September 2, 2010

In his weekly radio address this past Saturday, President Obama happily commemorated the 75th anniversary of Social Security.  From my perspective, the milestone is nothing to celebrate.  For although the president spoke earnestly about the “obligation to keep the promise” of Social Security, in reality, the program will wreck the government’s finances within 10 years.

The numbers are simply astounding.  Social Security is the largest social program in the world making up over 40% of all federal spending.  Over 58 million Americans – 1 in 5 citizens – receive a monthly check from Social Security program (which includes Medicare and Medicaid) that will have gotten so big that only 7 cents of every dollar of federal revenue may be left for everything else.

What exactly does “everything else” include?  Try the entire military, FBI, freeways, disaster relief, NASA, housing agencies, and the postal service – to name a few.  If new revenue is not found, and if current Social Security obligations are not changed, the remainder of federal programs would have to be cut by 88% by 2020.  Simply put, the “third rail” of American politics is about to electrocute us all.  Neeraj Chaudry, Investment Consultant

Due to ongoing structural banking problems, the broad domestic money supply has been in contraction, the economy is turning down again, and the Fed is scared.  It signaled that this week when it agreed to start monetizing some Treasury debt.  Ultimately, the U.S. dollar should face massive dumping as foreign investors flee dollar-denominated paper assets, and the Fed appears to be doomed ultimately to become lender of last resort for the U.S. Treasury.  Such monetization and the flood of dumped foreign-held dollars into the U.S. will lead to higher inflation.  As promised by Mr. Bernanke in 2002, a central bank always can debase its currency, creating inflation.  Critics of that concept offer that the process did not work in Japan, but the Japanese were not out to debase the yen.

As risks for a likely U.S. dollar panic and Treasury debt monetization near – high risk of same in the next six-to-twelve month – the general outlook for the economy and the markets is unchanged.  For those with soft assets denominated in U.S. dollars, circumstances continue to suggest looking at actions for long-range wealth preservation.  John Williams, Editor, Shadow Government Statistics

The debt will be defaulted on one way or another.  The trouble is they’re almost certainly going to default on it through inflation, by destroying the currency, which is much worse than defaulting on it overtly.  That’s because inflation will wipe out the relatively few people who are prudent in this country those who are actually saving money.  Because they generally save in the form of dollars, they’re going to wipe them out financially.

It’s just horrible.  Runaway inflation will reward the profligates who are in debt – people who’ve been living above their means.  And punish the producers who’ve been saving and trying to build capital.  That’s in addition to the fact it will destroy millions of productive enterprises.  A runaway inflation is the worst thing that can happen to a society, short of a major war.  They just should default on it honestly, as it were.  Doug Casey, Editor
Half a century ago, at the end of World War II, total known stocks of silver amounted to ten billion ounces (with the U.S. government holding 4 billion ounces of that total amount).  At that time, we were just entering an era of unprecedented global economic expansion that has lasted to the present.  In this era, silver was consumed in a variety of vital modern applications at a phenomenal rate.  Today, known stocks of silver have shrunk over 95%, to maybe a half a billion ounces.  The nine and a half billion ounce drawdown in total silver inventory, was the result of the persistent shortfall between supply and demand, which continues to this day.  Not coincidentally, the current 150 to 200 million-ounce annual deficit in silver mirrors the long-term trend line average.  This continuing deficit is remarkable in that there has been decent growth in world production of silver over the past 50 years, but obviously not enough to satisfy the surge in industrial demand.  Hinde Capital

America is effectively bankrupt, but refuses to acknowledge the losses.  Instead, they are being assumed by Washington, which is itself hopelessly indebted to foreign governments.  This risks an international run on the dollar, which early indications show has already begun.

Meanwhile, the American private sector is exhausted.  Anxiety over future stimulus and debt is now combined with fears over tax increases, greater corporate regulation, renewed political strength of organized labor, and new employer health care burdens.  John Browne, Senior Market Strategist

August 26, 2010

It’s not enough that the White House is moving to lock up hundreds of millions of acres of land in the name of environmental protection.  The Obama administration’s neon green radicals are also training their sights on the deep blue seas.  The president’s grabby-handed bureaucrats have been empowered through executive order to seize unprecedented control from states and localities over “conversation, economic activity, user conflict and sustainable use of the ocean, our coasts and the Great Lakes.

Michelle Malkin

With regard to the Ground Zero mosque, I am truly fascinated by the progressive elitists’ newfound enthusiasm for religious tolerance.  Aren’t these the same people who have spent the last few decades doing their best to exorcize virtually any expression of religion from the public square?  Aren’t these the same people whose fellow-travelers in Hollywood have done their utmost to debase Christianity and its adherents at every opportunity?  Aren’t these the “lovable” folks doing their best to turn the Christmas season into a “Winter Solstice” celebration?  Didn’t the president himself ridicule Americans who “cling” to religion?  So why are progressives suddenly gung-ho regarding religious freedom?

Arnold Ahlert

August 18, 2010

The increasing divergence of the U.S. and EU economies, and the sluggish statistics coming out of the former, point to one inescapable conclusion: the U.S. policy mix, in fiscal, monetary and regulator areas, has been uniquely bad.  This is not simply a question of party or  ideology: under the Democratic Clinton administration economic policy was pretty good, while Fed Chairman Ben Bernanke was appointed by a Republican President.  Nevertheless, the combination of misguided theories and poor execution is now doing damage to the U.S. economy that will take a very long time to repair.

Martin Hutchinson

The inspector general noted that “it is clear that tens of thousands of dealership jobs were immediately put in jeopardy as a result of the terminations by GM and Chrysler.”  After extensive investigation, the watchdog concluded that “the acceleration of dealership closings was not done with any explicit cost savings to the manufacturers in mind.”  Only after Capitol Hill critics – both Republican and Democrat – started questioning the Dealergate decisions did Obama’s auto “experts” come up with market studies and estimated job loss data to assess the impact of their reckless, arbitrary orders.

In sum, the inspector general found: “(A)t a time when the country was experiencing the worst economic downturn in generations and the government was asking its taxpayers to support a $787 billion stimulus package designed primarily to preserve jobs, Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls -  all based on a theory and without sufficient consideration  of the decisions’ broader economic impact.”

This is no surprise, of course, considering the amount of actual business expertise among Obama’s auto czars and key staff.  That is:  zero.  Obama’s first auto czar, Steve Rattner, ran a private equity firm in New York before resigning his position amid a financial ethics cloud.

Rattner’s chief auto expert adviser, Brian Deese, is a 30-something former Hilary Clinton/Barack Obama campaign aide and law school grad with no business experience, who openly boasted that he “never set foot in an automotive assembly plant.”

And Rattner’s auto czar successor, Ron Bloom, is a far-left union lawyer who cut his teeth under Big Labor boss John Sweeney, has ideological ties to the corporate-hating labor Zionist movement; and opined that “the blather about free trade, free-markets and the joys of competition is nothing but pabulum for the suckers.”

Michelle Malkin

With the economy and housing sliding faster again, lenders are worried that many of the 11 million homeowners who owe more than their house is worth – the 24% of homeowners who are “underwater” – will walk away from their mortgages.  This would burden lenders with even more unsold homes – a category known as “shadow inventory” because lenders don’t always list a newly foreclosed home for sale immediately.

This shadow inventory could reach as high as 7 million homes by some estimates.  Other analysts have calculated that it would take 103 months (about 8.5 years) to clear this gigantic inventory of foreclosed, distressed and defaulted homes.  Put these numbers in context: according to the U.S. Census Bureau, 51 million households have a mortgage and 24 million own homes free and clear (no mortgage), and about 37 million households rent.

Ron Struthers

Washington policymaking (fiscal and monetary) is on trajectory that will inevitably destroy the creditworthiness of our nation’s vast liabilities.  With ominous parallels to the mortgage/Wall Street finance Bubble, Federal Reserve policies have fostered Bubble dynamics throughout our Treasury, agency and debt markets, more generally. Instead of market dynamics working to discipline Washington’s profligate debt expansion, Federal Reserve interventions ensure that a distorted marketplace again accommodates perilous credit excess.  Our central bankers should heed Mr. Trichet’s warning.  Additional quantitative ease will only fuel the Bubble and risk calamity.

Doug Noland

In practice, socialism didn’t work.  But socialism could never have worked because it is based on false premises about human psychology and society, and gross ignorance of human economy. In the vast library of socialist theory (and in all of Marx’s compendious works), there is hardly a chapter devoted to the creation of wealth – to what will cause human beings  to work and to innovate, and to what will make their efforts efficient.  Socialism is a plan of morally sanctioned theft.  It is about dividing up what others have created.  Consequently, socialist economies don’t work; they create poverty instead of wealth.  This us unarguable historical fact now, but that has not prompted the left to have second thoughts.

David Horowitz

The unfolding renewed decline in economic activity now is likely to be one of the proximal triggers for an even greater systemic solvency crisis, one that will pummel the U.S. dollar, threaten the solvency of the U.S. government and set the stage for a hyperinflation in the United States.  In turn such a crisis would exacerbate the intensifying downturn into a hyperinflationary great depression.

John Williams

August 12, 2010

Silver is very close to exploding higher, but we may have to wait until September or October to see that materialize, but it’s coming.  Investors are realizing the real shortage of physical silver that is our reality today.  It’s just a matter of time, so don’t give up the fight yet.  Our time is very near.  Warren Bevan, Newsletter Editor

Long-time silver investors are well aware that there is a tendency for the prices of precious metals such as gold and silver to trade sideways to lower, hitting bottoms by mid-August.  And, as we have seen prices plunge over the past few weeks I am certain many silver investors have cause for concern as they see this sideways pattern in price continue.  However, there are many analysts who will tell you that August is the perfect time of year to bargain shop for physical holdings.  And, once we enter the northern hemisphere autumn months, the prices of gold and silver should recover from their lows as the buying season resumes in many regions of the world in particular India.  David Levenstein, Author

There is still just enough freedom and a never ending stack of fiat currencies available to buy gold and silver, but not for long.  Over abundant paper of every color and nationality will eventually pursue stores of value with which to see out the economic winter ahead.

 How will you get through winter?  By buying the ultimate financial insurance of history or by burning worthless fiat paper in your fireplace?  The date of this winter can be decades or just a few minutes away.  Knowing the time and date is not relevant.  Being prepared is relevant.  If the great unraveling is to take place after we are gone, then even more reason why we should prepare our children.  Peter Souleles, Editor

“If the practice persists of covering government deficits with the issue of notes, then the day will come without fail, sooner or later, when the monetary systems of those nations pursuing this course will break down completely.  The purchasing power of the monetary unit will decline more and more, until finally it disappears completely.”  Ludwig von Mises, Economist

August 5, 2010

The argument has been made that this rise in the monetary base will do no harm because it has not yet been turned into money by the nation’s banks.  I wish I had a gram of gold for every time I have heard that argument.  I would be a very wealthy man.  First, we cannot be sure of this because the Federal Reserve is lying about the nation’s money supply.  They have reclassified demand deposits (which are money) as time deposits (which are not money).   The Fed is telling the individual owners of these deposits that they are demand, but it telling the nation that they are time.  They cannot be both.

Second, the idea that there is a middle ground in which the Fed can create enough money to stimulate the economy but not so much as to cause “inflation” is more banker gobble-de-gook. These idiots do not even know what the economy is, and when they use the word, they meaning it has is ‘the bankers and their associate vested interests” (i.e., the paper aristocracy).  So to “stimulate the economy” means to help the paper aristocracy at the expense of the American working man.

This idea goes back to Keynes, and ever since the 1930s the establishment economists have been trying to find that middle ground.  They haven’t hit it once.  Back in the 1950s Arthur Burns (later the moving force behind the price and wage controls of 1971) complained that they were getting inflation in a recession (1958), and that was not supposed to happen.  The fact that the “impossible” was happening, however, did not faze Burns one iota.  Like the Red Queen, he used to believe 6 impossible things before breakfast.

Typically, the banks do not start to lend until sometime after the Fed has sharply increased their reserves.  That is the period we are now in.  This is a variable time lag because it is based on decisions by individual bank managers, and it depends on how scared they have been by the previous contraction.  But lend they always do.  And to have the money to lend they have to create it out of nothing.  A good clue here is an increase in corporate profits (which is just starting to happen).  As profits increase (because of the low interest rates caused by the Fed), business starts to dream of new projects.  For these projects, they need their bank loan.

