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International Forecaster December 2010 (#7) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster

-- Posted Wednesday, 22 December 2010 | | Source:

The following are some snippets from the most recent issue of the International Forecaster.  For the full 31 page issue, please see subscription information below.



Germany is supplying a great deal of money to the EUís bailout of Greece and Ireland and perhaps Portugal, Spain, Belgium or even Italy. The German people are against the bailout and they have told their leadership that they refuse to contribute any further. We have friends in Wiesbaden and the 42-year old father of the family, university educated, took 1-1/2 years to find a job making less than he had before. The position is in Cologne, about two hours away by car on the Autobahn, so he has to stay at a hotel during the week and gets to be with his family on weekends. We are sure the family doesnít like the arrangement nor do they relish bailing out other members of the EU and euro zone. Germans never wanted to be in the EU and nor did they want to be in the euro zone, which entailed giving up their beloved D-mark. Germany tells us unemployment is 8%. In checking out their numbers we find this hard to believe, especially in Eastern Germany. As we see it, even though Germany is the economically and financially strongest nation in the EU and the euro zone, all is still not peaches and cream. In this coming year German resolve will be tested to the maximum, as they consider thinking outside the box politically and in many other ways. Europe and Germany are going through a realization that there is life beyond Marxism, fascism and liberalism and a time is soon coming when classical free-market finance and economics will take their rightful place not only among the Germans but all thinking people of the world. It is time for Europeans to break out of the mode and again achieve the remarkable things they have in the past.


After WWII Germany believed a middle way was the path for their future so they chose socialism, the halfway house between communism and fascism. Under much pressure from the West they extended that into the future by being the leading part of the European Union and later the euro zone, both of which the Germanís were hesitant to join, particularly the euro zone. Over the past 50 years they accepted multiculturalism in the form of Turkish Muslims, which has resulted in a touch and go relationship. It must be said that relationship has worked out better than that of other European countries.


We lived in Germany during this process in the 1950s. The Marshall Plan and the discipline of the labor unions allowed Germany to perform an economic miracle in the rebuilding of Western Germany. This success spread throughout Europe. Prosperity and Peace were the result along with the assistance and presence of the American military, which we were part of there for several years.


Evaluation of the EU and the euro zone was a megalomaniac effort foisted upon Europe to bring about a stepping-stone for world government and a world currency. What was created was an unnatural anthropological disaster, which you now see being unraveled. The concept of the merging of tribes, an amalgamation, or Balkanization of peoples has not homogenized and never will, even if by force. This is also the result of one interest rate for all despite different states of development and different economic and financial structures.


The Soviet Empire is now gone as is Pax Americanus. The plan mainly designed by the UK and Britain is now after 65 years in serious trouble and will probably finally end up in failure. Again, the villain is one interest rate fits all.


Six countries are on the edge of insolvency: Greece, Ireland, Portugal, Belgium, Spain and Italy. We have strikes, demonstrations and riots in many of these countries and it is going to get worse before it gets better. The original plan for Europe is coming unglued irrespective of who is to blame. Millions are living on welfare and unemployment and the most employable have a hard time keeping their jobs and if they lose them it is very difficult to find another job. In addition, the large amount of Muslims is overwhelming England and the Continent. Low indigenous birth rates and out of control breeding by Muslims guarantee in years to come the destruction of what once was European culture. The Muslims absolutely refuse to assimilate. Europe has more problems than simply financial failure.


Sovereign default is nothing new Ė it goes back to the fourth century BC in Greece and here we are 2,400 years later in the same predicament.


Last week Germany signaled its distaste to extending government Ė financed aid for debt mired EU partners. That means all EU nations have to participate if they want to keep fighting the crisis in this manner. Germany did endorse an ECB boost in capital. In addition, the latest idea is to create a euro bond, which hasnít a hope of success, because it would engender a further loss of sovereignty.  The EU continues to move in the wrong direction such as further economic integration, which the Germans certainly do not want. Other socialist Ė one-world types Ė have told the Germans they are unpatriotic for not paying most of the bills created by these spendthrift near-do-wells. Germany is making all the right noises concerning the euro, but most Germans want the D-mark back. Europe has pushed Germans as far as they are willing to go. Worldwide investors are bailing out of bonds issued by countries in financial trouble in Europe. The ECB is buyer of last resort. The beat goes on as banks worldwide refuse to play the new world order game and continues to bury the ECB. They do not get it, yet, the dream of world government is over. No nation or investor wants to be left holding the bag.


As a result of this mayhem the ECB wants to provide unlimited liquidity for commercial banks, which caused these problems in the first place. They simply cannot give up the ghost. Hundreds of elitist controlled banks are going to go under and there is little that can be done to save them. This is succinctly pointed out in the case of Ireland and what the bankers have done to the Emerald isle.


There is no question that almost all of Europe is bankrupt, but so are the US and UK. German politicians dare not push the German public too far for fear of seeing Germans in the streets in reaction to being forced to bail out Europeís banks single handedly. Do they really want to put up two or three trillion for a bailout, hardly? What is very concerning is on top of the fiscal mess will Germany be subjected to a false flag terrorist attack as many other countries have? We see some things beginning that we have seen in America, the removal of freedoms from the German people. If this continues we could see Germany sliding into areas we havenít seen since the early 1930s.


