-- Posted Thursday, 4 December 2008 | Digg This Article
| Source: GoldSeek.com
The following are some snippets from the most recent issue of the International Forecaster. For the full 32 page issue, please see subscription information below.
US MARKETS
The monetary base has again risen dramatically over the past few weeks up 38% yoy, the largest increase since 1939. You can expect all the major central banks to do the same thing, as this was a large part of what G-20 was all about.
Those of you, as we mentioned over the past several weeks, who don’t believe loans are loosening up are wrong, they are. Consumer and bank lending has grown by an annualized rate of close to 50% in the last six months. As this unfolds we see demonstrations in Iceland where the currency has been crippled, inflation is 18% and no one trusts government, bankers and politicians anymore. European banks will take a $75 billion hit on this fiasco. Incidentally Danske Bank sees Iceland’s inflation hitting 75%. That could well cause the overthrow of the government. The Iceland experience could be the forerunner for America three years from now. It could be preceded by Pakistan, Argentina and a number of other countries. Just last week Argentina confiscated pension plans worth $26 billion. Our House of Representatives has discussed a similar plan.
Then there are the loans all over the world in trillions of dollars that will never be repaid. They’ll be monetized and American taxpayers will again pay the bill. The prime targets for trouble are not just the ones you notice among the major countries, but all over the world, especially in Eastern Europe and Latin America - things are going to be every bit as bad. Deficits in Eastern Europe are close to 10% of GDP whereas 3% is normal.
Cross border lending by European and UK banks to emerging market countries accounts for 22-1/2% of respective GDPs compared to 4% for US banks and 5% for Japanese banks. Europe has $3.5 trillion of debt outstanding to these financially 3rd world countries whereas the US has only about $500 billion.
Most exposed is Austria. Those loans make up 85% of their GDP, most of it in Eastern Europe. They are the largest holders of debt in the Ukraine and Hungary - two very weak banking systems.
Italy’s public debt is now the third largest in the world behind the US and Japan. At 107% of GDP it is twice the Maastricht limit. When Italy joined the Eurozone they were hardly qualified to do so and we said so at that time. They lied about their finances and everyone looked the other way. Their problems are shown in their bond yields, which are 1.08% more than similar German bonds. This predicament probably will force Italy and perhaps Austria out of the euro.
British bank exposure is primarily in Asia and Latin America. Sweden is exposed in the Baltic.
Spain is the largest lender in Latin America. That is indeed dire news when the domestic economy is in such trouble. They have lent $830 billion in Latin America.
Today worldwide banks are very interconnected and in the current environment that is very bad news, because eventually problems in one sphere will affect other spheres, making all currencies fall against gold.
Then there are the de-leveraging hedge funds of which over the next year could see 1,000 or 50% of their number, close down or go bankrupt. Hedge funds just sold about $600 billion in assets to meet redemptions and to reduce assets to conform to lower lending by lenders. For now that selling is over with. We could see a reoccurrence in February if credit lines are cut again, or if redemptions rise again. That $600 billion represents 30% of hedge fund assets. We expect the market to move lower earlier in the year so we could expect another $300 billion liquidation in February or March. We are assuming credit won’t be cut further. We see present leverage at 1.4 to 2 to 1.
Hedge funds, banks, brokerage houses and insurance companies were and are big players in the writing of CDS, credit default swaps, some $50 trillion to $60 trillion worth. Most of this derivative commitment is not hedged. The writers are running naked. If we have a string of corporate failures such as GM and Ford, etc., which is very possible, the system will collapse. That is possible and probable.
We have not seen a market selling climax, so pressure will remain on the market for sometime to come. All the fairy tale rallies – the “Working Group on Financial Markets” creates will not last. 2009 will see many bankruptcies. Investors have not capitulated, nor do many really understand the severe gravity of our economic and financial problems. 95% of investors, the public and Wall Street still do not get it. One of the reasons is government’s phony statistics. They believe the government. They would not think of thinking outside the box. That is where the problem lies. If you do not think outside the box you are doomed. Bear Stearns, Fannie and Freddie and AIG were just tips of Icebergs. Bear and AIG were supposed to be the best of the best. If they got in trouble what is going to happen to the rest of the players? Pros and investors are in denial. They just are unwilling to accept that all the things they knew, there whole lives are going to change for the worse for a long time to come. The worst of the financial crisis is not behind us. It is in front of us. That will be exacerbated by the coming economic crisis. We’ve had two major manipulated rallies in the past month. That isn’t unusual in a bear market with or without government manipulation. Some hedge funds have a liquidation cut off of 12/31/08, so any rally will be used for some unusual selling. That will put a lid on any real upside action.
Sixteen months ago the US financial system went into a state of collapse and the rest of the world is caught in the same trap. No grandiose plan by anyone has been offered or concocted to save the economy and the financial system or the economy. All the so-called solutions have not and will not work. More debt and increased taxes won’t work. As a result, governments worldwide are under attack - an extension of religious warfare in India, demonstrations in Iceland and Thailand and justified smoldering resentment. Our management, corporate, financial and governmental is corrupt and is a failure as it is in most other countries. Your assets are not safe from anything. 2009 will see bedlam in every sector of every economy in the world. Your best shot at financial survival is in gold and silver related assets, as we start the second of four phases of the biggest bull market in history.