As the projects unfold, they create demand, and this demand begins in the commodity markets (because all consumer goods come from commodities).  Neither is there any increased supply (as is sometimes argued) to offset this increased demand.  This is the stupidity of GDP.  A free economy (and all the businesses in it) has two jobs, not one.  Yes, it is nice to create more goods.  But it is also crucially important to create those goods which satisfy the consuming public’s most important needs.  This is every business man’s number one concern.  What do the people want?
In a free market, tremendous energy and effort goes into answering this question.  But in government projects, the question is never considered.  To measure only the quantity of goods produced and to ignore the larger question of which goods are most wanted and needed is insanity.  In the 1930s, Stalin gave the Russian people industrial goods when they needed food.  Eight million starved to death, but if they had had GDP in those days, then the Soviet GDP would have looked very good.  Howard Katz

July 29, 2010

The last month or so generally has seen economic reporting turn to the downside, and, importantly, the concept of an intensified economic downturn, or a “double-dip” recession, appears to be gaining broader acceptance.  Weak reports on retail sales, industrial production and trade activity this week all showed that broad economic activity has slowed in the second quarter. . .

Accordingly, as the recession intensified anew, the implications of worse-than-expected ballooning federal deficits, Treasury fundings, bank industry solvency issues, etc., increasingly will bring the issues of U.S. solvency and U.S. dollar soundness to the fore.  As suggested perhaps by some recent rebound in the euro, market concerns already may be shifting from European solvency issues to those of the United States.  At such time as U.S. solvency become the focus of global financial-market concerns, it is hard to imagine the U.S. dollar and the U.S. equity and credit markets not being pummeled.

As reported today (July 16th) by the Bureau of Labor Statistics, consumer inflation appears to be contained.  That should change quickly and sharply at such time as the U.S. dollar comes under heavy selling pressure, along with broad dumping of dollar denominated paper assets.  Not only will oil prices spike in response to the dollar weakness, but the Fed will find itself forced to become lender of last resort to the U.S. Treasury, with a resulting sharp jump in Fed monetization of Treasury debt and related money supply issues.  Both the dollar weakness and monetization developments are of increasing probability within the next year, with the time-horizon beginning to come in.  These developments should result in a rapid increase in consumer inflation, with the base then being set for a hyperinflation. . .  John Williams, Newsletter Editor

People who make more are taxed more.  That’s being punished for being more productive.  And then you’re being rewarded for being a parasite.  If you don’t do anything, if you’re just a bum, why, you can go on relief.  You get something for nothing.  That’s a violation of rationality and morality in the short run too.  The less you do, the more you get.  The more you do, the more you’re punished.  That’s a fine standard for a culture!  The most productive people are punished the most for being productive; the ones who produce the least are rewarded for being parasites.  Now, if I tried to design an irrational structure of a society, this is exactly what I’d pick.  Andrew J. Galambos

Gold has industrial uses in addition to being used to make money or jewelry.  It’s a good conductor of electricity and is also used in dentistry.  But silver has the same uses and many more.  What’s the big difference between silver and gold?  Gold is $1,200 an ounce and silver is $18.  If you can choose between the two for your industrial use, you’d always choose silver.  That’s why the world gold supply keeps going up.  Almost every ounce mined remains in supply forever, as opposed to silver, which gets mined and then consumed.  James Altucher, Wall Street Journal

Silver, trading around $18 an ounce, is “really, really depressed on a historic basis,” says Jim Rogers, a commodity investor and former Barrons’ Investment Roundtable member.  Barrons

“If you’re a long-term bull on precious metals, I believe the [gold-silver] ratio will go back below 20.  At 20-to-1, silver would fetch almost $60 an ounce, assuming that gold’s price didn’t change.”  James Turk, Author

“There is more disposable income on a global basis with people looking to invest,” and precious metals will likely be one asset group that savers, such as the Chinese, will target.  Writer Robin Blumenthal, quoting Silver Mining executive Robert Quartermain in Barrons

July 22, 2010

Ted Butler, whom I regard as the world’s leading expert on silver and its market machinations, perhaps summed it up best in his recent newsletter when he stated:  “Increasingly it is looking like the CFTC is the most hopeless or corrupt federal agency of all, in spite of great hopes by me for change that Gary Gensler might bring.” 
As a matter of interest, Gensler is the former Goldman Sachs co-head, who was installed as head of the CFTC in early 2009.

I am actually somewhat more optimistic than Butler when it comes to ultimate response from the CFTC.  It is admittedly a bureaucratic organization but, following the explosive revelations at the March hearing with respect to position limits on gold and silver on the Comex, it seems to me that it is painted into a corner and will be forced to act or lose all credibility.  John Embry, Asset Manager

A century ago, U.S. government debt (funded and unfunded) was a bit less than U.S. $ 30 per person.  Today, the funded portion of the debt alone is nearing U.S. $43,000 per person.  Bad as this “progression” is (add in the unfunded debt and the number explodes to well over U.S. $325,000 per person), it is the minor problem.  The major problem is the destruction of the monetary system.  The “legacy of debt and deficits” is already almost 100 years old.  Bill Buckler, Newsletter Editor

Massive quantitative easing for the past 18 months, at least in the U.S. and the U.K., has not led to an explosion of money as one would have expected.  In effect, the money multiples have shrunk dramatically; banks have build up record excess reserves and the asset side of their balance sheets has experienced a slight shrinkage, as loans have declined at a precipitous rate and Treasury holdings have only partially offset this decline.  Clearly banks are nervous about extending new credit.  Albert D. Friedberg, Hedge Fund Manager

A recent cartoon suggests, “Mr. Bernanke is getting ready to make good on his promise to drop money from helicopters.”  This counterfeiting activity is bad news for people on fixed incomes, but good news for people who buy physical gold and silver to protect themselves from Mr. Bernanke and his Keynesian friends.  In the history of civilization, there is not one country that escaped the destruction of its fiat currency, once monetary inflation became part of the process.   Not One. . .  This trend is bad news for people on fixed incomes and those holding fixed rate investments.  It is good news for people who own pure gold and pure silver.  Peter Degraaf, Newsletter Editor

Those with a long view of history know that the real risk is the current monetary system and not Gold/Silver.  Every fiat currency in history has failed.  Is it doom and gloom to expect the current monetary system to fail?  No, it’s just prudence and foresight.  Jordan Roy-Byrne, Newsletter Editor\

Your editor has avoided recommending ETF instruments that pretend to own gold or silver.  We say “pretend,” because a careful reading of the prospectuses of those instruments does not rule out the same kind of behavior that has enabled central banks (in conjunction with commercial/bullion banks) to manipulate the markets.  Jay Taylor, Newsletter Editor

July 16, 2010

“Double-Dip Begins to Surface in Market Fears.  A number of recent economic releases have shown slowing or contracting monthly activity, often surprising consensus expectations on the downside. From the standpoint of conventional wisdom in the financial markets and the happy hype from Wall Street and the Administration, the patterns here are suggestive of two unfolding and troubling developments. First, the recent "recovery" was weaker than touted and not much more than a short-lived impact from temporary stimulus measures . . . Second, the economic downturn is intensifying anew, as was signaled in advance six months ago by annual real (inflation-adjusted) growth in broad liquidity turning negative. 

“With hints of renewed economic weakness surfacing in the numbers, and as financial analysts increasingly have mentioned the possibility of a U.S. "double-dip" recession, the Fed began playing language games with its latest FOMC statement (June 23rd) . . .

“‘Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad’ . . . The italicized text places blame for a negative shift in the economic environment — a shift unforeseen by the Fed — upon the sovereign solvency crisis in Europe. The Administration already is hinting also that European austerity measures could kill the U.S. economic ‘recovery.’ Such is nonsense; the problems are not abroad, but at home. 

“Decades of unsound U.S. fiscal, monetary, financial-regulatory and trade policies . . . have culminated in the current crises. The United States led the global financial system into the current systemic solvency crisis and into the current severe economic downturn.

“Only politicians and Federal Reserve officials without viable options and Wall Street hypesters would claim that the current structural economic depression would be turned fundamentally by short-lived stimulus measures. The structural issues never were addressed.  Now, as the structural fundamentals reassert themselves, it is the problems at home that still are at the base of the systemic woes. . .

“The intensifying economic contraction has serious consequences that do not seem to have surfaced yet in financial-market concerns — consequences that are unexpected — including unexpected additional explosive growth in the federal deficit, an unexpected further surge in Treasury funding needs, and unexpected renewed solvency concerns for the banking system. Such conditions are not happy news for the U.S. equity or credit markets.

“The broad outlook is unchanged. The economy still is in a particularly severe and protracted downturn. The consequences of that and the extreme fiscal abuses practiced by the U.S. government over decades promise a shift in global market concerns to the U.S. dollar, with an eventual massive flight from the U.S. currency and a U.S. inflation surge that should lead into hyperinflation. Over the long haul, those with dollar-denominated paper assets would do well to consider preserving their wealth and assets.”  John Williams, Editor

 July 1,2010

Keynesians are now arguing the Europe’s austerity packages will plunge the continent back into recession.  President Obama penned an official letter to this effect prior to this weekend’s meeting of the G20 leaders of the world’s major economies, and was reinforced by Larry Summers and Treasury Secretary Tim Geithner in a Wall Street Journal op-ed.  Obama is right to be worried.  If the Keynesians are right, Europe’s budget cutters, by pushing the United States’ largest market back into recession, will damage the United States’ embryonic recovery.  If however the Keynesians are wrong, and Europe does not plunge back into recession, then the United States with its titanic budget deficit will become an isolated example of fiscal laxity, damaging its credit rating.  Since the Unites States makes an excellent return on seignorage from the dollars it provides to the world economy and to fearful Chinese central banks, causing the world’s bankers to focus on the dollar’s problems could push the country even further into downturn.  Martin Hutchinson, Author

So far this year, the U.S. dollar has enjoyed a strong performance.  Traders carefully watch this flagship currency since its fortunes affect virtually everything, from world=-trade balances to global financial markets to commodities prices. Given the dollar’s universal impact, understanding its drivers is essential for gaming all kinds of markets.

Today conventional wisdom attributes the dollar’s recent strength to the brutal selloff in the euro, its primary competitor.  And this is certainly logical.  The U.S. Dollar Index (USDX) is the primary tool traders use to track the dollar’s progress.  And the euro dominates this key metric at 57.6% of its weight.  So the dollar, which really means USDX inmost traders’ minds, is heavily affected by the euro.

But what if this causality is backwards?  What if the dollar isn’t strong because the euro is weak, but the euro is weak because the dollar is strong?  Identifying the prime mover in this relationship is exceedingly important for traders.  If the driving force  behind this year’s wild currency moves is emerging from the dollar side rather than the euro’s, it radically changes trading outlooks in all kinds of markets.

Europe has all kinds of problems today, the chickens coming home to roost on big-government socialism and out-of-control government spending.   It is tragic to see Washington asininely dragging the U.S. into this same socialist cesspool today given Europe’s woes.  And if the Europe situation truly is the driver of the dollar’s recent strength as nearly everyone assumes, its rally could continue for a long time to come.

But amazingly given the stellar popularity of this thesis, the market action really doesn’t support it very well at all.  If you carefully study the dollar’s price action, this currency is marching to the beat of a different drummer than the euro.  Its primary driver actually lies outside the currency realm entirely.  The fortunes of the U.S. stock markets have utterly dominated dollar behavior over the past couple years!  Adam Hamilton, Author

June 24, 2010

The international order has thus returned to the Kaiser’s world of multiple states, high tariff barriers and unfair trade competition.  Small countries have no alternative but to seek protection in the spheres of influence of their larger neighbors.  Participants in the protectionist new world order will be a diminished United States, a sclerotic and inward-looking EU, projecting its power no further than the Balkans, one or possibly two left-leaning Latin American blocs led by Brazil and Venezuela (which may or may not combine), a resource-rich and oppressive bloc led by Russia, a highly unstable Middle East dominated by Turkey and Iran, and an impoverished and unstable south Asian bloc led by India.  By far the most powerful and successful bloc will be led by China, which will include much of south-east Asia and large parts of Africa.  There will remain a few substantial independent states: an isolationist Japan, an unstable Indonesia, perhaps a modestly prosperous Australia.  Martin Hutchinson, Author

Let’s do a brief review of the “policies” he has endorsed or helped promote over the last three years.

