Don't let the rising stock market fool you. Things are not getting better. Also, what starts in California eventually makes its way to the rest of the country. Here's the situation in Cali.
SACRAMENTO (AP) — California lawmakers remained at an impasse over solving the state's $24.3 billion deficit Friday as the state controller prepares to hand out roughly $3 billion in IOUs to vendors, low-income seniors and others.
A morning vote on a portion of the Democratic budget plan fell short of the necessary two-thirds support in the Assembly for the second time. Lawmakers were scheduled to work through the weekend, with the beginning of the new fiscal year and an impending cash crisis just days away.
State Controller John Chiang said he will have to start issuing IOUs as soon as Thursday without a budget revision because California will lack enough incoming tax revenue to meet all its payment obligations.
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Close Call For US Banks
An Ingenious Plan to Pay All Debts
by Rick Ackerman
With the U.S. sinking hopelessly into a black hole of debt, and households facing an avalanche of tax hikes that will at best postpone the nation’s day of bankruptcy, we are all hard-pressed at this point to see a way to a happy ending. Lo, along comes an anonymous e-mail that describes a way to solve everyone’s debt problems painlessly. If you think the plan can work, I would urge you to forward it to your congressmen. But if you see a fatal flaw in the logic, please drop by the Rick’s Picks forum to explain. The forum can be accessed by clicking on the word “Comments” under the headline on today’s commentary. Here’s the magical plan to cure America’s”Accounts Receivable Crisis”:
“It is the month of August, on the shores of the Black Sea . It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.
”Suddenly, a rich tourist comes to town.
”He enters the only hotel, lays a 100-euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.
”The hotel proprietor takes the 100-euro note and runs to pay his debt to the butcher.
”The butcher takes the 100-euro note and runs to pay what he owes the pig farmer.
”The pig farmer takes the 100-euro note and runs to pay his debt to his supplier of feed and fuel.
”The supplier of feed and fuel takes the 100-euro note and runs to pay his debt to the town’s prostitute that, in these hard times, proffered her ’services’ on credit.
”The prostitute take the 100-euro note and runs to the hotel to pay for the rooms she rented when she brought her clients there.
”The hotel proprietor then lays the 100-euro note back on the counter so that the rich tourist will not suspect anything.
”At that moment, the rich tourist comes down after inspecting the rooms, takes the 100-euro note off the desk, tucks it back into his wallet, and explains that he did not like any of the rooms. He then leaves town.
”No one earned a penny. However, the whole town is now without debt and looks to the future with great optimism.
”And that, ladies and gentlemen, is how the United States Government is doing business.”
Come to think of it, that is almost exactly the way Uncle Sam is handling the debt problem. Your comments are welcome at the forum.
With the U.S. sinking hopelessly into a black hole of debt, and households facing an avalanche of tax hikes that will at best postpone the nation’s day of bankruptcy, we are all hard-pressed at this point to see a way to a happy ending. Lo, along comes an anonymous e-mail that describes a way to solve everyone’s debt problems painlessly. If you think the plan can work, I would urge you to forward it to your congressmen. But if you see a fatal flaw in the logic, please drop by the Rick’s Picks forum to explain. The forum can be accessed by clicking on the word “Comments” under the headline on today’s commentary. Here’s the magical plan to cure America’s”Accounts Receivable Crisis”:
“It is the month of August, on the shores of the Black Sea . It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.
”Suddenly, a rich tourist comes to town.
”He enters the only hotel, lays a 100-euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.
”The hotel proprietor takes the 100-euro note and runs to pay his debt to the butcher.
”The butcher takes the 100-euro note and runs to pay what he owes the pig farmer.
”The pig farmer takes the 100-euro note and runs to pay his debt to his supplier of feed and fuel.
”The supplier of feed and fuel takes the 100-euro note and runs to pay his debt to the town’s prostitute that, in these hard times, proffered her ’services’ on credit.
”The prostitute take the 100-euro note and runs to the hotel to pay for the rooms she rented when she brought her clients there.
”The hotel proprietor then lays the 100-euro note back on the counter so that the rich tourist will not suspect anything.
”At that moment, the rich tourist comes down after inspecting the rooms, takes the 100-euro note off the desk, tucks it back into his wallet, and explains that he did not like any of the rooms. He then leaves town.
”No one earned a penny. However, the whole town is now without debt and looks to the future with great optimism.
”And that, ladies and gentlemen, is how the United States Government is doing business.”
Come to think of it, that is almost exactly the way Uncle Sam is handling the debt problem. Your comments are welcome at the forum.
Potential Gold Fail And Why You Should Care
The following rather lengthy article explains the precarious nature on which our financial system sits at present. Our system of paper and electronic currency which is ultimately backed by nothing more than a promise to repay, has begun to crumble. The failure and subsequent bailout of Lehman and AIG show how critical our government finds it to keep confidence in the paper money system.
As the following article points out, banks and insurance companies are no better than the investments they make, and at present they are ALL insolvent. Should the general public every discover this fact, the insuing run would instantly bankrupt the system.
What does that mean in practical terms?
You lose everything in your FDIC Insured bank account, mutual funds, bonds, cash, futures and insurance company annuities and policy cash values.
Of course the only alternative to storing one's wealth in paper assets is gold, silver and/or platinum. As the following article points out, those who have it could reap a thousand percent return overnight in the event of a public panic, leaving them one of the few survivors in a systemic meltdown as almost happened last September. (Watch video of Congressman Kanjorski's candid testimony of how close we came to a banking system collapse last year.)
The following article shows how the current gold shortage could be the breach that breaks open the dam and starts the tidal wave of paper money defaults.
Potential COMEX Gold Fail
June 19, 2009 by Trace Mayer
FUTURES AND FORWARD CONTRACTS
Many commodities trade via forward or futures contracts. A forward contract is is an agreement between two parties to buy or sell an asset at a specified point of time in the future. A futures contract is a standardized contract to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price (the futures price).
