2008 Year End Odds and Ends

http://www.census.gov/newhomesales


Sometimes a picture is worth a thousand words. Same with graphs. But, sometimes they can be misleading.

Take the above graph. In what has supposedly been a terrible two years for the housing market, the median home price has only dropped by 13%.

So what do we make out of this data. Here are some thoughts.

1. There are pockets where home prices have fallen a lot, and those are the prices the media keeps focusing on. But overall, prices aren't down as bad as they lead you to believe.

2. The government is giving us bogus figures, much like they do for inflation. This makes the situation not look quite as bad as it really is, which in turn covers up their dirty deeds.

3. Instead of selling at lower prices, homeowners are just sitting tight and waiting for better times before they sell, move or upgrade. When there is more supply than demand, prices fall. So when homeowners quit selling, then the growth in the oversupply of homes on the market begins to slow and the price declines begin to slow accordingly.

I just found the above graph interesting, and in fact, all three scenarios could be true.

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Here is an interesting quote:

On May 20, 1999, Alan Greenspan testified before Congress, “Gold is always accepted and is the ultimate means of payment and is perceived to be an element of stability in the currency and in the ultimate value of the currency and that historically has always been the reason why governments hold gold.”

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Gold's deep plunge from July to September can be directly attributed to the $15 billion increase in gold shorts from JP Morgan. This is according to the 2Q and 3Q reports released by the Office of the Controller of the Currency. See page 30 of both reports.

http://www.occ.treas.gov/ftp/release/2008-152a.pdf http://www.occ.treas.gov/ftp/release/2008-115a.pdf



By shorting gold they are able to force the price down, making gold a less attractive alternative to the dollar. This keeps their paper printing scheme rolling right along, because without gold being viewed as an alternative store of wealth, the dollar continues to remain strong.

The above racket is bad enough but it gets worse. When these short positions expire and become worthless, Morgan simply gets the Fed to bail them out because of their "unforseen" investment losses.

Now we expect this from Morgan and the Fed, both are private corporations whose sole purpose is to make money for themselves. But with the OCC's involvement, you can see just how deeply the globalists tentacles have enwrapped our entire government and financial system.

The fox is guarding the hen house.

Israeli Conflict Is Pro-Gold

Four Reasons for an Immediate Rise in Gold


Gold hit $884 as this post was written early on Monday 29th December, the day that Indian astrologers have down for a stock market crash. That would seem unlikely given thin holiday trading. But a further rise in the gold price, even if short-term, looks probable for four reasons:

1. Geopolitics: Israel has attacked Gaza with considerable loss of life, a reminder of the chronic political problems of the Middle East with Iran and Pakistan other possible flash points. Arabs are big investors in gold and respond to disruptions in their own backyard.

2. Physical delivery requests are mounting at the Comex futures exchange which could well result in an immediate shortage of gold at the year-end. The futures market looks about to breakdown, giving control of the gold price back to the physical market where available stocks are low.

3. Gold preserved value through the storm of 2008, and 2009 looks no better, while investors are increasingly concerned about the bubble in the bond market. In the investment cycle the next step is a bond crash and a flight to precious metals.

4. The dollar rally looks to have already broken down, so look for a swift reversal to dollar devaluation and gold appreciation. That would also boost the oil price, usually a positive for gold, and also linked to geopolitical instability in the Middle East.

I Told You So

(Please note that the written word cannot be fully understood because of the black and white nature of it. In other words, you cannot see the joking nature in which I write this little post. Though it sounds like sour grapes, it is only meant as a fun little rant.)

Several years ago I sent out an email to all my friends, family and associates letting them know of my dire long-term outlook for the economy and America in general. In it I detailed my belief that our political and financial systems had been taken over by those who see only green, and are blind to red, white and blue.

I maintained that Republicans and Democrats were like zebras; though they might appear opposite with one looking like a white stripe and the other like a black one....the truth is that you will get the same result from either party, BECAUSE THEY ARE THE SAME ANIMAL!

My belief is that a conspiracy of super wealthy and powerful bankers and financiers control politics and our economies, and are purposefully driving us to the brink of destruction FOR THE EXPRESS PURPOSE OF recreating our world in way that gives them ultimate and unrestrained power.

The beauty of their plan is that no armies need be involved. There will be no political overthrows. On the contrary, the masses will ASK for these changes in exchange for security.