• The Federal Reserve cutting interest rates from 5.25 – 0.25% (Sept. ’07- today)
• The Bear Stearns deal/Fed buys $30 billion in junk mortgages (March ’08)
• The Fed opening various lending windows to investment banks (March ’08)
• The Treasury buying Fannie/Freddie for $400 billion (Sept ’08)
• The Fed taking over AIG for $85 billion (Sept ’08)
• The Fed dishing out $25 billion for the auto makers (Sept ’08)
• The Feds’ $700 billion Troubled Assets Relief Program (TARP) (Oct ’08)
• The Fed’s commercial paper (non-bank debt) purchasing program (Oct ’08)
• The Fed’s $540 billion backstop for money market funds (Oct ’08)
• Another $40 billion to AIG (Nov ’08)
• The Fed backstops up to $140 billion of Bank of America’s liabilities (Jan ’09)
• The Fed’s $300 billion Quantitative Easing program (Mar ‘09)
• The $1.25 trillion I mortgage backed securities purchases (Mar ’09 – ’10)
• The Fed buying $200 billion in agency debt (Mar ’09 – ’10)
• Opening up currency swap lines with foreign central banks (Spring ’10)

The Fed and various economists like to dress these moves up in fancy language and financial terms, but in reality they all boil down to one of three strategies:

• Printing money
• Letting bankrupt, failed institutions stay in business via handouts
• Buying garbage debt no one wants at 100 cents on the Dollar from said bankrupt institutions  Graham Summers, Author

June 18, 2010

Robert Reich’s “The Jobs Picture Still Looks Bleak” is at least an implicit admission that he is partially philosophically responsible for the obvious consequences of tax, spend, pander politics and the policies of the last 60 years.

Jobs were outsourced because the unions were destroying American businesses’ ability to compete in labor cost.  That would have been much more difficult to do had the politicians not pandered to organized labor in return for votes.  Since the good professor has no good economic solution to the circumstances which his positions have helped create, he is reduced to informing us of the obvious:  The standard of living in the U.S. will be coming down for just about everyone except, of course, career politicians and public employees.  Thank you Prof Reich.
James F. Chambliss

There is perhaps no better example of the destructive nature of government intervention than the current housing and retail goods markets.  For the past three years a spend-happy Congress lavished these areas with stimulus spending, tax credits, and other palliatives all aimed at papering over the structural defects in these markets.  In the case of retail goods, it was years of abuse of various types of credit to expand a spending bubble and increased reliance on foreign products.  However, Congress has not buttoned up - in fear for their political existence in many cases. The public is aware and fearful of debt for the first time in recent memory.   Living in a post-stimulus world; even if it is only until the next Congress is seated will be interesting to say the least.  Andy Sutton

Every year about this time, big government liberals stand up in front of college commencement crowds across the country and urge the graduates to do the nobles thing possible – become big-government liberals.

That isn’t how they phase it, of course.  Commencement speakers express great reverence for “public service,” as distinguished from narrow private “greed.”  There is usually not the slightest sign of embarrassment at this self-serving celebration of the kinds of careers they have chosen – over and above the careers of others who merely provide us with the food we eat, the homes we live in, the clothes we ear and the medical care that saves our health and our lives.

What I would like to see is someone with the guts to tell those students: Do you want to be of some use and service to your fellow human beings?  Then let your fellow human beings tell you what they want – not with words, but by putting their money where their mouth is.  Thomas Sowell

June 8, 2010

The broad money supply continues to tumble on a year-to-year basis, with May data likely to show deepening annual contraction. . .   

Some on Wall Street and/or the Administration may be anticipating a double-dip recession, since stories already are surfacing of how the systemic solvency problems in Europe could push the U.S. economy back into recession.  While politically it may be worth the effort to divert blame abroad, the problem remains a liquidity squeeze at home, where the Fed and the Administration have been unable to provide long-term stability to the system or adequate liquidity to consumers and businesses. . .

The weakness in the money supply foreshadows the economic renewed downturn, which in turn should set the stage for a serious inflation problem.  The systemic crises of the last couple years may be contained, temporarily, but they are not resolved.  Renewed economic downturn would threaten whatever systemic stability has been in place.  The worst is still ahead. . .  John Williams, Newsletter Editor

And speaking on ETFs, in general these are very poor instruments, designed by the big investment banks for the big investment banks.  They are skimming $billions off these things with their flash trading, front running the market in the name of a holy grail called “Market Maker. . .” 

GLD and other ETFs have no audits.  We can only go by what some Investment Bank says and if you trust their word, you better quit investing.  Even their prospectus is worded quite vaguely in many areas.  I doubt GLD or SLV holds any real metal at all.  These ETFs just like other leveraged ETFs are just a computer program making trades designed to mimic some other asset or index.  And these computers of the Investment Banks are running all this flash and high frequency trading on these ETFs.   Ron Struthers, Newsletter Editor

The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.   Ambrose Evans-Pritchard, Editor

May 28, 2010

Obama has nominated Donald Berwick to run the Centers for Medicare and Medicaid Services.  I discovered in research on my upcoming book that experts believe that under Obamacare, the role of the CMS will be greatly expanded to define the quality of health care for every insurance plan, set reimbursement rates for physicians in Medicare and Medicaid and decide how valuable certain treatments are.  According to Robert M. Goldberg of the Center for Medicine in the Public Interest, Berwick, essentially, “will get control of the practice of medicine.”

It would be scary enough for a bureaucrat of normal sensibilities and saner politics to have such control, but RedState has uncovered the extent of Berwick’s radicalism – like so many of Obama’s other appointees.  Berwick is an Ivy League academic who loves wealth redistribution and believes that health care is an ideal vehicle to achieve it.  He said: “Any health care funding plan that is just, equitable, civilized and humane must. . .redistribute wealth from the richer among us to the poorer and the less fortunate.  Excellent health care is by definition redistributional.”  Berwick also lusts after the British system of socialized medicine, saying that America’s health care system runs in the “darkness of private enterprise.”

David Limbaugh

Welfare.  Democrats view taxes as contributions to charity. (Seriously.  You should talk to a few Democrats if you doubt it.)  Consequently, when Democrats designed a welfare system that cost taxpayers trillions, they considered it a double good deed.  Welfare taxes benefited the poor and forced Americans to do the right thing.  Over the years, however, it became clear that government “charity” dollars were actually producing a social disaster – driving fathers from their children, bribing teenage girls to have children out of wedlock, subsidizing drug abuse and destroying the work ethic of entire inner city communities.

To address the problem, Republicans proposed welfare reforms that would put recipients to work and get others off the rolls.  Democrats said “No,” and dug in their heels.  They had to defend the vast patronage system that welfare created for government bureaucrats, social workers and other beneficiaries, who could be counted on to vote for the Democrat Party.

But Democrats also knew that the romance of the victim would work in their favor.  When Republicans proposed welfare reform, Democrats attacked them as mean-spirited and heartless.  They said Republicans lacked compassion.

David Horowitz

The markets have shut down for Greek banks, money is fleeing the country and the big Greek banks are about to collapse as the repo market is closed to them.  But the bigger story is the downgrading of Greek debt to junk, forcing institutions to sell and prohibiting holders of the debt from borrowing against them from the European Central Bank. 

The money on their balance sheets just took a 30% haircut at the minimum, and no one will lend against them, except the European Central Bank (which changed the rules to keep them eligible to use as collateral).  It is only a matter of time before this spreads to the other social welfare states.  As this crisis spreads to Italy, Portugal and Spain the interbank lending market will become increasingly dysfunctional and freeze up, as the Counter Party solvency issues which emerged with Lehman Brothers resurfaces.

Ty Andros

I believe that we’re living through a time of historic change for the U.S. and the world.  I believe the stock market is telling us an ominous story, but as usual, the stock market is well ahead of the story.  I believe the stock market is heading into what may be the worst and most decisive bear market in history.  The generations since World War II have been enjoying decades of good times with the help of fiat money and massive borrowing – a process that has created an international house of cards.  The stock market has forecast our great and “borrowed” period of the good life in its own way – by giving us the greatest bull market in history.

Now the bull market is over, and the great correction (bear market) is upon us, but it’s still in its early stages.  The bear market will be hair-raising in its intensity and persistence.  The bear market will produce losses that will be a wonder to behold.

The bull market was sustained by systematic inflation – and fiat money created by the central banks of the world.  Before the bear market is over the very worth of fiat money will be in question. . .

Richard Russell

May 26, 2010

Whenever real M3 has contracted on a year-to-year basis, the economy always has followed, either falling into a recession, or if already in recession, intensifying. . .The lead-time appears to be shorter in an existing recession, and evidence of an intensifying downturn should be imminent. . .near-term economic activity will turn down with major negative implications for the federal budget deficit, U.S. Treasury fundings, systemic solvency and the U.S. dollar.  Such developments should place significant upside pressure on domestic inflation.  U.S. difficulties eventually should dwarf the European sovereign solvency concerns currently helping to roil the markets.  Accordingly, the long-term outlook for the U.S. dollar and U.S. equity and credit markets remains bleak, while the long-term outlook for gold and silver remains extremely strong.  John Williams, Editor

Gold is speaking to us, in its gleaming, grinning, golden silence, from its distant historical perch in the affairs of commerce among humans.  It’s telling us what fools we are to believe in the fiat paper issued by governments.  James West, Editor

It’s clear the U.S. dollar will suffer inflation due to high and growing debt-servicing costs, government payrolls, and unfunded entitlement promises.  The U.S. can either default or inflate, and the former is unthinkable to a career politician.  At some point – and we think it is fast approaching – global investors will see that U.S. indebtedness has reached unsustainable  levels and exit the dollar, which today means selling bonds.  Interest rates will be forced higher, and the U.S. will face it owns Greek Moment.  Jeff Clark, Editor

The United States is the largest debtor nation in history.  Our continued solvency depends upon low interest rates.  But low rates are engendered either naturally from increased savings or artificially from money printing.  Without having the adequate savings to bring down rates the Fed has supplanted savings with monetization of debt.  However, money printing eventually leads to intractable inflation and will send bond yields much higher, especially on the long end of the curve.

To make matters worse, we currently see the difference between revenue and spending headed further in the wrong direction.  The budget deficit for the month of April was reported to be $82.7 billion.  That figure was nearly 4 times last year’s reported deficit in April which was $20.9 billion.  Michael Pento, Editor

“Strategic” defaults accounted for at least 12 percent of all [mortgage] defaults in February, up from about 4 percent in Mid-2007. . .

Housing analysts say strategic defaults mainly occur when a home’s value has dropped below remaining the balance on the mortgage.  A homeowner in that position may decide that continuing to make payments is throwing money away, or may default to get the lender to modify the loan. . .

Zillow.com states that one in five U.S. homes with a mortgage has “negative equity” so the number of potential strategic defaulters is rather huge; what we have on our hands is a ticking  time bomb and purchasing real estate now is one of the dumbest moves an investor could make…
Sol Palha, Editor

The EU has simply thrown a trillion dollars at the problem to make the symptoms go away temporarily.  But the debt is still there, and no increased economic engine of production has been facilitated or enhanced.  The austerity measures, even if sufficient (which they are not), cannot be implemented given the massive power of the unions and benefit corrupted public employees and welfare recipients.  Entrenched socialism won’t allow real cut backs in government spending – at least sufficient to eliminate the need for more debt and fiat money creation.

John Brown of Euro Pacific Capital explains: “As the health of much of the global economy weakens on a daily basis, political leadership increasingly ignores the source of the malady and instead focuses on short term ‘band-aid’ remedies.  These measures which may buy a few months, or years, of relative well being will convince the public that problems have been solved and will thereby take pressure off governments to make the needed structural changes.  The recently announced $1 trillion EU bailout is a perfect example of this ‘band-aid’ approach.”  Joel Skousen, Editor

April 19, 2010

Our economy is being transformed from a mostly capitalistic one to a mostly socialistic one.  More decisions are being made by politicians and lawyers in Washington and fewer by entrepreneurs.  The motivation behind this shift is the mistaken belief that the financial crisis of 2008 was caused by too much capitalism and a lack of proper government oversight.  This conclusion is self-serving for those in power, and couldn’t be more economically misguided.  Through corruption or just plain ignorance, Congress and this Administration have embraced an ideology that has failed every time it has been tried.  Peter Schiff

Forced redistribution makes eminent sense to most people these days, which fills me with shame for my species.  Humans will believe the darnedest things and then do evil with righteous delight in their hearts.

Notice how the problem – increasing disparity of wealth – is assumed to have no definite cause.  All we get to read is that government redistribution is the noble answer, the hard choice that a crusading meddler like Obama must fix.  But the world-improvers never for a second suspect that government intervention could be the cause of the very problems that they call on government to fix.  And like children, they really don’t understand the consequences of their actions.

