Ben is worried about inflation, he is worried about saving the Wall Street fraudsters even more, and this despite the fact that these fraudsters, who acted under the direction and supervision of the Illuminati, are responsible for all the current market predicaments.  That is, of course, because Uncle Ben is one of them, and takes his marching orders from the head Illuminists, just like Mr. Bubbles, Alan Greenspan, did during his tenure as Fed Head.  The Fed is worried only about Illuminist insiders.  They could care less about non-insiders, like the sheople, who can starve and go bankrupt and lose their homes for all they care. Basically, Ali Baba will now attempt to save his Forty Thieves. 

          If everyone is so worried about the dollar, then why has the Department of Commerce recently decided to discontinue publishing its reports on foreign investment data, citing funding limitations as the reason?  Gee, isn't that the same reasoning we heard from the Fed for its discontinuance of the M3 report?  Apparently, the government is expecting an avalanche of foreign investment similar to the avalanche of money and credit that the continued publication of M3 would have exposed.  But such an avalanche would not be anticipated if the dollar were about to be substantially strengthened.  Instead, the discontinuance of the foreign investment report clues us into the reality that our dollars are about to be flushed down the toilet, a fact which is well known to insiders, and which is especially well known to those who own large piles of those dollars, like China, Japan, Russia, Saudi Arabia and other big dollar forex holders.

          These large dollar forex owners, at least those who are Illuminist insiders, have probably just been given the word by the Illuminati that the destruction of the dollar is imminent, and they will all now desperately attempt to transform their paper holdings into tangible real assets before the axe falls on the dollar and it plummets to new lows.        Once the forex insiders start their move, the non-insiders will jump on the bandwagon to avoid getting screwed, and the dollar will drop so fast it will make your head spin, as will the dramatic rise in inflation that will result as all those exported dollars make their way back to our domestic economy.  It's going to get really ugly for the dollar once that process commences.  The timing is hard to predict, but our guess would be that this process will start in earnest after the November elections, assuming we have them.  The government wants to cover up the resulting huge influx of foreign capital because they do not want you to know, until it is too late to do anything about it, that they are going to trash the dollar to make way for the Amero and the North American Union as a regional stepping stone to a one-world currency and a one-world government.

          We can assure you that Buck-Busting-Ben will do just that as soon as the next debacle hits for the Wall Street fraudsters who engineered the subprime debacle.  He'll lower interest rates again sooner than you can say "rate cut" when this next round arrives, which is why he decided to stop at two percent.  He knows that much worse problems are coming down the line, and that the next time the system could irreparably implode if he has nothing left to work with.  What he probably does not know for sure, yet, is that the next round of real estate problems will destroy the system, will turn the dollar into a carry trade currency and will wipe out what is left of the Fed's general collateral, meaning that all remaining Fed-owned treasuries will have to be loaned out in exchange for toxic waste to keep the system from imploding.

          The fraudsters on Wall Street have still only written off less than half of their current losses and even greater losses are on the way as the next round of real estate foreclosures, which will include jumbo, negative amortization, Pick-a-Pay loans, make their way into the statistics.  There are hundreds of billions worth of toxic waste derivatives being held in off-balance sheet VIE's (Variable Interest Entities).  This is toxic waste that the fane-stream media has not told you about yet and that is still waiting to find its way back to bank balance sheets as SIV's (Structured Investment Vehicles) give way to VIE's as the debacle du jour.  This transpires as suicidal builders continue to increase new home inventories in the face of rising commodity prices, plummeting real estate prices and glutted used and new home inventories.  And then there are the people who are getting ever more backward on their equity at the rate of 14% per annum according to Case-Schiller, a situation sure to accelerate the number of borrowers who chose to default and send their "jingle mail" to the bank.  First time buyers have been cut off from purchasing homes by more stringent credit and down payment requirements and by an increasing sense that they will get in much cheaper if they wait.  They are the ones who start out most closing chains of interlinked sales, which means that people who currently own their own homes can not move up or find a buyer if they have to leave the area.  The entire real estate market is in a complete lock-up which will get worse as real interest rates continue to rise with the increased risk that comes in the wake of each new default debacle, such as defaults in consumer debt like credit cards, car loans and student loans, to name but a few.  Those who think the worst is behind us are either in denial or live on another planet.

