IF issue: Wednesday March 30, 2011

Excerpt from the issue:

Bob Chapman on the Max Keiser Show

http://maxkeiser.com/2011/03/26/dollar-doomed-bob-chapman-part-1-of-2/

Bob Chapman with Joyce Riley: The Power Hour

http://archives2011.gcnlive.com/Archives2011/mar11/PowerHour/0328112.mp3>

Bob Chapman - erskineonradio - 03/26/2011
http://www.youtube.com/watch?v=9rm2YyUt7mA

US MARKETS

            In today’s world there is always plenty to write about and today is no exception.

As far as we are concerned QE3 is on the way accompanied by almost zero official interest rates. QE1 was to bail out the financial sectors in the US and Europe and QE2 was to bail out US government debt. That is why the Fed has purchased 70% to 80% of Treasuries. Previous debt and the $1.6 trillion of new debt created this year means someone has to buy that debt and there are very few buyers. That means the Fed has to buy most of paper with funds created out of thin air in this monetization process. Those tremendous amounts of funds will most certainly increase inflation. This policy is never ending unless default becomes inevitable. That is why money and credit has to be created indefinitely until hyperinflation occurs and the system eventually collapses. It is no surprise then along with economic, financial, social and political instability that there has been a steady movement into gold and silver related assets and commodities. As long as stimulus of one form or another continues to be used the problems won’t be solved and these investment vehicles will move higher and higher. Every time money and credit are created with no collateralized backing, such as gold and silver, the value of these aggregates in circulation falls, and such an endless cycle guarantees the demise of the currency and the rising value of gold and silver.

            Recent tragic events in Japan has brought some unexpected developments, which for the time being could lift the economy from depression at least on a temporary basis. Funds committed aggregate just under $1 trillion not the official $309 billion. We believe the funds could be raised initially in the following way: $300 billion from the postal savings plan; $300 billion from yen bonds sold in the international market and $300 billion from the liquidation of US government and other US dollar denominated securities. That is for cleanup and infrastructure. Then Japanese insurance companies, as well as foreign insurers, have to raise billions more to pay off the insured.

            In Japan’s quest to reconstruct the region affected demand for commodities will increase putting added upward pressure on commodity markets. Not only for base metals and materials, but for food stuffs as well, due to contamination and the disruption in material and food distribution. Needless to say, these problems will create inflation, something not seen in Japan for almost 20 years. Trade surplus will become trade deficit and result in a balance of payments deficit. This tragedy could cost Japan its converted position in the top 5 industrial nations of the world. These events will probably as well lead to the end of the yen carry trade, which has funded speculation worldwide for many years. It will affect exports, but also the purchase of US Treasuries. The recent effort, illegal and unprecedented, by G-7 countries to rescue the yen was in reality a move to purchase US Treasuries being sold by Japan. Yes, the yen fell from $.76 to $.81, but that is a transitory move. Central banks and governments didn’t want upward pressure on real interest rates, the Fed having to buy all that paper, or the possibility of default by the US.

The Fed has for years, and the Treasury as well via the Exchange Stabilization Fund, been intervening in the currency markets. It is part of the legal function of both entities under the Executive Order, signed by President Ronald Reagan, known as “The President’s Working Group on Financial Markets.” The ESF is a legal subsidiary of the Treasury Department created in the 1930s to smooth currency markets. It is used frequently and could have as much as $1 trillion and when used with leverage can affect currency markets for several days in a row. It was used illegally in 1995 to assist Mexico when its economy was about to collapse. Two weeks ago for the first time in a long time, the Fed admitted intervening in currency markets, something they and the ESF do every day via JPM, GS and Citi. the last time we saw open Fed currency activity was 10 years ago in behalf of a falling euro. These are the kind of things government and the privately owned Fed get away with and the public never knows, because the media refuses to expose what they are up to. Another perfect example is the rigging of the gold and silver markets. Overwhelming evidence of such manipulation is presented every day and the media refuses to carry it. The bottom line is once QE 2, intervention and QE3 meet, inflation will go right through the roof.