They think they’re justified in their theft and their coercion . . . but consequences tend to be perverse and in the long run people tend to get what they got coming.  The growing disparity in incomes is a result of corporatism, inflation, fractional reserve banking, debt creation and a few other bits of mischief government and central banks exist to perform.  Jeff Clark

May 12, 2010

It would seem that statism, historical amnesia, economic ignorance and bigotry are the mental and moral dispositions that will be shaping the passage of our financial re-regulations bill in the Senate this week.

The current, ill-fated 111th Congress continues to blunder its way into our history books along with the dreadful 94th (cut off money to South Vietnam in 1975, lost the war and triggered the Cambodian genocide); 71st (1929-1930, passed the Smoot-Hawley Act, which led to the Great Depression); 63rd (1913-1914, passed the 16th Amendment – income tax; the 17th Amendment – direct election of the Senate; and creation of the Federal Reserve, which led to weakening of the states, encroachment of the federal government); and 33rd (1854-1855, passed the Kansas-Nebraska Act, which quickened steps to the Civil War).  A couple of more destructive laws enacted and the 111th will be No. 1.

Tony Blankley, Editor

May 5, 2010

Ironically, the United States is moving in the direction of the kind of economy that China has been forced to move away from.  China once had complete government control of medical care, but eventually gave it up as the disaster that it was.

The current leadership in Washington operates as if they can just set arbitrary goals, whether “affordable housing” or “universal health care” or anything else – and not concern themselves with the repercussions – since they have the power to simply force individuals, businesses, doctors or anyone else to knuckle under and follow their dictates.

Friedrich Hayek called this mindset “the road to serfdom.”  But, even under serfdom and slavery, experience forced those with power to recognize the limits of their power.  What this administration – and especially the President – does not have is experience.

Barack Obama had no experience running even the most modest business, and personally paying the consequences of his mistakes, before becoming President of the United States.  He can believe that his heady new power is the answer to all things.

April 28, 2010

When distortions in the economy are still small, and only a minor recession would be necessary to correct the misallocation, a modest amount of monetary or fiscal stimulus often will be sufficient to make the boom continue; this represents another source of deception.  Central bankers and finance ministers enjoy praise for this cheap feat of having prevented what would otherwise have been only a mild and short slump.  Yet by not letting mild recessions happen, these policy makers heap one pile of economic distortions upon another until the big downturn becomes unavoidable.

When finally confronted with the threat of a severe depression, these same authorities fall into panic.  Acting in fear, they tend to deny experience and to flout prudence and rationality.  In the face of a major economic downturn, monetary authorities resort to flooding the economy with even more easy money.  Furthermore, their deficit spending heaps new debt upon old debt.

Antony P. Mueller

April 14, 2010

Whether it is in education, housing, health care, automobiles, insurance, or banking, greater government involvement in the economy means higher prices, lower productivity, more bailouts, bigger deficits, increased taxes, diminished industrial capacity, fewer private sector jobs, less freedom, and a falling standard of living.

March 5, 2010

Foreign owners of U.S. government debt reduced their holdings by the largest monthly amount ever in December, with China offloading so many Treasury securities that it is no longer the largest foreign holder.   Total foreign holdings of Treasury securities plunged by $53 billion in December.   China led the sell-off reducing its holdings by $34 billion, while Japan increased its holdings by $11 billion to become the new largest foreign holder of Treasuries.

This news has seriously bearish implications for the U.S. dollar and is extremely bullish for precious metals.  If China stops buying U.S. debt, the Fed will be forced to monetize a greater portion of the auctions, creating currency at a blistering pace and sending the dollar much lower in an inflationary tailspin.  This news also calls into question the U.S. government’s triple-A credit rating and could lend further support to my belief that investors will stop turning to the dollar as a safe haven in the near future and instead begin turning to precious metals.  Jason Hamlin, Editor, GoldStock Bull

On February 17, the President of the Federal Reserve Bank of Philadelphia gave a speech to the Philadelphia chapter of the World Affairs Council.  The President of the Philadelphia Fed, Charles Plosser, titled his speech, “The Federal Reserve System:  Balancing Independence and Accountability.”  This sounds boring.  For those who understand the function of the Federal Reserve and its influence, the speech is not boring to read.  The target of the first half of the speech was Ron Paul.  It was a warning against Ron Paul’s bill in the House of Representatives that would authorize the Government Accountability Office to audit the Fed.  The House’s leadership has kept the bill from coming to the floor for a vote, despite the fact that a majority of the membership has officially supported it, and despite the fact that a majority of the House Financial Services committee voted for it, 43 to 26, in November 2009.  The Fed has consistently opposed this bill.  The official explanation is that this would in some way constitute interference with the Fed’s policy-making.  This argument has never been clear.  The fact that the General Accountability Office will verify the numbers in no way constitutes interference with Fed policy, unless Fed policy has been carried on under false numbers.  Nobody at the Fed will say what is really at stake:  an independent audit of the government’s gold holdings, which are officially held for the government by the Fed for safekeeping.  If the gold is gone, or if there are legal claims against it by foreign central banks as a result of Fed swaps, this would constitute fraud on a massive scale.

The real power in the Fed has always been the Federal Reserve Bank of New York.  In all textbook accounts of the years leading up to the Great Depression, the focus is on Benjamin Strong, the President of the New York Fed.  He set policy, not the Board of Governors.  The bulk of the world’s gold holdings are stored in the vault of the New York Fed.  This includes most of the deliverable gold (99.9%) owned by the Fed as trustee of the U.S. government’s gold.  The gold at Ft. Knox (probably coin melt, 90% fine)  constitutes a second holding area, said to be 20% of the nation’s gold.  No one knows.  It has not been audited since the early 1950’s, not even by the private accounting firms that audit the Fed on an annual rotation basis.

The Fed demands secrecy.  It proclaims that it pursues transparency, but does not on any issue of substance.

Bloomberg News in November 2008 sued the Board of Governors under the Freedom of Information Act to find out which institutions received how much money in October 2008 bailouts.  The Board of Governors refused to comply on this legal basis:  this would expose trade secrets of the recipient banks.  Gary North

March 2, 2010

Another dangerous power toward which we are moving, bit by bit, on the installment plan, is the power of politicians to tell people what their incomes can and cannot be.  Here the resentment is being directed against “the rich.”

The distracting phrases here include “obscene” wealth and “unconscionable” profits.  But, if we stop and think about it – which politicians don’t expect us to – what is obscene about wealth?  Wouldn’t we consider it great if every human being on earth had a billion dollars and lived in a place that could rival the Taj Mahal?

You can see the agenda behind the rhetoric when profits are called “unconscionable” but taxes never are, even when taxes take more than half of what someone has earned, or add much more to the prices we have to pay than profits to.

Thomas Sowell

February 24, 2010

“True to their mission as the organs of the liberal establishment, Time magazine and The New York times ran stories in the midst of the great snowmaggeddon warning us against drawing any politically incorrect conclusions.  ‘Skeptics of global warming,’ cautioned The Times, ‘are using the record-setting snows to mock those who warn of dangerous human-driven climate change – this looks more like global cooling’, they taunt.  Most climate scientists respond that the ferocious storms are consistent with forecasts that a heating planet will produce more frequent and more intense weather events.  Time agrees: ‘There is some evidence that climate change could in fact make such massive snowstorms more common, even as the world continues to warm.’

“Note how The Times contrasts ‘skeptics of global warming’ with ‘climate scientists.’  Bill Nye the Science Guy, appearing on MSNBC, used the same tactic, accusing skeptics about manmade global warming of ‘denying science.’

“Those who now protest that any particular weather pattern should not be confused with global climate have short memories.  Only yesterday, they were attributing every forest fire, drought, hurricane and toad disease to global warming.  Remember the ‘plight’ of the polar bears?  Turns out that polar bear populations have been increasing, not decreasing, for the past 30 years.”

Mona Charen, Editor

December 10, 2009

“Scooped by Fox News, conservative blogs and talk radio on the exploding ACORN scandal, the New York Times whitewashed its own role in covering up the community organizing racket’s financial shenanigans last fall when it cut off a reporter’s investigation a few weeks before Election Day.  Jill Abramson, the Times’ managing editor for news, acknowledged that her staff was ‘slow off the mark’ and blamed ‘insufficient tuned-in-ness to the issues that are dominating Fox News and talk radio.’  They assigned a new ‘opinion media monitor’ to track the competition, but refused to identify the watchdog for fear that he/she would get too  many mean, intrusive e-mails and phone calls.

“More recently, the paper’s website demonstrated that its real motto is ‘All the inconvenient news that’s fit to suppress.’  The Times’ lead environmental blogger, Andrew Revkin, haughtily refused to reprint damning e-mails leaked by a hacker in the burgeoning ‘ClimateGate’ scandal.  The documents reveal a long trail of manipulated data, but Revkin balked at the ill-gotten trove.  The blabbermouths at the Times had no problem exposing national security secrets to undermine Bush.  But shed light on scientific hoaxes that undermine Al Gore?  Unethical!”

Michelle Malkin

“The holders of Dubai’s real estate assets and sovereign debt are the major Western financial institutions already weakened by their escapades at home.  Though the government of Dubai has distanced itself from the mess, the bursting of the ‘Dubai bubble’ will mean even more write-downs for Anglo-American investment banks.

“This may prove to be the first of a new wave of defaults as the commercial mortgage markets begin to buckle.  Worse still, any news series of major defaults could spread rapidly to and within the derivatives market.  If that were to happen, a sudden cascade of settlement defaults could cause a devastating implosion of international financial markets – one that central banks may be powerless to contain.”

John Browne

November 9, 2009

“The most severe economic downturn since the onset of the Great Depression continues, as does the systemic liquidity crisis.  The employment and unemployment numbers remain coincident, not lagging indicators of broad economic activity, and their ongoing deterioration in October means that the economy is not recovering.  At best, activity in key areas such as retail sales, housing and production has flattened out at extremely low levels.  Those levels also have enjoyed short-lived support from one-time stimulus gimmicks that largely have run their courses. . . . .

The Fed continues in panic mode, spiking the monetary base at annualized paced not seen since the ‘worst’ of the crisis a year ago.  At the same time, broad money supply is contracting at a pace that even in the best of times would a promise a recession in the months ahead.

“The broad outlook remains unchanged.  I cannot remember stock market prices ever being so far removed from reflecting underlying economic and financial-system reality.  Irrespective of near-term market gyrations, the long-term outlooks remains extremely bearish for U.S. equities and the U.S. dollar, and extremely bullish for gold and silver.  The economy still faces an eventual hyperinflationary great depression, with high risk of that circumstance beginning to unfold in the year ahead.”

John Williams

“Maria Shriver’s new report, ‘A Woman’s Nation Changes Everything,’ has received a full dress media rollout. . . . . . .

“Hundreds of pages, lots of photos and charts, and it’s the same old song.  It completely misses the most important fact about modern women’s lives – the decline of family stability.  And not just women’s lives.  The decline of marital stability and the rise of unmarried parenting (currently almost 40 percent of children are born to unmarried parents) has not only been a catastrophe for children, it has also made combining work and family harder than ever. Just at the moment women entered the workforce en masse, marriages – so essential to providing stability to home life – unraveled.

“The solution, says the Shriver report, is for our ‘social insurance’ programs to ‘recognize’ how family life is changing and increase benefits for a range of domestic needs.  See how it works? The more that families disintegrate, the more demands are made upon the government to step in to fill the gaps.  That’s a downward spiral from which there may be no escape.”

Mona Charen

October 30, 2009

“In the past week, both Chis Matthews and Keith Olbermann have rolled out the Willie Horton ad, claiming that it marked the beginning of vicious personal attacks in politics, as opposed to what it was: The most devastatingly relevant campaign commercial in all of American history.

• In the 80’s, the Massachusetts Supreme Court ruled that a prison furlough policy had to be extended to convicted murderers, who were ineligible for parole.
• Even the Massachusetts Legislature, which contained about three Republicans, realized this was insane, and quickly passed a bill excluding first-degree murderers from the weekend furlough program.  But in a desperate bid for the ACLU’s Brain-Dead Liberal of the Year Award, Gov. Michael Dukakis vetoed the bill.
• Horton, who was later released under this program, was in prison for carving up a teenager at a gas station and then stuffing his body into a garbage can. (He had already been convicted of attempted murder in South Carolina – through no fault of his own, the victim survived.)
• Even after Horton used his Dukakis-granted furlough to rape and torture a Maryland couple in their home for 12 straight hours, the Greek homunculus issued a statement reaffirming his strong support for furloughing murders.
• The Bush campaign commercial about Dukakis’ furlough program never showed a picture of Horton.  In fact, the actors playing ‘criminals’ passing through a revolving door in the ad were all white.
• Voters considered it relevant that a candidate for president was so beholden to the ACLU that he backed an idiotic furlough program that released first-degree murderers.