          Let's take a look at what is happening to the last great bastion of American middle class wealth, which is of course their real estate.  Their stocks and bonds and pension funds have already been pulverized.  Now they watch as their home prices plummet at the rate of 14% per annum, while inflation rages at over 12%, thereby reducing what remains of their real estate value after real estate market losses are applied.  Let's assume that at the beginning of 2007, you had a home worth one million.  Three years from now, at the beginning of 2010, in terms of 2007 dollars, you would only have purchasing power of 405,224 dollars left out of your real estate nest egg that was worth 1,000,000 dollars in the year 2007, calculated as follows:  $1,000,000 x the cube of (1 - .14 - .12) or .74 cubed.  That 26% haircut each year could become much worse if inflation or housing take a turn for the worse, which is very likely, especially in the case of inflation which should reach 18% or more during 2009.  Now you see where you are headed, and this has been by the design of your government, Wall Street and corporate America under the direction of the Illuminati.  Even worse losses are possible than those illustrated, depending on how all the various debacles turn out.  You are looking at a blood bath beyond your wildest imagination.  So load up on gold, silver and their related shares or prepare to get taken to the cleaners in Locksley Hall.

          Note how the cartel's Illuminists are trying to run up oil while suppressing gold.  They want oil to be a counterbalance to gold instead of being a supporter of gold.  The next time you see substantial dollar weakness, you can count on oil to drop like a rock, if only temporarily, to put a hit on gold.  The PPT's blowout of oil shorts that were being used by specs to protect gold positions and that pushed oil up dramatically by forcing massive short-covering, has quickly run its course and oil has settled back down again to keep pressure on the metals after the shorts were destroyed.  Also, note how massive continuing manipulations of silver and resource stocks, which are fairly small markets overall, are being used by the PPT to portray a situation of non-confirmation for gold.  Silver is getting leased to death through negative short-term lease rates and resource stocks are getting pounded by naked-shorting.  This will keep the metals subdued until the next debacle hits, which will be bank failures and much higher inflation statistics, coupled with more real estate fallout and possible credit default swap problems.  The cartel is now so short on silver that they are illegally rationing Silver Eagles to dealers and starving the public demand so they do not have to go into the silver market and run the price up.  Welcome to corporatist, fascist America.

          To give you some idea of how desperate the general stock markets have become, let's look at the yen's movement versus the Dow.  When the Dow closed at 13,020.83 on May 6, the yen closed at 104.54 yen per dollar and 162.539 yen per euro.  On Tuesday, June 10, with the Dow at 12,289.76, the yen closed at 107.19 yen per dollar and 165.855 yen per euro.  Not even the carry traders can keep these hapless markets up, and we suspect that there is heavy de-leveraging going on.  Note how gold and silver, which usually benefit from a weaker yen, have been unable to take advantage of this current expression of yen weakness, which shows you how rampant the suppression of precious metals is right now.  The stock market situation has gone from scary to outright frightening.  Do not go anywhere near the general stock markets, unless you like losing lots of money.

          Our president informed us this past week that all is well with our economy. He must live in a different world than we do. The evidence of recession is everywhere as families try their best to preserve their purchasing power. We are told inflation is some 4%. The shoppers know this is untrue as they struggle in a world of hyperinflation. Their dollar is losing buying power against almost every world currency. There are tent cities stretching across our land in parking lots and in parks, a legacy of our Federal Reserve, a private corporation legislated long ago in 1913 for the further enrichment of our Illuminist elite, so that they may rule our lives. Wages are stagnant, a benefit of unbridled legal and illegal immigration, free trade, globalization, offshoring and outsourcing as the elitist transnational conglomerates destroy our economy and our culture. We are facing an economy comparative to 1930, where eventually one-third of our population will be living like beasts in tent cities. Were it not for the creation of more than $1 trillion in money and credit to the financial industry our economy would have already collapsed – eventually it will. Our dollar is being supported by foreign central banks and in the end they will own all of our assets. As the dollar collapses further these creditors will demand everything we own.

          Wall Street, corporate America, our media, the Federal Reserve and our government tells us the worst is over. This is only the beginning of the beginning. Stocks and bonds are falling and markets in municipals, corporate bonds, CDOs, SIVs and ABSs are virtually frozen. Wall Street profits are falling by two-thirds and we are just getting underway. Over the next few years at least 300 of American banks will fail, along with millions of businesses. Unemployment now at 14% will rise to 35%. Yes, it is going to be that bad. Housing will continue to collapse, as will commercial real estate, which is already virtually frozen. What does it tell you when government has to bring 35 bank bankruptcy specialists out of retirement, some of whom are in the 80s, to sort out the coming banking collapse?

