We have been fortunate enough to make some important calls over the past ten years. The top of the stock market in early April of 2000; the beginning of the gold bull market in June 2000; 9/11 in November ten months before it happened; the Iraq and Afghanistan Wars; the beginning of the real estate bubble; the top of that market in June of 2005; the beginning of the subprime fiasco in 2006 and the beginning of the commercial real estate freeze. We also forecast the terrible financial conditions facing states and the freezing up of insurance and the municipal bond market. We called the recession in February 2007 and told readers to get out of the market at 14,000. That’s with the exception of gold and silver and oil shares. The recession was right on schedule. The depression that began two weeks ago happened quicker than we had anticipated, but it is here and now.

We predicted a fall in consumption, which we estimate at 71% of GDP, a rise in savings, which is now 2.8%, and a fall in debt service not only in real estate, but also in loans and credit card loans. Massive losses continue probably some additional $40 trillion from just 9/08 to 12/09 alone in wealth destruction.

Those who follow and live off the Illuminist line favor a large, deep stimulus and if that doesn’t work than a bigger one in a year. What America needs is job growth, but that cannot happen in any meaningful way until we erect tariffs on goods and services. America has never been able too and will never be able to compete with cheap labor.

One of the solutions passed four years ago was the repatriation of profits from offshore tax havens by transnational Illuminist conglomerates. They returned $35 billion at a 5-1/4% tax rate instead of paying the normal 33%. Our Congress saw fit to reward their masters under the guise of creating jobs. Few if any jobs were created. It was just a giant money laundering exercise.

This solution is again running around Congress, only this time the amount is $550 billion at a 5% tax rate. A reward for the people who in part were responsible for the situation we now find ourselves in. We have a better idea. Let’s have legislation demanding the funds be repatriated and let’s charge normal taxation of 33% and force these ingrates to use the funds for job creation. We’d have taxes for our debt services and funds to get our nation underway again.

America has to come to grips with the fact it is bankrupt. We saw this in the early 1980s, and in the early 1990s and again in 2002-2003. Finally it is here again and moving bad assets off bank balance sheets isn’t going to work this time. This time the Illuminists have gone too far, and they are well aware of that. What we are experiencing has been done many times before in history and it has always been unsuccessful. The problem is that in the past these conspirators have been allowed to live on. This time it will be different.

The elitists have used the same destruction of capital in this depression as they did in the 1930s via a profligate, irresponsible monetary policy. That is endless and mindless increases of money and credit and zero interest rates. Falling interest rates usually cause a weaker dollar. The dollar has topped out of its rally and is making a slow downturn, which would have otherwise been quicker had not other major nations agreed to drop their rates to zero and increase money and credit as well. For the time being this cooperation is buying time for the international financial system and the dollar, but it is doomed to failure. The lowering of interest rates is not a cure for deflation, but poison for the economy and they reinforce deflation. It is interesting to note that under its Charter the Fed cannot be party to monetization of public debt under their charter, but they do so anyway, because Congress authorized it. That is the purchase of Treasury bonds in the open market and using them as collateral for its note and deposit liabilities after the fact. The bottom line is this forces capital to disappear into other investment avenues, such as gold. The dynamics of lower interest rates are continuing and totally injurious to the monetary structure. Throw in the bailouts and you’ve created a monster. That is why gold and silver is your only avenue of escape.

The point of no return was passed in June of 2002, and that is when the issuance of money and credit began to grow seriously. The result is the banking system is already in a state of collapse and the dollar is sure to follow. Looking back at monetary history we know that zero interest rates is pure insanity. The Fed, banking, and Wall Street know this and this helps us to conclude that none of this happed via incompetence or chance, but by deliberate intent.

In the early 1920s the Weimar Republic was hit by hyperinflation that lasted for several years. Germany, in moving into the 1930s, then experienced deflation.

We began deflation five years ago in 2004. That was kept under control with increases in money and credit. The Fed was joined about six months later by most central banks. The vast increases of money and credit continued along with monetization, so we should see the beginnings of hyperinflation soon. That should last at least 2-3 years. That will be followed by deflation and deeper depression. As the trillions in debt is liquidated it will be smothered by the hyperinflation and substantially higher gold and silver prices. The banking system has been broken. The dollar falls next versus other currencies and gold, then all currencies collapse versus gold.