“Every informed student of the 1988 campaign knows that the Bush ad didn’t show Horton’s picture.  And yet in Keith’s discussion of Bush’s allegedly vile, racist use of Willie Horton, he used a phony version of the ad, doctored to include a photo of Horton.
I don’t blame Keith personally for this blatant distortion:  He gets all his research material from Markos Moulitsas and other left-wing bloggers, so he cannot be held responsible for the content of his show.  Keith’s principle contribution to the program is his nightly display of self-congratulation and pompous douche-baggery.”  Ann Coulter

October 28, 2009

“The worst remains ahead for the economic and systemic-solvency crises.   Economic reporting has shown no meaningful signs of business recovery, with the current depression likely to evolve into a great depression, in conjunction with the collapse of the value in the U.S. dollar and a hyperinflation.  Risks are high for these crises to explode in the year ahead.  The general outlook is not changed.

“A full review of the economic outlook will follow with next week’s third-quarter GDP commentary.  In the interim, some selling pressure has continued against the U.S. dollar, along with continued strength in oil and gold prices, generally reflective of the Federal Reserve’s ongoing efforts to debase the U.S. currency.

“Rarely have market expectations (economic recovery, contained inflation, contained solvency crisis) been so far removed from underlying economic and financial-system fundamentals and reality.  That circumstance leaves open the possibility of extreme, negative market reactions, with highly volatile and disorderly markets possible.  Such is true particularly for U.S. equities and the U.S. dollar.”  John Williams

“Meanwhile, a great bull market starts  . .  a bull market that mirrors the demise of the dollar.  Gold is priced in dollars, and as the dollar weakens, it takes an increasing amount of fiat dollars to buy an ounce of gold.  Beginning in 1999, gold started up a primary bull market.  In my personal opinion, this is fated to be one of the greatest bull markets in history.  It will be a bull market built on not one, but tow powerful human emotions – greed and fear.  The speculative third phase lies ahead.  Slowly but surely, the US public will finally realize that the US government is bankrupt both morally and monetarily.  People will panic into gold  . . . I believe that there will be a world panic to buy gold.  This will set off one of the wildest and most explosive bull markets in history.”  Richard Russell

October 27, 2009

“History has shown us time and time again that the masses never seem to understand what is happening to them until it is too late.  This is providing us with an exceptional opportunity to profit and make spectacular gains for being smart, informed and able to make key decisions at moments when most others have no clue or feel caught like a deer in the headlights.  Have confidence in your decisions to own the physical metals and quality mining shares.  You re doing the right thing.

“The truth is gold is going to go much higher whether John or Mary Q. Public get it or not.  This reminds me of the great quote from Arthur Schopenhauer, which says:  ‘All truth passes through three stages.  First it is ridiculed.  Second it is violently opposed.  Third, it is accepted as self-evident.’

“Take the example of poor Galileo who was ridiculed, persecuted and eventually prosecuted for his belief that the earth revolves around the sun.  What is taken as being self-evident now was total heresy when it was then believed that the sun revolved around the earth.

“We have similar flawed thinking in today’s society when you look at how the masses believe in politicians who keep creating money out of thin air to fix anything that ails us.  The general public votes for and believes in deficit spending as if there are no consequences simply because a majority of Americans don’t want to take responsibility for themselves.  They have a sun-revolves-around-the-world entitle mentality that the government can and should take care of us from cradle to grave.  How pathetic!  Turning over your destiny to government fools is the antithesis of what the founding fathers stood for.

“Unfortunately for all of us, this entitlement fantasy will not have a good conclusion as the government runs the country into the ground trying to do what simply cannot be.”

Greg McCoach

October 20, 2009

“Rep. Diane Watson said, in praising Cuba’s health care system, ‘You can think whatever you want to about Fidel Castro, but he was one of the brightest leaders I have ever met.’  W.E.B. Dubois, writing in the National Guardian (1953) said, ‘Joseph Stalin was a great man; few other men of the 20th century approach his stature.  . . . But also – and this was the highest proof of his greatness – he knew the common man, felt his problems, followed his fate.’  Walter Duranty called Stalin ‘the greatest living statesman  . .  a quiet, unobtrusive man.’  George Bernard Shaw expressed admiration for Mussolini, Hitler and Stalin.

“John Kenneth Galbraith visited Mao’s China and praised Mao and the Chinese economic system.  Gunther Stein of the Christian Science Monitor admired Mao Tsetung and declared ecstatically that ‘the men and women pioneers of Yenan are truly new humans with spirit, thought and action,’ and that Yenan itself constituted ‘a brand new well integrated society, that has never been seen before anywhere.’  Michel Oksenberg, President Carter’s China expert, complained that “America (is) doomed to decay until radical, even revolutionary, change fundamentally alters the institutions and values,’ and urged us to ‘borrow ideas and solutions’ from China. . . . .

“The most authoritative tally of history’s most murderous regimes is in a book by University of Hawaii’s Professor Rudolph J. Rummel, ‘Death by Government.’  Statistics are provided at his website: (http://www.hawaii.edu/powerkills/welcome.html).  The Nazis murdered 20 million of their own people and those in nations they captured.  Between 1917 and 1987, Stalin and his successors murdered or were otherwise responsible for the deaths of, 62 million of their own people.  Between 1949 and 1987, Mao Tsetung and his successors were responsible for the deaths of 76 million Chinese.”
Walter Williams, Editor

October 13, 2009

“The U.S. government is bankrupt, but that isn’t stopping it from dramatically increasing its share of the economy.  The deficit will soon skyrocket due to $63 trillion in baby boomer retirement obligations.  New taxes and social programs grafted to an already bloated government will further drain the private sector, push productive endeavors offshore, and leave large numbers of the heavily indebted middle class out of work and out of luck come retirement.  This will trigger a negative feedback loop, as the unemployed, underemployed, and senior boomers become increasingly dependent on the state for the basic necessities of life.  The shift now underway is not that associated with a typical business cycle but rather with a long-term restructuring.”

Casey Research

September 21, 2009

“Since the Federal Reserve and the administration are both determined to continue "stimulus" policies, it is more likely that the bounce will continue for another six to 12 months, with the stock market getting back towards 2007 levels, removing the effect of the credit crunch, pushing oil prices above $100 and sending gold past $1,500 per ounce.

“In that case, by next spring, inflation will be running around 5%. Bulls will chortle that the recession is over, and will attempt to ignore the excessive prices of stocks, commodities and bonds (with real yields on 10-year bonds being by then negative), but the market will not allow them to do so for long.
The rebound will end in one of three ways. The least likely is that Ben Bernanke and the administration will come to their senses and begin to withdraw the excessive fiscal and monetary stimulus. They won't dare withdraw much, but even the beginning of withdrawal will cause panic in overextended financial markets. Since politicians generally and Bernanke in particular are above all determined to avoid blame, it's unlikely they will choose this course, which would leave their fingerprints too clearly on the subsequent unpleasantness.

“The second possibility, as I discussed last week, is a bond market strike, in which yields shoot upwards and the market refuses to absorb the ever increasing amounts of Treasury confetti Tim Geithner attempts to offload. In that event, the Fed would almost certainly step in to buy Treasuries, intensifying the monetary stimulus.

“That would then bring about the third possible denouement, in which rapidly accelerating inflation and rapidly accelerating commodity prices cause a collapse in real demand, plunging the United States into renewed recession. That process is likely to take longer than the others, perhaps a year. At that point, the Fed will also be forced to stop buying Treasury bonds, or watch the United States slide into the situation of 1923 Weimar, with wheelbarrows needed for daily cash.”

Martin Hutchinson

September 16, 2009

“Three stories bubbled up in the past week, although if you read The New York Times and the administration’s other airbrushers you’ll be blissfully unaware of them: The resignation of Van Jones, former (?) communist and current 9/11 ‘truther,’ from his post as Obama’s ‘Green Jobs Czar.’ The reassignment of Yosi Sergant at the National Endowment for the Arts after he was found to be urging government-funded arts groups to produce ‘art’ in support of Obama policy positions. And, finally, the extraordinary undercover tape form Andrew Breitbart’s Big Government Website in which officials from ACORN (the Obama chums who’ll be ‘helping’ with the next census) offer advice on how pimps can get government housing loans for brothels employing underage girls from El Salvador.

“What do all these Obama associates have in common? I mean, aside from the fact that Glenn Beck played a key role in exposing them. We are assured by the airbrushing media and ‘moderate’ conservatives that Beck is crazy, a frothing spokesnut for the lunatic fringe. By contrast, Van Jones, Yosi Sergant and ACORN are all members of the lunatic mainstream, embedded philosophically and actually in the heart of Obamaland.
“What all these individuals share is a supersized view of the state, from a make-work gig coordinating the invention of phony-baloney ‘green jobs’ to Soviet-style government-licensed art in support of heroic government programs to government-funded ‘community organizers’ organizing government funding for jail bait bordellos. OK, government-funded child prostitution’s a bit of an outlier even for this crowd – for the moment. But you get the general idea.”

Mark Steyn

“Government is a parasite economy. Parasites cannot succeed if they kill the host. And yet, the government is killing its economic host, the U.S. economy. The same thing happened in the 1930s in the U.S. and in Japan in the 1990s. It’s not the end of the world and it’s not doom and gloom, but I does create hard economic times for those not suckling on the government teat.”

Adam Brochert

September 3, 2009

“Because the central banks of the world have flipped the lever on the printing presses and the global economy is drowning in liquidity, the new game in town is to get hold of printing press money, preferably first and to convert it into a ‘store of value.’ Flipping cash for stores of value is the way to go. Cash burning a hole in your pocket has a whole new meaning.”

Sarel Oberholster, Anaylst

“A double dip recession is more than just a danger in my book it is more like a probability. . . . Make no mistake the credit crunch is like a smoldering bush fire and the embers are everywhere. . . .”

Neil Charnok, Analyst

“I know the media is now rife with folks predicting the end of the recession. I even know ‘smart’ analysts who are saying the same at independent research firms. In terms of the REAL economic picture, these folks are completely misguided and wrong. The US is facing the worst economic contraction since the Great Depression. This is NOT a plain vanilla recession.”

Graham Summers, Newsletter Editor

“The stimulated revival of housing is not the pivot upon which the economy will turn, nor will it be the epileptic stimulus spending that will do the trick. The economy will only turn when bank balance sheets acknowledge the truth, depositors and investors (both foreign and local) take their losses and new industries begin to produce real products using local people.”

Peter Souleles, Analyst

“The White House is finally admitting that there is a substantial and extensive gap between its earlier rosy economic forecast and reality. What? Higher unemployment rates and higher deficits all around. A nightmare brewing? Unemployment is headed to double-digit figures and add to that the fact that unemployment benefits are rapidly coming to an end for the vast majority of those unemployed.”

David N. Vaughn, Newsletter Editor

“The number of people calling for a new bull market, saying the recovery is upon us and saying that the stock market ‘sees’ a future recovery and is discounting it is funny to me. Funny in a sad way, because I know what comes next and how upset many retail investors are going to be in a few short months. I have taken my licks and learned a lot about trading bear market rallies over the past few months, to be sure. Mr. Market never fails to humble.”

Adam Brochert, Editorialist

“The corruption of government and finance is total. It has become so bad, I have to laugh! Market prices we see today are all phony. This will be the case until our foreign creditors put an end to the monetary and fiscal insanity of our Keynesian ‘Policy Makers.’ Expect lower asset prices and higher CPI inflation to result from this.”

Mark J. Lundeen, Analyst

“As the balance sheet of the Fed has blown up, as the deficit of the U.S. and the debt has increased, people have asked the obvious question: will there be inflation in the future? Right now we’re facing deflation, but sometime in the future, there will be consequences.”

Joseph Stiglitz, Economist

“The global financial crisis, which began with the collapse of the U.S. subprime-lending market in 2007 has led to almost $4 trillion of write-offs and credit losses at banks and other financial institutions around the world. . . . .

“What about the People? How much wealth have they lost in their homes, stock portfolios, and other financial assets? Such a number is difficult to calculate, although various estimates have been given by different ‘authorities’ – running from $25 trillion to $50 trillion. This sum is staggering and equals the yearly GDP of the entire world.”

Gold & Silver Report

“Most economists think that we are going to see a clear recovery between late 2009 and early 2010, although they argue about how strong or weak this recovery will be. The bearish minority mostly fears an inflationary blow-out sooner or later. We are clear about seeing a deeper downturn or depression starting next year, with the markets very likely to turn downward by early September.”