Bye bye freedoms.

Certainly a free and democratic America stands as a large obstacle to the realization of that dream, and because of this, this current economic "crisis" has been, and will continue to be, micro-managed to its pre-determined outcome.

The Reaction
Of course, when I wrote this originally, most took my comments as confirmation of what they had always believed, and that was that "Old Dave is crazy."

Well, I can understand how folks would think that, for afterall, this isn't the kind of stuff you get from the nightly news. And who are you gonna believe? Some nut job from SC, or the NATIONAL NEWS? DUH!!! The news is objective!!!

The Vindication
Most of you know that, as a Christian, I certainly believe there will be a one-world government in the last days, and that we are in those last days. So it is understandable for folks to look at my conspiracy theories with just a bit of suspiscion as though I am trying to press the square peg of reality into my round hole of religious beliefs and make it fit. I will give you that.

You think I am not playing with the same deck as everyone else, but the point of this little post, is to let you know that there WERE quite a few folks playing with the same deck as you that are now saying the same things I was 5 years ago.

What They Are Saying
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 24 years. He runs an investments advisory newsletter at www.GoldenJackass.com. As far as I know, he is not particularly religious, and therefore has no axe to grind.

Jim recently wrote, "The networks seem totally incapable of noticing the responsibility of Goldman Sachs and JPMorgan in the destruction, a gigantic blind spot. It is truly remarkable that so much corruption has destroyed the systems underlying the United States, yet observers cannot come to grips with the fact that the corruption is engrained within the most revered firms still in charge."

Now, let me interpret that for you. What Jim is saying is that the super wealth financiers and bankers who control the world are the ones responsible for this mess, and the financial media can't seem to figure that out.

In other words, THEY ARE LOOKING THE OTHER WAY!!!!

Now, let's ask a question. Is it that they can't figure it out, or that they are simply bought and paid for as the propaganda team for the Wall Street money machine?

Five years ago I was laughed at for suggesting that there was a conspiracy afoot to bring down the United States' economy and financial system.

No body is laughing today.

Well, actually, let me take that back. If you still believe that this is all by chance, by greed and corruption, and NOT an orchestrated effort to destroy the sovereignty of the USA........then, wait a minute....I DO hear someone laughing.

It is me laughing at you.

Just remember this: Your lack of education and understanding does not make me crazy.

Regarding 2009, which will be the worst year since the great depression, just remember....I TOLD YOU SO!

Putting A Dollar Collapse Into Perspective

I pointed out recently that in the event of a bank run, the FDIC would certainly bail-out depositors for up to the $250,000 limit. But this raises a question..... If FDIC fund less than $1 for every $100 of deposits, how can they pay off every depositor if all the banks crash? Easy. It's called the printing press. Print more dollars and hand them out to the depositors.

But I also noted that should this happen, the value of those dollars would be depreciated between the time the banks close their doors, and the months later when those dollars were paid off.

Why?

Because printing money is like adding water to a cup of coffee. The more you add, the weaker the coffee. You dilute the original cup of coffee, just as new dollars "water down" the existing supply of dollars.

When this happens, foreign investors in the dollar would sell them en masse causing the value to drop 10%, 20%, 100% or more.

In other words, what used to cost you $1 before the bailout will now cost $10, $20 or $100. This is the reality of a currency devaluation, and this is nothing new. We have seen it all our lives, we just never pay it much attention since it is a "gradual" devaluation and not an overnight one.

The following photo is New York City 1908. A 2 cents hotdog now costs $2. That's 100 to 1 devaluation!

This is why you better have some of your wealth in something other than paper.

The Value of FDIC Insurance

The following is from this morning's column by Chris Laird entitled Central Bank Quantitative Measures to Boost Gold in 09.

"We know that shorter term US Treasuries are yielding practically zero rates, or zero to two percent for terms longer than 4 weeks. People want to be in cash, and they are flooding into US Treasuries because they don’t trust banks, even with FDIC guarantees. And, this is one reason the USD rose so much in recent months with the latest detonation of the world credit markets after Lehman failed, etc."

Question: Why would those in-the-know not trust FDIC? What do they know that the average person doesn't know?

The following is from Jake Towne's Dec. 15th article entitled, Rioting at the Gates of Thermopylae: The Fed & Central Banks Shudder
"In brief, the FDIC (Federal Deposit Insurance Corporation) is a relic of the Great Depression designed to give depositors psychological assurance that the government will bail them out if the bank fails.