*******************************************

IF issue: Saturday, March 26, 2011

Excerpt from the issue:

US MARKETS

The US dollar continues under acute pressure, as the world seeks an alternative reserve currency. The days and years of manipulation, fraud and criminal behavior are fast coming to an end. New alliances are evolving, as are outspoken advocates of a new world reserve currency. As a result more and more foreigners are bypassing Treasury and Agency bonds, as well as other US dollar denominated investments. We watch as other major nations accumulate gold and cannot help but think that the new world reserve currency will be gold backed.

Over the past 11 years the Fed and other central banks have increased money and credit by several devices and in the last three years more aggressively by purchasing bonds and via using swaps. QE1’s monetary creation has now begun to affect costs and the entire price structure. As wages lay stagnant the resultant inflation will eventually destroy the middle class, the structure that holds American society together. As the taxpayer saves the financial institutions the middle class is being destroyed. They are funding their own demise. We believe inflation is currently 8% and should be 14% by year end. That is the result of QE1 and stimulus 1. Next year the US economy will be impacted by QE2 and stimulus 2. If we get QE3 and stimulus 3, 2013 will be impacted. Inflation could range from 25% to 50%, or more, dependent upon what the elitists have in store for us. While this transpires unemployment will rise and government revenues will fall increasing the already colossal debt. That means consumption will fall as a percentage of GDP from 70% to perhaps 64.5%, the long term mean, by the end of 2013 if we get QE3 and stimulus 3. People will only be able to spend on basics. That also means corporate profits will fall, as well as share prices. That, of course, will depend on whether the “Working Group on Financial Markets” is able to hold the markets up and keep them from falling. Deficits will spiral completely out of control, as will personal and corporate insolvencies. That means education will be cut to the bare bones. Instead of 18 to 21 children in a class you will see 36 to 42. Social services and welfare will be cut in half. Extended unemployment will be phased out and no new projects will be funded.  It is not surprising that the Fed has to buy 80% of US debt. Few others are willing to purchase it. Most of the foreign buyers are from England and the Cayman Islands. Is this the Fed buying, which we have suspected for years, or is this real buying? We don’t know, but if rep. Ron Paul is successful we could find out, along with all kinds of other law breaking. Don’t forget the result of all the things the Fed has been doing translates into a tax increase on every American. This is another effort to bring the consumer to his knees, so he will be softened up to accept world government. In addition, the dollar is about to approach new depths and a chance exists that it could soon break 71.18, the old all time low and fall to 40 to 55 on the USDX. Many of the items purchased by consumers, that presently represent 70% of GDP, could rise more than 100% in costs, which will cut deeply into consumption. This at this juncture could be in the elitist plan for the destruction of America, as we have known it. Can Weimar or Zimbabwe be far away?

--Bob Chapman

*********************************************************

IF Issue: Wednesday, March 23, 2011

Excerpt from the issue:

US MARKETS

            Cycles and booms and busts just don’t happen. They are planned that way. In the late 1990s Fed Chairman Alan Greenspan commented on irrational exuberance and said he hoped the market would cool down. The amount of money and credit he had introduced into the system had a great deal to do with a forming of a bubble. He indicated that on the short-term there was little he could do about it, when all he had to do was raise margin requirements from 50% to 60% temporarily. We wrote about the solution as a coupe of other writers did, but no one really wanted to take away the dotcom punchbowl. In late March of 2000 the market began its collapse. We removed our subscribers out of the market in the first week of April, as did Joe Granville, a friend and one of the best market timers ever.