REGULATION AND COUNTER-PARTY RISK
Both futures and forward contracts introduce counter-party risk which depends on the financial ability of the counter-party to perform and may result in a failure to deliver. The calculated counter-party risk of futures contracts are assumed to be lower than forward contracts because they are traded on commodity exchanges. This is because generally governments must provide a common insurance or regulatory standard, such as the Commodity Futures Trading Commission (CFTC), and some release of liability, or at least a backing of the insurers, before a commodity market can begin trading.
COMMODITY MARKET SIZE
As a result of this increased confidence the size of futures contracts has grown tremendously. The major commodities exchanges in the United States were the COMEX and NYMEX which merged under the New York Mercantile Exchange and Commodity Exchange, Inc. (NYMEX) name on 3 August 1994.
The notional value outstanding of OTC commodity derivatives contracts increased 27% in 2007 to $9.0 trillion. OTC trading accounts for the majority of trading in gold and silver. Overall, precious metals accounted for 8% of OTC commodities derivatives trading in 2007, down from their 55% share a decade earlier as trading in energy derivatives rose.
BACKWARDATION
Because of the large aboveground stockpiles of the monetary metals threfore gold and silver should never enter backwardation. Backwardation would be evidence of the market’s increased apprehension of counter-party risk and the increased probability of a failure to deliver. The brief gold backwardation or the recent black swan of nine weeks of silver backwardation in the London Bullion Market Association (LBMA) forward markets revealed the extreme fragility of the worldwide financial and monetary system.
Mr. Avery Goodman, a securities attorney and a member of the roster of neutral arbitrators of the National Futures Association (NFA) and the Financial Industry Regulatory Authority (FINRA), has also written extensively about whether the COMEX will default on gold and silver, how the NYSE ran out of gold bars, the evidence that the ECB bailed out Deutsche Bank preventing a failure to deliver of gold on the COMEX and a follow up article on the ECB’s saving of the COMEX from a gold default.
Then there are other commentators like Jason Hommel, the creator of the satirical silver CFTC appreciation medallion above, who alleges regulatory culpability. Still others like the Gold Anti-Trust Action Committee (GATA) who has met with CFTC officials bring considerable intellectual firepower to the allegation of a central bank gold price suppression scheme where Mr. Robert Landis, a Harvard trained attorney, asserts “Any rational person who continues to dispute the existence of the rig after exposure to the evidence is either in denial or is complicit.”
TOOLS OF SPECULATION
Due to the size of the derivative contracts traded on the commodity exchanges and the counter-party risk the contracts are impregnated with therefore a bankruptcy of either the counter-party, the exchange or both could happen. Due to the increased liquidity of these exchanges many of those buying or selling the contracts for speculative purposes neither want possession of the underlying commodity nor possess the underlying commodity and have the ability to physically deliver.
While there are some some legitimate measures such as oil or gold companies that sell forward their production, and the number of gold companies has increasingly withered, in many cases when you buy these gold derivatives you are buying from a speculator who is shorting gold and that gold speculator does not actually own any physical gold.
MECHANICS OF AN EXCHANGE BANKRUPTCY
Let us assume for the sake of argument that gold prices go ballistic and you decide you want your gold by taking delivery on the contract. What if gold prices go up dramatically in one day such as a thousand dollars an ounce. Is it possible? Of course. Is it probable? Not really.
But that means the person who shorted gold is in a very precarious position and could have possibly lost everything or more. Perhaps they had a stop but the market is fast and gaps and as a result they cannot get out of their position. What would happen?
Let us assume this speculator had ten thousand dollars in their commodities account and they were short a gold contract. Suddenly, perhaps overnight, the Chinese press the issue because the International Monetary Fund failed to deliver on their gold sales and needed a line of credit, gold prices rapidly jumped and this speculator lost a hundred thousand dollars overnight. Now the brokerage firm has to attempt to collect on this ninety thousand dollar margin call in the form of an unsecured debt. What if they cannot collect and what if there are hundreds or thousands of speculators in similar situations?
With this failure to deliver and violation of margin requirements what if the exchange, because they do not have adequate capital or liquidity, cannot get the currency to settle the contracts? Then the exchange goes broke unless there is a government bail out but what good would that fiat currency do in purchasing the physical gold or silver bullion?
COUNTER-PARTY RISK MATERIALIZING
This is what happened with the American Insurance Group. The reason AIG went bankrupt is because they were the other side of many speculative contracts. When the flock of black swans they had insured against descended AIG could not perform because they did not have the cash. The government bailed them out at the cost of hundreds of billions if not trillions of dollars.
This means if you buy silver or gold on the COMEX via futures contracts, there is a huge move up, the COMEX goes bankrupt and the government does not bail them out then you are not going to be able to cash out your epic gains from the casino. Like the auto maker’s bond holders you will not realize and enjoy the profits you thought you would.
This is precisely what happened with people who were short a bunch of oranges and other interesting things via hedges with Lehman Brothers and even though they ‘made’ millions of dollars on their positions they lost everything. Why? Because Lehman Brothers went under and did not perform on the contracts. This is counter-party risk.
CONCLUSION
At all time and in all circumstances gold and silver remain money. For the conservative investor the reason to own them is as insurance for when everything else fails. These issues of counter-party risk are important when considering how to buy gold or silver through third parties. There are third-parties, like GoldMoney, that not subject to counter-party risk because of the way ownership is titled and the ability to demand physical delivery at any time.
As I explain in my book The Great Credit Contraction capital is burrowing down the pyramid into safer and more liquid assets. The safest and most liquid of them all are gold and silver. Why? Because the world reserve currency the FRN$ is merely an illusion that can become worthless while gold and silver are money and will always buy something.
Consequently, the conservative investor will determine what their gold standard is considering there are 140 ounces of paper gold for every ounce of physical gold. Then they will take appropriate actions, such as buying gold in a vending machine, to remove the layers of risk between them and their purchasing power in an effort to preserve and safeguard their capital.
CLICK IMAGE TO ENLARGE
As the following article points out, banks and insurance companies are no better than the investments they make, and at present they are ALL insolvent. Should the general public every discover this fact, the insuing run would instantly bankrupt the system.
What does that mean in practical terms?
