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Chapman: Gold, Silver, Economy + More
by Bob Chapman
International Forecaster
Sunday, 24 August 2008


US MARKETS

From Buck-Busting Ben Bernanke's mouth to God's ears (God must be getting an Excedrin Headache from all the Illuminist and neocon propaganda being wafted into His ears lately): Inflation pressures should moderate this year amid tepid economic growth. He also added that his inflation forecast remains "highly uncertain." Inflation will "moderate" all right, when we go into depression in the next two to three years. Ben is just hedging his bets with the talk about the forecast being "highly uncertain," because he knows darn well that inflation is not going "moderate" any time soon. Meanwhile, it is bound for the stratosphere and will soon enter outer space where it will run into a hologram emanating from the world line running through the event of the former Weimar Republic during its inflationary "heyday." Supposedly, this "stunningly good" news from Mr. Bernanke, who is now dumping barrels of moral hazard out of his helicopter on the US public along with bundles of Federal Reserve notes (aka "worthless paper"), together with another oil crash of $6.59 per barrel, was cause for a nearly 200 point Dow rally on Friday. The drop in oil may have contributed, but the yen was weakened against both the dollar and the euro from the day previous by one and one half yen, a huge and very unnatural drop in yen strength during a single trading day. The PPT had the Japanese bankers hit the yen, and orchestrated a hit on oil despite Russia's capture of Georgia and its resulting iron grip on European oil and gas supplies. These PPT manipulations are what boosted the markets, not talk from Mr. Bernanke, who no one believes anymore. Not a single one of his prognostications has come true. Rally mystery solved.

The Illuminists have fallen into yet another box they cannot get out of. We already told you about the box they are in because the Fed's raising of interest rates would lock up the real estate market and destroy the economy, while its lowering of rates would ignite speculation and inflation, which in turn would destroy what is left of our economy in any case. Now, they have managed to get themselves caught in an "oil trap." If they run oil down too low, the euro deposits plummet, thus draining gargantuan, system-killing amounts of liquidity from the banking system and bringing the credit-crunch to its final implosion. On the other hand, if they keep oil prices too high, the added liquidity from the new flow of petrodollars, which are converted mainly to euros thus driving the dollar down, will also drive costs of all goods into the ozone, and this added cost will eventually kill the US and world economies by cutting off all discretionary consumer spending, and by eventually cutting off some necessary consumer spending as well. They cannot raise or lower oil prices too far in either direction, putting them in a box similar to the interest rate box. The US consumer will be especially hard-hit by high oil prices, and their weakness will be transferred to the world economy, which will not decouple. Decoupling is a myth, like the moderation of inflation predicted by Helicopter Ben. Eventually, the Illuminati will have to lower oil prices to keep mortgages and other consumer loans from going into default and to keep earnings and consumer spending from dropping off a precipice, events which would administer the coup de grace to the fraudsters, which are already technically bankrupt and insolvent. That will drain huge amounts of liquidity from the system because of the euro effect, and the system, and also the dollar, will totally break down if this is allowed to continue for a period of several months, so Mr. Bernanke will have to make up for those liquidity losses with more direct injections of money and credit. As the credit-crunch continues to worsen, as Fannie and Freddie are bailed by capital injections from the US Treasury, as the Fed exhausts its general collateral by exchanging it for toxic waste, as foreigners begin to shun treasury and agency paper due to increased risk, a falling dollar and negative real rates of return, and as bonds and derivatives implode from plummeting real estate values and rising foreclosures and loan defaults, treasuries will have to be created out of thin air. These new treasuries will have to be immediately monetized at an ever-increasing rate, which is highly inflationary, and this will send gold and silver into inter-dimensional space.

