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International Forecaster April 2009 (#4) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster

-- Posted Sunday, 12 April 2009 | | Source:

The following are some snippets from the most recent issue of the International Forecaster.  For the full 29 page issue, please see subscription information below.



For those of you too young to remember, the World Bank and the IMF were creatures of John Maynard Keynes, and then assistant Treasury Secretary Harry Dexter White, a soviet spy. They, the IMF and the World Bank, have competed with commercial banks as an instrument of elitist policy, as an adjunct to one-world policy.


This has brought us a legacy of socialism and fascism as today’s Treasury Secretary calls for a trebling of lending power for the IMF. The IMF has been a failure and up to recently had very few loans outstanding, which dramatically cut its income. As a result, Rodrigo Rato resigned and French socialist Dominique Strauss Kahn took over. At the World Bank Paul Wolfowitz paid off his lover with an undeserved higher salary and he was kicked out in favor of ex-Goldman official Robert Zoellick. This entire group has something in common and that is they are all members of the Illuminati.


From an elitist viewpoint the current world financial crisis has given both institutions a new undeserved lease on life. Their raising of funds and the demands from Treasury Departments worldwide has been crowding out businesses in world money markets, at the same time banks have been cutting out lending. We see no end in sight for this ongoing problem. Almost every country has a budget deficit that has to somehow be funded.


Presently the IMF has about $50 billion deployed and wants $500 billion more, of which $250 billion has been committed from the printing presses of major nations. Of the $50 billion only about $19 billion has been lent out. Even Ukraine, in a state of financial and economic chaos has only drawn $4.5 billion of a $16 billion line of credit. The reason is the conditions of the loan are particularly onerous. That is because of a pending election in which the Illuminist candidate might otherwise be defeated destroying all the hard work of the CIA and George Soros. The challenger, Julia Tymoshenko, is pro-Russian. That is not unusual in a country with a large Russian population. For those who missed their geography lesson Ukraine borders on Russia. The other big loans are $15.5 billion to Hungary, $7.5 billion to Pakistan and $2.3 billion to Belarus. In addition they have lent $2.2 billion to Latvia and $2.1 billion to Iceland. That is more than 90% of last year’s commitment. Countries have to be desperate to take IMF funds. They are like dictators and their demands are unreasonable. That is why all the South American countries paid off their debt and threw the IMF out.


The next logical question is when will the IMF have to lend to Greece, Ireland, Spain, Italy, the UK and perhaps even to the US?


England has, via the Bank of England, already bought about $150 billion worth of British Treasury paper. Annualized that is $600 billion a year. At that rate they would be printing money faster than Weimar Germany. Japan, England and the US are all buying their own Treasuries. They are monetizing creating high inflation and have fiscal deficits of more than 10% of GDP. Those deficits will be even larger next year and for years to come.


Just as bad is that nation’s are increasing money and credit at an average of 14% with no end in sight and they’ve been doing that now for 4-1/2 to 5 years. You can see inflation is of no consequence to these people. They will never have tight monetary policy, nor will they ever reign in these excesses, because if they do, the system will collapse into deflationary depression. That is why owning gold and silver is so important.


The same economists who want to be accepted, or are concerned about their jobs, keep on telling us we are in recession and we will bottom out this summer. These are the same professionals that couldn’t call a recession until the government made it official, a year after it began. Some economists now talk about restrictive monetary policy, which should have been discussed five years ago. Few will speak out because they are captives of the system. They have a vested interest in lying. This is not only in economics and finance; it permeates our whole society.


The Dow is going to 4,000 or so whether Wall Street, banking and government like it or not. Our question is will we be lucky enough for it to stay at 4,000? We do not believe it will. We will know better in time.


Not only do you need gold and silver related assets, you need freeze dried and dehydrated food, a water filter and protection. Banks and financial markets could be shut down for periods of time. Have a minimum of $5,000 in small bills in your safe at home – more if you can afford it. There could be currency controls with money forbidden to go in or out of the country. You might not be able to access CD’s, bank accounts, insurance, annuities, pensions and Social Security. These precautions could save the lives of your family.


The latest beauty from the Illuminists is that the FDIC will be given $500 billion from the Treasury instead of banks joining government insurance programs. The public gets to pay again. The FDIC will provide non-recourse loans – loans secured only by the value of the toxic mortgage assets being bought for $0.85 on the dollar, when their real value will be $0.10 to $0.30 on the dollar -banking debt that the American taxpayer will be allowed to pay for. You know the program; we explained it previously. We can’t even find out who is getting the money. It is a state secret that would affect our sovereignty and it would put a stigma on the recipients.


Wait until US Treasury yields rise and everyone tries to exit this “safe” asset at the same time. There will be pandemonium and gold will go crazy.


The economy sunk 6.3% in the 4th quarter and we see the same results in the first quarter. In the second half of the year we see minus 3% to 4% and for the first three quarters of 2010 the GDP will be even. The economy will continue to deteriorate and unemployment will grow. In 2010 we will see GDP fall to a minus 10% and from then on out it is anyone’s guess what will happen. Why do you think the government’s preparing for revolution?


Americans are cutting back on debt creation as lenders cut back on lending. They are saving again. Americans are not going to borrow and spend as they have in the past, at least not for now. They won’t until the depression is behind them. Washington and Wall Street’s dream of back to business as usual is deeply flawed. As saving and not spending as much takes place that will put further pressure on the Treasury market forcing greater monetization by the Fed. That will put further pressure on the economy throwing it deeper into depression.


As we predicted earlier this year, the US 10-year Treasury, then at 2.70% should trade up to a 3.50% yield before the end of the year. This is the only way the Treasury can hope to attract foreign investors, particularly the Chinese and Asians.


China is not only doing currency swaps, but South America’s, Bank of the South, will be in action next month with $10 billion in start-up capital. This will lessen the need for dollars.


At a recent meeting in Toronto, Nouriel Roubini said he saw no growth for two years. Half of the hedge funds will go bust next year.


Meredith Whitney said, “To get out of the problem break up the market share of the five big lenders.” You will see credit ripped out of people’s wallets. Ten million more will lose homes. There are $4.2 trillion in credit cards outstanding. If you cut credit it is a pay cut. That is bearish.


Credit card companies shut down eight million credit card accounts in February. Banks have already closed out 80 million cards.


As we predicted the Treasury says that life insurers will be able to use TARP.


As we forecast in January and February the largest state and municipal pension plans lost 9% of their value or $2 trillion. That followed 30% losses in 2008 of $900 billion. These retirement funds are about 50% funded. These funds have no safety net. Wait until you see what happens to all retirement funds, life insurance and annuities when the Dow falls from 8,000 to 4,000.


Treasury Secretary Timothy Geithner is catching all kinds of flack for his stress test - a backdoor way of giving away money. The NY Post described it as a test like an open book, take-home exam, that doesn’t actually work. The FDIC’s Sheila Bair says it is a pointless exercise that has more sizzle than steak. It is a sham.


The latest on the IMF gold sale is the rumor that the Chinese want to take down the entire 403.3 tons, if sale is approved, at a 10% to 20% premium. That figures, because they want to dump dollars. That would be only a 1% increase in reserves. Total IMF reserves are only 5% of China’s currency reserves. By way of comparison the US, Germany, France and Italy have 60% to 75% of reserves in gold. Russia has 4% of gold in reserve. Thus, Russia is a competitor for any IMF gold sales. Even if approved there is no chance any of the IMF gold will hit the market.



Wednesday, April 11, 2009

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