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International Forecaster February 2008 (#5) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster

-- Posted Monday, 18 February 2008 | Digg This ArticleDigg It! | Source:

The following are some snippets from the most recent issue of the International Forecaster.  For the full 20 page issue, please see subscription information below.


The Illuminati have a huge problem.  They have buried it and no one in the media is talking about it, at least not in the correct order of magnitude.  They are quaking with fear as they consider the possibility of this problem being unleashed.  The problem lies in the Land of the Rising Sun, or should we call it the Land of the Sinking CDO.  You have already heard the tripe about there being about $400 to $500 billion of CDO and other asset-backed derivative losses worldwide, and we have already shown you that these losses are way understated and that the delays in their recognition are downright fraudulent.  We also showed you that total losses on asset-backed bonds and derivatives could be as much as $4 trillion in this past issue of the IF, and that does not include the tens of trillions in potential losses in credit default swaps and interest rate swaps.  So why does Japan represent a potential ground zero for the biggest financial catastrophe of all time?  You saw our previous report that of the $400 to $500 billion of potential losses admitted to so far, $150 to $200 billion of those losses may have Japanese banks as their "proud" owners.  Yet we don't hear a peep from Japan.


We have Citigroup, Northern Rock, SocGen, UBS, IKB, Merrill, JP Morgan, Morgan Stanley and many others from the US and Europe who have already written off over a hundred billion with sovereign wealth fund bailouts of 75 billion and some being on their way to partial or even total nationalization, but not so much as a hiccup emanates from Japan.  Could it be that Japan is also undergoing a catastrophe somewhere along the lines of George Romero's "Night of the Living Dead?"  Well, if Japan has 30 to 40 percent of the paltry $400 to $500 billion that has been admitted to, what if they have 30 to 40 percent of the $4 trillion.  That could wipe out their entire forex surplus, the largest in the world, and take the whole financial system down with it when it goes.  Where's the connection to the rest of the world financial system?  You need look no further than the Ultimate Yen Death-Star.  When the magnitude of these losses are finally grasped by the Japanese and foreign investors alike, the Nikkei isn't just going to tank, it is going to be vaporized!  And when all that liquidation occurs, guess what happens.  Everyone sells their equities and corporate bonds and toxic waste and gets yen and Japanese bonds in return (along with truckloads of gold).


That will drive the yen and gold into the ozone and the carry trade and yen shorts into the deepest, darkest depths of Mordor!  Your looking at a sub-100 yen and the biggest financial double-whammy of all time as the toxic waste ignites the Ultimate Yen Death-Star in a thermonuclear pyrotechnics display that will be remembered for millennia.  The hapless Japanese bankers must be sick as they gather together to discuss these problems.  This is not just about saving face.  They are completely and utterly terrified!  We suspect wakizashi short swords may be in short supply in the not too distant future. Sepuku anyone?  All that liquidity, over a trillion dollars of carry trade bets, plus leverage, will be totally drained from the system in a matter of days, and stock markets worldwide would crash and burn like the Hindenburg.  This would make 1929 look like a drop of water dripped into an Olympic-sized swimming pool.  Oh, and incidentally, any sovereign wealth funds or other investors who try to bail out any of these banks, investment banks and bond insurers in Japan or anywhere else in the world is a first class moron.  By the time this whole thing plays out, those who try to bail these flim-flam operations out may well never see so much as a penny of their investment back again.  They may as well load 100 dollar bills into earth movers and then back them up and dump them into the cauldron of an active volcano for a crispy critter Crane confetti cookout!  What idiots!  How about buying billions in gold instead, knuckleheads?!


Silver and oil were the big performers this week and supported gold well as it yawned at the IMF news that its perpetual gold sale was on again.  Spot silver went on a rampage to a new 27-year high of 17.60 on Tuesday after gold came close to testing its all-time high on Monday, hitting about 927, only $10 per ounce short of a breakout. Oil finished the week strongly by peaking out at 96.67 and settling at 95.50.  Gold and silver will consolidate along with resource stocks in the near term and we see new records being set in the weeks ahead.  And don't forget that the IMF sales, even if approved, will not take place until well after this seasonal rally is over.  Economic new is simply abysmal and precious metals are going to continue to shine under these circumstances.  We note that some 3000+ contracts of February gold futures are still open as of Thursday's close.  Could it be that someone is holding out for delivery? We'll have to see.  That would be a nice test case of 10 metric tonnes.  Large specs must seriously start to consider building cash to demand some physical delivery. Central banks are all insolvent.  Their gold is parked and it ain't goin' nowhere.  Let's get radical!


       The Fed’s interest-rate cuts last month have failed to lower borrowing costs for many companies and households. That means soon there will be one or probably two more ˝% cuts.


       Taxpayers should ask Congress why they are bailing out borrowers, lenders, investment banks, bank and brokerage houses who all committed fraud?


There are urgent proposals before Congress and the neocons for a bailout of the banking, investment banking and insurance industries. This would allow them to keep profits and lay off the losses on the public. There is more than $1 trillion in loses still to be accounted for. You can be sure our Parliament of Whores will sell us out again.


Market adjustments worldwide triggered by the real estate and CDO (Collateralized Debt Obligations) and SIV (Structured Investment Vehicle) collapse and the credit crisis has triggered the loss of $5.2 trillion – 50 of 52 share indexes worldwide ended January lower.


Wait until the investors and Wall Street see the write-offs over the next two years and the drop in earnings as a result. In January the Turkish market fell 22.7%; China 21.4%; Russia 16.1%; India 16%; Paris 12.3%; London 8.9% and New York was off 6%. Just under half of the major markets lost more than 10% of their value. The FTSE in London lost 9% and 16.5% over the past three months. Paris lost 15.3% over the past three months.



SATURDAY  021608(5)_IF

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

An international financial, economic, political and social commentary.


Published and Edited by: Bob Chapman

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-- Posted Monday, 18 February 2008 | Digg This Article | Source:

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