What we are seeing in banking is no solution. The banks have to be purged and allowed to fail. Until that happens there will be no solution. Only a return to a gold standard can regain the confidence and trust of people worldwide. The concept of good and bad banks under present circumstances is ridiculous-moronic. The very concept is mad. Our situation is worse than in the 1930s or in the early 1990s in Scandinavia. The problem under our circumstances is that both banks are bad, because our currency is worthless without gold backing.

If we are correct, and we believe we are, the stimulus package and TARP, plus all the other bailouts are not going to work. This so-called solution is just more of the same, but more of it. When you stop to think of it how can a bankrupt nation with a fiat currency save a banking system that is bankrupt as well? The solution to this is simple. Back the dollar with gold and set the official price at $2,000 an ounce, although it may be trading at $3,000 in the marketplace. The US Mint would then vastly increase the number of gold coins available for purchase. Of course if the treasury has little or no gold they cannot do this, and the whole system collapses. Otherwise, with gold backing, capital would flow to America. Such a currency would allow nominal interest rates and would draw users and prices would remain stable. Eventually all countries would do likewise, set a world gold standard, and tariffs that suited their circumstances. If a nation was short on gold or had none, they’d have to sell assets to others to accumulate gold.

If the forgoing is not adopted the world will continue to plunge into monetary chaos. Revolutions would take place as starvation and warfare stalk the land. We expect the worst, because no change has taken place in Washington. We have virtually the same purchased and compromised Congress. The President’s new advisors will bring about the same results we have seen over the past eight years. That is the grand push for a world currency and a world government. These are all the same characters along with banking and Wall Street that caused these problems in the first place and supposedly are finding solutions to our dilemma. In finality, if we do not take our government back from these evil miscreants, we are doomed. Your solution, as we have pointed out so often, is to prepare. Get rid of credit card debt. Purchase a water filter, freeze-dried and dehydrated foods, be able to defend your home and family, with extra assets buy gold and silver coins and shares. If you can, still try to save the system from within. If we cannot, you know what the alternative is.

Due to the pending stimulus package and another probably $2 trillion stimulus package in 2010, the bottom of the housing market won’t be hit until 2012 or even later. Moody’s has downgraded 2,446 different classes of RMBS, Residential Mortgage Backed Securities. ALT-A loans originated in the second half of 2007 will experience 25.5% losses of original balance, versus 23.9% of the first half of 2007 deals, 22.1% for the second half of 2006 and 17.1% for the first half of 2006 deals. The CDOs and SIVs are soon going to be written off and that could cost $2 trillion. It will take at least until 2017 to put a new credit system in place. It will take years beyond that for the Fed and the Treasury to sell off the toxic waste.

By the time next year’s stimulus package is unveiled, the Dow should be trading between 3,800 and 5,500. That is bad, but what is worse is that pension funds about 80% funded will be 40% to 50% funded. We ask how do they pay the promised benefits? We don’t think they can and pensions could be cut 40 to 50 percent. We wrote about this six years ago and called it the pension bomb. On the municipal level the situation will be much worse. Some states, such as California, which is bankrupt, may not pay anything at all. Calpers and the other state fund are on the edge of insolvency.

Treasury Secretary Timothy Geithner’s efforts to restore trust and confidence in our markets have fallen on deaf ears. We still do not know all of what he intends to do with $350 billion in TARP funds. What we do know for sure is that he wants to give financial firms as much of it as possible. He wants a repeat of TARP I, the theft of taxpayer funds to bail out his masters. His plan entails a price of $2.75 trillion and the ‘what he calls’ nationalization of the banking system, which in reality is the consolidation and further privatization of the banking system - a tight control by the privately owned Fed on as much of the banking system as possible.

The stimulus plan to create more debt to spend our way into prosperity is being passed simultaneously, as the decision on how TARP is to be spent.