Sir Alan Greenspan spent almost 20 years serving his masters who own the Federal Reserve, JPMorgan Chase, Goldman Sachs, Citigroup and many more. The Fed has no independence – it takes orders from these banks and brokerage houses. This same group controls Congress by paying off 95% of the representatives and senators via campaign contributions and via lobbying. Thus, with the assistance of the Fed, Wall Street and banking, they not only control money, supply, credit, interest rates and Washington, but they control our entire economic and financial scene and the lives of every American. Booms and bubbles can be blamed on politicians, but the real culprits behind the scenes are Wall Street and banking in which we spent 29 years of our lives and for many of those years owned our own firm. If you do not know and understand these realities you should not be an investor or a financial and economic journalist. Our whole existence as a nation is controlled from behind the scenes by parsonages and groups most people have never heard of. All of what you see just didn’t happen; it was planned that way. People must understand that creating money out of thin air to fund astronomical deficits has to end in failure and ruin. We are now in an inflationary depression that will probably graduate into hyperinflation and then descend into a deflationary depression. This is what these elitists have done for centuries and have more often than not gotten away with it. This time it will be different.

We started warning people more than 50 years ago that the path America was taking could only end in tears. The days of inflation and social and political misery are finally upon us and as a result, so is social dislocation worldwide in the form of protest, demonstrations, civil wars and the overthrow of governments. We are not witnessing that in North Africa and the Middle East. This has been in reaction to dictatorial governments, low wages, high prices for food and few jobs. As we have said over and over again, revolutions begin with empty bellies. What you are seeing will not be limited to the third and second worlds, but to the first world as well. the elitists have again gone too far and the people of the world are reacting. This is only the beginning of dramatically higher food prices and perhaps oil and gas prices as well. Governments cannot help, nor can the elitists behind the scenes for all intents and purposes, saving the system is now out of their hands and what they have done has been discovered.

Most countries have followed the path of the US, UK and Europe, accumulating deficits many of which are unpayable. Essentially the world banking system is bankrupt. The Fed and the ECB buy debt and toxic debt as well as sovereign debt; the funds used for this purpose are created out of thin air. Sooner or later there will be a major worldwide meeting to revalue, devalue, and to multilaterally default. This can be the only solution to 40 years of profligacy and fiat currencies. The present cover-ups by central banks, Wall Street, banking and the City of London won’t last much longer. Unemployment worldwide and higher inflation are worsening and can only end in social and political dislocation. How can a government such as the US continue to spend in excess of 60% of revenues and expect others then the Fed to purchase their bonds? Spending has to be cut and taxes raised over a five year period. If that doesn’t happen and we get QE3 and more stimuli there will be ever more inflation and debt. Finally there will be financial collapse.

We do not in anyway relish having to tell you that the future will be very difficult. Financial dislocation will abound and in some of the countries in the third and second worlds there will be famine and death. As you know desperate people do desperate things and in June 2003, after the point of no return has passed, we predicted the events that unfortunately are being sensationalized today. Bringing the truth and facts to the people of the world is one thing, but trying to unnecessarily terrify people is another. All this should be presented in a calm, logical and rational manner.

As you know gold is up 15-1/4% annually, versus 9 major currencies over the past ten years. Over 11 years it has risen 83% versus the US dollar. Even the venerable Swiss franc is off 12.1% annually or 50%. The Dow has fallen 82% versus gold. The US economy has not only been mismanaged, but it has been gutted by massive criminal corruption. As the end of the world financial structure comes into view the scramble by the criminals on Wall Street and in banking accelerates, because they want to steal as much as they can before the collapse. That is why once the people have rescued their country from these criminals they should be tried, convicted, jailed or hung and all their assets that they have accumulated for themselves and their families should go to the federal government and the people. Heads will roll and we remind them because we know they read this publication, that you are conscious and alive for 15 to 30 seconds after your head is removed. This gives these criminals a final view of their headless corpuses.

    --Bob Chapman

*************************************************************

IF Issue: Saturday March 12, 2011

The following is just a sample from the latest IF issue...