          The commodity market and gold and silver are booming just as we forecast. As a result, raw material costs have skyrocketed adding to the pull of inflation. If corporations do not pass along these added costs to the consumer, profits will collapse and layoffs will ensue. If profits fall share prices will fall and the whole stock market will fall.

          The more difficult times lie ahead of us and the economic, financial and social dislocation will be staggering. It will be more widespread than anyone can image. What has happened in this credit crisis to small and mid-sized companies will happen to not only the American consumer, but to consumers worldwide. No one is going to escape this one.

          The large investment banks and banks won’t all escape. The Illuminists cannot save them all. These institutions have massive losses from bad loans, which still haven’t been revealed. That is both US and European banks and other financial institutions. The failure and mergers will create an ever smaller financial sector and banking and brokerage monopolies will be formed.

          As we wrote 3-1/2 years ago the financial sector losses in the US will be between $1 and $2 trillion. The Fed, one way or another, is lending out over $300 billion a month and that is what is holding the US financial system together. This cannot continue indefinitely as the dollar plunges and inflation rages. Overall banks are borrowing almost $500 billion a month, which is an all-time record. It is not only the banks and financial firms; there are corporations, insurance companies and speculators who are borrowing those funds from the banks. The banks are speculating themselves in addition to making loans. That is why the commodity market is so powerful. Interestingly banks still refuse to lend to each other. 

          Home equity is vanishing as lending standards are tightened. Credit card and other revolving debt remains strong as people grope to finance declining lifestyles. There are no savings and who can blame Americans. They are faced with low interest rates and high inflation.

          Now that lying has become socially acceptable, British banks are lying about borrowing costs to avoid the perception they couldn’t raise funds as the credit crisis unfolded.

          From June 2008 to January 2009 house prices will fall at an accelerated rate and foreclosures will rise exponentially. This year and one-half will mire America into a major recession and will lay the groundwork for a second great depression that will begin in 2010 to 2012. We are looking already at a fall in prices of 14.1%. That fall exceeds the 10.5% drop in 1932, at the height of the depression. If you include official inflation that equals 18%. There was no inflation in the 1930s. Today we have falling asset prices and inflation, better known as stagflation, a term coined many years ago by the dean of the newsletter writers Harry Schultz.

          Some real estate markets are down 30% or more and the average is 18%. Sales in California are off 50% and 40% of new sales are foreclosures.

          If you subtract those who die from those who are new homebuyers, you will find the demographics add about 850,000 units a year net. The home building industry is in a deep recession; with additional yearly new home supply cut in half since 2006. But, homebuilders are still adding a million units a year. That nets to 850,000 excess homes. You cannot tell homebuilders that because all they know how to do are build homes. Thus, it will take many years to get housing inventory back to normal. That includes the bankruptcy of many builders. You shouldn’t buy a house for at least the next two years. Then we’ll take another look at the market. During this period and for a number of years thereafter, there will be staggering economic, financial and social damage that Americans are not prepared for.

          As politicians would have it the solution is bailing out lenders, builders and homeowners who never should have been allowed to own a home in the first place. The lenders at best acted incompetently, the builders keep on building as inventories build and the borrowers continue in homes they cannot and could never afford.

          Then there is the vacant home problem that Congress ignores and attempts to worsen. The excuse is they want to bail out speculators, liars and cheats. Even the best proposal by Barney Frank (D-MA), Chairman of the House Financial Services Committee, that could conceivably help 500,000 homeowners, would not put a bottom in the housing market. All it would do is allow the pace at which home prices are falling to slow somewhat. The bill would cost $1.7 billion. When compared to the Senate’s overwhelming support for $25 billion for bailing out builders, this is a pittance. We wrote long ago that a 50% cut in housing construction wouldn’t be enough. The standard housing reduction in building in a recession is 65%, today it is 50%. We figure they have to cut 70% to 75% to help bring inventory into balance over several years.

          A 20% decline in home prices would put 25% of mortgages upside down and a 30% fall would put lots more under water, probably over 70% will walk away. That inventory then has to be cleared and that can only happen with lower prices no matter what government does to try to remedy the situation. We are probably looking at a $7 trillion loss. That would be a loss in household spending of $300 billion or about 2% of GDP.

          How will these problems be solved? Not through more legal and illegal immigration. Not by foreign buying, and not by inflation hedgers who cannot get loans. Government certainly isn’t the answer; it will just prolong the agony. The system has to purge the excesses and until that is done there will be no solution.

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WEDNESDAY June 11, 2008  -   061108(3)_IF

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-- Posted Thursday, 12 June 2008 | Digg This Article