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Regarding $10 cups of coffee......I would refer you to study the collapse of the Argentinian currency and government of a few years ago.
The situation you talk about was NOT the case there and probably won't be here either. The Argentianian people saw huge increase's in the cost of everyday items as the currency lost most of it's value in a few months. Foriegners came in and "picked up the pieces" in the property and real estate markets because they had become bargains in depreciated Argentine pesos. Foriegners will be picking over the "destruction" in our economy too. "Unhedged" US citizens will feel the pain just as the Argentines did. They had several governments over there in just 6 months and all kinds of rioting! Banks were closed and when people COULD get there money out it didn't buy much! The "proverbial" $10 cup of coffe became "reality".
I still think you have to get the heck out of the US$....it scare's me to death!!
Rogue
Oil stocks.....the price action in the major oil stocks seems to be "leading" the price of oil very nicely.
They are now in the final "C" wave of a typical ABC Elliot Wave correction. I'm going to do some Fibbonaci retracement analysis of the major oil company price charts and try to get a "handle" of where to jump in again with both feet. There is still a bit of downside left till the "C" move is complete to the very minimun downside price target in the major oils.
Rogue
Len......I agree we are very much in the 9th inning of this economic "ballgame".
I'm very concerned about the US$.......God help us and everyone please try to get your "house" in order.
My girlfriend today asked me if some sort of GM savings CD or the like that she own's is "safe". I said "probably not".....but the government will print the money to pay you off and make you "good" in case GM goes bankrupt.
We may see $10 cups of coffee in the future in the good ole USA......and I'm not talking about that fancy stuff at Starbucks! LOL!!
Rogue
Housing market/Phoenix......Kind of reminds me of the frenzy and supply/demand imbalances we saw during the internet/tech bubble as people bid for Yahoo at $400 per share and Cisco Systems saw strong bids and few sellers on it's way to $85 per share.
LOL!!
Seriously though....Phoenix may be "undervalued" compared to some real "bubble" areas in real estate.
Rogue
FNM/Fannie Mae......my eyes are on it and I've been watching it decline for some time now. I think thing's can get really ugly very quickly.....there are some real major accidents "waiting" to happen out there.
I'm really very worried and scared about the US$ dollar. If FNM and GM need government bailout's someday the "ripple effect" through the economy can be disastrous for the US$. The government will "turn on" the printing presses to make everybody "whole" in the bailout. Throw those big messes on top of the terrible deficits now and what hope is there for this economy other than a complete "wipeout" and "starting over". It's happened recently in other countries with similar economic problems.
Anybody remember or care to study what happened to Argentina's economy/government/currency 2 or 3 years ago?? Lot's of people were wiped out.
Rogue
Housing bubble.....Fannie Mae (FNM), chart looks terrible.Fundamentals? They were one of the prime reasons for the real estate "expansion" of the past several years.
Anyone got the guts to buy it here??....or do you sell it "short" here or??
Any opinions??
Rogue
Oil....Just looked over the charts of the major oil stocks. They look as if they are entering the "C" wave of an "ABC" correction in Elliot Wave terms. We could see some weakness in oil and at least the major oil stocks until this "C" wave downside correction has run it's course.
I will then look to add to my oil company positions.....we are still in an energy bull market that has a long way to go in my opinion.
Rogue
Len/regarding debt and the dollar article..........GM and Ford could be in for big trouble soon. I've been short GM for over a year,it's taken awhile for the market to realize the perils in GM.
I haven't had many short positions in the past few years, but those that I have had have gone well for me. I DO kind of wish there was more interest from this board in hedging out "value" longs with short positions and ideas.
The US$ really scares me.....I'm very motivated to position myself to survive a dollar catastrophe. My grandfather had always told me how he was "wiped out" financially by Mussolini and his group in Italy when the Lira currency became virtually "worthless" in a very short time.......and I'll never forget his stories and warnings.
Rogue
Len/China auto demand......
"It appears they are saying that the price competition is a direct RESULT of the slowdown in sales across the board - which would be a logical ramification."
Maybe not so "logical" Len.....What I am saying is that my bet is that auto sales in China will be up year over year. I will have to see the "official" numbers before I believe that an auto sales slowdown year/year in China has occured. I believe it is more likely that the "supply" of autos has increased much more than "demand" so prices have fallen and margins eroded. THAT would not surprise me. Many more manufacturers have entered the market recently.....sales of autos MAY still be up year/year before all is said and done.
Rogue
Len /China demand..........."Automaker, Brilliance China (NYSE: CBA - News) pointed to what management called a "significant" slowdown in domestic automobile demand in China as the cause of the disappointment. Apparently, the government's economic-austerity measures are really starting to bite into consumer demand, and profits are suffering."
I'll have to dig a little deaper on this one. I'm not really sure that "demand" for autos is tapering off in China. I do know that the competition is fierce in the auto industry in China and CBA may be taking the brunt of the savage competition. So CBA management may be covering their butt's and their companys extreme slowdown with a generic market "slowdown" excuse.
Motley Fool may be getting "fooled" on this one.
Rogue
OIL PRICES.....Bring it on,let them slam the price of oil! I've been long oil futures several times in the past few years and would welcome any and all low risk entry points!
The fact is that world oil production has "peaked" and demand is rising. The supply and demand situation for oil is very positive. Now throw in the kicker of a US$ dollar that is being "printed" and exported all over the world and voila....higher pricers for oil in US$!!
The oil price in US$ has nowhere to go but up in the long-term in my opinion. Would you trade your valuable oil for "highly suspect" paper(US$)if you were selling oil? You would probably want more and more US$ dollars for your barrel of oil to compensate for the depreciating purchasing power(value )of the US$.
Rogue
Hedging??.......does anyone on the board ever hedge their long positions with short positions? Either in Index positions or outright short positions in particular overvalued or financially weak companies?
I've had a short position in GM for over a year that has worked very well. They have some very tough sailing ahead with Chinese competition looming and BIG pension problems, among other negatives.
I think it would be fun and profitable to try and find good short positions to hedge our value microcap longs.
Rogue
EGY....I added some more today too.
Rogue
Kudlow....when I ever have the stomach to listen to him, I find it hard to believe he EVER gave up his $500 per day cocaine habit.
He's in some sort of la-la land of "make believe"......some would call it "denial".
Rogue
Alaskan oil?.....just noticed this one taking off. AKOL.PK.....don't know anything about it, probably belongs on zip-code changers if anything.
Rogue
Trade Deficit at All-Time High of $665.9B
Wednesday March 16, 11:33 am ET
By Martin Crutsinger, AP Economics Writer
U.S. Trade Deficit Hits All-Time High of $665.9 Billion in 2004, Commerce Dept. Reports
WASHINGTON (AP) -- The United States deficit in the broadest measure of international trade soared to an all-time high of $665.9 billion in 2004, showing in stark terms the speed with which the country is becoming indebted to the rest of the world.
The Commerce Department reported Wednesday that the shortfall in the current account was 25.5 percent higher than the previous record, the $530.7 billion deficit set in 2003. The department also noted that the deficit was worsening as the year ended with the shortfall in the fourth quarter hitting a record $187.9 billion, up 13.3 percent from the third quarter deficit.
The Bush administration contends the soaring trade deficits reflect a U.S. economy that is growing faster than the rest of the world, pushing up imports and dampening demand for U.S. exports. But private economists are worried that the huge level of resources being transferred into the hands of foreigners will eventually result in lower U.S. living standards.
Meanwhile, the Federal Reserve reported that output at the nation's factories, mines and utilities rose by 0.3 percent in February, following a tiny 0.1 percent increase in January. It was the best showing since a surge of 0.8 percent in December and was led by a 0.5 percent jump in manufacturing, the third straight 0.5 percent gain in this sector.
In other economic news, the Commerce Department said construction of new homes and apartments rose by 0.5 percent to a seasonally adjusted annual rate of 2.195 million units in February, the fastest pace in 21 years.
Construction of single-family homes hit an all-time high of 1.775 million units, up 0.3 percent from January, and multi-family construction was up 1.7 percent to 420,000 units.
Analysts believe the housing sector, which has set sales records for four straight years, will begin to cool this year under the impact of rising interest rates.
The current account trade deficit is closely watched by economists because it is the broadest measure of international trade, covering not only trade in goods but also trade in services and investment flows between nations. The deficit for 2004 was not only a record in dollar terms but also as a percentage of the total U.S. economy, climbing to 5.7 percent of the gross domestic product, up from 4.8 percent of GDP in 2003.
The deficit represents the amount in resources that the United States is transferring into the hands of foreigners in exchange for foreign oil, cars and other products that Americans are purchasing.
While foreigners have been more than willing to exchange their products for U.S. dollars, there is a worry that at some point they will become less willing to do so and will seek to exchange dollars for other foreign currencies.
The dollar's value against other currencies has been declining for three years but so far that decline has been orderly.
However, some private analysts worry that one day the dollar might begin falling in value more sharply if foreigners suddenly decide to diversify into other currencies and begin cashing in their holdings of U.S. stocks, bonds and Treasury securities. Such a development could send stock prices in this country plunging and interest rates surging.
Investor Warren Buffett warned in this year's letter to shareholders of Berkshire Hathaway Inc. that the United States could become a "sharecropper's society" by the continued transfer of U.S. assets into foreign hands. He estimated the country's debt to foreigners could surge to $11 trillion by 2015.
However, Federal Reserve Chairman Alan Greenspan has said in recent speeches that he believes the country's current account deficit will be resolved without sparking financial market turmoil as the weaker dollar makes U.S. goods more competitive in foreign countries while making imports more expensive and thus less appealing to Americans.
But Buffett warned in his letter to shareholders that the growing indebtedness would require annual payments to foreigners to service the debt of around $550 billion by 2015, a transfer of resources that would mean less investment and lower living standards in the United States.
For 2004, the current account deficit reflected a shortfall of $665.5 billion in goods, up from a goods deficit of $547.6 billion in 2003. One-fourth of the deterioration was blamed on higher foreign oil imports.
The U.S. surplus in services shrank to $48.4 billion last year, down from a surplus of $51 billion in 2003. U.S. investors earned $24.1 billion in their foreign holdings last year while foreign investors earned a higher $33.3 billion on their holdings in the United States. Unilateral transfers, including such things as foreign aid, totaled $72.9 billion in 2004, up from $67.4 billion in 2003.
Rogue
Len....Oil/gas. I think this superbull in resources will climb a wall of worry and have many doubters and naysayers. That's good. I don't like everyone agreeing with me...that's when I am uncomfortable. This board has some smart cookies though.
Rogue
EGY.....looking to double up on my position sometime in the near future. My average cost will rise but I think this one will have quite a run before it's all over. I love to buy 'em when they are getting thrown out the door!
Keep your eye and pencils sharpened on the oil/natural resources sector....it may go through a correction but it's not over in my opinion by any means.
Rogue
Rainmain,Oil/natural resources.....I believe the strength that we will see in this sector will rival the "tech bubble"of the 1995-2000 period in severity.
In a falling broader US market with higher interest rates there may be few places to hide. I think this guy Van Damme will be correct.....seems like he's reading my mind and your's.
I think it may be worth reading the book "Remininces of a Stock Operater" about the life of legendary trader Jesse Livermore. Applying some of his wisdom and principles to the "management" of some select oil/natural resource companies in our portfolios may just make some on this board quite wealthy!
Rogue
EGY.......looking to add another chunk soon. The selling has been pretty relentless. I'm going to use this ongoing "closeout sale" to double up my remaining position.
I think we'll probably see at least a $7 share price in the near future.......could get alot higher when the momentum boys come back to play in the oil patch.
Rogue
blue_in_mich....very good job putting togethor the nice info on those microcaps! Thanks. I've added a few more of those companies to my watchlist.
Rogue
From Finacorp Securities daily market update today.....
"Israel has drawn up plans for an attack on Iran's nuclear plant if diplomacy fails"....
Get your house in order for more war coming soon.
Rogue
Anyone privy to what oil company this guy is talking about in this essay???