US MARKETS

Wall Street at least temporarily relieved of the burden of having to buy Treasuries & Agency bonds, is looking at the jump in oil prices as nothing more than an irritant to their plans for a higher market. Bill Dudley of the NY Fed, a most powerful member, continues to make a vigorous defense of Federal Reserve policies. He, and a few other Fed participants, and Chairman Bernanke believe liquidity is the key for solving problems. That is not only in the realm of debt purchases, but in the relief it brings to Wall Street and banking. It relieves them of the responsibility of having to make those purchases to assist the Fed. Those funds can then be directed toward other investments, such as la liquidity-driven stock market rally. The correlation between the movements in the Fed balance sheet and market can be traced to 85% of market movement for the past 2-1/2 years. An interesting result of Fed manipulative policy is low level of short interest during this period. Most of the professional market players knew the market was headed higher, because they knew such overwhelming liquidity injections would have to take it higher. They also knew that the Fed had to keep the wealth affect going, because the market was the only generator of wealth left, as the bond market bubble would be broken eventually. The Fed has engineered a market recovery and Wall Street knew what they were up too. QE1 saved the financial community and QE2 saved the government debt structure at least temporarily. The wealth effect has been saved temporarily as well. The public has been left with a pile of crumbs as they struggle for survival. Unemployment has improved ever so slightly and now we have a new problem to increase the suffering and that is much higher oil prices.

The largess sponsored by the privately owned Federal Reserve has still not been enough to spur adequate growth and the effects of Fed monetary creation and deficit spending have not been enough to produce higher economic growth and now the economy has to deal with rampant inflation, the result of QE1 and QE2, plus stimulus, of what will turn out to be a subsidy of some $5 trillion, plus rocketing oil prices. It then is not surprising that we are seeing downward revisions of analysts in 3rd and 4th quarter growth estimates. We still are seeing declines in home prices and sales, as well as in orders and shipments. All this cannot help but negatively affect consumer spending. At the same time the states and municipalities are severely cutting back.

The inventory overhang, higher interest rates and lack of funds for down payments have again trapped the housing market. As we predicted long ago, before anyone else, that the downside in  housing has at least two years to go, and perhaps four years, before a bottom is found. Then how long will it bump along the bottom? Perhaps eight years or 20 years, or more. Even new homes are facing lower appraisals.

There is lack of job creation and debt control. The Republicans want to cut $61 billion from the budget deficit, which is a pittance and an insult with a deficit of $1.6 trillion. They cannot be serious, but they are. This shows you how out of touch with reality most politicians are and that they only answer to those who are paying them off, not their constituents.

There has been no impetus on job creation at a time when real unemployment is 22.4%. It is like the American worker didn’t exist. The situation at the state and municipal levels isn’t helping at all either, as cutbacks and layoffs prevail. This while food and gas prices head toward the stratosphere. As we predicted earlier, 2011 is not going to be a good year for growth at 2% to 2-1/4% at best. The stock market is not expecting this, and when it becomes evident the market will fall.

It is interesting to note that personal income rose 1% month-on-month, but as tax relief is subtracted, you remember that pork package from December don’t you, and growth would have been 0.1%. Hardly a number to write home about. As a result January spending fell 0.1% and that should continue negative. Don’t forget all that credit card debt from November and December has to be paid off. As we predicted the fist quarter should show negative spending and consumption.

The personal question we are asked is when will the Fed find out it cannot continue to create money and credit? Whether most of you realize it or not present monetary policy has been in action for 11 years, so this is nothing new.  That is how long inflation has been created over those years. It shows you that central banks have major leeway and a long time line to do their dastardly deeds. The problem for these bankers is that in the end they lose every time. Historically they have extracted themselves by buying everyone in sight. When the Lombard League collapsed in 1348 they were exiled and in 1789 in France their heads were removed.