First Mr. Geithner wants a $1 trillion “public private investment fund” to value so-called troubled assets, also known as toxic garbage. He wants to leverage Treasury funds of $100 billion up to $1 trillion in loans to consumers and businesses and that would require lenders who are loaned those funds to actually lend them, not hoard them as they are presently. $600 billion would go to Fannie Mae and Freddie Mac to insure more failing loans and to purchase CDOs and SIVs, plus $50 billion for foreclosure prevention by rewriting loans, so people will have lower payments so their loans won’t go into foreclosure. Plus, an expansion of SBA loans.

The wealthy of Wall Street and the City of London via this “public private investment fund” will cherry-pick the best loans for undervalued prices. They’ll be purchased for $0.10 to $0.30 on the dollar. Billionaires will then quickly become trillionaires. These will be the donors to our president the “friends of Barak,” FOB if you please. That leaves the rest of the real garbage to be held by the taxpayers. This is the price we have to pay to keep deadbeats in their homes. People who should have never had loans in the first place.

The current Geithner proposal for this $1 trillion “public private investment fund” is to guarantee that the value of the toxic waste will not fall below a designated floor value. The anointed FOB buyers will be indemnified against loss of any consequence. In other words the FOB’s get sweetheart deals. For this the taxpayers get nothing but the garbage. If these toxic assets fall below the floor price the public pays for it. It is a terrible deal for the American public. What should be done is that all these banks, brokers and industrial companies should be allowed to fail. All of the equity and unsecured debt should be wiped out and then they should be really nationalized. They can then be resold at a later date to new shareholders. The elitists and politicians do not want that because then they won’t be able to steal these companies.

These crooks are hiding the values of assets, some of which are totally worthless. If we have a bad bank all the garbage will come off the balance sheets of Goldman, Morgan, the other money center legacy banks, Wall Street, insurance companies, private equity dealers and corporate gamblers like GMAC and GE.

Geithner intends to buy these assets using our money at close to par (perhaps at 80%) and then rebill it to the private part of the private-public partnership at $0.15 on the dollar with a quarantee against loss. A deal made in hell.

This is why the Fed, banks and Wall Street want the mark-to-market accounting standards repealed. How can the insiders get huge bonuses and pay large dividends if the toxic waste is removed at its real value of $0.15 on the dollar? The postscript is no matter what they do it will be a disaster for taxpayers.

Each plan for the past 20 months has been a loser, because the people who created the disaster are the ones supposedly fixing it. You must keep in mind there is no intention to fix anything. It is to enrich the rich and destroy the system so that we can have a World Currency and One-World Government. The hopes of the public have been bashed many times. The return to normality hasn’t occurred in 20 months. If fact, the situation is much worse. The elitists have hit a stonewall. Few believe them anymore. There is no trust left.

GOLD, SILVER, PLATINUM AND PALLADIUM

...

After seeing how the SEC covered up the Madoff scandal for 10 years that we know of, we suspect even more so now that there could be things going on with the ETF’s GLD and SLV that should not be going on. As we have said over and over for years, the SEC and CFTC exist to protect the old boy network. Both are arms of Wall Street not the investor.

Could it be that both GLD and SLV are not playing by the rules? Perhaps but we just do not know. We saw 45 tons of gold supposedly purchased by GLD last month. That is a lot of gold. How were they able to purchase this gold or did they go into the derivative market to do so? If the gold had come from Comex it would have been very easy to spot. In fact if it came from any exchange it would have been obvious. So, if it didn’t come off exchanges where did it come from? Perhaps the World Gold Council can tell us?

How does one buy 45 tons of gold in a physical market where there is so little supply that coin minting is closed down by five major mints? That said, and seeing what has transpired with Madoff, and watching the CFTC refuse to find any wrongdoing on obvious market concentration and manipulation, we find it hard to believe the gold bullion was purchased and that derivatives were used in its stead. If that is correct than GLD holders only have part of the gold they are paying for and the rules have been broken. Thus, we call for an investigation by Congress, not the SEC, because they are part of the elitist crime family. At least in Congress we can get the problem into the open and find out if we are right or wrong. If we are correct these acts destroy the value of GLD. Investors buy GLD because it holds gold bullion and that is what the prospectus says, not questionable derivatives. Do we have another elaborate scam or a Ponzi scheme? Let’s ask Congress to find out.

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THE INTERNATIONAL FORECASTER

Saturday, February 14, 2009

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-- Posted Monday, 16 February 2009 | Digg This Article