COMMENT: Waiting for the Energy Balloon to Burst.
Dear A-Letter Reader:
When I was a kid in New England, my cousins and I spent more than a few
hot summer days with a water hose and a bunch of balloons. We'd play
games taking turns pumping water into the balloons; handing the rapidly
filling balloon to each other like a game of hot potato. Man, you'd
watch that latex stretch and stretch...knowing it was ready to pop any
second. If the balloon blew up in your face, you lost. We went through
a lot of balloons...we all got wet. And we all had fun.
Those halcyon days come to mind as I watch the oil market nowadays.
Investors and institutions alike are pumping more and more money into
energy stocks, chasing oil prices that are up 20% in a little over a
month and up over 110% in the last two years. The more money that gets
pumped into oil stocks, the more nervous the smart money gets -- because
man, that balloon is full to bursting. This is a lot less fun than
water balloons - it's downright nerve wracking!
And with oil breaking out to new highs, friends ask me if it's too late
to buy. After all, most Wall Street analysts still expect oil prices to
decline back below $35 per barrel in the next two years - and my friends
don't want to end up all wet! Here's what I tell them:
1) Wall Street analysts can go jump in a lake. Their firms often trade
the same stocks they rate, and they're out to make money for them, not
you. Mind you, I'm not saying oil is going to go straight up - anyone
who tells you he knows exactly where oil prices are going is either a
fool or a liar. In fact, a pullback in oil prices wouldn't surprise me
right now. After a run of 110%, some backing and filling is ordinary
and natural in a much bigger bull market. Still, I think the pullback
won't be nearly as deep as Wall Street expects. And correction or no
correction, the next big surge in oil prices could arrive with
tsunami-like surprise.
2) It's not too late to buy energy - IF you know what to look for.
Sure, many energy stocks have come too far, too fast, and they'll likely
get shredded when the bubble bursts. But there are some solid values
out there - stocks for which any sell off is just a buying opportunity.
Heck, if oil pulls back to $40 a barrel - taking energy stocks down
with it - I'm not just buying, I'm buying with BOTH hands.
My reasoning basically boils down to this: oil (and energy in general)
is in a long term uptrend with the potential for explosive moves. It's
simple math:
* The world produces about 84.5 million barrels a day of oil (bpd).
* The world consumes close to 84 million bpd of oil now and the
International Energy Agency (IEA) estimates global demand will hit
84.3 million bpd this year.
* If anything, the IEA is under-estimating. Just this past week, they
estimated China's oil demand should grow 7.9% this year. But as
recently as January, the IEA forecasted Chinese oil demand to grow by
just 5.7%. I think the IEA isn't facing reality - my own estimate is
it's more likely that China's oil demand will grow by 10% in 2005 to
about 7 million barrels a day.
* US oil demand is also rising. Only a 1% increase is expected in 2005.
But that adds up to nearly 21 million barrels a day - of that, 11
million barrels a day are imported, and imports are growing.
Add it all up - it seems clear to me. We're facing a real supply-demand
crunch.
Can OPEC pump more? Not much more. About all the excess OPEC supply is
in Saudi Arabia and some smaller Gulf states, and that doesn't amount to
a whole lot. And Indonesia's oil output is falling so fast it may have
to withdraw from OPEC. Iraq, meanwhile, is a civil war ravaged basket
case that will continue to import oil for the foreseeable future. And
non-OPEC producers like Russia? Oil production is actually expected to
fall as the Kremlin crushes budding capitalism with its sticky, ham
fisted fingers.
And remember how $40 was supposed to be the new floor for crude oil, and
$50 the new ceiling? Well, crude hit $54 last week. Meanwhile, OPEC
official Adnan Shihab-Eldin of Kuwait said that a major supply
disruption could send oil soaring to $80 per barrel.
I've been following the energy markets for years now, and I think we can
get to $60 pretty quickly. Heck, I'm pretty sure we can get to $80 even
WITHOUT a major supply disruption - it'll just take longer.
Still, you can see why investors hesitate. There are some energy stocks
that are inflating just like the water balloons of my childhood, pumped
bigger and bigger by an ever increasing stream of money. You can
practically hear these shares stre-e-etch as their prices expand. A
short-but-sharp correction in oil prices will burst those over inflated
stocks but good!
But here's the other side of the coin: What if oil takes off? You don't
want to be left on the sidelines. Instead, the smart thing to do might
to be to buy an energy stock that's still a good value. If you look
internationally, you can find some that look downright cheap. These
shares should continue to trend higher even if we see a pullback in oil
prices. And if oil really takes off, these shares could potentially
double - maybe more.
Why international energy companies? There are a couple of reasons. The
biggest one is that despite a resurgence in drilling, the amount of new
oil found in the US is disappointingly small. When they asked Willie
Sutton why he robbed banks, he replied: "Because that's where the money
is." Well, if you want to find oil, you need to look overseas - that's
where the oil is.
Let me give you an example - without naming names -- of one of the
bargains just waiting to be scooped up...This energy company is sitting
on an ocean of oil and has poured money into new exploration. It's
already striking "black gold" - its proved reserves jumped by double
digits last year. But this company isn't sitting on its hands. In fact,
it's cranking up capital spending by nearly 50%.
Most of the world's remaining oil is in hard-to-reach places. Sure
enough, this company is drilling for oil in a former Soviet Republic
that pretty much defines "middle of nowhere." But the company has an
ace up its sleeve - a pipeline to drastically cut transportation costs
for its oil.
The company has its challenges, including production problems and
geopolitical worries. But in my view, the geopolitical fears are
overblown, and its production problems are fading in the rear view
mirror.
Plus, revenues and earnings are rip roaring! All this, and the stock is
cash rich and the company is buying back its own shares. Now here's the
best part. It trades at less than 10 times trailing earnings. That's
about ONE FOURTH the industry average -- by this measure, making this
stock very undervalued indeed. Wall Street has overlooked this
international gem...but likely not for much longer. I strongly believe
this stock is a bargain.
Our own Eric Roseman has already pulled the trigger on the stock I just
mentioned for his Commodity Trend Alert subscribers; telling them how
to play it for maximum profit potential. And is this the only bargain in
the international energy sector? Heck no - it's just the beginning.
Eric is riding the surge in energy prices with select international
picks. One of his selections is showing open gains of 134% since it was
first recommended, another is up a stunning 391%. And Eric has all
kinds of commodity picks in his sights - energy, precious metals and
more.
SEAN BRODRICK, Editorial Director
The Sovereign Society Ltd.
E-mail: seanbrod@bellsouth.net
Rogue
Latest provacative essay from old market pro Bob Chapman at www.theinternationalforecaster.com
March 13 2005
It took the FDA two years to finally send US Marshals to seize millions of tablets of the antidepressant Paxil CR, which had $725 million in sales last year and is used by 450,000 patients in the US each month; and Avandamet, a diabetes medicine, at facilities in Tennessee and Puerto Rico operated by Glaxo Smith Kline. The problems previously detected revealed that Paxil CR tablets tended to split, leaving patients with half a table with no medicine and another half with no buffering substance. We want to talk about last week’s BLS report on non-farm payrolls, which supposedly increased in February 262,000. Starting off, the 3/04 estimates have been revised upward by about 203,000 or 0.2%. Revisions have ranged from plus 0.2% to 0.5% over the past ten years. The BLS has factored in an 11/12ths increase into Fed numbers or 186,000. These new jobs were not 262,000 but 76,000. Then we must add in the hedonic adjustment of the BLS, so called birth/death model, which added 100,000 jobs. Consequently, we actually lost 24,000. This is pure accounting and pure manipulation of statistics and lies. A factoid for you to ponder, America spends $4 trillion on government. Russia spends about $40 billion. George Bush has the audacity and hypocrisy to criticize Russian President Putin for consolidating Russian federal power. Incidentally, Russia has no equivalent legislation such as the USA Patriot Acts. Furthermore, our neocons act more like communists than the Russians do. Last election Russia had 20 political parties on the ballot, we really had only two. We have a political, financial and economic mafia running our country, which we call elitists. They collectively are no better than common criminals. Russians of every possible political opinion have representation in the Duma, which is their Congress, while tens of millions of Americans have no voice at all in government for their political opinions.
Pat Buchanan asked recently why are McCain and Lieberman bully ragging Russia but not China? After all, Putin was elected, but Hu Jintao was not. Could it be that Chinese exports hold-down US inflation and that China holds hundreds of billions of dollars of our Treasury paper? Russia has an elected legislature with opposition parties. China has never held a free election. The Russian people have freedom of religion, China persecutes Christians. Russia threatens no US ally or the US. China threatens Taiwan. Hu Jintao is one of the world’s worst dictators. Why would our elitist perpetually want to consort to dictators? It is because they want to be world dictators via world government? We do not see George Bush upbraiding the Chinese, but he took a special trip to see President Putin to warn him against selling arms and getting involved in the Middle East and to instruct him to stop putting oligarchs out of business to the detriment of European banking interests, particularly the Rothschilds. As you can see, Mr. Bush’s priorities are that European banking interests control Russia - not how many Christians the Chinese liquidate. As it turns out Mr. Putin is defending his country against the elitists and in defending Russia’s interests in defending the interests of the American people. Presently the two biggest roadblocks to the elitist’s new world order are Vladimir Putin and Hugo Chavez. Things have sure changed in 15 short years.
We are not here to judge the 65-year old Ernst Zundel. We are here to speak about the rule of law or lack of it in both US and Canada. Mr. Zundel was detained in the US, jailed, sent to Canada and again detained for a total period of two years, In Canada, as in the US, if you commit an offense you are arrested. If you are not a flight risk, you receive bail. You can be held in custody until trail. In Zundel’s case, only secret trials were held. That is the path usually taken when pursuing terrorists. Mr. Zundel was stripped of his constitutional rights and deported. It was probably a relief for Mr. Zundel because two years of solitary confinement was enough. We now have judges who are a threat to our civil liberties, not only Mr. Zundel’s. This is to put us all on notice that if we disagree with any elitist opinion we will be thrown in jail until we recant, even though we have committed no crime. This is thought control at its worst and Orwellianism at its best. Remember, you may be next. We continue to hear how a revaluation of the yuan of 15% or 40% is going to solve America’s financial woes. Not on your life. We can never hope to compete with wages of $0.10 an hour even if they rise to $0.50 an hour. A strong yuan means goods exported to the US will be 15 to 40% more expensive and that means higher interest rates to try to counteract the higher inflation. The bottom line is a revaluation of the yuan will be very detrimental to our economy contrary to what those charlatans in Washington and on Wall Street tell us. You have nearly 10% inflation now; with a stronger yuan you might have 20%. A rise in interest rates will collapse the bond, stock and real estate markets. America needs saving badly. Presently, we have almost none. Those who believe higher interest rates will encourage saving are mistaken. Americans are buried in debt. Instead of saving in a crisis, they will be struggling to pay off debt and keep from going into bankruptcy. A 35% further drop in the dollar will not do the job. It has to be accompanied by 15-20% interest rates. The system has to be purged if it is to survive and the chance survival is 10-20%.
The following is an example of how the elitists control both sides of an argument. Saddam Hussein may have former US Attorney General Ramsey Clark on his defense team. Clark is the son of a former Supreme Court Justice. While serving under Lyndon Johnson in 1967 to 1969, he supervised the drafting and passage of the Voting Rights Act of 1965 and the Civil Rights Act of 1968. He is founder and chairman of the International Action Center, the largest antiwar movement in the country. You might ask why Clark is an elitist. We will prove it to you. Clark just returned to Iraq to open a law office with a former law partner of US Defense Undersecretary Douglas J. Feith, an elitist neocon, who had urged the US to overthrow Iraq and was a principal architect of US post war planning. What Clark represents is the loyal opposition. We have neocons prosecuting Saddam and we have an elitist representing him. Either Saddam gets a deliberate sleigh ride or they bury him. We will find out when it is all over.