It is funded by small fees on all deposits its 8,384 member banks hold. The FDIC started 2008 with about $53 billion in reserves. Due to the failures at IndyMac and others, the FDIC fund has less than $34.6 billion left. Based on the closings since September 30, Captain Calculator reports less than $30 billion is left.

The FDIC last reported on September 30 a reserve ratio of 0.76%, covering $4,544 billion in insured deposits, so now they are at about a 0.66% reserve ratio. Converted to English, this means that just $0.66 out of every $100 that you have on deposit is REALLY "insured." The FDIC reported the total assets of these banks to be $13,613 billion, so $30 billion is really a pittance.

My warning to you is that a major bank failure will eradicate the FDIC funds overnight.

Now, if the FDIC fails, you will probably still get your money back in dollar terms. However, to do this the government/Federal Reserve will simply print more money, and you will NOT be able to get your funds immediately. How long is anyone's guess, my guess is months. With all of the building potential for a hyperinflation or inflation spike, by the time you get your dollars back, you may not be able to buy much with them."

In light of the above, I would encourage folks to seriously consider the percentage of their savings and investment funds that they hold in the banking system. You certainly need to keep some of your wealth stored there, but not all.

These days, diversification is the key to safety, not government insurance.

Political Humor: How Obama Became President

In one civics class, the young adults were discussing the qualifications to be president of the United States . It was pretty simple.

The candidate must be a natural born citizen and at least 35 years of age.

However, one girl in the class immediately started in on how unfair the requirement to be a natural born citizen. In short, her opinion was this requirement prevented many capable individuals from becoming president.

The class was just taking it in and letting her rant, but everyone's jaw hit the floor when she wrapped up her argument by stating...

"What makes a natural born citizen any more qualified to lead this country than one born by C-section?"

They walk among us and they vote!

Is Gold A Risky Investment?

by Peter Degraff

Those of you with money in the bank are sliding backwards, every day of the week!
Figure it out for yourselves. The bank pays you let’s say 4% per year. At the end of the year you pay the government 1% of that in taxes. So you think you are ahead by 3%?

The official rate of price inflation is about 4% per year. However the actual rate of
price inflation in Canada and the USA is about 8%, and it is rising! Think of petroleum,natural gas, heating oil, wheat, corn, medical costs, education etc. With the rising price of corn and wheat comes higher prices for all kinds of meat products, as cattle eat grains!

So at the end of the year, unless you are earning at least 10% per year with your
money, to cover the rate of price inflation and taxes, you are sliding backwards!

Facts are facts!

The worldwide gold supply is increasing by 1.5% per year. It is inelastic. Gold is hard to find, and difficult and costly to extract.

As long as money supply in the country in which you reside is increasing by more than
1.5% per year, (currently rising by 12% per year in Canada and the USA), gold will rise!

It’s a ‘slam-dunk’! A ‘no-brainer’!

Problem is most of you won’t believe me until you read about it in the papers, or see it on the nightly news. When that happens we are usually near a temporary top, and the price then slides back down for a spell, and everybody goes back to sleep again.

Don’t listen to your ‘advisor’ who tells you that gold is ‘risky’! Gold is the only commodity that for 5,000 years has not been ‘risky’!

Auto Bailout - A Microcosm of a Larger Problem

Letter To General Motors
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Abridged letter from Troy Clarke, President of General Motors
Followed by a response from our son, Gregory Knox:


Dear Employee,
Next week, Congress and the current Administration will determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation's history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis. As an employee, you have a lot at stake and continue to be one of our most effective and passionate voices.

I know GM can count on you to have your voice heard.

Thank you for your urgent action and ongoing support.

Troy Clarke
President
General Motors North America
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From Gregory Knox,
In response to your request to call legislators and ask for a bailout for the United States automakers please consider the following, and please also pass this onto Troy Clark, the president of General Motors North America for me.

You are both infected with the same entitlement mentality that has bred like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping the nation, awaiting our new "messiah" to wave his magical wand and make all our problems go away, while at the same time allowing our once great nation to keep "living the dream".

The dream is over!