You lose everything in your FDIC Insured bank account, mutual funds, bonds, cash, futures and insurance company annuities and policy cash values.
Of course the only alternative to storing one's wealth in paper assets is gold, silver and/or platinum. As the following article points out, those who have it could reap a thousand percent return overnight in the event of a public panic, leaving them one of the few survivors in a systemic meltdown as almost happened last September. (Watch video of Congressman Kanjorski's candid testimony of how close we came to a banking system collapse last year.)
The following article shows how the current gold shortage could be the breach that breaks open the dam and starts the tidal wave of paper money defaults.
Potential COMEX Gold Fail
June 19, 2009 by Trace Mayer
FUTURES AND FORWARD CONTRACTS
Many commodities trade via forward or futures contracts. A forward contract is is an agreement between two parties to buy or sell an asset at a specified point of time in the future. A futures contract is a standardized contract to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price (the futures price).
REGULATION AND COUNTER-PARTY RISK
Both futures and forward contracts introduce counter-party risk which depends on the financial ability of the counter-party to perform and may result in a failure to deliver. The calculated counter-party risk of futures contracts are assumed to be lower than forward contracts because they are traded on commodity exchanges. This is because generally governments must provide a common insurance or regulatory standard, such as the Commodity Futures Trading Commission (CFTC), and some release of liability, or at least a backing of the insurers, before a commodity market can begin trading.
COMMODITY MARKET SIZE
As a result of this increased confidence the size of futures contracts has grown tremendously. The major commodities exchanges in the United States were the COMEX and NYMEX which merged under the New York Mercantile Exchange and Commodity Exchange, Inc. (NYMEX) name on 3 August 1994.
The notional value outstanding of OTC commodity derivatives contracts increased 27% in 2007 to $9.0 trillion. OTC trading accounts for the majority of trading in gold and silver. Overall, precious metals accounted for 8% of OTC commodities derivatives trading in 2007, down from their 55% share a decade earlier as trading in energy derivatives rose.
BACKWARDATION
Because of the large aboveground stockpiles of the monetary metals threfore gold and silver should never enter backwardation. Backwardation would be evidence of the market’s increased apprehension of counter-party risk and the increased probability of a failure to deliver. The brief gold backwardation or the recent black swan of nine weeks of silver backwardation in the London Bullion Market Association (LBMA) forward markets revealed the extreme fragility of the worldwide financial and monetary system.
Mr. Avery Goodman, a securities attorney and a member of the roster of neutral arbitrators of the National Futures Association (NFA) and the Financial Industry Regulatory Authority (FINRA), has also written extensively about whether the COMEX will default on gold and silver, how the NYSE ran out of gold bars, the evidence that the ECB bailed out Deutsche Bank preventing a failure to deliver of gold on the COMEX and a follow up article on the ECB’s saving of the COMEX from a gold default.
Then there are other commentators like Jason Hommel, the creator of the satirical silver CFTC appreciation medallion above, who alleges regulatory culpability. Still others like the Gold Anti-Trust Action Committee (GATA) who has met with CFTC officials bring considerable intellectual firepower to the allegation of a central bank gold price suppression scheme where Mr. Robert Landis, a Harvard trained attorney, asserts “Any rational person who continues to dispute the existence of the rig after exposure to the evidence is either in denial or is complicit.”
TOOLS OF SPECULATION
Due to the size of the derivative contracts traded on the commodity exchanges and the counter-party risk the contracts are impregnated with therefore a bankruptcy of either the counter-party, the exchange or both could happen. Due to the increased liquidity of these exchanges many of those buying or selling the contracts for speculative purposes neither want possession of the underlying commodity nor possess the underlying commodity and have the ability to physically deliver.
While there are some some legitimate measures such as oil or gold companies that sell forward their production, and the number of gold companies has increasingly withered, in many cases when you buy these gold derivatives you are buying from a speculator who is shorting gold and that gold speculator does not actually own any physical gold.
MECHANICS OF AN EXCHANGE BANKRUPTCY
Let us assume for the sake of argument that gold prices go ballistic and you decide you want your gold by taking delivery on the contract. What if gold prices go up dramatically in one day such as a thousand dollars an ounce. Is it possible? Of course. Is it probable? Not really.
But that means the person who shorted gold is in a very precarious position and could have possibly lost everything or more. Perhaps they had a stop but the market is fast and gaps and as a result they cannot get out of their position. What would happen?
Let us assume this speculator had ten thousand dollars in their commodities account and they were short a gold contract. Suddenly, perhaps overnight, the Chinese press the issue because the International Monetary Fund failed to deliver on their gold sales and needed a line of credit, gold prices rapidly jumped and this speculator lost a hundred thousand dollars overnight. Now the brokerage firm has to attempt to collect on this ninety thousand dollar margin call in the form of an unsecured debt. What if they cannot collect and what if there are hundreds or thousands of speculators in similar situations?
With this failure to deliver and violation of margin requirements what if the exchange, because they do not have adequate capital or liquidity, cannot get the currency to settle the contracts? Then the exchange goes broke unless there is a government bail out but what good would that fiat currency do in purchasing the physical gold or silver bullion?
COUNTER-PARTY RISK MATERIALIZING
This is what happened with the American Insurance Group. The reason AIG went bankrupt is because they were the other side of many speculative contracts. When the flock of black swans they had insured against descended AIG could not perform because they did not have the cash. The government bailed them out at the cost of hundreds of billions if not trillions of dollars.
This means if you buy silver or gold on the COMEX via futures contracts, there is a huge move up, the COMEX goes bankrupt and the government does not bail them out then you are not going to be able to cash out your epic gains from the casino. Like the auto maker’s bond holders you will not realize and enjoy the profits you thought you would.
This is precisely what happened with people who were short a bunch of oranges and other interesting things via hedges with Lehman Brothers and even though they ‘made’ millions of dollars on their positions they lost everything. Why? Because Lehman Brothers went under and did not perform on the contracts. This is counter-party risk.
CONCLUSION
At all time and in all circumstances gold and silver remain money. For the conservative investor the reason to own them is as insurance for when everything else fails. These issues of counter-party risk are important when considering how to buy gold or silver through third parties. There are third-parties, like GoldMoney, that not subject to counter-party risk because of the way ownership is titled and the ability to demand physical delivery at any time.