Irrespective of how you feel about Saddam Hussein, he is a prisoner of war totally within the rules of the Third Geneva Convention of 1949. Thus far, all we have seen is blatant massive breaches of his basic rights under that convention by George Bush and his neocons who control the US government, which in and of themselves are war crimes against Saddam. This trial will be conducted in a manner, which probably can only bring about the death of Saddam. This will be a show trial and a kangaroo court with supposedly strong representation for Saddam by Clark. The conspiracy has to make it look good. Saddam Hussein was George H.W. Bush’s partner. They want to shut him up. We can assure you, he will either be executed or spend the rest of his life in solitary just as Rudolph Hess did.
We get the very worst. First it was Ashcroft, then Gonzales and now Michael Chertoff, who makes Gonzales look like a choirboy. Chertoff has been implicated in advising the CIA on the legality of various means of torturing detainees; not prisoners of war just anyone they choose. Needless to say, the White House lies and said he did nothing. We would not expect otherwise. According to the NY Times, Chertoff told the CIA that certain forms of torture were entirely permissible under the currently existing US anti-torture statute. That means the White House and the Justice Department approve unconditionally of torture. What this means fellow Americans is that very harsh interrogation techniques qualified as torture only if they were enough to cause organ failure or imminent death. These are the kind of monsters we have running our country. This is based on the Gonzales memo that approved the legal justification for the CIA and DOD to use brutal inhuman methods on suspects as documented by the FBI, CIA, the DIA, and the Justice Department. Aren’t you proud to be an American?
We find it very unusual that Michael Chertoff was confirmed by the Senate 98-0 and no one questioned the fact he is a dual citizen. We have someone who is Homeland Security Czar and among many agencies, he oversees the Bureau of Citizenship and Immigration Services. Nowhere in the established media have we seen any reference to his being an Israeli. Even more interesting is that his mother played an important part in the creation of the Zionist state of Israel. If he were a dual citizen of any other country, we would raise the same question. Michael Chertoff is a "de jure" Israeli national by birth. How can we know where his sympathy’s lie?
As a political payoff to England and Italy, the new Navy helicopters will be manufactured by an international consortium headed by Lockheed Martin.
Before the National Governor’s Conference, Bill Gates tells us that he was ashamed and appalled to describe his reaction to the failure rates of students. He said only one-third of our students graduate from high school ready for college, work and citizenship. India in 2001, graduated almost a million more students form college than the US did; China graduates twice as many students with bachelor’s degrees as the US and they have six times as many graduates majoring in engineering. Someone should clue this elitist into teaching to the lowest common denominator and the perpetual dumbing-down process.
According to current and former government officials the Bush neocon secret program to transfer suspected terrorists to foreign countries for interrogation has been carried out by the CIA, under broad authority that has allowed it to act without case-by-case approval from the White House or the State or Justice Departments. This is known as rendition and that authority was put in place within days of 9/11. These detainees were subjected to coercive interrogation techniques and brutal treatment during months spent in detention under torture in Egypt and other countries. The neocons refuse to confirm that a rendition program exists and will not admit how many prisoners have been transferred as part of the program. Thus far, about 150 detainees have been from or sent to Egypt, Syria, Saudi Arabia, Jordan and Pakistan. In addition, they hold large numbers of prisoners from al Qaida at secret sites and, of course, the hundreds of suspected terrorists held at Guantanamo Bay.
Fifty percent of working America has only their house and Social Security at age 65. Of the other half, only half have a 401(k) plan and for those age 55-64 the average balance is $42,000, as an annuity that would pay $300 a month. That means people have to work as long as possible. The under-funding of private defined-benefit pension plans exploded between 1999-2004 from $300 billion to $450 billion on a termination bases, or in bankruptcy. You have seen the steel companies, other companies and now airlines go under. We believe the auto industry is next. GM is so under-funded that if it went under, the liability to PBGC, the Pension Benefit Guaranty Corp. would be $9 billion; GM’s bonds are soon to be rated as junk. In order to cover ongoing under-funded corporate failures the PBGC would need a 58% increase in premiums or an increase from $19 to $30 a worker.
If you want the government to know less about you use cash. Every time you use your credit card, ATM, use your library card, rent a movie or log on to the Internet you increase the size of your surveillance portfolio held by private intelligence companies that are compiling personal information about you. Due to your activities, they are also able to profile you. They have all your tax information and they often, for a fee, provide our government with files on you. What this amounts to is you have no privacy. In order to deprive these data collectors use cash whenever possible. Cash checks mailed to you for cash. Only use credit cards, ATM or debt cards when absolutely necessary. Write as few checks as possible. Live in a cash existence.
The elitist Bush and the neocons want free trade and globalization, but only on their terms. Venezuela supplies the US with about 3/4’s of the oil the Saudi Arabia supplies the US. Venezuela wants to diversify its client base. This is the result of two-foiled assassination attempts and a terribly botched coup. As we explained in the Latin American section, presently the US is attempting to destabilize and throw into chaos all of South America and they are sending major armaments and personnel to Aruba, 46 miles from Venezuela. Due to the arrival of new military equipment from Russia and MIG-29 fighters, a direct assault will be difficult. Thus, we can expect attempts at internal subversion and invasions from Colombia. A blockade of Venezuela would be easy, but it could bring Russian and Chinese vessels into play. The key to US success would be assassinate another duly elected president to effect regime change and put elitists into office and again loot the country. For the elitists anyway is fine just get rid of Chavez. It is incredible to us that these criminals have gotten away with these tactics over the past 60 years.
Transcripts of Federal Reserve meetings prove Sir Alan Greenspan and those others at the Fed knew as early as 1996 they had created a bubble. That means they lied about the bubble and they continue to lie about the real estate bubble. As an example, the volume of new commercial mortgage-backed securities continues to head inexorably higher. There will probably be $18 billion in new deals in March alone, which brings the first quarter total to close to $30 billion, way ahead of the $21 billion in the first quarter of 2003. As of 2/28/05, loan-to-value is now an unbelievable 96%, an all-time high and up from 95% in the fourth quarter. More than 32% of the loans had a loan-to-value in excess of 100%, up from 30% in the fourth quarter. Additionally, interest-only loans are also setting new records with some 52% of the loans issued thus far in 2005, having no amortization for part or all of the term, up from 45% in the fourth quarter. Interest-only loans have been climbing steadily and were in single digits just two years ago as well.
The Bush neocons lost $9 billion in Iraq and they still can’t find it. We do not hear one word from the White House. This is another tribute to bribery, corruption, graft, greed and incompetence. One helicopter with $1.4 billion simply disappeared.
The new bankruptcy bill has cleared the Senate and is ready for passage. The measure is a thinly disguised gift to banks, who should not have been making the loans and credit lines in the first place to people they know could not pay the funds back. This measure will financially wipe out at least one-third of middle class families and start the beginning of the end of consumerism. Massive credit bills have been symptomatic of broader economic problems caused by booming health care costs and educational costs. Fifty percent of bankruptcies are caused by medical costs. This is a bonanza for credit card companies who made $30 billion in profits last year. It is a nightmare for the poorest of the poor and the weakest of the weak. The bill does nothing to curb abusive bankruptcy practices by wealthy families, who can create special trusts to shelter their assets, and by corrupt companies like Enron and WorldCom, who were able to find favorable bankruptcy courts and deprive many of their employees and retired employees of benefits. This bill is the result of lobbying by Visa, MasterCard, the American Bankers Association, NBNA America, Capitol One, Citicorp, Ford Motor Credit and GMAC. They spent $40 million on the issue. This is how government is run in America today, by political payoffs and cold hard cash. This bill will create the biggest black economy in history and another 30% of American will stop filing income tax. That will be followed by a staggering economy and complete revolt against the system.
The Federal government is forcing states to pick up $30 billion in expenses in fiscal 2006, mostly for education programs that Congress passed without providing money to find them. That is $300 billion in ten-years, which is overwhelming. Eighteen billion comes from the No Child Left Behind Act, and $45 billion in budget cuts to Medicaid, effecting 53 million poor and disabled Americans so we can have our wars against terrorism. Nearly two-thirds of the costs will come from funding for K-12 education. Another $60 billion bill for the states will be federal requirements to develop new standards for driver’s licenses, birth certificates and a national ID card. Our Federal government is a disgrace to us all. It is time for all good men to contemplate action.
Do you want to read more by Bob Chapman? There are 61 previous issues for you to read.
www.theinternationalforecaster.com
EGSR....will be looking for a good point to enter a position. I definitely like oil and gas in the ground rather than idle depreciating US$$ in my account.
Rogue
EGSR....Not sure what to do with this one. RRainman999(who has had a really "hot hand" recently with his picks in the oilpatch) has said in the past it is a "scam" company.
I believe Bobwins owned it or liked it once in the past. Not sure of his current thought's on EGSR??
Rogue
Provocative thoughts from Bob Chapman at www.theinternationalforecaster.com
March 7 2005
Two years before the Iraq invasion we predicted perpetual war for perpetual peace. War was to be a cover for economic failure: an excuse to steal and control Iraq’s oil; a way of stopping Saddam Hussein from selling oil in euros, which could undermine the dollar and lead to its demise as the world’s reserve currency; a way to outflank Russia geopolitically and a method of setting up for the eventual invasion of Iran. We also predicted an event would take place, which would allow the invasion in the Middle East, probably Iraq. We set the date at 10/16 only 35 days after 9/11. That prediction occurred in the previous November, 10 months before 9/11. We knew the elitists needed a major event to justify invasion. In spite of George Bush’s denials, he in all likelihood will invade Iran. The elitists have to directly control Middle East oil and they cannot allow the new Iranian oil exchange to trade oil in euros and dollars. All over Washington, everyone knows an invasion is eminent. If they are correct and we invade, it could trigger the use of nuclear devices by both Israel and the US. Even if that did not happen, we could see war spread throughout the Middle East and into Asia. The invasion of Iraq was planned long before George and the neocons were first elected and we believe that the invasion of Iran was planned at the same time. We wrote about this probable scenario in 1992. These plans were laid some 15 years ago by elitists who are as evil and deranged as George W. Bush. We have already been told that clandestine commando infiltration has taken place over the past seven months marking facilities with homing devices so that they can be destroyed in an initial bombardment-preceding invasion. We are also told that Israeli commandos are operating extensively in Kurdish, northern Iraq with an Iranian terrorist group.
Much of the intelligence others and we have received has come from serving and former CIA personnel. The agency has been betrayed and purged by the very people they were assisting, the elitists. Many see the ultimate consequences of these wars and as real patriotic Americans they are in mutiny against their government, as are many other Americans. Our last two national elections were stolen from us and many Americans realize that. We must continue to expose what is really going on and who is guiding us headlong towards disaster.
We continue to hear debate over undervalued currencies, particularly in China and in Asia. We have said before, even if the dollar index fell from 82 to 65 or 70, the US and Europe would still not be able to compete with slaves’ wages. All the mental gymnastics in the world are not going to change that. The third world has no intention of letting their currencies or wages rise if that is preventable. We have said the only way to solve the problem is to raise interest rates and purge the world financial system or set up protective tariffs. The third world is not playing by the rules and the G8 governments refuse to act to protect their own economies. Any other arguments are blather and a waste of breath. The time for the G7 to act is now. The longer they wait the worse the pain. The system as we know it is terminal. Two years from now, it will have collapsed.
The geniuses at Bank of America tell us they have lost computer tapes containing personal information on 1.2 million federal employees, including some member of the US Senate. The lost or stolen data includes Social Security numbers and account information that could make customers of a federal government charge card program vulnerable to identity theft. Last week Choice Point, this week Bank of America. The loss and exposure of financial data can be financially damaging, but Congress should end this erosion of privacy rights, as more and more personal and financial information is collected and sold on databases, we get less and less privacy and more and more vulnerability to criminals and others.
No sooner was the ink dry on the Gillette-Proctor and Gamble deal and we find thousands of Gillette retirees may face diminished medical benefits. P&G, the surviving company, cannot make any changes for two years. Even after the two-year period, retirees’ pensions, which are held in trust, will be protected. After two years, P&G can do what they want. As you can see, you can work hard all your life for a company and not receive what you were promised. We can understand financial misfortune, but the theft of benefits is wrong and outrageous.