As expected we are witnessing Republicans refusing to cut spending in order to obtain an extension of the Bush tax cuts, and the funding of health care reform. There were only some 96 changes in Congress and 1/3rd of them were resignations. The supposed irate public returned the worst of the worst to the House and the Senate. As a result you can expect even more corruption and scandals, as America sinks further into the great dark pit. Reform of health care could have been de-funded, but these whores are going to allow it to continue and in that process destroy the American medical system. Probably 1/3rd of doctors will retire or leave the country or find other professions. The affect on the availability of medical care will be staggering, as will the rationing of medical care, which will mean all older people and those with chronic problems will be allowed to die, as all useless eaters will be removed from society. What you are going to see will be horrible.


The death tax will be back in vogue to destroy American businesses, so further concentration can take form as the corporatist fascist government moves further to control Americaís services and industry. This result was as usual the result of secret meetings with the financial hand of the elitists hidden from view. It wasnít bad enough to see this happen but there is absolutely no effort to stop runaway spending that will be in part funded by such actions. In just 2011 weíll see $75 to $100 billion in new spending. We can promise you your politicians are not listening to you, but to the elitists who control them with their money. The Republican pre-election pledges are a joke, already long forgotten. If you extend the new spending it could be as much as $200 billion and the loss in jobs as a result of some cutbacks in tax breaks could cost 80,000 jobs a year. As major corporations continue to lay off workers, and are sitting on almost $2 trillion in cash, they will now be allowed to write off 100% of capital investments for a year. They will also continue to get research and development tax credits. The pork continues to flow and the generations of taxpayers to come will have to pay for it.


 A big question is how effective will the $858 billion stimulus package be? This is a bill that started out as an extension of the Bush tax cuts and morphed into a pork laden stimulus program. There is no question in our minds that Republicans and Democrats knew long before joint meetings, what this bill would become. If we add $600 billion that is in the process of being spent by the Fed between now and June the Fed we have $1.458 being spent to keep the economy from faltering. We expect that Fed spending will exceed that level by 9/30/11 moving up to a net $1.4 billion in the creation of money and credit by the Fed. The result should be GDP growth of 2 to 2-1/2 percent for the fiscal year. From what we have seen of the contraction in the credit market recently we could see stimulus being used to reduce debt, or go into savings. The market has put too much faith into a stronger recovery, as has the public and business, which could very well be disappointed. The current firm market could last into February and surprise us, but the rest of 2011 could produce downward market pressures. Present professional bullish statistics could prove a hindrance as well, as the majority is almost always wrong. As a result of this and other things gold, silver and commodities probably will do quite well.


The spending bill is still up for grabs as we write, as is the debt ceiling. That means Republicans may have gone as far as they are willing to go on spending for now and may pursue cuts in other areas. If that is the case the market would not react favorably. That leaves the economyís liquidity in the hands of the Fed, which is always more than happy to comply, an on demand money machine. Theyíll be needed if a budget battle occurs and we believe conservative freshmen congressmen and women will lead it.


There are some developments that are positive and one is the awakening of the public to what the Fed has been up too. The positioning of Rep. Ron Paul in the House and Bernard Sanders in the Senate should present formidable opposition to the elitists who run the Fed from Wall Street. More than 60% of Americans want to get rid of the Fed and that is positive. The Fedís purchases of bonds over the last few years has suppressed interest rates and increased bond prices. Those low rates make quantitative easing easier. This monetization heads straight through the open doors of Wall Street to produce ever more leveraged profits in derivatives, options, foreign exchange, stocks and commodities and shorting gold and silver, in what is now nothing more than a vast casino. In this process the Fed stands by to absorb the losses in behalf of the American taxpayer. When it looks like the Fed cannot handle it anymore then the elitist think tanks can supply war on demand as a diversion to cover up financial problems. In all likelihood that will be accompanied by the call for currency controls in and out of the country and rules regarding restriction of travel. We lived in currency blocked Zimbabwe (Rhodesia) and South Africa and so we know what it is like. We found it similar to living in a financial prison. You have to understand the corporatist fascist mind. It believes all of the wealth of the country and its citizens belongs to the fascists.


If IRAís, 401Ks, pension plans and government retirement plans are not taken over in whole or in part, then you can expect these plans to be forced to acquire a certain percentage of Treasury, Agency and toxic bonds. Foreign travel will have so many rules, like the TSA, that people will refuse to use planes, trains and buses. There may even be price controls that wonít work. The use of cash will be discouraged as government phases in credit and debit card usage. They may go even so far as to demand the return of foreign investments to the US. If Americans do not comply they may confiscate these assets. Remember, they believe all your assets belong to them.


If you want to understand why Wall Street, banking and corporate America think the way they do, just look at the poor Keynesian education they get. They cannot see the forest for the trees. Look at Bernanke, he has never worked in the real world in his life. Does he understand what he is doing and its consequences, of course he does. Keynesianism has been a failure over and over again, as the economic and monetary model for corporatist fascism. This is the path Mr. Bernanke has chosen, as did Sir Alan Greenspan. We were in the vanguard of exposing what has been going on in the US and world economy for many years, since 1960. Finally a few are speaking up today, but we need hundreds and thousands more to assist us. Due to the lack of those who will expose what is going on we have to do this at 75 years old. The reason we continue is to let people know, who will listen, what a precarious situation we are in. The elitists are in a very precarious position, but they are not going to tell you that. They have lost total control but yet, still have partial control. There will be concern, but do not expect panic. We have got to show them that they can be beaten and that is exactly what we have to do. The system has to be purged of its excesses and malinvestment. That is a painful process that everyone must endure, whether they like it or not. That means no more fiat currencies, only gold backed currencies.




12/22/10 (7) IF


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