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International Forecaster July 2009 (#2) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster



-- Posted Wednesday, 8 July 2009 | | Source: GoldSeek.com

The following are some snippets from the most recent issue of the International Forecaster.  For the full 27 page issue, please see subscription information below.

US MARKETS

 

          The Obama administration may start its program to spur purchases of mortgage-backed securities from banks with about $20 billion in public and private money, down from as much as $100 billion when the effort was announced in March, sources said. The Treasury Department will provide about $1.1 billion in capital to eight to 10 money managers it will select for its Public-Private Investment Program.

 

          [It is interesting that no mention is made of the fact that the Fed is creating (monetization) $3 trillion to purchase US Treasuries, Fannie Mae and Freddie Mac bonds and CDO toxic waste from banks. The Fed will not tell us what they are paying for the CDOs and part of the game is that the banks rotate the money into Treasuries, a sweet little daisy chain. As you can see, the Treasury might get an additional $20 billion into CDOs. We don’t see it happening. The private interests don’t want to get involved. Bob]

 

          US consumers made 675,351 bankruptcy filings in the first half of 2009, a 36.5 percent increase from a year ago, according to the American Bankruptcy Institute. June filings by consumers totaled 116,365, up 40.6 percent from the same period in 2008, the ABI said.

 

          Oracle plans to cut as many as 1,000 jobs in Europe, the CFDT labor union said on its Internet site. Of the total, about 250 jobs will be lost in France, equivalent to 16 percent of the company's workforce there.

 

          British authorities have started an investigation into millions of dollars of payments from the operations of the convicted money manager Bernard L. Madoff to companies linked to the Austrian banker Sonja Kohn, an Austrian official confirmed yesterday.

 

          The Serious Fraud Office had asked Austrian prosecutors in May for help in investigating payments made by Madoff’s London office for research reports by Bank Medici, which was majority-owned by Kohn, who also served as its chairman.

 

          “We’re closely cooperating with the SFO and the US Justice Department in that case,’’ the official, Gerhard Jarosch, a senior public prosecutor in Austria, said yesterday. A separate investigation by the Austrian prosecutor into whether Kohn and Bank Medici were involved with Madoff is continuing, he said.

 

          Prosecutors are looking into whether Madoff paid more than $40 million to Kohn in exchange for turning three Bank Medici funds into feeder funds for his business, The Wall Street Journal reported, citing affidavits filed by prosecutors in the United States and Britain. The Austrian daily Der Standard reported last week that Kohn received about $11.5 million, for research reports for which prosecutors were unable to find receipts.

 

          U.S. service industries from retailers to homebuilders contracted last month at the slowest pace in nine months, as measures of new orders and employment improved.

 

          The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 47 -- higher than forecast -- from 44 in May, according to data from the Tempe, Arizona-based group. Readings less than 50 signal contraction.

 

Our President favors torture just like his predecessor did. He threatens other governments if they expose what his administration is up too. He blocks any and all exposure of government activities, a culture of non-disclosure. In addition, there is a large list of dissidents, such as myself and other publishers and radio personalities of every political persuasion. Anyone who exposes what the Illuminists are up too is an enemy of the state. We wish George Orwell were here to see this.

 

Last week we filled you in on the scandal that could envelope and crush the administration. That is the illegal arbitrary dismissal of Investigator General Gerald Walpin who tried to get criminal charges brought against Barry’s close friend and Mayor of Sacramento, Kevin Johnson who misappropriated some $500,000. The AG later layed a $73,000 payback on Johnson. As you can see, crime pays. More blatant corruption. We have done scores of programs on the mainline media regarding the scandal, something the kept media themselves refuses to do.

 

Sir Alan Greenspan was a disaster for America. His latest lying, idiotic comment was, “I don’t think it is an economic problem – it is a political problem.”

 

What we have is a monetary and fiscal problem that translates into an economic problem. The American engine of growth has grounded to a halt over the past two years as a result and has taken the entire world economy with it. Today’s problems are very much an out growth of Greenspan’s terribly flawed monetary management, followed by an equally incompetent Ben Bernanke.

 

What else would you call non-financial growth in the early nineties, which averaged $565 billion annually that peaked at $3.545 trillion in 2007? Does that sound like monetary sanity? This was the massive system of credit that inflated asset prices, incomes, corporate profits and government revenues. This caused the wild orgy of consumption, services, including de-industrialization and massive imports spawned by free trade, globalization, offshorting and outsourcing. Those horrendous events will take decades to reverse. Who can call prudent or reasonable the creation of those combined Treasury, GSE and MBS obligations surging $1.949 trillion, or 15.3% in 2008 to $14.709 trillion? This is called Ponzi finance dynamics. The word is bubble and that bubble is still being sustained. How does Sir Alan justify Total Mortgage Debt growth from the 90s averaging $269 billion to $1 trillion by 2003 and $1.390 trillion in 2006? ABC, asset backed securities, went from $200 billion in 2003 and beyond $800 billion in 2006. MBS doubled in four years to $4.5 trillion by the end of 2007.

 

That was the bad news; unfortunately there is worse news on the way. Today’s credit crisis finance bubble will make the residential and commercial bubble look like a joke. Multiply by 5 or 10. Who knows where this can end up? The bomb is in the air and hasn’t even hit yet. The quality of Treasury, GSE (Fannie Mae and Freddie Mac), CDO and ABS falls every day. The debt is massive and it is not producing real economic wealth creation. This is a tremendous drag on the system. Wage increases are miniscule, inflation grows as purchasing power falls as does general confidence. There is major misallocation of assets and a maladjusted economic structure that can only end in dire inflationary consequences.

 

The private creation of real jobs has generated about 100,000 jobs a year and the public sector more than double that, or 240,000 a year. Most jobs created over the past ten years have been low paying. 290,000 have been created in healthcare, 157,000 in food and drinking establishments and 139,000 in government education. Declining jobs, free trade, globalization, offshoring and outsourcing, have decimated living standards and have caused a massive transfer of wealth to BRICs; OPEC and slave labor countries that cheapen their currencies by manipulating them and by subsidizing their industries. In just the first quarter GDP fell 5.5% due to a decline in inventories and trade. The 37.3% decline in business investment and inventories was a record. The greatest decline since 1947 when records began. The 38.8% decline in homebuilding is the largest contraction since 1980.

 

Next comes the planned reduction of Fed market support programs, including swap lines with 14 international central banks, due to expire in October to February. The Fed says it will reduce the maximum size of its term securities lending facilities, TSLF, from $200 billion plus options, and the maximum size of its term auction facility, TAF, to $500 billion from $600 billion. This is part of the Fed’s glide path to normalization. This rhetoric can’t happen unless the Fed has finally decided to allow deflation to take over and we do not see that happening.

...

           THE INTERNATIONAL FORECASTER

WEDNESDAY – JULY 8, 2009

070809(2)_IF

P. O. Box 510518, Punta Gorda, FL 33951-0518

An international financial, economic, political and social commentary.

 

Published and Edited by: Bob Chapman

NOTE: NEW E-MAIL ADDRESSES

For correspondence to Bob: bob@intforecaster.com

For subscription and renewal: info@intforecaster.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. bob@intforecaster.com

 or info@intforecaster.com

 

RADIO APPEARANCES:

To check out all of our radio appearances click on this link below:

http://www.theinternationalforecaster.com/radio


-- Posted Wednesday, 8 July 2009 | Digg This Article | Source: GoldSeek.com



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