As I explain in my book The Great Credit Contraction capital is burrowing down the pyramid into safer and more liquid assets. The safest and most liquid of them all are gold and silver. Why? Because the world reserve currency the FRN$ is merely an illusion that can become worthless while gold and silver are money and will always buy something.
Consequently, the conservative investor will determine what their gold standard is considering there are 140 ounces of paper gold for every ounce of physical gold. Then they will take appropriate actions, such as buying gold in a vending machine, to remove the layers of risk between them and their purchasing power in an effort to preserve and safeguard their capital.
CLICK IMAGE TO ENLARGE
3rd Largest Life Insurer Buying Gold
Bloomberg - Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales has bought gold for the first time [in] the company's 152-year history to hedge against further asset declines.
"Gold just seems to make sense; it's a store of value," Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor's in Brooklyn. "In the Depression, gold did very, very well."
Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November.
"Gold just seems to make sense; it's a store of value," Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor's in Brooklyn. "In the Depression, gold did very, very well."
Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November.
Exclusive Interview with Future Prediction Expert Gerald Celente
by Terry Easton see article
06/05/2009
It’s the end of the world as the Greater Depression hits after 2010’s failed “W-recovery”
Human Events had the opportunity to interview forecaster extraordinaire Gerald Celente, President of Trends Research Institute, several days ago -- and the future he predicts looks bleak indeed. In fact, as Mr. Celente sees it, the Great Depression will seem like a mild recession as what waits for us in 2011 hits with the force of a Katrina financial hurricane.
In case you’re wondering who Mr. Celente is (if this is still possible), he’s appeared -- along with his predictions -- on Oprah, CNBC, Reuters, NBC, PBS, BBC, the Glenn Beck Show -- the list goes on an on. His Trends Report has been successfully predicting the major future trends impacting our lives for 3 decades, including calling the dot com crash back in the 1990's.
Mr. Celente's forecast on our impending future is based on his study of history. He says we are bent on destroying our currency, bankrupting our government, and unleashing a violent citizen-against-citizen eruption as the economy collapses into chaos and martial law fascism.
Quite a claim. And God help us if he is right -- again.
“We’re sounding the alarm about the ongoing downward economic cycle”, Gerald told Human Events. “In 2002, we predicted that the collapse of the American empire would fall like the World Trade Center in a thunderous crash -- in slow motion before our eyes. And now it’s happening.”
Mr. Celente follows over 300 trends: family, crime, war, education, consumer & business patterns which TRI synthesizes to predict the future.
“The US is becoming a shadow of what it used to be. Take education for example. The OECD group of developed countries ranks quality of life, education, health care of its member nations. The US is now falling down the table as one piece of data after another shows America is in decline. We’re no longer Win, Place or Show in quality of life, education, longevity… all the essentials where we used to be #1. And our economic underpinnings are failing.”
Mr. Celente puts part of the blame squarely on the federal government, and especially FED Chairman Bernanke and Treasury Secretary Geithner, and warns us not to believe a word they say “They’re the same people who didn't see it coming - are now telling us the worst is over, that ‘green shoots are spouting upwards’. But they were wrong before. They’re wrong on this too”.
“When you pump out tons of money manure into this system based on nothing – printing press paper, it’s like giving a patient with a chronic disease a pain killer -- it won’t cure the patient.”
“But let’s go beyond the economics. Our whole Constitution has been abrogated. The president simply writes an Executive Order to do whatever he wants. Nationalize the banks, take over the insurance industry, automobile industry, health care industry…
None of it is constitutional.”
When did the problem begin?
“After Dwight Eisenhower -- our last great president -- the Allied Supreme Commander in WWII – who warned us of the dangers of the military-industrial complex. We've become completely corrupted.”
“We became enmeshed in foreign entanglements. We forgot the lesson of England - and how their global imperial overreach destroyed their empire.”
Of course, the average American doesn’t think that we’re an empire. We’re not like the classical empires of old - raping, pillaging and stealing the wealth of invaded peoples. What does Mr. Celente have to say about this?
“What we’re doing is squandering our wealth, our resources, the genius of our scientists and the future of our children. We’re over-consuming in every way -- but under consuming our education and focusing on the quantity, not the quality, of what we’ve built. So much of today’s culture is counter-productive to what American built it’s foundation on -- a high-quality producing nation building things, not pushing paper.
"And we’ve become not only a consumer society but a low-quality consumer, as well as the most obese society in the world, eating low-quality high-carb, high-fat processed foods.”
“We’re now focused on the lowest cost, the lowest common denominator. Not the best and highest quality. We advertise buying cheapest as the most important thing.”
Mr. Celente argues that we’ve socially destroyed our productivity and have abandoned it to other countries.
“And we have fallen into a moral vacuum. Look at how people used to dress. Smartly. Not like the cheap hoods of today. Fashion now copies the lowest common denominator. Our children wear clothes without belts, and shoes without shoelaces, to copy the styles of the violent criminals -- who have these items removed by the police in prison so they can’t be used as weapons. That’s become the fashion statement of today’s youth. Like rap music from the ghetto. We’ve become an underdeveloped nation.”
Mr. Celente observes that "people used to think of America as that shining beacon on the hill with 'liberty and justice for all…' ." So what happened?
"Morality is missing from our American public consciousness. Start with Wall Street. It’s run by a criminal gang. The only question is ‘how much can you make, how much can you steal?’ At the bottom, the welfare recipient says ‘how much can I take?’ And the government is in on the take."
“Morality is absolutely the issue. We had a government where we were taught all our lives that we are a free enterprise system -- so we depend on our own strength, our entrepreneurial ideas. The world used to look to us for our innovative spirit.”
“This is being destroyed before our eyes. And our government has become more interventionist than any of the old empires could imagine.”
