-- Posted Wednesday, 24 March 2010 | | Source: GoldSeek.com
The following are some snippets from the most recent issue of the International Forecaster. For the full 24 page issue, please see subscription information below.
US MARKETS
The Dow rose 1.1%, S&P 0.9% and Nasdaq 0.4%. The Russell 2000 fell 0.4%. Banks rose 1.3% as broker/dealers fell 0.6%. Cyclicals fell 0.6%; transports gained 1.1%; consumers rose 0.9%; utilities 1.6%; high tech rose 0.7%, as semis were unchanged, along with Internets. Biotechs fell 0.5%. Gold bullion rose $5.00 and the HUI Index was unchanged. The USDX, dollar index, rose 1.2%.
The 2-year Treasury bill was up 4 bps to 0.995%; the 10-year notes were off 1 bps to 3.69% and the 10-year German bund was off 6 bps to 3.11%.
Freddie Mac 30-year fixed rate mortgage rates were off 1 bps to 4.96%, which is 1-1/4% higher than the 10-year note and that is where it is supposed to be. The 15’s were 4.33%. 1-year ARMs were off 10 bps to 4.12% and jumbos were 5.81%.
Fed credit surged $30 billion last week to $2.292 trillion y-o-y. Fed credit is up $25.1 billion or 12.3%. Fed foreign holders of Treasuries jumped $14.9 billion to a record $2.997 trillion, as custody holdings for foreign central banks rose $406 billion, or 17.7% y-o-y. The big question is did the Fed lend them this money and we won’t find out until the Fed is audited. We believe the Fed has created more than $1 trillion and lent it to foreign central banks to buy treasuries.
M2, narrow money supply, fell $13.3 billion to $8.513 trillion. It is up $1 billion y-t-d.
Total money market fund assets fell $73.6 billion to $3.07 trillion y-t-d. That is down y-o-y $354 billion, or 24%.
Over the past 50 years we have seen many bubbles. They have come and gone and the aftermath sometimes has lasted years, all from the courtesy of our privately owned Federal Reserve. We can remember those many years ago when we tried to explain to others that the Fed was owned by American and European bankers we were scoffed at. Well, finally the message has gotten through. These are the people who create bubbles for profit and power.
The ongoing real estate bubble, both residential and commercial, has been the biggest bubble since the late 1920s. In the second week of April of 2000, we recommended that our subscribers exit the stock market only three weeks after the market had topped out. We said we were headed for recession and that the only safe place to be was in gold and silver related assets. In 2001, the Fed decided to cut interest rates to relieve downside pressure on the stock market as it pressed downward toward Dow 7,200. A conscious decision had been made by the FOMC and Alan Greenspan to create a real estate bubble to at least temporarily bring back prosperity to the American economy. In 2002, aggressive cutting proceeded in interest rates. Mortgage debt rose from about $250 billion to $900 billion. By 2003, it was clear the forming of a bubble was in progress. By 2004, mortgage growth was up to $1.25 trillion and anyone who could put his or her mark on the bottom line was allowed to purchase a home. By 2005, some 69% plus of Americans owned homes with their partners the banks. In mid-2004 interest rates had finally started to move up again. In November 2004, we told subscribers that the bubble would break in the summer of 2005 in some areas of the country and that it was time to start selling, if you ever had any intention of doing so. In 2006, some regions were still on the way up, but the trend had been set. In 1-1/2 years interest rates from 2% to 5-1/4% and anyone of sane mind knew the end was near. The result of these low rates was that the Fed had deliberately created another bubble allowing a massive growth in total mortgage debt.
This madness was accompanied by massive derivative distribution, which is still with us, which Mr. Greenspan championed. He also strongly came out against regulation. That insured even more leveraged speculation to 70 to 100 times assets in hedge funds, brokerage firms, investment banks and even your corner bank. They were all totally out of control including Fannie Mae, Freddie Mac and Ginnie Mae.
We have contended since the bubble’s inception that the results were deliberately created and preordained to take down the American and world economy, which as we now well know ended in a credit crisis, the explosion of MBS, CDOs and ABS, particularly in Europe and the US. This credit bubble didn’t just happen. There wasn’t a mistake made. It was all planned and Greenspan and Bernanke deliberately looked the other way. In fact, Sir Alan Greenspan was knighted for his efforts in behalf of the Illuminists by the Queen of England. It was another giant scam by the Federal Reserve designed to bring the US and the world into world government and that plan is still in operation. The Fed is the moving force in this episode and that is why the Fed has to be audited. An investigation will show this and many other events that supposedly were mistakes, were well planned and executed. Those who believe it was mismanagement just do not get it. There is no complicity, only intent. Interest rates do not fall to 75-year lows by chance. The key to monetary management is that you do not allow bubbles to happen. Greenspan made the same mistake late in 1995, with his infamous massive irrational exuberance comment, when all he had to do was raise margin rates 5%, but he didn’t want to do that. He wanted or was instructed to not obstruct the dotcom boom, which also ended in collapse. These bubbles were deliberately created. It is the function of the Fed to make sure they do not happen in the first place. Monetary policy is not a rearguard action; it has to be the leading component of a sound money policy. Instead it has been light years in the opposite direction. Even today after 2-1/2 years in an ongoing credit crisis with 19 major countries on the verge of bankruptcy and the failure of their sovereign debt, all the Fed and other central banks are concerned about is bailing out banks, investment banks, brokerage houses and insurance companies, with taxpayer debt. Simultaneously the public is fed a bowl of porridge and is told by our controlled media that everything will be all right. Well, it isn’t all right. We are headed toward the biggest deflationary depression in the history of our country – far worse than 1929 and 1872.