That leads us to the US government bond market, which is suffering a crisis of confidence and it couldn’t have happened at a worse time. Here is our Treasury and the Fed bailing out Illuminist Wall Street, banking and corporate America via bonds and other money and credit for distressed assets worth an average of $0.25 on the dollar. This has force Treasuries to record low yields at least temporarily. The one-month bill is yielding 0.2%. How can anyone of sane mind buy those bills with inflation at 12-1/2% and our nation is bankrupt. We recently saw a recommendation by a money manager, brokerage firm recommending US Treasuries. They have to be out of their minds. Every time bonds are issued it makes the issuer less solvent, our currency less viable and the borrower a major loser. That is why people worldwide for the past six months have been cashing in dollars and other currencies for gold and silver bullion and coins. Some see what is in our future.
As we stated recently the bond settlement system has broken down. Fails to deliver in Treasuries are now over $2 trillion. Broker/dealers have stopped delivering bonds and holders are now afraid to lend them into the repo market for fear they’ll never be returned and potential buyers sit on the sidelines fearful of handing over their money to a counterparty that at best might not deliver a bond on time, or at worst might go under.
This is another reason that US Treasuries are no safe haven. There is a lack of functionality in the Treasury market and if not soon connected it could lead to negative investor perception. If that happens the Treasury will find it increasingly difficult and expensive to raise money and to roll over maturing debts. That will cause interest rates to rise as government is manipulating them lower negating their attempts to jump-start not only the economy, but the world as they both head into depression. The situation is so far advanced that 10-year TIPS are pricing in zero or netative average inflation for the next ten years, which, of course, is insane and shows you the extent of bond market manipulation by the Fed to keep interest rates low in order to keep mortgage rates low enough to allow refinancing and new buyers. Our government has savaged the TIPS inflation spread in order to keep their scam going and to give retirees no return on their Treasury investments. Anyone who buys US Treasuries is insane or stupid.
Delivery needs to be enforced. If it isn’t it is over. It’s a situation similar to the SEC not enforcing the law on naked shorting. This game of Wall Street, banking and government always winning is over. You cannot have 8.6% of all treasuries outstanding failing in the first five months of the year, compared with 1.2% in the first five months of 2007. Now the figure is $2 trillion.
Our elitist globalists are in the process of destroying our financial system to eliminate the nation-state system and impose a global, corporatist, and fascist dictatorship over the entire world.
You subscribers understand this and now perhaps as much as 25% of our fellow citizens do as well thanks to the Internet and alternative radio.
This time it’s just not Germany and Italy that is to become fascist, it is the whole world if the Illuminists and Europe’s Black Nobility has its way. As part of the Venetian style banking system and the concentration of corporations into cartels, the project is able to finance itself. It also causes concentration of military and police power under a federal mandate such as Homeland Security to keep the people in line. Thus we are to have a world system run by banks, finance and insurance companies and corporate cartels. This is what is to replace the sovereign state. We saw the Illuminists try this in the Western nations in the 1920s and 1930s. In the US the driving force was Morgan & Dupont who tried to implant a fascist government. They were stopped when exposed by General Smedley Butler in 1934.
The next modern move to fascism began with GATT that was to usher in the WTO in 1986 to develop modern British mercantilism today known as free trade, globalization, offshoring and outsourcing. During that time frame the corporatist fascist movement was again set in motion by Bilderbergers in 1968 at Mont Tremblant, Canada.
The planning was by George Ball, an Illuminist mover and shaker in those days, who was a senior banker at Lehman Brothers. He was a key top member of the Illuminati. He called for the World Company.
The approach has been implemented and it will show you how far ahead the Illuminists plan. The name changed to globalization in the process.
The process has now reached the stage where debt from banks, finance houses, insurance companies and Illuminist corporations is being transferred from their balance sheets to those of government, which are the people. During this process the physical economy is simultaneously being driven into the ground, recession begins and depression follows. De-industrialization is then complete and the economy collapses along with the financial system. No longer a major producer and only a service provider the economy has a massive account deficit to be funded by foreigners.
This the Illuminists hope will return the world back to the 17th century’s mercantilist, rentier-financial feudalist model. This is where the elitists want us to go so get ready for it by protecting your assets by owning gold.
Conditions are going to get considerably more difficult for Americans. In 2 years 25% to 38% of all Americans will be out of work and waiting outside homeless shelters and food pantries. Many will be the elderly or single women and children. The question is will welfare and food stamps still be available?
Many former manufacturing centers already are experiencing 20% unemployment due to the deliberate elitist policy of transnational conglomerates of free trade, globalization, offshoring and outsourcing. The financial meltdown has been and will continue to plunge the working class into levels of destitution worse than those seen in the “Great Depression.” As a prelude to this banking, Wall Street and our government squanders taxpayer money on idiotic schemes to prop up bankrupt Illuminist banks, Wall Street, insurance companies and select Illuminist corporations. In that process faithful workers are thrown onto the street with no further way of making a living. They are losing their homes, jobs and vehicles and some are living under bridges.
Our Treasury and the Fed are holding trillions of dollars in almost worthless assets. Each day billions of taxpayer dollars are being thrown into a black hole. The biggest bank and insurance companies in America are bankrupt, Citicorp and AIG. Retail sales are falling and the entire automotive industry is bankrupt. Real unemployment is 14% and long-term unemployment is 18%. We’ll lose about 1.5 million jobs in 2008 to go along with the 5 million lost in the previous 8 years. In inner city areas young male unemployed is 30% to 50%. Twelve million homes are worth less than their mortgages and millions more will either lose their homes or simply walk away. Another one-third of homeowners face foreclosure in 2008.
...
THE INTERNATIONAL FORECASTER
WEDNESDAY, December 3, 2008 - 120308(1)_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