Harry Dent, Author

“The US has lent or committed $13 trillion to prop up its collapsing financial system and economy . . . . . It is still our view that the total cost to the US alone of the current crisis will be at least $25 – 30 trillion. And where is the money coming from? Governments believe they can manufacture endless amounts of money and that this will create eternal wealth for their economies.

“But governments are not just creating money out of thin air. They are also looking after their affairs better than any other group in the economy. The only net increase in jobs in the last few years has been in the government sector, both in the US and the UK. Whilst the rest of the economy is suffering and cutting down, government is adding hundreds of thousands of jobs. Also pay and pensions in government jobs are superior to the private sector. So the main growth sector in the economy in the last few years has been the government sector that produces nothing but consumes 50% of GDP. No wonder we are all in trouble. Government spending has gone from 10% of GDP in 1932 to almost 50% in 2008.”

Egon von Greyerz, Asset Manager

“To those who study the numbers, it is now obvious that America’s fiscal situation is hopeless. Given the country’s current debt and unfunded liabilities of $75,000,000,000,000, an amount growing by a least $5,000,000,000,000 per year, it will be statistically impossible for the United States to pay its obligations unless it repudiates them in large measure, or the dollar is sacrificed on the altar of searing society-altering inflation.”

“Congress and much of the nation are in utter denial about the country’s unfolding fiscal catastrophe, as evidenced by federal spending that is accelerating, producing all-time debt and deficit records that exceed anything ever experienced by any nation on earth, at any time in history.

“Denial is a psychotropic, mind-altering drug that by comparison makes crack cocaine look like health food, and addiction to it shuts down the brain. America’s denial about its out-of-control spending, non-repayable debt, financial sector fraud and deceit, decadent political institutions, epic dereliction of leadership duty, fiscal and monetary immorality, and disastrously dishonest system of cronyism is leading the nation into an economic nuclear winter of desolation and chaos.”

Stewart Dougherty, Analyst

August 31, 2009

“With the U. S. now hopelessly insolvent, it’s imperative for the U.S. government to convince the world that demand for its debt remains strong. Should the foreign creditors who hold a mortgage over the U.S. economy see such demand evaporate, this would cause interest rates to immediately soar – followed shortly by a downgrade to the U.S.’s national credit rating, which still holds the same farcical “AAA” rating as trillions of dollars of Wall Street scam-products . . . . .

“In a post from his blog on Thursday, Chris Martenson revealed that during the previous week’s Treasury auctions that the Federal Reserve secretly bought nearly half of the Treasuries which were auctioned. . . . . .

“It reveals that demand for U.S. dollar-products is much lower than what is pretended by the Obama regime. Secondly, the much greater degree of “monetizing debt” (i.e. printing money to pay the interest payments on its debt) reveals much greater money-printing (i.e. dilution) of the U.S. dollar than what is claimed by the U.S. government.”

Jeff Nelson, Analyst

“There are, as always, isolated bargains to be found in equities, but ‘the markets’ themselves are anything but a bargain today. Instead stocks are pricing in a powerful economic/earnings recovery that is expected to materialize just as the U.S. consumer looks prepared to go down for the count. Can monetary and fiscal stimulus measures alone really do for the economy and markets what the unprecedented housing/credit bubbles did during the 2002-2007 ‘recovery’? There is also the risk that as the Fed eyes removing some of its emergency easing strategies and/or interest rates begin to rise (possibly because of decreased foreign demand for U.S. debt?), that an economic relapse will come to pass. Can economic stability in the U.S. really be sustained if interest rates jump sharply higher? Finally, there is the threat that policy makers will be unable to sustain their attack against the deflationary monsters still threatening to devour markets and asset prices across the globe. Thanks to QE measures and China’s seemingly robust (bubble?) recovery, the deflation argument has recently lost some of its backers. This could quickly change . . .

Brady Willett, Analyst

July 9, 2009

“The problem for us is that Bush, Obama, Geithner, and Summers are all following the Keynesian playbook, with Nobel laureate Paul Krugman serving as head cheerleader. If instead we just allowed the free-market process to work, the economy by now would likely have already bottomed; companies like AIG would be emerging from bankruptcy and the unemployment rate would be dropping instead of continuing to rise.”

Mark Thornton

July 8, 2009

“The most ridiculous argument is that the average American is so tapped out he can’t borrow anymore so the money supply can’t grow. This totally ignores the multi-trillion dollar expenditure of the US government which is multiples of its tax revenue and is being funded by money that is created by the Federal Reserve. The US Government can spend into existence as much money as it deserves to create. For the critics who say that M3 is not yet reflecting the monetary debauchery I would remind them that inflation is relatively more money chasing relatively fewer goods and services. So a contraction of things to spend money on with even a static money supply will lead to an increase in the general price level.”

Adrian Douglas

July 2, 2009

“It has now become clear that the new regime in Washington is intent on inserting itself into every aspect of the economy and private business, without regard to the consequences, the rule of law, or even common sense.”

Brien Lundin

June 16, 2009

“Why is DEPRESSION inevitable? With a President, a solid Democrat controlled Congress as well as a bi-partisan consensus believing that deficit spending is vital in fighting the RECESSION, there is absolutely no constraint on government spending. The sky is the limit with deficit spending, now approaching two trillion (with a T) plus dollars over each of the next two years alone and that’s not counting healthcare reform. There are only two ways to pay for it: (1) By printing more money, which debases the currency causing inflation, and (2) By hiking taxes, which kills investment, businesses and jobs, destroys what is left of the housing market and results in a Depression. Or, as in this case, the worst of both worlds – AN INFLATIONARY DEPRESSION.”

Aubie Baltin

“Spurring the growth of the California budget was the State’s phenomenally large capital gains tax base. The top one percent of earners generates 40% of the state’s revenues; 250,000 people have been doing the heavy lifting for a state with a population around 36 million. From 1994 to 2007, this top-heavy tax system flourished as virtually every class of investment vehicle, including stocks, residential real estate, commercial real estate, commodities, art, collectibles, oil, gold and U.S. Government bonds participated in a bull market. During this period of economic expansion, the state was collecting roughly $25 billion in capital gains driven taxes. Since the middle of 2008, most investments have declined precipitously in value. The losses associated with all investments have created tax-loss carry forwards that will offset about 80% of any capital gains tax liabilities for the next 5 years."

Chriss Street

June 10, 2009

“How can you trust a government that first creates the biggest financial bubble in history and then, as proof of their total idiocy, attempts to solve the problem by massively increasing the size of the bubble!

It is totally comprehensible that the rest of the world is not prepared to buy the currency which is not worth the paper it is printed on. The dollar is going to disappear into oblivion and run down into the Atlantic and the Pacific and if there is anything left, this will trickle down into the Gulf of Mexico. In the next few years there will only be one buyer of US Government debt namely the US Government itself. This will of course exacerbate the fall of the dollar and of US T debt in an ever faster spinning vicious circle.

So, Who is Paying the Bill?

Nobody, of course. The bill will never be paid. It is like a gigantic Ponzi scheme where the issuers and the arrangers - the government and the financiers - are the beneficiaries whilst the US people, who are burdened with this massive debt, become paupers.

So far in history no country has abolished poverty by printing paper. How can the government continue to issue paper that they know will never be repaid? Because it gives them temporary power and perceived glory. And by the time the debt is due for repayment, that will be the new government's problem. The Government is socialising every entity that is powerful enough to effect their popularity or can line their pockets. But the people who are on their way to poverty and destitution are getting no help whatsoever.”

Matterhorn Asset Management

June 9, 2009

"The Fed is buying up all this government paper in an attempt to keep interest rates low. Its plan is to spur economic activity via artificially low interest rates. THEY NEVER LEARN. There is only one main problem that all Socialists seem to overlook: Nature’s Laws of Supply and Demand. Thus their problem is that it's not working. Even with all that firepower at their disposal, because of the Laws of Supply and Demand, they cannot keep rates from rising. As such, just as I have been warning you since January 2009, the next major financial bear market crash will be in U.S. government bonds including Muni’s and although is started back in January, it has not yet been recognized by Wall Street."

Aubie Baltin

June 4, 2009

"If there is one thing above all others that would snuff out any talk of "green shoots of economic recovery" sprouting across the US, it is a spike in mortgage rates. Not only would this greatly increase the already record levels of foreclosures and simple abandonment of housing of all descriptions, it would deter anyone who can still get a mortgage loan from taking advantage of the depressed housing prices already available. It would be the broken straw pushing the US from recession into depression."

Bill Buckler

June 3, 2009

"Based on these official US reports, it is clear that there will be no fiscal moves made by the Obama administration as long as it is in office towards a balanced US budget. It is equally clear that neither will any moves be made to diminish the US budget deficit. The federal government intends to continue to roll on towards bankruptcy. On these plans, the only thing that will stop it IS bankruptcy."

Bill Buckler

May 29, 2009

"The Fed recently said that there were $US 12.1 TRILLION in US mortgages. Other estimates go to $US 14.1TRILLION. It is estimated that 30-35 percent of those areunderwater regardless of the interest rate.

That, roughly, leaves $US 4 TRILLION in mortgage loansexposed! The entire US financial system only has about $US1.4 TRILLION in capital. It is horribly exposed - recentstress tests to the contrary notwithstanding - to a new wave ofcapital losses. This is what happens in a credit money systemwhen the collateral foundation crashes out from under thefinancial system. Shrink that collateral foundation far enoughand the banking and financial system becomes insolvent. Thisis the REAL US ‘stress test’."

Bill Buckler

May 21, 2009

"The American economy cannot tolerate a stagnant or contracting state for very long. The economy does not generate sufficient cash flow to meet debt obligations, requiring strong economic growth in order to avoid a collapse of the bond markets. Should the economy not respond to the present stimulus, even the federal government may not be able to borrow. A collapse of the bond markets not only takes away the ability of the government to stabilize the banks and the economy, but the resulting high interest rates will bring America down both economically and politically."

John Kutyn

"It now takes over $7.00 of new debt stimulus to produce only $1.00 of GDP growth. Like trees that can’t grow to the sky, a debt pyramid can only grow so much before imploding. Believe it or not, deflationary forces have now caused the Federal Reserve to lower short-term rates to zero thus setting the state for a Treasury Bond Collapse that will end up destroying all savers."

Dr. Aubie Baltin

May 20, 2009

"The stunning thing about the proposed budget is that nothing announced looks like it will improve the efficiency of the economy. Nothing looks like it’s in the direction of freedom or liberty. Nothing looks like it has any faith whatsoever in markets. It’s all about rewarding interest groups: unions, the green lobby, the education lobby, and the health care sector."

Jeffrey Miron

"Fiscal conditions continued collapsing in April 2009, as the big tax collection month had a sharp enough fall-off in deficit in a quarter century. The severe, deepening recession and surging government outlays have continued to pummel the government'’ finances.""

John Williams

May 15, 2009

"Off we go, into the wild red yonder -- President Obama, how could they have done this to you? You listened to the Wall Street crowd, and it's going to destroy your presidency. Why? The latest White House estimate for this year's deficit has been raised 5% from its earlier February estimate to the new estimate of (deep breath) $1.84 trillion. And the deficit for next year will be $1.25 trillion. That's over three trillion dollars in two years! Who in hell is going to buy all the securities that will have to be offered? "Who the gods would destroy, they first make mad." Welcome to mad America."

Richard Russell

May 14, 2009

"After virtually every disaster created by Beltway politicians you can hear the sound of feet scurrying for cover in Washington, see fingers pointing in every direction away from Washington, and watch all sorts of scapegoats hauled up before Congressional committees to be denounced on television for the disasters created by members of the committee who are lecturing them.

The word repeated endlessly in these political charades is "deregulation." The idea is that it was a lack of government supervision which allowed "greed" in the private sector to lead the nation into crises that only our Beltway saviors can solve.

What utter rubbish this all is can be found by checking the record of how government regulators were precisely the ones who imposed lower mortgage lending standards— and it was members of Congress (of both parties) and who pushed the regulators, the banks and the mortgage-buying giants Fannie Mae and Freddie Mac into accepting risky mortgages, in the name of "affordable housing" and more home ownership. Presidents of both parties also jumped on the bandwagon.

Most people don't have time to spend digging into the Congressional Record and other sources to find out the ugly truth being covered up by the blizzard of lies coming out of Washington and echoed in much of the media."