"Our society is now based on consumption -- 70% of the GDP. This is more than we produce. So to pay our bills, we use funny money invented in 1913 with the creation of the Federal Reserve and the fiat dollar based on credit (debt) -- the fractional reserve system. In 1930's you bought what you could afford. You saved up to buy your home. The easy credit of the 90's has destroyed the country. Now you borrow what you can’t afford - and the nation’s done the same."
Mr. Celente predicts the use of printing press money will cause the "greater depression".
"I predict continuing deflation of real estate, followed by extreme currency inflation -- ultimately becoming worthless. This is why gold is the only honest money -- the government can't counterfeit it. Look for it to top at least $2000 an ounce"
"Our unemployment numbers are also bogus. For example, the construction industry is really above 20% , and the government is creating low-level jobs, not real jobs. The US total real unemployment is more like 16%. Before the crisis is over, it will reach 25% - great depression numbers."
"When people have lost everything they have nothing to lose. Violence and crime will explode. Look at the OECD figures. The number of people not graduating from high school is exploding -- they're wacked out on drugs. New York City will look like Mexico City in a few years. The collapse of morality from top down -- and especially in the government -- makes it inevitable."
"What can we expect in the coming future", we asked.
"Washington has declared 'Economic Martial Law'. Wall Street is putting Main Street out of business. The key to watch is Christmas sales. They’ll fail. Christmas will be when reality sets in."
"Another trend we wrote about over 2 years ago was the tax revolt. What’s happened? Tax revenues have collapsed by 33%. And the wealthy people are leaving."
"We predict state secessionist movements will rival the breakup of the Soviet Union."
"The only way we can ever recover is to return to individual community, personal responsibility, local government. Next, average will disappear, Quality will return. Look at GM. Junk cars financed by junk bonds. Now owned by a junk government. As a consumer, don’t consume quantity -- consume quality."
"How will it all end?", we queried. Will the dollar survive?
"The dot com bubble should have burst and gone away in a short sharp recession. But the boys at the Fed re-inflated the economy by lowering interest rates to a 46 year low -- and in turn created the real estate bubble -- much bigger than the dot com bubble. "
"Now they’re creating the bailout bubble -- which will ultimately dwarf the real estate bubble. It will cause the implosion of the global economy world wide -- which will not be able to be repaired by creating yet another bubble. Every time the government fails, it tells a bigger lie and then a still bigger lie."
"These previous bubbles were not allowed to pop -- but they didn’t destroy the infrastructure of the country. This bailout bubble will."
"But this bubble will be the last one. After the final blowout of the bailout bubble, we are concerned that the government will take the nation into war. This is a historical precedent that’s been done over and over again."
"So, it’s not that the dollar that will survive. We may not even survive. Look at the German mess after WWI. It gave rise to Fascism and WWII. The next war will be fought with weapons of mass destruction."
06/05/2009
It’s the end of the world as the Greater Depression hits after 2010’s failed “W-recovery”
Human Events had the opportunity to interview forecaster extraordinaire Gerald Celente, President of Trends Research Institute, several days ago -- and the future he predicts looks bleak indeed. In fact, as Mr. Celente sees it, the Great Depression will seem like a mild recession as what waits for us in 2011 hits with the force of a Katrina financial hurricane.
In case you’re wondering who Mr. Celente is (if this is still possible), he’s appeared -- along with his predictions -- on Oprah, CNBC, Reuters, NBC, PBS, BBC, the Glenn Beck Show -- the list goes on an on. His Trends Report has been successfully predicting the major future trends impacting our lives for 3 decades, including calling the dot com crash back in the 1990's.
Mr. Celente's forecast on our impending future is based on his study of history. He says we are bent on destroying our currency, bankrupting our government, and unleashing a violent citizen-against-citizen eruption as the economy collapses into chaos and martial law fascism.
Quite a claim. And God help us if he is right -- again.
“We’re sounding the alarm about the ongoing downward economic cycle”, Gerald told Human Events. “In 2002, we predicted that the collapse of the American empire would fall like the World Trade Center in a thunderous crash -- in slow motion before our eyes. And now it’s happening.”
Mr. Celente follows over 300 trends: family, crime, war, education, consumer & business patterns which TRI synthesizes to predict the future.
“The US is becoming a shadow of what it used to be. Take education for example. The OECD group of developed countries ranks quality of life, education, health care of its member nations. The US is now falling down the table as one piece of data after another shows America is in decline. We’re no longer Win, Place or Show in quality of life, education, longevity… all the essentials where we used to be #1. And our economic underpinnings are failing.”
Mr. Celente puts part of the blame squarely on the federal government, and especially FED Chairman Bernanke and Treasury Secretary Geithner, and warns us not to believe a word they say “They’re the same people who didn't see it coming - are now telling us the worst is over, that ‘green shoots are spouting upwards’. But they were wrong before. They’re wrong on this too”.
“When you pump out tons of money manure into this system based on nothing – printing press paper, it’s like giving a patient with a chronic disease a pain killer -- it won’t cure the patient.”
“But let’s go beyond the economics. Our whole Constitution has been abrogated. The president simply writes an Executive Order to do whatever he wants. Nationalize the banks, take over the insurance industry, automobile industry, health care industry…
None of it is constitutional.”
When did the problem begin?
“After Dwight Eisenhower -- our last great president -- the Allied Supreme Commander in WWII – who warned us of the dangers of the military-industrial complex. We've become completely corrupted.”
“We became enmeshed in foreign entanglements. We forgot the lesson of England - and how their global imperial overreach destroyed their empire.”
Of course, the average American doesn’t think that we’re an empire. We’re not like the classical empires of old - raping, pillaging and stealing the wealth of invaded peoples. What does Mr. Celente have to say about this?
“What we’re doing is squandering our wealth, our resources, the genius of our scientists and the future of our children. We’re over-consuming in every way -- but under consuming our education and focusing on the quantity, not the quality, of what we’ve built. So much of today’s culture is counter-productive to what American built it’s foundation on -- a high-quality producing nation building things, not pushing paper.
"And we’ve become not only a consumer society but a low-quality consumer, as well as the most obese society in the world, eating low-quality high-carb, high-fat processed foods.”
“We’re now focused on the lowest cost, the lowest common denominator. Not the best and highest quality. We advertise buying cheapest as the most important thing.”