Last week our government lost a bid to obtain telephone records of two NY Times reporters in a major free speech battle over journalists’ rights to keep their resources secret from prosecutor’s probes. The ruling by a US District Judge who said reporters’ rights are protected under the First Amendment, which guaranties freedom of speech and press, will we are sure, be challenged in a higher court and be superceded by the Patriot Acts. Under those acts, you have no rights.
Retired Major General Alan Stretton says Iraq will end in disaster just like Vietnam. Eventually the Bush neocons will bow to public pressure and withdraw the troops, leaving behind a bloody mess. General Stretton is an Australian. Australia is sending another 45 troops to southern Iraq to protect Japanese engineers. The General said Australia should not have been involved in Iraq in the first place, as there were no WMD. He said, “This talk about fighting for democracy is absolute bullshit. The whole operation is flawed and Iraq could never be democratic.” Amen.
Senator Joe Lieberman (D-CT) and Senator John McCain (R-AZ) have introduced a resolution condemning Russian President Putin’s assault on democracy in Russia that violates the spirit of the industrialized democracies. This issue became part of the meeting between Putin and Bush in Slovakia. In question is Mr. Putin’s opinion that he does not believe that Iran is seeking to build nuclear weapons of mass destruction. That, of course, is diametrically opposed to the US-Israeli position. The other reason is the demise of all but one of some 20 oligarchs in Russia that were financed by merchant bankers from Europe, the main one of which was the Rothschilds. They were able to inject their wealth into Russia via their Russian contracts and were able to purchase whole industries for $0.05 on the dollar. Mr. Putin has put them all out of business. For those unpardonable sins Mr. Putin and Russia is now the enemy. The world media, which is controlled by these elitists for the last six months, has been staging a subtle attack on Mr. Putin. For these reasons Russia supposedly is violating democratic principals. This reflects the goals of our corporatist, fascist, and neocon dictatorship. They are again out to destroy Russia and Mr. Putin because they cannot control them.
Since 1994, both agreements, the World Trade Organization, WTO, and the North American Free Trade Agreement (NAFTA), our economy has been clobbered. Their laws, particularly their tax laws, have overridden our laws, in pricing of imports, and dictating how we are to conduct business in our own country. They have expedited the movement of manufacturing and service industries out of the US and have encouraged outsourcing. Over the last ten years, we have lost about ten million jobs from our economy.
If American companies want a binding legal opinion that effects their international trade they can only appeal to a dispute resolution panel of the WTO in Geneva, Switzerland. That is because our government has illegally ceded part of our sovereignty to the WTO. Our becoming WTO members was a transformational movement, a fundamental alteration of our system of government. The adoption of WTO was a major step toward world government.
We now have our President and many in Congress pushing for FTAA, the Free Trade Agreement of the Americans. Our resident lunatic has made it clear to Congress he wants this treaty signed soon. For us it is a blessing that now most South America countries do not want to sign it. They want a grouping of their own. They are tired of being exploited by world elitists. Be as it may our globalists in Washington will push hard for FTAA’s passage. When NAFTA was passed the famous pervert, member of the CFR and Trilateral Commission, Henry Kissinger said, ”it will represent the most creative step toward a new world order taken by any group of countries since the end of the Cold War”. “NAFTA is not a conventional trade agreement, but the architecture of a new international system.” David Rockefeller, CFR guiding light and founder of the Trilateral Commission said, “everything is in place, after 500 years, to build a true “new world” in the Western Hemisphere,” As Sir James Goldsmith said before passing, “Global free trade will force the poor of the rich countries to subsidize the rich in the poor countries.” This is what is happening in the transference of wealth and power from Europe and the US to China today. You can never compete with a population that can work for 90% less wages than you do. These treaties eventually will bring about social upheaval and revolution. The public does not have a clue about what is being done to them. Every household now has to have two workers and too many have to hold two or three jobs. That is because they have lost their good paying jobs to globalism, free trade and the third world. We are sowing the seeds of our own destruction as Karl Marx said in 1848, “Free trade breaks up old nationalists. It hastens social revolution.” What free trade does is siphon off America’s wealth and brings our economy to the level of the third world. FTAA must be stopped and we must withdraw from WTO and NAFTA. If we do not, our way of life will be destroyed and our world will be in chaos.
Since last June, the Fed has raised interest rates six times, intending to prevent the US economy from overheating, but instead the increases are having the opposite effect. They are spurring the economy, not reining it in. Sir Alan Greenspan’s and our government’s lies are coming home to roost. They are well aware why we are seeing this phenomenon. We are floating in a sea of liquidity and inflation is far higher than they tell us it is. The Fed plays dumb but they are in the bond markets every day suppressing yields, because if they do not do that and the ten-year US note goes to 5-1/4%, and it will choke off home refinancing. Then only home equity loans will be left to keep consumers spending. A 6-1/2% to 7-1/2% 30-year mortgage would cut new home mortgage originations by 50%, so you can understand why Mr. Greenspan does not understand. He does not want you and the investment community to know what he is up too. Since the 1-1/4% rise in overnight Fed rates, the ten-year note has fallen 30 base points. That is truly impossible under normal circumstance. Lower than normal interest rates have kept the housing bubble in tact and made increasing debt easer to carry. The Fed rate increases have not damped consumer or corporate spending, because that has not been allowed to be reflected in the real market. M3 may be up only 5.8% y-o-y, but bank loans are up 8.9%. The banks have been deliberately and subtly providing additional liquidity much of which, as a product can end up in US Treasury paper. Then there is the matter of foreign central banks increasing their M3’s by over 6% to keep the value of their currencies low and to buy dollars, which suppresses US Treasury yields and allows the US to increase its debt exponentially in spite of massive fiscal and current account deficits. You might say most every one of means is gambling in the bond market. They have to do something with their dollars and they do not want the system to collapse. You have massive lending and massive foreign fiat money creation, which ultimately will be disastrous. One wrong move and the house of cards will collapse. You saw the panic two weeks ago when South Korea, the fourth- largest holder of US Treasuries, said we are going to diversify some of our dollar holdings. The market came unglued, as did bond yields as the price of gold and silver took off. It does not take much to trigger calamity. In addition, inflation is rampant even the garbage collector knows that. If it were not true, how could you explain commercial loans including real estate rising 9.9%? We are adrift in a sea of liquidity and there is no escape. That is part of the reason why ten-year note yields cannot climb. They have become a depository for excess funds. We can guarantee you that long-term rates are going to rise in spite of what the Fed does and they know that. The Fed has spent four years flooding the world with money and credit and soon the result of their efforts will end, as it always ends, badly. Deliver us from evil. The UN wants to control the Internet. They said two weeks ago that they are laying the groundwork for the UN sponsored World Summit on the Information Society where they intend to make a final decision on whether it is time to try to control the Internet. That will be in Tunis in November. They will consider and discuss cyber-crime and E-mail spam and consider developing country requests that the UN control domain names and other issues. We know world elitists are behind such moves because French PM Jean-Pierre Raffarin has called for international rules to govern the net; international rules world citizens can rely on. Yes, from where, an interment camp? China is leading efforts to globalize Internet control, but allows its own citizens Internet access only with government surveillance. Done like a true police state. In order to inflict their new world order, the elitists know they have to totally control the media. They have to eliminate opposition and replace that opposition with their own controlled opposition. They must be able to control the Internet and its content to proceed and be successful. That is why publications, such as the IF are so important. They compile the news and views in a format that is easily understood and allows you to find out what is really happening out there and how it is going to affect your lives. The elitists, in order to stop the IF, if under UN control, would simply label it spam and your server would be forbidden to transmit it to you. Incidentally, that has already happened in a limited way over the past five years, as servers such as AOL acted unilaterally or were under orders to harass us from the government. This is where the elitists and the UN are headed and it is imperative that they are stopped. If they are not stopped the last bastion of media freedom will be lost.
We find it quite strange that investigators have found that about 100 researchers from NIH, National Institute of Health, did not engage in secret deals with pharmaceutical and biotechnology companies and the seeming improprieties were actually the result of errors by government investigators. If you believe that, you are a moron. This is just another government cover up. The NIH director has imposed severe new restrictions on the personal activities and finances of all the agency’s more than 5,000 employees and they are very upset. Congressional investigators found some 100 NIH employees guilty or taking kickbacks so why shouldn’t these moonlighters be banned from accepting even uncompensated professorships and board positions with professional societies when it leads to kickbacks? The NIH found no one guilty yet there is proof of scientists collecting thousands of dollars in fees, expenses and travel reimbursements for undisclosed activities. Hundreds of them have violated disclosure rules and should be fired. These same people want to take away your rights, vitamins, minerals, herbs and hormones to protect your health.
Do you want to read more by Bob Chapman? There are 60 previous issues for you to read.
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Rogue
Good site for "paired trading" info/education....
http://www.pairstrading.com/content.asp
Rogue
Paired trading....here's one site to start your research.
http://www.hedgedtrading.com/Index.htm
There was an excellent site I had on my old computers hard drive before it crashed. If I come across that one again I'll post it.
I think it's a very good time to start getting "market nuetral".
Rogue
I would consider hedging 100% of my "value" longs with going short an equal dollar amount to protect against a possible forthcoming bear. A simple hedge would be to short the QQQ's/. Not much value there at all.
An interesting strategy that I've used successfully in the past is "paired trades". Go long one "undervalued" company on an industry and short an equal dollar amount of another(market nuetral strategy). A few years ago I bought $5000 worth of Cadbury Schweppes(CSG) at $19 per share and sold $5000 Coca-Cola(KO) at $45. In 2 years CSG went to $35 and KO declined to $41. Nice gains on both sides of the hedge while having nuetral "market exposure". Buy "value", sell "non-value", etc. There is a good website with some info on "paired trades"......I 'll post a link when I find it.
I think all here should be thinking of hedging their long positions. I do believe we are going to war with Iran this year and don't see how the market will like that.
Rogue
If we have any sort of significant correction in the oil/natural resources sectors.........I would be looking to once again add to my positions.
There will be very few places to hide on the long side in the coming year.(I DO expect the US to go to war with Iraq before year-end!!!)
I expect the sectors you own to have a full fledged "bubble rally " of epic proportions before it's all over. (See previous oil/gas bubbles in the past 40 years). The only thing this time that scares me is that the fate of the US$ is so precarious this time around..........our liabilities are one heck of a mess. It might not look exactly like the previous oil/inflation rally's of the past 40 years.
Rogue
Regarding "New Call on Market"...
I agree that the US market will have problems. Look for investments that will prosper with a depreciating US$ and inflation and possible higher interest rates. I love "real things" like oil/gas, natural resources....and etc. You must strive to preserve your net worth against the tide of a US$ that will purchase less and less as we go forward. Notwithstanding the government numbers which may pacify you nad lull you to sleep as your wealth is destroyed.
There are probably going to be some very,very good short selling oppurtunities coming also.
Any ideas....long or short out there?
Rogue
EGY.....just added another nice chunk of stock on the selloff today. This company should have a much higher valuation in the next few years....conversely the US$ dollar will buy less and less oil over the next few years making this companies earnings in dollars much higher.
Very much like the Chinese that are holding and converting all those US$ dollars that we send over there......I am recycling my US$$$ into "real things" like oil/gas, natural resource companies,etc.
I believe the "flipside" of the natural resource "new paradigm" is the erosion of value of the US$ and it's role as a reserve currency around the world.
Rogue
"...anybody else tired of natural resource plays on this board?"
I believe that in the "big picture" here that the natural resource companies may be going through a "paradigm shift" in market perceptions and valuations. This could be a BIG year for them.
Whereas all the "hot money" was chasing technology/internet biotechnology junk a few years back and applying insane valuations...in the "new paradigm" I believe the valuations that will be placed on natural resource companies will surpise quite a few at how high they go. In the same light, I believe technology company valuations will decrease to single digit P/E's over the long term.