Even today Mr. Greenspan believes liquidity should not be restrained. Supposedly this liquidity in the right hands in time will solve the problem. This is the same old song. Banks today have two sets of books and plenty of liquidity, but they are not lending and that is because they know what is coming and are preparing for it. Why do you think the BIS and FASD did not in January demand that balance sheets be market-to-market, not to model as they have been. They knew most of these financial institutions, even though flush with cash, are actually insolvent. There is plenty of liquidity, but the funds belong to the Fed not to the banks, which still average leverage of 40 to 1 after 2-1/2 years. The only thing that has been written off or losses taken on are the CDOs and ABS that the Fed has conveniently purchased from lenders to the tune of $1.2 trillion. Worse, the Fed refused to tell us what they paid for this toxic garbage and from whom it was purchased. These are the same criminals who talk about transparency. Their actions have been indefensible.
The result is continued instability and a grinding path toward an international financial collapse led by the US and England.
If we hadn’t left the gold standard on 8/15/71 we wouldn’t be in the fix we are in today. We do not have that standard, but after all else has collapsed we will then again regain that standard. We no longer have free markets and continued injections of liquidity will not work, only purging the system will work and its time is fast drawing to such a conclusion. Remember you cannot understand how this game works, unless you can understand the criminal Illuminist mind and their past history. Once you understand the rest is simple.
The specter of tariffs on goods and services is again in the spotlight. What has been used to destroy the American economy, that is, free trade, globalization, offshoring and outsourcing, is in the process of ending as we predicted it would. Tariffs are going to return. Paul Krugman says 25% tariffs against China should do the trick and he may be correct, but how about all the other cheaters who have been taking advantage of us for years. We say a 25% tariff for everyone, particularly those who deliberately reduce the value of their currencies. So what if the Chinese, Japanese and others dump dollars, American goods just get cheaper as those who left to manufacture or to maintain staffs in foreign countries come home to again employ Americans. All world currencies are in trouble, particularly versus gold, so who cares about devaluation? The fall of the dollar has been and will continue to be inevitable. If nations, especially China and Japan, sell dollars they will have to absorb some steep losses. Our trade and current account deficits would fall and the income from tariffs would reduce our unserviceable debt. This is not nonsense. This is reality. America cannot compete with slave labor wages. It never has been able to nor will it ever be able too. Transnational conglomerates and China have virtually destroyed our economy, and it has to come to an end. Our lone voice is finally being heard as a sidelight, China’s 30 million unemployed will grow, and that is likely to bring revolution to China’s totalitarian communist government, something pundits have seen to have forgotten. This is trade war and so it should be. What we are seeing now by those who want tariffs is no political posturing, but a way to allow America to economically survive and a way to reduce debt at the same time. The Chinese cannot allow the yuan to rise, because the rest of Asia will eat their lunch. That is unless we have worldwide devaluation and debt default and all currencies are pegged versus gold. Whatever is done will have to be done at an international meeting, but it’s coming. We predicted by the end of 2011. Perhaps we will be right.
The media talks about moral hazard and rightly so. Bailing out the financial sector falls into that category. Then we have, particularly on Wall Street, the syndrome of we neither admit nor deny, which is followed by a fine, which shareholders get to pay. Then there are the operations of “The President’s Working Group on Financial Markets,” which has a license to destroy free markets and to steal, usually with the passing of inside information. Then we have the collusion of the SEC and the CFTC, where no accountability exists. Crooks have no real fear of reprisal, particularly those in large firms. Public scrutiny has been enveloped in a cloud of arrogance. The Fed, treasury, government, banking and Wall Street do not care anymore that you know what they are doing. They believe they control everything and can do as they please. No rules, not even a Constitution. Our regulators know fully what is going on and won’t lift a finger to stop it. They just pick on small firms, brokers and newsletter writers who do not have the financial means to defend themselves. The problems associated with rigging the markets, particularly in gold and silver, are now so blatant even a high school student could recognize the manipulations of our markets. These people do whatever they want and get away with it. Fraud is endemic throughout the entire financial system. There is outright cooking of the books on a massive basis. Just look back at Bear Stearns and more recently Lehman Bros. What absolute audacity, and there is of course the derivative scam, which has yet to be addressed. As we project the criminality outward we can see the end of political and stable free markets. We cannot justify criminal activity and accept the adage we are doing God’s work. That is the ultimate insult. Foreigners see this and have begun to leave our markets in a big way. The day of criminality is drawing to a close, but everyone is going to feel the pain, like it or not.
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WEDNESDAY, MARCH 24, 2010
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