Thomas Sowell

May 11, 2009

"The U.S. economy remains in a deepening depression that will prove to be particularly protracted and unresponsive to traditional stimuli…. Despite all efforts by the Fed and Treasury to debase the U.S. dollar, broad money growth has stalled anew, suggesting an intensifying solvency crisis, with new or expanded Fed actions likely. Broad money growth should pick up, however, with escalating Fed monetization of Treasury debt. Although the U.S. dollar generally has held its recent relative strength in the currency markets, global investors increasingly will shun the greenback, and intense dollar weakness eventually will push dollar-based prices such as oil much higher, igniting consumer inflation that ultimately will feed into a U.S. hyperinflation." John Williams

"We find ourselves facing the horror of what has always been the Achilles’ Heel of the left wing: its abysmal ignorance of economic science. The ideological tendency has gone from Keynesianism to outright socialism in a matter of a few weeks. And the trajectory seems to be accelerated mainly by the logic of the interventionist cycle: bad policy leads to bad results that are addressed through bad policy, and so on, straight down the fast track to serfdom." Llewellyn H. Rockwell, Jr.

"Federal government loans, spending or guarantees to rescue the financial system now total more than $US 12.8 TRILLION since the international credit crisis began in August 2007, according to data compiled by Bloomberg as of March 31. That includes the $US 2 TRILLION on the Fed's balance sheet. This amounts to lending, spending or guaranteeing 89.5 percent of current nominal US GDP! That, on the face of it, should make it obvious that the US has entered into the land of the economically absurd." Bill Buckler

May 7, 2009

"The book that permanently made me a sadder – and hopefully, wiser – man was Edward Gibbons’ The Decline and Fall of the Roman Empire. To follow one of the greatest civilizations of all time as it degenerated and fractured, even before being torn apart by its enemies, was especially painful in view of the parallels to what is happening in America in our own times. The fall of the Roman Empire was not just a matter of changing rulers or political systems. It was the collapse of a whole civilization – the destruction of an economy, the breakdown of law and order, the disappearance of many educational institutions. It has been estimated that a thousand years passed before the standard of living in Western Europe rose again to the level it had once had back in Roman times. How long would it take to recover from the collapse of Western civilization today – if we ever recovered?" Thomas Sowell

"While many in the media are now saying that things are looking up, and that the worst may now be over, I think it’s just begun. For several reasons… For starters, stocks are cheap relative to where they’ve been over the last five years, but they’re not cheap relative to historic bottoms (e.g., 1 times book, around 6.6 times earnings – after big earnings cuts – and 6-10% dividend yields). Treasuries are in a bubble. And, as hard as it has fallen, residential property has not yet bottomed. But the worst is yet to come. And I’m not talking about student loans, car loans, and credit card debt. Or Social Security, Medicare, and Medicaid. Or the looming bankruptcy of most states and many municipalities. The real crisis will be in pension funds, commercial real estate, and life insurance companies. The life insurers own mostly commercial real estate, mortgages, and bonds; many will be totally busted, even before people start cashing in their whole life policies. You don’t even hear about these three things in the press yet. Of course that’s all in addition to the fact half of U.S. hospitals are currently running at a loss – even before legions of the poor start really overwhelming their emergency rooms. And the balance of trade deficit has yet to turn around and go positive – which will be devastating to both the dollar and the average American’s standard of living. Sorry to be unremittingly bearish. But the Greater Depression is still very early days. Hang on to your hat." David Galland

"The real big danger is derivatives, not sub-prime mortgages. The Bank for International Settlements (BIS) has issued a report stating that Derivatives are now $1.14 quadrillion dollars. That is a one with 15 zeros after it. AIG has now been given $180 billion dollars, with a good portion of that money going to Merrill Lynch, Goldman Sachs, J.P. Morgan, Deutsche Bank and a list of others covering one whole page. These are the counter parties to insurance contracts (DERIVATIVES) written by AIG which, like the money given to the banks, is supposed to keep the world’s financial system afloat. But as large as these monies are, it is just like spitting in the ocean. As these Derivatives implode, there will be no end to the monies given to AIG, which has on its books $400 billion of OTC Derivatives and $200 billion of sub-prime mortgages (in a large measure directly due to government malfeasance). But remember the size of the problem. As AIG comes to the feeding table for more and more money, they are not the culprits the Government is making them out to be. They are the Government’s RED HERRING to deflect scrutiny away from themselves AND to funnel taxpayer money into the banks in their effort to prop up their prime campaign contributors and ‘frat-buddies.’ Perhaps by the 10th time, John Q. Public will finally get it with regards to the enormous FRAUD that Socialism really is, as you the taxpayer, are being asked to pay for it. But the taxpayer is completely taxed out and there will be a great many tax defaults since people cannot pay as they just try to survive. How much Capital Gains Taxes do you think will be collected next year, regardless of what Congress raises the rates to? What I am saying is that the tax short fall will be tremendous." Aubie Baltin

"Fannie Mae had a yearly loss of $59 billion dollars and Freddie Mac lost $50 billion for 2008 alone and there is no end in sight to their losses. And that’s after buying $5 billion of their Bonds. If the FED is determined to continue to buy up all the defaulted Derivatives, then the easy conclusion is that the Fed will ‘debauch’ the currency. I’ve also come to the conclusion that hyper-inflation is the inevitable outcome, as there is not enough money in the world to take care of the Derivatives….. Sell your long term Treasuries, Corporate and most Municipal Bonds. Most have escaped the real blood bath thus far, but they are living on borrowed time. Sooner rather than later, the FED will be forced to raise interest rates in a futile effort to defend the US Dollar. So sell while the selling is good. This Recession/Depression, whatever you want to call it, is not going to be a short term affair, more likely it will last years and Government deficits will grow larger than even the most pessimistic are projecting." Aubie Baltin

May 4, 2009

"The government today is marshalling every resource and every means at its disposal to prop up a failing system of the past. Meanwhile, we live in completely new times. These new times are characterized by systematic destruction of the establishment in media, banking, and finances. What is emerging to replace them is something that no government on the planet can stop. Markets will not be crushed and they resist control as never before.

"These new times are not the 1930s when a few eggheads in Washington could set most prices and wages and gather the captains of industry to cobble together business cartels. The economic and financial world moves at the speed of light and is so diffuse that no political authority can act quickly enough to control it. The establishment is going down. This is another reason that all believers in freedom have reason to rejoice today."

Llewellyn H. Rockwell, Jr.

April 23, 2009

"The bond market may be ‘backing off’ for fear of rising inflation. Fed Chief Ben Bernanke has embarked on an all-out policy of ‘print and spend.’ The government is creating trillions of Federal Reserve Notes in a massive effort to support a debt-laden economy. Today a trillion is the new billion. The sheer amount of fiat money that is being created is frightening many of our creditors, such as China and Germany. Frightening them to the point where the talk is of a ‘new world reserve currency.’ The new currency will be a basket of currencies including the yuan, the euro, the dollar and gold, and it will be run by the IMF. As Bernanke goes wild in printing, our creditors become increasingly worried about the dollar as a store of value. ‘Let the dollar take care of itself,’ thinks Bernanke. ‘Our first priority is to ward off deflation and another depression.’"

Richard Russell

April 22, 2009

"Without one iota of doubt the U.S. is between a rock and a hard spot. Increasing money supply via QE [Quantitative Easing] will indeed keep interest rates low. Consequently, this will help alleviate the real estate debacle (i.e. failing banks and tidal waves of foreclosures throughout the land). On the other hand near zero interest rates, coupled with massive monetization of the ballooning national debt to finance President Obama’s overtly ambitious Rescue (bailouts) and Stimulus Programs, will inadvertently cause a draconian devaluation of the U.S. greenback. It is as sure as rain is wet.

How To Protect Your Accumulated Wealth?

We all know what is coming down the pike: Continued exploding money supply; Massive debt monetization, and; Eventual hyper-inflation. This begs the question: What can an investor do to mitigate the government’s efforts to effect WEALTH DISTRIBUTION?

Lamentably, all uninformed investors are destined to suffer material loss of the purchasing power of their savings (accumulated wealth) – as QE relentlessly evolves in the coming years of Obama’s planned annual Trillion Dollar Budget Deficits. However well-informed smart investors will recognize that as the value of the dollar declines, the value of gold and silver will inexorably appreciate (as will most other commodities)."

Oracle

April 16, 2009

"The book that permanently made me a sadder – and hopefully, wiser – man was Edward Gibbons’ The Decline and Fall of the Roman Empire. To follow one of the greatest civilizations of all time as it degenerated and fractured, even before being torn apart by its enemies, was especially painful in view of the parallels to what is happening in America in our own times.

The fall of the Roman Empire was not just a matter of changing rulers or political systems. It was the collapse of a whole civilization – the destruction of an economy, the breakdown of law and order, the disappearance of many educational institutions.

It has been estimated that a thousand years passed before the standard of living in Western Europe rose again to the level it had once had back in Roman times. How long would it take to recover from the collapse of Western civilization today – if we ever recovered?"

Thomas Sowell

April 15, 2009

"While many in the media are now saying that things are looking up, and that the worst may now be over, I think it’s just begun. For several reasons…

For starters, stocks are cheap relative to where they’ve been over the last five years, but they’re not cheap relative to historic bottoms (e.g., 1 times book, around 6.6 times earnings – after big earnings cuts – and 6-10% dividend yields). Treasuries are in a bubble. And, as hard as it has fallen, residential property has not yet bottomed.

But the worst is yet to come. And I’m not talking about student loans, car loans, and credit card debt. Or Social Security, Medicare, and Medicaid. Or the looming bankruptcy of most states and many municipalities. The real crisis will be in pension funds, commercial real estate, and life insurance companies. The life insurers own mostly commercial real estate, mortgages, and bonds; many will be totally busted, even before people start cashing in their whole life policies. You don’t even hear about these three things in the press yet.

Of course that’s all in addition to the fact half of U.S. hospitals are currently running at a loss – even before legions of the poor start really overwhelming their emergency rooms. And the balance of trade deficit has yet to turn around and go positive – which will be devastating to both the dollar and the average American’s standard of living.

Sorry to be unremittingly bearish. But the Greater Depression is still very early days. Hang on to your hat."

David Galland

April 10, 2009

"My overall advice here is to ‘do nothing.’ The odds are that what ever you do in this area is going to be WRONG. It'’ observing time, as far as I'’ concerned. The markets are saying, 'Things are happening – so move.’ I’m doing just the opposite.

Subscribers who bought the DIAmonds have been doing well. Profits, no matter where they come from, are always welcome.

OK Russell, so those are your thoughts, but what do we really know?

1. The US is continuing to run massive deficits with the national debt climbing annually by units of trillions of dollars.
2. The US consumer is strapped for money and still loaded with debt.
3. Unemployment across the US is climbing dangerously and rapidly.
4. The average American (with little or no savings) is not positioned to withstand an extended recession or a depression."

Richard Russell

April 8, 2009

"We’ve averted" the risk of a depression, Federal Reserve Chairman Ben Bernanke said this week. "Now the problem is to get the thing working properly again.

Appearing on CBS network’s 60 Minutes, Bernanke told correspondent Scott Pelley that concerted efforts by the government likely averted a depression similar to the 1930s. He also stated the nation’s largest banks are solvent, and that he doesn’t expect any of them to fail; and that the U.S. recession will come to an end "probably this year."

Is this finally the light at the end of the tunnel for the U.S. economy?

We don’t want to appear as perpetual gloom-and-doomers, but fact is, when Bernanke tries to predict the future, he’s usually wrong."

Casey Research

April 3, 2009

"Job destruction is a relentless force behind this economic downturn. Unfortunately, real unemployment is grossly underreported almost every month because of the government’s Birth Death Model (see.www.bls.gov), which magically adds jobs for firms that are estimated to have been started. For example, in the February 2009 job release, the Birth Death Model added 134,000 imaginary jobs. (How silly is that?) Therefore, the actual job loss in February was 758,000 not the 651,000 reported.

"The mainstream financial press also fails to report that only 60 percent of people who lose their jobs are eligible to file for unemployment. Many millions of workers are independent contractors or private business owners who don’t qualify for unemployment benefits. Even if you’re a real estate agent, mortgage banker, insurance salesman, etc., good luck trying to file for unemployment. So, when initial claims are reported as being 600,000 for a week, you can safely assume one million people actually lost their jobs that week."

Richard Benson

April 2, 2009

"The ability of the United States Federal Reserve and the United States Department of the Treasury to administer the national currency and bank account is being severely undermined by policy moves that erode the faith of international holders of U.S. debt. The situation is exacerbated by the disingenuous attempts by these same offices to obscure the severity of the dilutive effects of unbridled money fabrication in press release language that is blatantly dissembling.