Stay long natural resource companies/ get short overvalued technology companies.
JMHO.
Rogue
CYD....Rainman, any thoughts on the outcome of the corporate governance problems with CYD?
Curious as to your feelings on this.
Rogue.
The latest "must read" essay from old market pro Bob Chapman at theinternationalforecaster.com.........
February 26 2005
Four years ago we passed the point of no return financially for the United States and the remainder of the world. Our situation today is far worse than it was in the 1930s. Our government and our banking system were bankrupt in the 1930s and they are bankrupt today. We are being forced to adopt a fascist system led by elitist corporatists and our government, something we were able to avoid during the depression. This time it is all going under.
Between 1945 and 1960, we created real wealth. Then we began with GATT, which eventually evolved into WTO. For the last 20 years, we have eliminated tariffs, shipped entire industries overseas and have outsourced many of our best jobs to the third world.
Most of the people we elected to Congress are either paid off or too dumb for words. The latest example of jumping from the frying pan into the fire is in California’s choice of trading socialist Grey Davis for fascist Arnold Schwarzenegger, a creature captured and harnessed by the elitists. When the real estate bubble is broken and decimates the wealth of California again, we can promise you California will end up with martial law and many other states will immediately follow.
Anyone who cannot recognize that we have an economic, fiscal, monetary and financial crisis is just plain dumb. We have a decadent country that no longer wishes to produce, just spend. Our technology is being shipped out, over 50% of our factories are gone, we now import agricultural products and our great skills are being lost. Our country is rotting and dumb Americans stand by and watch. As we said last week, we are not alone; Europe is in the same predicament.
Most of us stand by and watch as our President prepares to rape Social Security and ultimately destroy it. Socialism is bad, fascism is worse. Social Security is the only bulwark left for the disabled and retiree. Let us suppose you put your money in the stock market and it collapses, like we believe it will, you will be out of your only backup. Private pension plans are already in jeopardy. If the market goes down, many of them will fail, so you do not want to lose your Social Security.
We were against the Afghanistan and Iraq wars three years before they started. We must immediately get out, and if we do not we are not going to have a US military. The volunteer system will be dead. Few want to join the National Guard or Reserves and recruitment is difficult in all service branches. The military knows what is going on and they do not like it. We know Cheney and Rumsfeld want to use mini-nukes and they plan to use perpetual warfare to establish a one-world government. We cannot allow this to happen.
Alberto Gonzales, Bush’s Nazi lawyer, has been confirmed as Attorney General. We can now look forward to the promotion of indefinite detentions not only in foreign locations but in the US as well. The torture of detainees (prisoners) held without charges will expand under the legal rationalization for the untrammeled exercise for executive powers and the egregious abuse and misuse of those powers. You might recall that Hitler used the same strategy and justification in relations with the Soviet Union based on the excuse that Russia had not participated in the Hague Convention and therefore, had no rights under it. This is what led to German barbarity on the eastern front that was, of course, answered in return by Russian atrocities.
Our new Himmler, Mr. Gonzales, like his master George W. Bush, calls the war against terrorism “a new kind of war.” Mr. Gonzales said, “In my judgment, this new Paradigm renders obsolete and quaint" various provisions of the Geneva Convention on the treatment of prisoners of war.” He also said the Geneva Convention did not apply to the war against the Taliban and al Qaida in Afghanistan. The neocons are operating under the assumption that there are no limitations, which either the courts or Congress and its laws can impose on the President in the conduct of war. Events will be staged and wars will happen. Gonzales argues as well that the President could launch a military attack “pre-emptively” against alleged terrorist organizations, or countries claimed to be harboring terrorists, whether or not such organizations or countries were even linked to 9/11 or terrorism. These arguments may well have been the basis for an executive order authorizing inhumane treatment of interrogation techniques in Iraq, which our President may not disclose to the public. The military has been using torture and although authorized to also do so the FBI has refused to follow the military’s sordid example. The FBI knows all about this because military and CIA torturers were masquerading as FBI agents. This Gonzales is a very evil man and we will all suffer by his acts.
Last year under Governor Arnold Schwarzenegger the state’s total debt load grew by more than 55% and the state budget has a budget deficit of more than $8.1 billion for 2005-06. Fifteen billion dollars in additional debt was incurred, which has only postponed California’s plunge into bankruptcy.
Arnold’s answer is to sidestep the legislature and use referendums. His answer is major budget cuts; structural reform that would give him as Governor, more powers then the legislators and a decimation of the state pension system. That would entail turning the program into 401(k’s) and serving the funds up to Wall Street on an individual basis. This cuts back on the state’s contributions and enriches the elitists on Wall Street.
Arnold is led by George Schultz, one of the guiding lights of the conspiracy. A creature of Becthel Corp., a devotee of the Chicago School led by Milton Friedman and the creator of economic restructuring of Chile under dictator General Augusto Pinochet. Arnold and George Bush are in the process of trying to replicate the failed privatization of Social Security that Chile adopted.
Schwarzenegger wants to cut health and human services in a state that already has six million uninsured. Due to massive illegal immigration, most emergency trauma centers have already been cut. The tax base does not reflect the real economy because the illegals work in the black economy paying no taxes and sending more than $4 billion out of the state every year. Arnold says drug companies will get voluntary discounts, which we doubt. In his campaign, Arnold received more than $360,000 in contributions from drug companies. He also wants to cut $2.2 billion from education in a system that has been one of the worst in the country since 1928. When we lived there, we were forced to send our children to private schools.
Probably the most damaging item for change is the privatization of CALPERS, the California Public Employees Retirement System. He would pour the money into Wall Street, just as George Bush wants to do with Social Security, in small accounts to keep the stock market from collapsing and to provide Wall Street with billions of dollars in fees. He wants to abandon the system, so that the state no longer has to fund it. Incidentally, CALPERS returns average 8.89%, which is excellent, whereas 401(k’s) on average have returned 6.86%. Voters in California had best remove Arnold before he does permanent damage.
As of 9/30/04, JP Morgan Chase had $43 trillion in derivatives, which is about four times US GDP; Citigroup has $17.5 trillion and Bank of America $17.1 trillion. Other trillion dollar players are Wachovia and HSBC, Hong Kong Shanghai Bank Corp. Twenty-five banks held $86.9 trillion in derivatives. The collateralization for these derivatives was only $804 billion. For those unfamiliar with derivatives, they are a form of insurance. Eighty-seven percent of all derivatives were interest rate bets, followed by foreign exchange bets of 9%. In the past three years, banks’ derivatives holding increased by 25% and they have doubled since 2000. Since the end of 2000 derivatives have soared $44 trillion or 108%, while assets have grown only $2 trillion or 32% to $8.2 trillion, loans have grown $1.1 trillion, or 28%, to $4.8 trillion and equity capital has grown $292 billion, or 55% to $821 billion. Thus, derivatives are now ten times assets, 17 times loans, and 103 times equity capital. The real danger of this massive bookmaking operation is that it is entirely unregulated. It is a Ponzi scheme. When the economy heads down and the stock, bond and real estate markets follow, the derivative house of cards will collapse. An additional danger for banks is that they are setting aside less and less capital for loan loss reserves and as the economy comes unglued their losses will mount more quickly. At the big banks, charge-offs for bad loans have exceeded provisions for the seventh quarter in a row and the overall level of loan-loss reserves declined for the fourth time in five quarters. The big banks only covered 93% of their write-offs, pocketing the difference as profits, which they were not. Fifty-eight percent of recent growth in equity capital was in good will, which is worthless. As you can see, any sharp correction in the economy could easily take the banking system down. It is purely a scam built on derivatives that could very well become worthless in a crisis. We have been decrying the use of derivatives since the early 1990s, but we have been only one of a few voices in the wilderness. Derivatives pose an enormous risk to the welfare of the world financial system, because of the unscrupulous quest for banking profits at all costs. Even the investment community is clueless to what is going on in derivatives because the system remains totally secret and unregulated. Derivatives are a terrible risk to the financial system and almost everyone outside the banking and brokerage industry do not know what they are or that they even exist. Not only banks sell derivatives, they are sold by brokerage houses, investment banks, and insurance companies. You have not heard about them and derivatives are the world’s biggest industry, worth more than $200 trillion. It is a vast betting and bookmaking network for corporate gamblers used as a means to exponentially increase profits. Once markets begin their decent, these derivatives will come unraveled causing a paralysis of the entire banking system. Derivatives will be the icing on the cake. They will exacerbate financial turmoil, unemployment increases will be compounded and pensions will evaporate. Of course, Bush and Blair will try to blame a terrorist, someone who caused it all with an Arabic name who is involved in New York or London. Derivatives are truly financial weapons of mass destruction. Our message is clear; we are in terrible financial danger. The only way you can protect your financial assets is to be in gold and silver related assets. If you are not, you will be financially doomed.
In Mid-December, the National Guard began to pay a bounty of $15,000 a head for every six-year reenlistment due to the poor reenlistment rate. If the trooper goes to Iraq, his or her bonuses are free from taxes. Three-year enlistments get you a $7,500 bounty. Last year the Guard’s reenlistments were 7,000 short. Unfortunately, the guard is looking for an economic solution to a socio-political problem. Poor areas of the country draw the biggest enlistments and reenlistments.
More statistics in answer to the President’s partial privatization of Social Security: In 1994, 65-year-old retirees who derived their retirement income from Social Security enjoyed roughly the same monthly payments as those who derived their retirement income from a private stock fund. If both spouses survive, Social Security actually paid nearly $100 more every month than a stock fund. We believe that young people now entering the workforce or those under 40 would accrue larger benefits than in Social Security, but there is a great element of risk. If we borrowed $2 trillion and popped it into the market now the interest would be very burdensome and if the Dow fell from 10,700 to 4,500, the picture would change dramatically. If that did not occur the payout might be up to 40% higher, but we do not know that. The government result is safer. If the system is to be changed, the funds should be taken out of Social Security revenues for those in the system under 40 years old. That would, of course, deprive the political spenders in Washington of $200 billion or so a year. We believe that is the way it has to be. Due to increasing taxes and declining benefits, a phased in stock and bond portfolio could work, but you are still dealing with money managers with varying records and the vicissitudes of the market.
Congressional investigators warned federal agencies that the promotion of government policies, propaganda, through video news releases meant to look like TV news stories may violate federal rules. The presentations are made to look like news segments broadcast to the public by independent television new organizations. Our government is just a bunch of cheap hucksters.
Political globalism began in 1948. Commercial globalism got underway in the 1950s. You can remember the book and the movie “The Ugly American.” It was not called regime change in those days but the CIA was busy at its work via AID and other organizations. The European Common Market and EFTA were evolving and then GATT followed by WTO, the European Union and NAFTA. Many nations did not like the ultimate goal of world government. They protested and were either liquidated or their governments were overthrown. In the early 1970s, the IMF and the World Bank used loans to nations that they knew they could never pay back to entrap them and push them to the edge of bankruptcy, so that these two agencies could drag these nations into the new world order. London and New York also took aim at the currencies of these nations to bring them into line. The most vulnerable countries were in Africa, some in Asia and many in Central and South America and Mexico. These nations lost in many ways their ability to develop their own economies. The way out was to use slave labor to allow transnational corporations to loot their natural resources and their people. How it works is the bankers go into the country first and if that did not work the CIA would follow. In recent years, we have had the slave labor countries competing with each other bringing even cheaper goods to the US and Europe and a lower standard of living for the cheap labor. At the same time this cheap labor and that of illegal aliens have brought wages and purchasing power down in the US and Europe. This process over the past 20 years, and particularly over the past ten years, has closed factories and service companies and caused them to move overseas to the sites of cheap labor. Americans and Europeans did not realize it yet, but their countries are in a state of collapse and that is being done by design. The US and Germany, the engines of the Western World, are bankrupt; they just do not know it yet. No matter the quality of your products and your productivity growth, you cannot compete with slave labor. That means in the not too far distant future they will officially be bankrupt. They can no longer compete. Either third world wages have to rise to their levels or tariffs have to be imposed. It is as simple as that.