The dream that we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement-minded "laborers" without paying the price for these atrocities and that still the masses will line up to buy our products

Don't tell me I'm wrong. Don't accuse me of not knowing of what I speak. I have called on Ford, GM, Chrysler, TRW, Delphi, Kelsey Hayes, American Axle, and countless other automotive OEM's and Tier ones for 3 decades now throughout the Midwest and what I've seen over the years in these union shops can only be described as disgusting.

Mr. Clark, the president of General Motors, states:
"There is widespread sentiment in this country, our government and especially in the media that the current crisis is completely the result of bad management. It is not."

You're right, it's not JUST management, how about the electricians who walk around the plants like lords in feudal times, making people wait on them for countless hours while they drag ass so they can come in on the weekend and make double and triple time for a job they easily could have done within their normal 40 hour week.

How about the line workers who threaten newbies with all kinds of scare tactics for putting out too many parts on a shift and for being too productive (mustn't expose the lazy bums who have been getting overpaid for decades for their horrific underproduction, must we?) Do you really not know about this stuff?

How about this great sentiment abridged from Mr. Clarke's sad plea:
"... over the last few years we have closed the quality and efficiency gaps with our competitors."

What the hell has Detroit been doing for the last 40 years? Did we really JUST wake up to the gaps in quality and efficiency between them and us?

• The K car vs. the Accord?
• The Pinto vs. the Civic?
• Do I need to go on?

We are living through the inevitable outcome of the actions of the United States auto industry for decades.

Time to pay for your sins, Detroit.

I attended an economic summit last week where a brilliant economist, Alan Beaulieu surprised the crowd when he said he would not have given the banks a penny of "bailout money." Yes, he said, this would cause short term problems, but despite what people like George Bush and Troy Clark would have us believe, the sun would in fact rise the next day and something else would happen. Where there had been greedy and sloppy banks, new efficient ones would pop up. That is how a free market system works. It does work if we would let it work!

But for some reason we are now deciding that the rest of the world is right and that capitalism doesn't work; that we need the government to step in and "save us." Save us, hell we're nationalizing and unfortunately too many of this once fine nation's citizens don't even have a clue that this is what's really happening but they sure can tell you the stats on their favorite sports teams yeah THAT'S important.

Does it occur to ANYONE that the "competition" has been producing vehicles, EXTREMELY PROFITABLY, for decades now in this country? How can that be?
Let's see:
• Fuel efficient
• Listening to customers
• Investing in the proper tooling and automation for the long haul
• Not being too complacent or arrogant to listen to Dr. W. Edwards Deming, 4 decades ago
• Ever increased productivity through quality, lean and six sigma plans
• Treating vendors like strategic partners, rather than like "the enemy"
• Efficient front and back offices
• Non-union environment
Again, I could go on and on, but I really wouldn't be telling anyone anything they really don't already know in their hearts.

I have six children, so I am not unfamiliar with the concept of wanting someone to bail you out of a mess that you have gotten yourself into. My children do this on a weekly, if not daily basis, as I did at their age. I do for them what my parents did for me (one of their greatest gifts, by the way). I make them stand on their own two feet and accept the consequences of their actions and work them through.

Radical concept, huh?

Am I there for them in the wings? Of course but only until such time as they need to be fully on their own as adults. I don't want to oversimplify a complex situation, but there certainly are unmistakable parallels here between the proper role of parenting and government.

Detroit and the United States need to pay for their sins.

Bad news people, it's coming whether we like it or not.

The newly elected Messiah really doesn't have a magic wand big enough to "make it all go away." I laughed as I heard Obama "reeling it back in" almost immediately after the vote count was tallied "we might not do it in a year or in four!" Where was that kind of talk when he was RUNNING for the office?

• Stop trying to put off the inevitable!
• That house in Florida really isn't worth $750,000!
• People who jump across a border really don't deserve free health care benefits!
• That job driving that forklift for the big 3 really isn't worth $85,000 a year!
• That couple whose combined income is less than $50,000 really shouldn't be living in that $485,000 home!

Let the market correct itself people, it will. Yes it will be painful, but it's gonna be painful either way, and the bright side of my proposal is that on the other side of it is a nation that appreciates what is has and doesn't live beyond its means and gets back to basics and redevelops the work ethic that made it the greatest nation in the history of the world and probably turns back to God.

Sorry, don't cut my head off. I'm just the messenger sharing with you the "bad news."

Gregory J. Knox
President
Knox Machinery, Inc.
Franklin, Ohio 45005