George Orwell should be slapping himself on the back in congratulations for the foresight with which he predicted the advent of DoubleSpeak, whereby the government pretends that negatives are positives. Assisted in large part by broadcast media, who lend the appearance of legitimacy by debating the pros and cons of the sundry policy machinations in all seriousness, the rest of the world is not so easily fooled.

Take, for example, the Fed’s announcement that it was going to spend $300 billion in the purchase of long term U.S. Treasurys. Does that agency honestly believe that that press release would obscure the simultaneous rollout of expanded Toxic Asset, or, as they have been translated into DoubleSpeak, ‘Legacy Assets’ expenditures totaling an additional $1.5 trillion?"

James West

April 1, 2009

"The truth is that this stimulus will be impossible to remove without bringing about another collapse in the economy; hence, inflation will be with us for a very long time. However, an inflationary path is seen as the Holy Grail by the Fed. Ben Bernanke, a ‘student’ of the Great Depression, was apparently absent from class when the part of history that dealt with the hyperinflationary economies of South America and Africa was taught. Banana Ben believes inflation could have saved us from the Depression of the 1930’s. He couldn’t be more wrong. Depressions are caused by debt, not by a decrease in the money supply.

"The truth is inflation completely destroys an economy by wiping out savers, crushing those who exist on a fixed income and crippling those at the lowest end of the income scale by raising prices of the most basic goods.

"Further, what might surprise the new President-allegedly a champion of the poor – is that an increased supply of money is never evenly distributed throughout the economy; it always finds a home with the nation’s most wealthy citizens who have access to credit first. Skyrocketing prices relegate the middle and lower classes to use all their available funds for the basic necessities of life. Since the demand for discretionary purchases collapses, unemployment rates explode and the economy is left in shambles.

"Investors would be wise to continue trading in measurable portions of their cash holdings for gold. It may also be prudent for some to speculate in the beaten-down bank and home building sectors for a brief period of time, as I believe the entire market will benefit from the initial stages of inflation – the Fed and Administration may be able to provide a truncated period of ersatz prosperity before the terror begins. But because of their decision to monetize away what would have been a deep-and-necessary-recession, the economy and country will be far worse off in the long run."

Michael Pento

March 31, 2009

"Quantitative easing is the word of a euphemism for monetization or the printing of money, to buy U.S. Treasuries or debt by the Federal Reserve. Why this attempt at debasing the dollar would be deemed as a reason to buy stocks is beyond me. Once again the herd mentality is well and alive – jump on the bandwagon and buy because everyone else is buying. This rally will fail and meet the same fate as its predecessors. Why am I so confident in my prediction? It is high valuations and low demand. Valuations are not low enough in most sectors to support a sustained rally. That is especially true in, the often lusted after, technology stocks. Not only are valuations high but the outlook for earnings is negative and the economy is deteriorating. Just because some stocks are down 50% from their all time highs does not mean that they are undervalued or that they make good investments.

Ghassan Abdallah, Ph.D.

March 30, 2009

"Last week a very dangerous precedent was set when the Fed announced that it is going to start overtly intervening to backstop the ailing Treasury market. The market’s verdict on this announcement was immediate and unequivocal. While Treasuries rallied sharply as one might expect, the dollar cratered and gold staged a dramatic turnaround to close sharply higher. The reason that this precedent is so dangerous is that once they start monetising this debt, which means creating money to buy that portion of newly created Treasury debt that cannot be sold off, there will be no end to it – they will eventually find themselves buying more and more of it, as foreign buyers continue to withdraw, deterred by a combination of pitifully low yields and any prospective capital gain being wiped out by the continued combination of pitifully low yields and any prospective capital gain being wiped out by the continued decline in the dollar that must transpire as a result of diluting the currency by creating money to absorb unsold Treasury paper."

Clive Maund

"Let me tell you something. While we are all working (those of us with jobs) and living, the entire financial and political world is in a panic over what is happening, but we only see a small picture. But your leaders are panicking right now and will be for a while. Our world is in the process of turning inside out. If you think things are going to normalize much at all in the next several years, I think you will be surprised by what’s going to happen."

Chris Laird

March 24, 2009

"As time passes, more people are realising the fact that the world’s monetary system is fraud and that gold and silver is real money and not the paper money that the world uses today. The traffic is one-way, more, not less people come to the realisation that paper money is fraud and ditch it for gold and silver (the potential is huge). Maybe, right now someone who is reading this is ditching paper money for gold and silver. This fact is what makes me most bullish about silver, since it is the form of money that has the greatest potential due to the fact that is has more room to move from where it is (a demonetized monetary asset) to a fully monetized asset.

"The debt levels in the world are enormous, and it is an inescapable fact that debt can only be properly and fully settled with real assets. Some assets are better than others when it comes to discharging debt. Gold and silver are real assets, and due to the fact that they are money, they are the ultimate form of payment and settlement of debt.

"Due to these enormous debt levels, assets that are acceptable as proper settlement of debt will be in huge demand if these debts are to be properly settled; and this holds true whether debt levels are extinguished by default as well. Gold and silver is in huge demand, and this will accelerate.

"Should the big debtors of the world attempt to ‘settle’ their debt with more debt (inflationary) such as paper promises (like what is currently happening), then paper prices of real assets will explode, with gold and silver leading the way.

"Paper money, bonds and other promises to pay are all subject to possible default, and during these times, default is a very common occurrence. Real assets are not subject to default, and gold and silver are real assets that you can hold in your hand, and are financially liquid (liquidity is even more essential during such times)."

Hubert Moolman

March 23, 2009

"The political response to this economic downturn has differed from previous responses to downturns in a number of ways, the most economically significant of which lies in the extent to which failure has been subsidized. Counterproductive economic pathologies have been encouraged, financial structures that endangered global prosperity have been bailed out and trillions of dollars have been poured into industries that obviously needed to downsize. Far from providing ‘stimulus,’ such subsidies both deepen the recession moderately and extend its duration inordinately."

Martin Hutchinson

March 18, 2009

"The Manhattan Bank (later merged into Chase-Manhattan and then to J.P. Morgan) established a chair of economics at Harvard University for John Kenneth Galbraith. Galbraith was one of a group of crackpots who said that, if the bankers are given the privilege to legally counterfeit money, this is the road to plenty for the society. Harvard was not going to hire Galbraith on its own. But when the Manhattan Bank waved around its money, they grabbed it. Using the prestige of Harvard (which they had just bought and paid for) these bankers took over the economics departments of first the most prestigious and later all the schools of economics in the country."

Howard S. Katz

March 17, 2009

"Lest one is not yet convinced of the stupidity of government (and yes we do mean all governments, even those with popular and charismatic leaders), one need only take a gander at the latest Obama budget. On top of having the inane title, ‘A New Era of Responsibility: Renewing America’s Promise’, the document is chock full of grossly overoptimistic assumptions, that show a government in abject denial of reality. Firstly, they project GDP growth of –1.2% for this fiscal year, i.e. a mild recession. Based on the huge negative revision to 4th quarter GDP just released (which, incidentally, is the first quarter of this fiscal year), for the budget’s projection to be even close implies that the US is already out of recession this quarter and will grow strongly for the remainder of the year! Absolute nonsense, but it gets even more ridiculous. The budget then projects strong economic growth next year of 3.2%, to be followed over the next three years by real GDP growth of 4.0%, 4.6%, and 4.2% up to fiscal 2013. After this period of superlative growth under Obama’s watch, the economy will then return to a ‘normal long term growth rate’ of 2.6% per year thereafter. All told, according to the budget, for the six years 2008-2013 inclusive (a period that includes a severe global financial crisis and a once in a lifetime global depression) the US economy is projected to grow a cumulative 17.1% which, moronically, is even greater than it would have grown if it grew by the ‘long term growth rate’ of 2.6% over this six year period (16.6% cumulative) instead. In short, the depression, the financial crisis and the banking catastrophe are good for the economy!! The US is projected to grow by more with them than it would have grown if they had never happened in the first place. Truly mind boggling logic!"

Eric Sprott and Sash Solunac

March 13, 2009

"The US government currently possesses the largest bureaucracy in the country’s history and we’ve never had as many laws as we do now. So, despite calls from people like Barney Franks we don’t need any more laws or bureaucrats, we have too much as it is. The SEC has thousands of people and yet they ignored all their own reports about Bernard Madoff. The IRS is one of the largest employers in the United States, they knew that Stanford owed taxes for years, and yet nothing happened. Donations to the right people count more than your rights. That’s the society that has been meticulously crafted, and that’s the society that will find itself standing in bread lines in another year or two. It’s a hell of a price to pay for trying to avoid what cannot be avoided."

Dow Theory Analysis

March 11, 2009

"Since 2000, The New York Times Company has generated a respectable cumulative net income of $1,598,062,000. Yet management, over the same period, has paid out $2,779,601,000 for stock buybacks and dividends. This means, during the present decade, stock buybacks and dividends have exceeded cumulative net income by an astonishing $1,181,539,000. Is it any wonder The New York Times’ balance sheet is such a train-wreck? Operationally, this company has done well during the past nine years. Conversely, the company’s balance sheet has been hideously mismanaged by an incompetent executive management team – as supervised by a grossly negligent board of directors.

The New York Times, most certainly, is encountering a difficult operating environment. The internet has posed a serious challenge to companies involved in print media. Advertising revenues, moreover, are dropping dramatically due to the current economic depression. Nonetheless, had executive management been prudent and conservative with respect to balance sheet management, the Times would have had a war chest full of cash, strong working capital, and strong equity; thus, allowing it the financial flexibility to survive these very challenging times. As things stand today, in my opinion, the Times’ strategic alternatives are probably limited to either seeking an acquirer or reorganizing under Chapter 11 Bankruptcy.

In closing, it is appropriate to bring The New York Times’ op-en columnist, Maureen Dowd, into the picture. She recently savaged executives from A.I.G., Bank of America, Citigroup, Merrill Lynch and the U.S. automakers; deeming them to be incompetent, self-serving charlatans. In this January 28, 2009 op-ed piece titled Wall Street’s Socialist Jet-Setters, she calls these executives ‘boobs,’ ‘dumb,’ ‘obtuse,’ and ‘…careless ghouls who murdered the economy.’ So Ms. Dowd, what do you think of the executives who ‘murdered’ The New York Times Company’s balance sheet? What names would you like to call them.?"

Eric Englund

March 4, 2009

"Personally, I find these bail-outs absurd, unethical and a total waste of valuable resources! Who gave these politicians the authority to act like investment bankers? Mr. Geithner is not a qualified ‘merger & acquisition’ expert, so how does he have the audacity to use other people’s money to take over insolvent banks? Likewise, Mr. Bernanke is now using American taxpayers’ money and buying distressed debt! I find this outrageous! Is he going to act like a debt collector when people default on their loans?

"Mark my words – the establishment is only making matters worse and prolonging the pain. Moreover, by printing insane amounts of paper, the politicians are setting everyone up for an inflationary nightmare! One thing is for sure – before this drama ends, the viability of the U.S. dollar as the world’s reserve currency will come under question. When the U.S. dollar starts to implode, hard assets will go through the roof. Remember, commodity prices went ballistic in the late 1930s as well as during the 1970s. We should expect similar action in the years ahead."

Puru Saxena

"Now that the credit crisis is about one and a half years old, since Aug 07, bank/financial pressures have expanded to a new phase. First causing credit markets to freeze, then threatening bank and business solvency worldwide, the new phase is currency instability.

"To give a partial list: The Russian Ruble, UK Pound, Hungarian Forint, Korean Won, Swiss Franc unbelievably, and the Euro are all having serious problems. Other places like Ireland, the Baltic states, the Southern/East European states, Ukraine are on the verge of insurrections. The EU is quite concerned.

"At some point, the USD would be threatened as well. What happens is that countries have to do a blanket guarantee to stop a run on their entire banking establishment, and thus assume huge public liabilities that in some cases dwarf the size of their entire economy. For example, Iceland’s banks had made bad loans totaling over 8 times the size of their GDP. Ireland is in a similar predicament, after they did a blanket guarantee. Russia is in a similar situation, having to use their 30% of their foreign reserves to prop up the Ruble.

"So, the gigantic losses in the financial markets not only paralyzes credit and is causing massive business shrinkage, but as nations nationalize the losses, their bond markets come under pressure, and thus their currencies too become threatened. This currency phase is already well underway, and is a new and pernicious phase of the credit crisis."

Chris Laird