We envision the bankruptcy of many nations. In Europe and the US, we see debt repudiation, which will affect every nation in the world, as they hold 70% of our debt. We see worldwide currency controls instituted by the US. The dollars and debt outside the US will be frozen. The currency inside the US will be changed. Interest rates will rise to 20%, and as the system is purged unemployment will rise to 35%, but will be somewhat offside by a Selective Service draft of some five million young Americans, who will fight our foreign wars as our volunteers have for the past four years, as our elitist leadership engages in seizing control, financial control and ownership of raw materials assets commodities. This is a race for power. The EU, UK and Japan will be forced to join in this endeavor to meet the challenge from Russia, China and others.
The elitists are not interested in the human race, only themselves and the exercise of total power. They want to manage the earth’s resources to their ends. The US and Europe have squandered their technological superiority. They must retrieve that leadership if they want to stand any chance of financial survival. The bill for our future, which we have mortgaged, has finally come due. Once the public finally perceives that the system is coming down hopefully there will be a commonality of interests. If that does not occur, the whole world will be in revolution. The price will be stupendous and the elitist power will be eliminated.
As we pointed out previously, Wall Street expects to make more than $1 trillion on the investment of Social Security funds. This infusion of cash would provide 25% of all cash flows into Wall Street stock and bond funds in the foreseeable future. Needless to say, Wall Street is directly financing the anti-Social Security campaign. Part of that effort is channeled through the free trade think-tank Cato Institute. In antiquity, Cato was known as Cato the Carthage hater. In response to his propaganda, Rome invaded Carthage and totally destroyed it. Republicans under the direction of Bush, Cheney and Rove, House Speaker Hestert and Senate minority leader Frist have launched a nine-month campaign to bring about Social Security partial Privatization Legislation. One hundred million dollars will be spent on TV-AD propaganda against Social Security and for corporatist privatization. The message will be, particularly to the young, that Social Security is broke. The privatization plan is based on massive benefit cuts while adding as much as $2 trillion to federal debt. You would think Congress could spend the effort more effectively by helping to find a solution for the more than $450 billion shortfall in under-funded private pensions. Cato is an arm of the Mont Pelerin Society formed in 1947 in Vevey, in France, across Lake Geneva, in Switzerland at the Hotel du Parc. Attending were Friedrich A. Von Hayek, founder of the Austrian School of Economics, Ludwig Von Mises, monetarist Milton Friedman, philosopher Karl Popper and journalist Walter Lippman. The most powerful elitist oligarchical families were in attendance as well. Sir John Clapham of the Bank of England who was president of the Royal Society, which was the model for the Council on Foreign Relations, Otto Von Hapsburg, Max Von Turn und Taxis the second most powerful and rich family in Europe, and bankers from the City of London and Wall Street. In forming this group they controlled both sides of the debate. The boards and commissions were staffed by who’s who at the CFR and Trilateral Commission. The funding comes from JPMorgan Chase, Citicorp/Solomon Brothers, American International Insurance, that is AIG run by the Maurice Greenberg crime family, the Chicago-Mercantile Exchange, the Bond Market Association, the Sarah Mellon Scaife Foundation, the Harry and Lynde Bradley Foundation, Olin Foundation, the Koch Foundations, Charles G. and David H. Koch Foundations and the Claude Lamb Foundation. The group has recommended a change in indexing of initial Social Security benefits from the wage-based system that would hedonically slash retiree benefits over several decades down to about 20% of the average wage. This would be done to offset the money being poured into Wall Street. The conspiracy desperately needs this Social Security change to keep the stock market from collapsing. The vote on this issue will be the most important legislative vote in the last 100 years. If Bush and the elitists are defeated, it will permanently damage their effort to soon bring about world government.
Social Security gives workers no binding rights to their payments so those benefits can be cut or changed, or even taken away at any time. The government could at anytime default on the $1.5 trillion Treasury bonds held by the Social Security Trust Fund. This argument will be used to try to arrange for the diversion of the entire 6.2% of a worker’s payroll tax into Individual Accounts. Cato has organized fake fronts to attack the system and make it look like popular support. Now, as well Congress is being “educated” (paid-off and threatened) about how the changes will benefit the country, that is elitist money and power interests.
Thus, Cato is a propaganda mechanism. One of its offshoots is “For Our Grandchildren.” This is supposed to be a grassroots organization of grandparents who are concerned that their grandchildren will not get Social Security and targets propaganda at young people. One of the members of FOG’s National Advisory Council is Jose Pinera, the elitist who gave Chile their disastrous privatization plan. Another agitprop is United Seniors Association, Cato’s main elderly “constituency group for privatization.” Cato’s senior Social Security analyst, Andrew Biggs, is running a covert operation inside the Social Security Administration. He dispatched a “policy brief” internal document that mandates that all Social Security managers are required to present the idea “that Social Security faces dire financial problems requiring immediate action.” These same groups also want to decriminalize drugs and have espoused that position since 1947.
The privatization of Social Security is a vast looting operation for the benefit of Wall Street and others. Mont Pelerin-Cato oligarchs directing the looting are former Secretaries of State George Schultz and Henry Kissinger, as well as William F. Buckley. As you can see the entire program is another elitist charade. It also spotlights how the elitists infiltrate and/ or create opposition how people such as in Von Hayek, Ludwig Von Mises and Milton Friedmanget sucked or sucked us in.
The Department of Defense is deliberately not reporting a significant number of dead in Iraq, manifests show that far more bodies have been shipped into Dover AFB then have been officially reported. The educated rumor is that the actual death toll is in excess of 7,000 with 15,000 plus seriously wounded. As you know, our government never tells the truth.
Former UNSCOM weapons inspector, Scott Ritter says George W. Bush has signed off on plans to bomb Iran in June 2005. He also said the US manipulated the results of the recent Iraq election. Orders are for an aerial attack on Iran and its purported goal is the destruction of Iran’s alleged program to develop nuclear weapons, but in fact, it is to overthrow the Iranian government.
The Iraqi elections were not free said Ritter and they were manipulated in order to reduce the percentage of votes received by the United Iraqi Alliance from 56% to 48%. Dahr Jamiall a journalist said mainstream media sources are complicit in the war and help sustain support for it by deliberately downplaying the truth about the devastation and death it is causing.
Why haven’t video journalist Robert Novak been thrown into jail in the Valerie Plame affair? Judith Miller, NY Times reporter and Mathew Cooper of Time, are now facing jail time. Yet, Novak has miraculously escaped. Novak was the only columnist in the country who actually published Plame’s name in violation of federal law. We believe Novak is being protected by George and the neocons, because he knows who leaked the information to Miller and Cooper and he willingly became a conduit for that information. This was part of a conspiracy to punish her husband Ambassador Joseph Wilson, due to his opinion piece for the NY Times contradicting President Bush’s claim that in his 2003 State of the Union speech that Iraq had sought to acquire uranium from Niger. The Niger documents were so crudely forged that only an idiot would believe they incriminated anyone. Novak ended Plame’s CIA career, shut down a very valuable pipeline and caused the deaths of hundreds of operatives. Of course, there was disgust and outrage in the intelligence agencies, most of which were purged by Bush in Stalinistic style. American is a country of double standards. As we have said repeatedly, it has a system of selective justice. This is another excellent example. How else could this self appointed messenger of death skate so blithely through this firestorm without getting singed?
This persecution and prosecution of reporters is taking place at a time when the White House has perfected the art of manipulating the Fourth Estate. This preceded the recent revelations that three prominent columnists were well-paid consultants for administration lies and propaganda, so it is easy to see why the First Amendment is not taken particularly seriously these days. Then there is Jeff Gannon of the White House press corp, who actuality is James Guckert, a Republican dirty trickster and homosexual prostitute, who fit very nicely with an administration whose contempt for journalists knows no bounds. This is the slimmest most depraved administration in history hiding under the cover of Christianity. We ask again, why isn’t Bob Novak going to jail?
On Tuesday morning, the Fed added $11.5 billion in repurchase agreements raising the repo pool to $77.841 billion, but it was to no avail the Dow fell 174 points to 10,611. Gold ended the day at $435.80 up $6.90 and silver, which has been very strong and was up $0.14 at $7.51. The euro was very strong at 1.3260 up just under $0.02. As we have said many times, it will be some small-unexpected event that will start the ball rolling in our direction. This time it was the South Korean announcement on diversifying out of the dollar, and the discovery that 52% of central banks were reducing US dollar holdings. Every professional now knows the markets are all rigged by the “Plunge Protection Team” and the Fed and they lie about most everything. Their credibility in this venue is stone cold dead. It will not be long before the investing public realizes as well what is going on. Even to the less educated, after Sir Alan Greenspan’s performance before the House and Senate Committees last week, it is becoming obvious that he is only doing what he is being told to do. His performance was dreadful. He knows that as interest rates rise gold rises or vise versa. If either spike, it will collapse the derivative market and that will spell the beginning of the end. The Fed has tremendous resources at its disposal and in spite of that, they will lose. In today’s world of instant communication it is not easy to fool thinking people.
We all hear about RFID tracking the supply chain and retail items, but its use is starting to expand. SAMSys Technologies has an agreement to supply passive radio frequency identification RFID as a family locater system. It will be used at resorts using bracelets to identify family members at various locations round the venue as well as to facilitate cashless transactions for the purchase of food, drinks and merchandise on premises.
More than half of UK companies predict that RFID will be an accepted part of the business landscape in just five years, if for no other reason than shrinking of equipment and lower costs. The key feature of the technology is the ability for an RFID object to be tracked instantly anywhere in the world, provided that a reader is in range. It is expected RFID will replace bar codes.
What we are most concerned with is our government tracking us and our fellow citizens in violation of our rights and freedoms under our Constitution. We will see them in auto tires and jeans, so the question is will they try to chip us? Sub-dermal chips are already offered commercially. It is only a matter of time when they will try to force us to accept RFID chips, so they can totally control our lives.
When Jacques Chirac spoke at dinner with President Bush and others he spoke in French, which Mr. Bush does not understand. The irony is that President Chirac speaks perfect English, another snub to go along with France and Germany’s desire to leave NATO.
George and the neocons have spent millions illegally on reports on the President’s Medicare, education and drug policies. Not content to buy retail press coverage, they are producing and distributing their own news network - the Pentagon Channel, which we mentioned previously. We have Time Warner and Dish distributing the Pentagon Channel through which it will reach 11 million viewers. Prepare yourself for more pure propaganda.
Do you want to read more by Bob Chapman? There are 59 previous issues for you to read.
www.theinternationalforecaster.com
Rogue
One of those that is not normally "freaked" that has been saying some pretty provacative things about our economy is the long-time bond guru Bill Gross of Pimco.
If you read some of his comments, he sees some rough times too. That surprises me ....he has always been pretty mainstream and "corporate".
Rogue
Martin D. Weiss, Ph.D.
Editor, Safe Money Report
Mon. Feb. 21, 2005
Dear Subscriber,
Early Friday morning, as a bitterly cold wind blew into
lower Manhattan from the Northwest, bond traders
commuting to Wall Street were expecting to see an
equally cold report on the nation's producer price
inflation.
They figured that, excluding energy and food, last
month's rise in core producer prices would be contained
to a meager 0.2%. They assumed that investors in U.S.
bonds would rejoice, as usual. And they counted on many
more months of low, soothing interest rates.
Instead, soon after they arrived at their bond trading
desks, they were greeted by a short burst of
pandemonium.
Reason: The U.S. Bureau of Labor Statistics announced a
shocking 0.8% surge in core producer prices.
It was FOUR times what they expected, the worst since
December 1998 ...
It was running at an annual rate of 9.6% ...
And it was raising the ugly specter of double-digit
inflation!
The news hit the markets like a ton of bricks ...
injecting a megadose of fear into the hearts and minds
of investors ... sending bond prices into a tailspin
... driving interest rates skyward ... and raising a
series of urgent questions for all investors, including
you:
* If price indexes are beginning to rise at
nearly double-digit rates, will long-term
interest rates start heading toward double-digit
levels as well?