Wednesday, March 9, 2011

ENGLAND

Britain's biggest bank, which has been headquartered in the capital for 19 years, warned key investors that last week's disappointing full-year results have made arguments for shifting HSBC's domicile to Hong Kong "overwhelming".

The shareholders have been surprised by the swift gear-change in HSBC's review of its domicile but some have already told the bank that they would support the move.

            The loss of HSBC's headquarters in London, although threatened for months because of the increase in financial regulations, would be a severe blow to the Coalition which, despite some of its 'banker bashing' rhetoric, is relying on a private-sector-led recovery.

            One top institutional investor in HSBC told The Sunday Telegraph: "HSBC has a review of its domicile every three years, normally it's a formality, this time we were told that a move is now more than likely."

Another shareholder added: "Instinctively we were very surprised by the change of tone. But you can't argue with the numbers. Moving to Hong Kong could deliver a 30pc premium [to the share price] overnight."

CANADA

Canada’s economy accelerated more than forecast from October to December on the biggest jump in exports since 2004 and faster consumer spending.  Gross domestic product expanded at a 3.3% annual pace in the fourth quarter following a 1.8% expansion in the previous three months…”

Saturday, March 5, 2011

• Lehman Brothers Holdings Inc.’s Australian unit failed to advise of the risks of collateralized debt obligations and ignored policies that required municipalities to invest conservatively, a lawyer for towns and councils seeking to recoup investment losses said.
• Depicting moment-to-moment detail, the Securities and Exchange Commission yesterday laid out civil fraud charges linking a former Goldman Sachs board member to the biggest hedge fund insider trading case ever. It’s a portrait of corporate board meetings leading to secret phone calls, to stock trading orders, and finally to huge illicit profits made within hours. The SEC charged Rajat Gupta, who has also served on the boards of Procter & Gamble and the parent company for American Airlines. Gupta was a guest at President Obama’s first state dinner. But at the height of the financial crisis, Gupta passed along privileged financial information that helped enrich the target of the government’s sweeping probe, the SEC alleges.

• HSBC Bank USA and HSBC Finance Corp. have stopped all home foreclosures until further notice and may face unspecified regulatory actions or fines, after regulators found “certain deficiencies” in servicing and foreclosure procedures, HSBC said in government filings Monday. The disclosure by HSBC, buried deep within its annual financial report to the Securities and Exchange Commission, marks the first time HSBC has admitted to a foreclosure moratorium in the wake of a legal and paperwork crisis that swept the industry.

• World food prices rose 2.2% in February from the previous month (a 26.4% annulaized rate) to a record peak, according to the The Food and Agriculture    Organization of the United Nations. It is the eighth consecutive rise in the FAO food price index.

Gold, Silver, Platinum and Palladium

• On Wednesday gold was up al day during the session with spot closing up $6.50 at $1,437.20, as the April contract was up $3.10. Spot silver rose $0.40 up $34.81, as May rose $0.18. The government fought hard and could only make headway to the downside after the regular session closed in a much thinner market. Gold traded as high as $1,437, a new all-time high. Gold open interest rose 6,060 contracts to 515,784, and silver OI fell 412. The dollar got hit again, falling .35 to 76.67 and that was part of the reason the government attacked. The HUI rose 1 to 575.64 and the XAU rose .03 to 217.29.
• The US Mint has again halted the production of the American Silver Eagle, because they have run out of bullion blanks.The Comex announced a small 252 notices or 1,260,000 ounces of silver for delivery, out of 4,250 contracts. Something is grievously wrong. That leaves 3,998 notices left to be served upon or 19,990,000 ounces. This is a dire situation that could end in default as there is no silver available in the dealer category. That is why owners are being offered 30% to 50% payoffs not to take delivery. Thursday was a mixed day as spot gold was hit for $21.20 to close at $1,416, as April fell $20.82. Spot silver fell $0.51 to $34.31 and May fell $0.61. The government again was very active suppressing gold and silver prices.