Are the system and its fraudsters too big to fail, or are they too big to bail? US investors and consumers are starting to think more and more that the latter is the case. They are sick to death of being lied to, and many, including Jimmy Rogers, think Bernanke should resign for sticking it to the US public with "cutesy" financial moves and bailouts that are dripping with moral hazard. They are sick of paying for OPF - other people's fraud. How will the abuses ever end if no one is forced to suffer the losses which their greed, deceit, stupidity and fraud have engendered? In fact, is that not what Bernanke promised us last year, that he would not allow this moral hazard to occur? The truth is, that is what his Illuminist masters told him to say until the losses mounted up and the fraudsters needed to be bailed out. That way they could shut the public up until the debacles caused panic and fear over a possible systemic breakdown, at which point Bernanke would swoop in like a savior and save the system, with the public allowing anything that would keep them from losing their precious "spendaholic" world. The Fed can make all the new rules they want, but if there is no penalty for not following those rules, what the freak good are they? How will US consumers be able to pay for all this fraudster fallout when one out of three are unemployed and they are faced with double digit interest rates and Weimar-like inflation? It's not going to happen! There will be revolution and social unrest. The Illuminati will be run down and shot like rabid dogs, and we say good riddance to these reprobates and sociopaths when the public finally has their fill of this crap and the trials and recriminations start. We say let the whole system come down, and let's start from scratch. No pain, no gain. Anything is better than what we have now, which is a military-industrial-financial complex run by satanic trillionaires who denude citizens of their earnings with rampant fraud and corruption, who slaughter our children, and what should be our foreign friends, with continual wars for profit and who are trying to make us all into serfs in the ultimate feudal system to be run by the would-be lords of the universe, but not until they wipe out billions of useless eaters with pogroms, plagues, wars, famine and eventually nukes, biochemical warfare and other weapons of mass destruction. Is this what our brave men and women are fighting for? Perish the thought! These miscreants have destroyed themselves and their precious financial and military systems. Let's keep it that way! And let's start a new system that delivers the freedom and prosperity to all, and not just to the privileged few, which is what our Founding Fathers intended when they wrote our Constitution and Bill of Rights!!! Make sure you vote out all incumbents in November, except for Ron Paul.

The GAO says 2/3’s of American companies did not pay corporate taxes from 1998 to 2005. Individual taxpayers get to make up the difference. In the last five years corporate earnings doubled. During the first six years of the decade, corporate tax collections were just 2.2% of GDP, far below the 3.4% average for industrialized countries.

The MBA mortgage applications index fell 1.5% last week to the lowest level since December 2000. The purchase index fell 0.4% and the refi index fell 3.7%. The 30-year fixed rate loan was 6.47%, down 11 bps. More than 77,000 properties, or 28%, were repossessed by lenders nationwide in July, up from 16% yoy. Nine of 33 major markets saw inventory rise significantly. Sacramento foreclosed inventory was 31,219 units, or more than twice to 14,913 units on the MSL listings. San Francisco saw a 190% increase, while Phoenix rose 130%.

William Tanona, an analyst for Goldman Sachs says Lehman will post a $2.5 billion loss for the third quarter. He also believes that recovery for the troubled industry is still a few quarters away, and that many Wall Street banks will focus on purging their books of risky mortgage securities. He lowered third quarter and full year estimates for Merrill Lynch, JP Morgan Chase and Morgan Stanley.

The NAR, National Association of Realtors Commercial Leading Indicator for brokerage activity slowed a 0.9% to 117.9 in the second quarter from 119.1 in the first quarter and was 2.1% lower yoy.

The New York AG is intensifying his probe of ARS fraud at Bank of America, Goldman Sachs and Deutsche Bank.

Goldman Sachs has reaffirmed it – calls for $149.00 oil.

The new housing program faces growing doubts among real estate experts and economists, who point out that government will now be competing with lenders and private homeowners who have been struggling to sell in a depressed market

California communities with the most foreclosures and therefore likely to be first in line for federal aid, already have a relatively ample supply of affordable housing.

Sacramento County has a high need for affordable housing.

The federal government has been using its system of border check-points to greatly expand a database on travelers entering the country by collecting information on US citizens crossing by land, compiling data that will be stored for 15 years and maybe used in criminal and intelligence investigations.

The DHS in a federal register notice said they were guarding against terrorists. What this data collection is all about is spying on citizens and accumulating data bases on everyone. This will be accomplished by June when all travelers crossing land borders will need to present a machine readable document, such as a passport or a driver’s license with an RFID, a radio frequency identification chip. This system was authorized in the Enhanced Border Security and Visa Reform Act of 2002, the Aviation & Transportation Security Act of 2001, and the Intelligence Reform & Terrorism Prevention Act of 2004.

These laws do not authorize such a database and only authorizes the government to issue travel documents and check immigration status. This database is worse than a watch list. This is a massive fishing expedition in which government wants to know everything everyone does, especially American citizens.

Officials will record name, birth date, gender, date and time of crossing, and a photo, where available, for US travelers returning to the country by land, sea or air. Data on foreigners is held for 75 years.

Mainline analysts now believe Fannie Mae and Freddie Mac will now need $100 billion to survive. That means a taxpayer funded bailout and nationalization of the GSEs. We see losses at over $2 trillion.

Once the auction-rate securities settlements are made securities firms will probably lose 200,000 investors. It is hard to see them keeping these clients that they treated with such distain. This is very typical of Wall Street today. We hope the investors get smart and go into gold and silver related assets and Swiss franc government bonds.

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