Mr. Celente argues that we’ve socially destroyed our productivity and have abandoned it to other countries.
“And we have fallen into a moral vacuum. Look at how people used to dress. Smartly. Not like the cheap hoods of today. Fashion now copies the lowest common denominator. Our children wear clothes without belts, and shoes without shoelaces, to copy the styles of the violent criminals -- who have these items removed by the police in prison so they can’t be used as weapons. That’s become the fashion statement of today’s youth. Like rap music from the ghetto. We’ve become an underdeveloped nation.”
Mr. Celente observes that "people used to think of America as that shining beacon on the hill with 'liberty and justice for all…' ." So what happened?
"Morality is missing from our American public consciousness. Start with Wall Street. It’s run by a criminal gang. The only question is ‘how much can you make, how much can you steal?’ At the bottom, the welfare recipient says ‘how much can I take?’ And the government is in on the take."
“Morality is absolutely the issue. We had a government where we were taught all our lives that we are a free enterprise system -- so we depend on our own strength, our entrepreneurial ideas. The world used to look to us for our innovative spirit.”
“This is being destroyed before our eyes. And our government has become more interventionist than any of the old empires could imagine.”
"Our society is now based on consumption -- 70% of the GDP. This is more than we produce. So to pay our bills, we use funny money invented in 1913 with the creation of the Federal Reserve and the fiat dollar based on credit (debt) -- the fractional reserve system. In 1930's you bought what you could afford. You saved up to buy your home. The easy credit of the 90's has destroyed the country. Now you borrow what you can’t afford - and the nation’s done the same."
Mr. Celente predicts the use of printing press money will cause the "greater depression".
"I predict continuing deflation of real estate, followed by extreme currency inflation -- ultimately becoming worthless. This is why gold is the only honest money -- the government can't counterfeit it. Look for it to top at least $2000 an ounce"
"Our unemployment numbers are also bogus. For example, the construction industry is really above 20% , and the government is creating low-level jobs, not real jobs. The US total real unemployment is more like 16%. Before the crisis is over, it will reach 25% - great depression numbers."
"When people have lost everything they have nothing to lose. Violence and crime will explode. Look at the OECD figures. The number of people not graduating from high school is exploding -- they're wacked out on drugs. New York City will look like Mexico City in a few years. The collapse of morality from top down -- and especially in the government -- makes it inevitable."
"What can we expect in the coming future", we asked.
"Washington has declared 'Economic Martial Law'. Wall Street is putting Main Street out of business. The key to watch is Christmas sales. They’ll fail. Christmas will be when reality sets in."
"Another trend we wrote about over 2 years ago was the tax revolt. What’s happened? Tax revenues have collapsed by 33%. And the wealthy people are leaving."
"We predict state secessionist movements will rival the breakup of the Soviet Union."
"The only way we can ever recover is to return to individual community, personal responsibility, local government. Next, average will disappear, Quality will return. Look at GM. Junk cars financed by junk bonds. Now owned by a junk government. As a consumer, don’t consume quantity -- consume quality."
"How will it all end?", we queried. Will the dollar survive?
"The dot com bubble should have burst and gone away in a short sharp recession. But the boys at the Fed re-inflated the economy by lowering interest rates to a 46 year low -- and in turn created the real estate bubble -- much bigger than the dot com bubble. "
"Now they’re creating the bailout bubble -- which will ultimately dwarf the real estate bubble. It will cause the implosion of the global economy world wide -- which will not be able to be repaired by creating yet another bubble. Every time the government fails, it tells a bigger lie and then a still bigger lie."
"These previous bubbles were not allowed to pop -- but they didn’t destroy the infrastructure of the country. This bailout bubble will."
"But this bubble will be the last one. After the final blowout of the bailout bubble, we are concerned that the government will take the nation into war. This is a historical precedent that’s been done over and over again."
"So, it’s not that the dollar that will survive. We may not even survive. Look at the German mess after WWI. It gave rise to Fascism and WWII. The next war will be fought with weapons of mass destruction."
I Am Right Again
Just saw these numbers this morning on Doug Casey's site.
Casey's Daily Resource Plus - June 06, 2009
The day’s big numbers were in the much-anticipated employment report from the Labor Department, which said that job losses slowed in May. Labor said that nonfarm payrolls declined by 345,000, the smallest job destruction in eight months. That was far under economists’ projections for something closer to 500,000.
The currency market surely took note, as this “may be the stamp of approval we've ended the panic period,” in the words of Max Bublitz, chief strategist at SCM Advisors. “People think they don't need to sell the dollar.”
However, the drop in job loss was nowhere near job creation. “The pace of deterioration is slowing, but we are still a long way from the point of stability in both the labor market and the broader economy,” said David Greenlaw, of Morgan Stanley.
The report also noted that the economy has lost 6 million jobs since the recession began in December 2007. Payrolls have fallen by 4.3%, the biggest loss since the 1957 recession.
Underlining the seriousness of the situation, overall unemployment rose by 787,000 in May to 14.5 million, pushing the jobless rate from 8.9% to 9.4% -- the highest level since August 1983. Unemployment is up 5% from its low, the biggest increase since the Great Depression.
And that’s just the leading edge of the wave. If the data included discouraged workers and those whose jobs have been cut back to part-time status, the number of un- and underemployed rose to 16.4% from 15.8% in April. The number of workers forced into part-time positions rose by 164,000 to 9.1 million.
We are not out of the woods yet.
A few days ago I commented that the official unemployment figures were closer to 15% than the "offical" rate of 8%. Just wanted everyone to know that I was right again. Send your notes of praise and admiration to tannerinvestments@windstream.net.
Casey's Daily Resource Plus - June 06, 2009
The day’s big numbers were in the much-anticipated employment report from the Labor Department, which said that job losses slowed in May. Labor said that nonfarm payrolls declined by 345,000, the smallest job destruction in eight months. That was far under economists’ projections for something closer to 500,000.
The currency market surely took note, as this “may be the stamp of approval we've ended the panic period,” in the words of Max Bublitz, chief strategist at SCM Advisors. “People think they don't need to sell the dollar.”