* If so, how soon will home mortgage rates start
surging? And if mortgage rates surge, what will
they do to the value of your real estate properties?
* Crude oil is already creeping back up toward
$50 per barrel. If it goes to $60 or $70 per
barrel, like many experts expect, what will THAT
do to U.S. inflation, bonds, mortgage rates ...
and your real estate? And what will it do for
your energy stocks?
* Three weeks ago, Martin on Monday warned that
the ethnic and political conflicts in Iraq would
spread to neighboring countries. Since then, we've
seen outbreaks of new troubles in Lebanon, Syria
and Iran. If this pattern continues, THEN what?
I can't answer all these questions in full this
morning. But I WILL give you a thumbnail response to
each, plus some pointers on where to go for more
information and decision-making tools.
LONG-TERM INTEREST RATES
FINALLY ABOUT TO TURN UP
Strangely, for the past few months, even though short-
term rates have been going up, long-term rates had been
going down.
Why? One reason was because so many people were duped
by assurances that inflation was tame and under
control. But now, that's changing -- and fast. Bond
investors, bankers, and even members of the Federal
Reserve Board are finally beginning to admit that U.S.
inflation, which had been incubating for many months,
is now threatening to blast off.
They can't ignore the fact that cigarette prices jumped
3.4% in January and auto costs surged 1.2%. Nor can
they pooh-pooh the fact that, even WITHOUT these two
items, core producer prices STILL jumped by 0.7%.
Bottom line: We're now seeing across-the-board producer
price surges in almost every single sector.
Result: The Fed cannot and probably WILL not maintain
its so-called "measured pace" of interest-rate hikes.
Instead, the Fed must begin to jack up interest rates
at a faster clip ... raising its Fed Funds rate by a
half point at a shot ... sending a new round of shock
waves into the financial markets ... and, this time,
truly driving long-term interest rates higher.
REAL ESTATE BOOM ... AND BUST!
The specter of double-digit inflation and rising
interest rates couldn't have emerged at a worse time
for America's real estate.
I'm not predicting that America's real estate bubble is
going to pop tomorrow. But it's clearly time to add a
strong element of caution to any real estate decisions
you may be making. Indeed, warning signs are beginning
to surface from various sources:
Warning #1. Mortgage demand, including refinancings,
has plunged dramatically -- down 24% in a year, 65%
from its peak. And even excluding refinancings, it's
off sharply. This is critical: Without mortgages,
consumers rarely buy homes. And without the critical
demand from American households, the primary demand for
housing could break down.
Warning #2. There are more new homes for sale now than
at any time in history. This abundant supply is not yet
being dumped on the market. But an avalanche of
unwanted, difficult-to-sell supplies could be in the
making.
Warning #3. Although home values have been unusually
strong, home rental rates have been unusually weak. As
a result, the price-to-rent ratio for existing homes is
at a record high. If rental rates don't begin to rise
soon, real estate investors will lose their incentive
to buy rental properties.
OIL PRICES SURGING -- AGAIN!
Crude oil prices rebounded past $48 per barrel on
Friday.
And as you can see from this chart, since the beginning
of this year, they've been building up for a new blast-
off -- first to challenge the $50 level ... and then to
challenge the all-time high of $55 per barrel reached
last November.
But even if oil prices fail to surge at this juncture,
the very fact that they have been HOLDING above $40 per
barrel since last summer has been a boon for virtually
every company in the energy sector, even those that use
little or no leverage and aim mostly for income.
In any case, rest assured there is no change in my view
about energy trusts. I still like them -- which
is why I am recommending subscribers hold the balance
of their positions.
Naturally, the more aggressive you get, the more risk
you incur. But the energy sector is not just for
investment and speculation. It's also something you may
want to consider as a hedge -- a protection against the
damage rising oil prices can do to the economy, to the
stock market, and to your personal assets.
Here's how it works: If we don't see a sharp rise in
energy prices and inflation, your other investments
should do well. If we do see the sharp rise, your
energy investments should do well. In either scenario,
you're likely to be covered.
My advice: If you don't own the energy trusts we've
been recommending, allocate some of your liquid assets
to them right now, buying half at the market and the
balance on the next correction. In addition to powerful
supply and demand forces, one key reason is this ...
THE ETHNIC CONFLICTS I WARNED YOU ABOUT
THREE WEEKS AGO ARE ALREADY SPREADING
As you may recall, three Mondays ago, on the morning
after the Iraqi elections, I wrote:
In most of the West, governments are welcoming
Sunday's landmark election in Iraq as a victory
for direct democracy, a form of government born
in Athenian Greece circa 508 BC.
In the Middle East, however, many are viewing the
Iraqi election primarily as a new, potentially more
violent chapter in the war between Shiite and Sunni
Muslims -- an ethnic/religious conflict born with
the death of Muhammad's grandson during the battle
of Karbala in 680 AD, over thirteen centuries ago.
Both of these interpretations are largely correct,
and both are being hotly debated throughout the
region. But only one will determine the course of
history.
If democracy prevails, it's assumed that, in the
best-case scenario, the region's oil supplies will
flow freely, the world economy will continue to
grow, inflation will not be inflamed, and investors
will prosper.
If the Shiite-Sunni conflict prevails, however,
the picture changes drastically. In this worst-case
scenario, the Sunni population rises up in a broader
rebellion, Iraq bursts into civil war, the conflict
spreads to neighboring countries in the Persian Gulf,
and the world's most critical oil supplies are
severely disrupted.
I hoped it would be the more peaceful scenario and, God
willing, it still can be. But right now, the conflict
has already begun to spread in ways that no one, myself
included, could have predicted three weeks ago. Instead
of spreading into the Persian Gulf, new troubles have
first struck the neighboring countries of Syria and
Lebanon:
* One week ago, on Monday, February 15, a car
bomb in Beirut killed former Prime Minister Rafik
Hariri of Lebanon. This is a country that had
finally recovered nicely from a long civil war
among Sunnis, Shiites, and other ethnic groups.
Now, according to the New York Times, the
assassination was "the most serious blow to the
stability of Lebanon in more than a decade."
And according to the Bush administration, it
was a "terrible reminder" of the need for Lebanon
to break loose from Syria.
* U.S. tensions with Syria, already near the
boiling point, literally went off the charts
-- with the U.S. withdrawing its ambassador,
with Defense Secretary Rice launching a verbal
attack, and with Iran and Syria threatening an
unholy alliance to defend themselves against any
future U.S. aggression.
* In Iran, meanwhile, unexplained explosions in
the same province as Iran's major nuclear
facilities rocked not only the region but the
world's financial markets.
And ironically, all this happened soon after elections
in Palestine, Iraq, and even in autocratic Saudi
Arabia.
So again, recent events beg the question: Which will
prevail -- democracy or chaos?
I hope and pray it will be the former. But at the same
time, there's little doubt about this fact of life:
Democracy alone -- whether legitimate or feigned --
does not preclude chaos in the short term.
Nor can any reasonable observer question the fact that
the spreading chaos is a growing threat to oil in the
region. Take a look, for example, at this chart of
Iraqi oil production in the last four years.
After a natural bounce-back following the Iraqi war
last year, little additional progress has been made in
boosting output. And in the most recent month for which
we have data, oil production fell again, matching the
lowest level in over a year -- largely due to insurgent
attacks.
What's most distressing to all of us who are closely
watching the Iraqi situation is that the insurgency is
not dwindling, let alone ending. Despite the capture of
Saddam Hussein ... despite the hand-over of power to
the Iraqi interim government ... despite the elections
last month, the threat to oil production in the region
is not receding.
Forbes puts it this way:
The oil export facilities face problems from
attacks (which may get worse) and from technical
problems (which are clearly getting worse). Rumors
of serious technical problems with the Northern
Fields have been rife for many months. Production
fell from 2.4 million barrels per day in October
to 1.5 million b/d in December. At the end of
January, problems with water injection meant that
exports of Basrah Light for February would be cut
from 1.6 b/d to 1.45 million b/d ...
Although some oil majors are showing interest in
providing technical assistance, no serious
investment will take place until there is a credible
and recognized government with serious legislation
in place to govern upstream oil agreements. This is
a long way off given that the constitution will
almost certainly not be ready by the mid-October
deadline. Similarly, violence against oil
installations will continue, perpetrated by a
combination of Sunni dissidents and foreign
jihadists, who understand that these attacks
are a way to damage a U.S.-backed administration.
Prognosis: A continuing trend toward double-digit
inflation and, in its wake, double-digit interest
rates. Don't get caught off guard. Be ready!
Good luck and God bless!
Martin
Rogue
The latest from Bob Chapman at theinternationalforecaster.com
This old market pro has some great observations on the markets and politics every week.......
February 21 2005
According to an internal Selective Service memo made public under the Freedom of Information Act, the agency’s director met with two of Defense Secretary Rumsfeld’s undersecretaries in February 2003, precisely to debate, discuss and ponder a return to the draft. It did not point to a general draft at that time, but of a possible draft of men and women with certain special skills such as, medical personnel, linguists, computer network engineers, etc. We may have a magnificent force but the Army and Marines are perilously over extended. Unfortunately, the volunteer foundation is beginning to crack. Half of our frontline fighting force is composed of “weekend warriors” from the Reserve and National Guard of which 100,000 enlistments have been involuntarily extended. Young reserve officers and enlisted men are retiring in droves. In order to get reenlistments they are offering anyone $30,000 to reenlist. Our military is maxed out in a war and occupation that has dragged on for two years. We are called conspiracy mongers because we report the truth. The elitists will supply us with another event and we will have a draft to meet the needs of our Middle East quagmire or to staff our internal Gestapo Fatherland Security. Men and women 18 to 34 are being lined up as future cannon fodder.
As we told you last week, little had changed except overall things were worse. That is why at $410 to $414 gold and at $127.5 on the euro that the correction has run its course. We were correct. The Dow was up 1% last week on generally lousy news. The AP/ISOS poll consumer confidence was a disaster. Our President wants to destroy Social Security. He lies about reducing the budget deficit and the state of the war. Spending is increasing not falling. The thing that will fall in 2005 is corporate earnings as inflation rises. A $66 billion increase in M3 in just three weeks is very large as bank and real estate lending goes bananas. Foreigners and foreign central banks continue to cut back on purchasing US assets. When will they start selling? We even have to ask the Europeans not to raise interest rates to buy Treasury paper and support the dollar. The Chinese are being extorted to revalue the yen or we will hit them with 27.5% tariffs. These are not good omens as we approach the “ides of March.” It is not good and could get lots worse. Our government has no solutions. All they and the Fed do is spend and create liquidity in a world awash in debt and liquidity. The UK and Australia have inverted yield curves, which portend inflation and recession. We are only 0.78% away. Short rates are rising and long rates have been falling. Over the past 18 months, the spread between two and ten year yields have relentlessly been closing. The platitudes of the administration and the Fed are starting to fall on deaf ears and before the year is out things will be a lot more difficult. We expect soon that gold and silver will return to test their recent highs and move higher. The game is only getting underway.
Wal-Mart will pay a $135,540 fine to settle federal charges that it used 24 children in Connecticut, Arkansas and New Hampshire, who operated 18 dangerous machines. Our interpretation is slave labor. In 3/2000, Wal-Mart was fined $205,650 for using child labor in Maine.
Handing Mr. Bush another legislative victory, the Senate overwhelmingly approved a measure that would sharply limit the ability of people to file class-action lawsuits against companies. Adopted 72 to 26 it now goes to the House. The measure would prohibit state courts from hearing many kinds of cases they now consider, transferring them to federal courts. The measure would affect pending cases. The measure has been attacked by civil rights organizations, labor groups, consumer organizations, many state prosecutors and environmental groups, who say it, will sharply curtail cases and provide new protections for unscrupulous companies. Many federal and state judges have criticized the bill, saying it would strip states of an important role in judging such contest and it will add a considerable number of cases to already overburdened federal dockets.