However, the drop in job loss was nowhere near job creation. “The pace of deterioration is slowing, but we are still a long way from the point of stability in both the labor market and the broader economy,” said David Greenlaw, of Morgan Stanley.
The report also noted that the economy has lost 6 million jobs since the recession began in December 2007. Payrolls have fallen by 4.3%, the biggest loss since the 1957 recession.
Underlining the seriousness of the situation, overall unemployment rose by 787,000 in May to 14.5 million, pushing the jobless rate from 8.9% to 9.4% -- the highest level since August 1983. Unemployment is up 5% from its low, the biggest increase since the Great Depression.
And that’s just the leading edge of the wave. If the data included discouraged workers and those whose jobs have been cut back to part-time status, the number of un- and underemployed rose to 16.4% from 15.8% in April. The number of workers forced into part-time positions rose by 164,000 to 9.1 million.
We are not out of the woods yet.
A few days ago I commented that the official unemployment figures were closer to 15% than the "offical" rate of 8%. Just wanted everyone to know that I was right again. Send your notes of praise and admiration to tannerinvestments@windstream.net.
Happy Days Are Here Again!
This morning's jobs data shows 345,000 jobs lost in May. On this wonderful news, the stock market has rallied while precious metals have tanked.
What a crazy world!
Speaking of unemployment figures, the "official" data is that we are running around 8% unemployment. But unknown to the public, that figure does not include people who have been out of work for more than a year. The government's logic in excluding these workers is that if you are out for more than a year then you are no longer looking for a job. Gee, that makes sense. (I am currently rolling my eyes to signal my disdain for this logic.)
In a May 16th piece by Bob Hoye of INSTITUTIONAL ADVISORS entitled Great Depressions Are So Methodical, notes that a year into the Great Depression, unemployment figures were 8%. Eventually they reached 25%. Let's hope this correlation doesn't hold true, but the fact is, history always repeats itself, only this time it will likely be worse, due to the fact that our "true" unemployment numbers at this stage are estimated to be between 12% and 15%.
Anyway, I just wanted to share this delightful information with you heading into the weekend so that you will at least have a legit excuse for your drunken revelry and frolicing for then next two days. Which reminds me, if we ALL drink and party more, this should really help the adult beverage manufacturers, which in turn could add a substantial amount of jobs to the payroll.
Hey, problem solved, BY ME! And just think, all that intelligence after only 5 years of college.....mostly spent at Tiger Town Tavern enjoying dollar a pitcher happy hour.
Gee, I really am onto something here.
Have a nice weekend!
What a crazy world!
Speaking of unemployment figures, the "official" data is that we are running around 8% unemployment. But unknown to the public, that figure does not include people who have been out of work for more than a year. The government's logic in excluding these workers is that if you are out for more than a year then you are no longer looking for a job. Gee, that makes sense. (I am currently rolling my eyes to signal my disdain for this logic.)
In a May 16th piece by Bob Hoye of INSTITUTIONAL ADVISORS entitled Great Depressions Are So Methodical, notes that a year into the Great Depression, unemployment figures were 8%. Eventually they reached 25%. Let's hope this correlation doesn't hold true, but the fact is, history always repeats itself, only this time it will likely be worse, due to the fact that our "true" unemployment numbers at this stage are estimated to be between 12% and 15%.
Anyway, I just wanted to share this delightful information with you heading into the weekend so that you will at least have a legit excuse for your drunken revelry and frolicing for then next two days. Which reminds me, if we ALL drink and party more, this should really help the adult beverage manufacturers, which in turn could add a substantial amount of jobs to the payroll.
Hey, problem solved, BY ME! And just think, all that intelligence after only 5 years of college.....mostly spent at Tiger Town Tavern enjoying dollar a pitcher happy hour.
Gee, I really am onto something here.
Have a nice weekend!
News Excerpts
from Bullion Vault
Global economic activity up to 2007 was driven by rich world consumers buying things even they couldn't afford. In the US alone they have since lost about $12 trillion of private wealth - $120,000 per family. Judging by estimates published in The Economist this should induce a demand slump of about $500 billion per year, for 10 more years.
That means a typical family will be cutting back spending at the rate of $5,000 per year for a decade. So our economies will stay shrunk, threatening deflation.
from Roger Weigand
After Labor Day, this fall, we forecast a false stock market rise followed by most professional traders selling into strength with ferocity. September, 2009 30-year bond futures are trading this morning at 115.12. Next support is 112.50, 110.00, 108.00 and then 106.00. Our longer range forecast is 80.00 with larger potential for something much worse. We told our readers it gets scary when the 30’s sink under 120.00. Well folks we have arrived.
Our new forecast for later September, 2009 through early October would be a 62% crash from the early fall high. This means a selling event of at least 4-6,000 points lower on the Dow Jones.
The Gold Report
John Kaiser: The Race to Rare Earths
June 02, 2009
These days I'm not only concerned that the United States is losing its relative clout on the global stage, but also that countries like China are going to have to go it on their own. They're sitting on these enormous foreign reserves - $2 trillion - two-thirds of which are U.S. denominated instruments - and all of this was built up when they were very dependent on an export economy. They were making things, selling them to the United States, and then shipping the dollars back for IOUs in the future.
But this game is now over. They know it and they are developing infrastructure internally to develop their own domestic economy. They're looking around and saying, "Where are we going to get all the raw materials that will allow us to keep building our own infrastructure and economy, and what are we going to do with all these IOUs?" So they're taking these IOUs and solving this security-of-supply problem by acquiring deposits and assets around the world to ensure that they will have control of the key raw materials that are needed for their long-range plan.
Global economic activity up to 2007 was driven by rich world consumers buying things even they couldn't afford. In the US alone they have since lost about $12 trillion of private wealth - $120,000 per family. Judging by estimates published in The Economist this should induce a demand slump of about $500 billion per year, for 10 more years.
That means a typical family will be cutting back spending at the rate of $5,000 per year for a decade. So our economies will stay shrunk, threatening deflation.
from Roger Weigand
After Labor Day, this fall, we forecast a false stock market rise followed by most professional traders selling into strength with ferocity. September, 2009 30-year bond futures are trading this morning at 115.12. Next support is 112.50, 110.00, 108.00 and then 106.00. Our longer range forecast is 80.00 with larger potential for something much worse. We told our readers it gets scary when the 30’s sink under 120.00. Well folks we have arrived.
Our new forecast for later September, 2009 through early October would be a 62% crash from the early fall high. This means a selling event of at least 4-6,000 points lower on the Dow Jones.
The Gold Report
John Kaiser: The Race to Rare Earths
June 02, 2009
These days I'm not only concerned that the United States is losing its relative clout on the global stage, but also that countries like China are going to have to go it on their own. They're sitting on these enormous foreign reserves - $2 trillion - two-thirds of which are U.S. denominated instruments - and all of this was built up when they were very dependent on an export economy. They were making things, selling them to the United States, and then shipping the dollars back for IOUs in the future.
But this game is now over. They know it and they are developing infrastructure internally to develop their own domestic economy. They're looking around and saying, "Where are we going to get all the raw materials that will allow us to keep building our own infrastructure and economy, and what are we going to do with all these IOUs?" So they're taking these IOUs and solving this security-of-supply problem by acquiring deposits and assets around the world to ensure that they will have control of the key raw materials that are needed for their long-range plan.
Year To Date Returns
June 4 (Bloomberg) see full article
Before today, silver jumped 36 percent this year, platinum was up 32 percent and gold climbed 9.2 percent.
Before today, silver jumped 36 percent this year, platinum was up 32 percent and gold climbed 9.2 percent.
Safety: A World Turned Upside Down
In his Monday Morning Notes posting entitled THE GENERAL HAS NO CLOTHES Michael A. Berry, Ph.D. said "As of 6 AM Chevrolet Saturn (a GM affiliate) filed for bankruptcy in New York. The following chart shows a 91% decline in the share value of the stock effectively wiping out the equity holders of GM. Shareholders must include (or have included) a great many pension funds and endowments. This AM Bloomberg carried the story of a couple with six children who had invested $700,000 in GM corporate bonds because they thought they were safe, would see their children through college and ensure their retirement.
The General is dead. Long live the General.
The US and Canadian Governments will own 70%, the bondholders only ~10%.
Something is very wrong here.
Later this morning the General (GM) a 100 year old company will file for bankruptcy. The US government will own 60% ($20 billion loan), Canada’s government 12% ($9 billion loan)shareholders will get nothing. The bondholders (many retirees who believed in the General)will get between 10% and 15% of the new equity. How is it in our society that secured bondholders have been pushed aside? Irrespective of the human toll, the bond markets are going to be much more expensive in the future because of this government trump card.
One aspect of today’s bankruptcy is critical. This is a global event. It ushers in the changing of the guard globally. Politically, economically and from a capital markets regulatory perspective all has changed significantly. It is now more likely to be a confrontational situation with the government confronting corporate bondholders from time to time. Investments that were not supposed to be speculative (corporate bonds in GM) are now very speculative and have been made so by the solons in Washington and Ottawa.
The ethics of Moral Hazard has been thrown down in a most ungracious manner. Some risk takers have been rewarded and others thrown to the wolves – like the family who invested $700,000 in GM bonds.
This is wrong and immoral.
There has been a 180 degree shift in risk profile from what was previously considered “safe” to what was considered very risky.
The moral of this story is that there is no completely “safe” investment anywhere in the world today."
The General is dead. Long live the General.
The US and Canadian Governments will own 70%, the bondholders only ~10%.
Something is very wrong here.
Later this morning the General (GM) a 100 year old company will file for bankruptcy. The US government will own 60% ($20 billion loan), Canada’s government 12% ($9 billion loan)shareholders will get nothing. The bondholders (many retirees who believed in the General)will get between 10% and 15% of the new equity. How is it in our society that secured bondholders have been pushed aside? Irrespective of the human toll, the bond markets are going to be much more expensive in the future because of this government trump card.
One aspect of today’s bankruptcy is critical. This is a global event. It ushers in the changing of the guard globally. Politically, economically and from a capital markets regulatory perspective all has changed significantly. It is now more likely to be a confrontational situation with the government confronting corporate bondholders from time to time. Investments that were not supposed to be speculative (corporate bonds in GM) are now very speculative and have been made so by the solons in Washington and Ottawa.
The ethics of Moral Hazard has been thrown down in a most ungracious manner. Some risk takers have been rewarded and others thrown to the wolves – like the family who invested $700,000 in GM bonds.
This is wrong and immoral.
There has been a 180 degree shift in risk profile from what was previously considered “safe” to what was considered very risky.
The moral of this story is that there is no completely “safe” investment anywhere in the world today."
Don't Let the Indexes Mislead You
Today the Dow Jones Industrial Average (DOW, or DJIA) dropped banrupt General Motors from their index of the 30 largest US industrial companies. See story Therefore, when looking at the DOW, or any other index that measures performance, we must realize that it is not a fully accurate picture of reality.
For instance, if I owned three stocks over the last year which I paid $100 each for, then my total investment is $300. If one goes bankrupt, my portfollio drops in value to $200.
But if there were an index that tracked those three stocks, and when the one stock went belly up, they simply replaced it with another $100 stock, then the index would show no loss. THe index would still have a value of 300. Therefore, anyone who looks at that index would incorrectly assume that had they been invested in that index over the last year, that they would have lost no money.
Just a heads up to let you know that numbers can be misleading sometimes, even when no one is trying to mislead.
For instance, if I owned three stocks over the last year which I paid $100 each for, then my total investment is $300. If one goes bankrupt, my portfollio drops in value to $200.
But if there were an index that tracked those three stocks, and when the one stock went belly up, they simply replaced it with another $100 stock, then the index would show no loss. THe index would still have a value of 300. Therefore, anyone who looks at that index would incorrectly assume that had they been invested in that index over the last year, that they would have lost no money.
Just a heads up to let you know that numbers can be misleading sometimes, even when no one is trying to mislead.
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