We believe we could be drawing close to a time when we will have another terrorist event in one of our major cities. Of course, the Iranians will be blamed for the event and it will be used as the excuse to implement a new Selective Service Draft. A draft for men and women with no exemptions.
The new American police state is taking form in a law that will require all citizens to possess electronic identification cards in order for them to travel or to conduct affairs with government officials. The issue will force states to issue all adults federally approved electronic ID cards, including driver’s licenses. Federal employees will refuse identification that does not comply, curbing use of airplanes, trains, national parks and any area controlled by the federal government. The House approved the bill HR418 by a 261-161 vote. This compares very favorable with Nazi Germany in the 1930s, extreme control over US citizens at home and abroad, a police state. Next, they will demand parents relinquish rights over their children to the state along, of course, with RFID tags.
Earlier we predicted five years from now Michigan, Ohio, Indiana, Quebec and Ontario would be former vehicle producers. One of the reasons that will happen is because Chinese carmakers are planning on flooding our auto market with low cost vehicles in the future. More than 50% of our industrial base has been shipped overseas over the past 20 years and now the backbone of America’s industrial economy is in the process of being destroyed. In two years, we will begin to see the flood of exported Chinese cars, an event similar to the Japanese car invasion that began 30 years ago. We cannot compete with slave wages. We were able to keep our high standard of living with trade barriers and tariffs and if we do not return to them we will have no way of life left. Do not forget China is still a Marxist state and the Chinese still do not honor patent rights. The companies that are owned by the Chinese government will be dumping cheap cars in our country. In just seven years, beginning in 2007, 250,000 autos will hit our market. That is as many as Daimler-Chrysler produces. In 2010, the Chinese plan to sell one million cars in eight to twelve models, which would make their market presence larger than Fords 2000 production. You do not need a road map to see where this is going. It will just about wipe out American industry as we have known it. Readers, this is where free trade and globalization is taking us. If we do not stop it, our nation is doomed.
Dov Zakheim resigned as Pentagon Comptroller and CEO after he was unable to find $1 trillion, but as usual, our media has overlooked the incident. This while the IRS duns poor Americans for $152.80. The GAO says the Defense Inventory System cannot find 56 planes, 32 tanks and 36 Javelin missile command launch units. Zakheim is a longtime Bush associate.
In Medicare, Bush outspent Lyndon Johnson by adding a $1.2 trillion to our debt via subsidized prescription drugs. Thus, Bush has spent more on armaments, education and health care than any liberal within memory has. The man has plunged us further into debt than any President in history.
We are headed toward a financial train wreck on a totally unsustainable policy that is calculated to bring our country financially and economically to its knees and deliver us into a second world status.
One hundred eighty-two billion dollars was removed from Social Security last year, which means the real debt was $609 billion not $427 billion. It should also be noted that China bought $200 billion in US Treasuries last year, which means they funded almost 50% of the US budget deficit. The minute China, and for that matter Japan, stop buying, the Fed will have to buy the government debt - those Treasury notes will cause immediate monetization, higher inflation and higher interest rates. The Fed, the Federal Reserve banks and the commercial banks are the buyers of last resort. The recession that follows will affect the entire world, as will the collapse of the dollar. Japan has effectively stopped buying Treasury paper since 3/04. China is the buyer of last resort.
We could be witnessing 1994 all over again. In 1994, we projected an 8-3/8% 30-year bond. We hit the nail on the head and our prediction of bonds getting killed was right on. That was accompanied by a ten-year note yield of 7.75%. Back then Sir Alan Greenspan was raising rates in the face of inflationary pressures but as he did that, he also drove Fed credit and reserves up by double-digit amounts. We believe he will do the same thing again. If we are correct, long-term rates will move higher ahead of short-term rates. That has been the way it has been since 1950. The best comparison we have is between now and the 1930s. That is if we have a higher curve. We have now, as then, a corporate predisposition to hold cash and eschew capex and hiring. We have three added factors today, colossal debt far beyond anything experienced in the 1930s; outsourcing, which is something that did not exist in the 1930s and which happens to be deflationary and a collapsing dollar. The dollar was under pressure in the 1930s and that is why FDR illegally confiscated gold. He was paying off America’s debts. The markets still believe the Greenspan put is still in operation. He is phasing it out and he has told the professionals just that. Unwind those carry trades. We can expect interest rates at least another 1% higher this year and at the same time see M3 rising over 10-12%. The higher rates are needed to protect the dollar and keep it from breaking 80 on the dollar index and the increase in aggregates will be needed to stop a consumer debt contraction. If they do not do both simultaneously, yes and one offsets the effect of the other, and delays facing the problem then we will have debt contraction and recession/depression. Thus, in spite of higher rates we will have higher inflation via more excess liquidity, only this time we will not get a repeat of 1995-6 because the economy is already over extended beyond what can be controlled. Needless to say, gold and silver will move higher. Sir Alan leaves the Fed in 2/06, after that the deluge.
It is the opinion of the United Nations that even though the US Senate has not ratified the Kyoto Treaty it is binding on the US since it is the will of the world body. The UN, regardless of non-ratification, believes the Treaty is in force. If the US government agrees to this, it is treason as explained under the Constitution.
California Governor Arnold Schwarzenegger fired all the state pension board trustees’ members who voted against his proposed scrapping of the pensions and their replacement by 401(k)’s to which the state would contribute very little. In the process, he called nurses, teachers and legislators punks, as he collected $100,000 each from elitist financial, business and legal fixers in the state. The money will be used to finance referendum campaigns to scrap the pension plans, cut teachers pay, put automatic cuts in the state budget, year after year, and take legislative redistricting out of the hands of the legislative. Such referendums in a Democrat state could cost California’s 20 Republican federal representatives their seats. Believe us, they are really concerned. They believe Arnold has, in a short time, gone many steps too far.
AIG has received subpoenas from NYAG Eliot Spitzer and the SEC relating to policies sold that helped smooth corporate earnings. AIG is run by the Maurice Greenberg crime family.
The leader of the Pentagon’s new espionage unit Col. George Waldroup has abruptly resigned. This Strategic Support Branch has enormous potential for misuse especially if Congress is cut out.
Budget numbers presented by President Bush show a budgetary land mine that will blow up right after the next presidential election. The real massive financial commitments will rise dramatically after Mr. Bush leaves office. If passed, the privatization of Social Security would cost $79.5 billion in the last two Bush budgets but over the following five years, the committed cost would be $135 billion a year a total of $675 billion. These are the members behind the smoke and mirrors.
We cannot make up our minds. We do not know whether today’s Washington is more like 1905, a great year for assassination or 1924 in Munich. This past week, the Sunni leader in Beirut was very professionally assassinated. The question is was it the CIA, Mossad, both or a private contractor who works for one or both of them. What a great world we live in.
Well-known Civil Rights Defense Attorney, Lynne Stewart, has become the latest victim of the Bush administration’s assault on human rights as we descend into the depths of dictatorship via the torture chambers of Abu Ghraib and Guantanamo and internally via the Patriot Acts. Ms. Stewart was targeted by former Attorney General John Ashcroft, because of her determined defense of Muslim Cleric Omar Abdel Rahman, and because of her long career of defending the civil rights of Americans. This is part of a pattern of illegal detentions, denial of access to attorneys and torture. The administration claims the right to incarcerate anyone without notifying them of the charges against them, all under the pretext of fighting terrorism.
Now the administration wants to make it a crime to offer legal assistance to anyone targeted by them.
It is imperative we fight back against this obvious attempt of the US government to silence dissent and install fear in those who would challenge the government and its lies and unconstitutional behavior. We urge you to contact your elected representatives and give them an earful.
The end of the housing bubble could mean substantial losses in home value for millions of Americans says www.realestatejournal.com. Housing prices, adjusted for inflation, are up 36% since 1995 the steepest boom in at least 50 years. As interest rates rise, some buyers who stretched their purchasing power with adjustable rate loans and interest only mortgages could face financial problems. They see trouble ahead.
New construction on US houses unexpectedly rose by 4.7% to an annual rate of 2.159 million the highest in 21 years. Building permits rose 1.7%. The South showed the largest gains up 18.8%, the West was flat and the Northeast fell 23.9%, they also fell 12.5% in the Midwest.
We will soon have robot soldiers, perhaps within ten years. The military plans to invest tens of billions of dollars in automated armed forces. The costs of that transformation will help drive the Defense Department’s budget up 20%, from $419.3 billion to $502.3 billion in 2010, excluding the cost of war. The annual costs of buying new weapons, is scheduled to rise 52%, from $78 to $118 billion. Robots could possibly save many lives but can we afford them with our debt.
Next week Mr. Bush will have a showdown with Senate Democrats by re-nominating 20 failed judicial nominees, many of whom have been denounced by critics as right-wing extremists. The Republicans even want to change the Senate rules to prevent anymore procedural hurdles known as filibusters against judicial nominees. Only 51 votes are needed to change the rules of the total 100 votes. You would think Bush would have submitted a compromise, but he is too arrogant to do that.
American Funds, the biggest seller of mutual funds, violated securities regulations for three years by illegally paying brokerage firms $100 million in kickbacks in exchange for the brokerage firms pushing their funds. The fines will be paid and of course, no one goes to jail.
Our Energy Secretary Samuel Bodman has said the Nevada nuclear Test site’s ability to resume actual underground warhead detonations must be enhanced. This, in spite of the fact that downwind in Utah since the 1950s thousands have been scourged with disease and death due to radioactive fallout. Bodman has appeared before the Senate Armed Services Committee requesting $2 billion in the next fiscal year for the nuclear weapons stockpile stewardship program, which verifies that America’s aging atomic arsenal remains operational. What they are also doing is computer simulation or potential bunker busters, which were used in Afghanistan.
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Rogue
Bush Denies U.S. Plans to Attack Iran
Tue Feb 22, 1:41 PM ET Top Stories - AP
By TOM RAUM, Associated Press Writer
BRUSSELS, Belgium - President Bush (news - web sites) said Tuesday that it is "simply ridiculous" to assume that the United States has plans to attack Iran over its alleged nuclear weapons program after discussing the issue with European allies.
AP Photo
Reuters
Slideshow: President Bush
"This notion that the United States is getting ready to attack Iran is simply ridiculous. Having said that, all options are on the table," Bush said.
The assurance to Iran's leaders was Bush's bluntest assessment yet. Last week, he used a series of pre-trip interviews with European journalists to minimize talk of any military attack by the United States.
Bush has walked a careful line between supporting an approach led by European nations to persuade Iran to scrap its uranium enrichment program in exchange for technological, financial and political support without talking about the U.S. reservations about that strategy.
"It's in our interests for them not to have a nuclear weapon," Bush said in a news conference with European Union (news - web sites) leaders.
The United States has refused to get involved in the bargaining with Tehran or to make commitments toward incentives, insisting that Tehran abandon its program.
The possibility of a military strike has been raised since the U.S.-led war with Iraq (news - web sites) over its alleged weapons of mass destruction, which never were found.
Also on Tuesday, Bush hailed NATO (news - web sites)'s modest pledge to help train security forces in Iraq, saying "every contribution helps."
"The NATO training mission is an important mission, because after all, the success of Iraq depends upon the capacity and the willingness of the Iraqis to defend their own selves against terrorists," he said during an earlier news conference at NATO headquarters.
Bush also made clear his intention to challenge Russian President Vladimir Putin (news - web sites) on recent actions, including restrictions on the press and Moscow's treatment of neighboring Baltic countries, that U.S. officials view as harmful to democracy there. The two leaders meet Thursday in Slovakia.
"A constructive relationship allows me to remind him that I believe Russia is a European country and European countries embrace those very same values that America embraces," Bush said. "I'm confident that can be done in a cordial way."
Bush also reiterated U.S. opposition to Europe's plans to lift its 15-year arms embargo against China. Bush said the United States fears that removing the ban would upset the balance in the Asian region.
"There is deep concern in our country that a transfer of weapons will be a transfer of technology, that it will change the balance of relations between China and Taiwan," Bush said.
Rogue