The International Forecaster: Italy Crisis

Even the middle of the road journalists are beginning to question Europe’s elected and appointed leadership. This past Monday the plan for the euro zone was laid out for a final capitulation to world government. The financial crisis has been handled from behind the scenes by the Fed, so that Germany’s Chancellor Merkel and France’s President can concentrate on more important matters, namely the final federalization of the euro zone to be followed by the entrapment of the remainder of the European Union.

The calls for major changes to the current treaties have little to do with the debt crisis. What these two emissaries of the world elitists are up to is to tear down the legal strength of monetary and political union of this unnatural association, and replace it with a stricter budgetary discipline known as the ESM, the European Stabilization Mechanism, this ostensibly to support countries in difficulty. Within this major change is a complete shift away from the original Maastricht and Lisbon Treaties, which is being done without the consent of the public in these countries. There is one exception to that in the case of Germany that must approve the changes.

On the 9th the final proposals will be laid out and agreed upon by various heads of state, some elected and some appointed. This “leadership” could care less what the people of these countries think. There are no trappings of democracy here, just the iron fist of Illuminist world ambitions. Any thinking, sophisticated person has to look on in disbelief at what is about to take place.

The plan is to have a committee of 8, assisted by 17 immunized finance ministers control the budgeting and fiscal policies of these 17 nations, which strips them of their sovereignty.

We read writer after writer and they do not have a clue as to what is being done to the people of these nations. They don’t know these appointments are all members of the Trilateral Commission, Bilderbergers and former Goldman Sachs employees. If they do know they are ignoring its significance. This is where Messrs. Draghi, Monti and Papademos all came from appointed to take the euro zone and eventually the EU into world government.

We have studied these characters for more than 50 years and we know exactly what they are up too. It is the job of these 3 Sherpas to continue to advertise the increased risk to financial and economic conditions, if such treaty changes are not made. This is a charade to mislead and misdirect the people offering them the only way out. Unfortunately, as far as we know, our voice is the only one being heard in exposing the real intent of what is being pulled off. There is no question that there is an economic and financial debt crisis, but these treaty changes have little to do with that. Their key phrase is price stability when real EU inflation is running more than 7%.

Since July the ECB has refused to expand money and credit. A month ago control passed from the hands of Trichet to Draghi, who immediately lowered interest rates, which we predicted he would do - no one else made such a call. The ECB still hasn’t printed euros, but the Fed is going so in its stead. The ECB is buying Italian and Spanish bonds, but only about $20 billions worth. The ECB, known to few, has been sterilizing its sovereign debt buying by draining an equivalent amount of euros from the banking system. This is the antithesis what central banks do. The Trichet ECB wanted their actions not to create inflation. This is why inflation has held so well in Europe. That is all about to change as the FED takes over. The funds to purchase bonds and supply liquidity will be available to jump start Europe as inflation climbs.

All of the players knew austerity plans play well and eventually work to tear down an economy, but short term they are a loser. The only thing that works is more and more money and credit. Who wants to stop economic growth. Up until Draghi took over the euro has not been wantonly destroyed. Just be patient Draghi will end all that.

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Saturday, December 3, 2011

IF Issue: Saturday Dec 3, 2011

Excerpts and links from the latest issue:

BOB CHAPMAN/KERRY LUTZ

http://traffic.libsyn.com/kerrylutz/Bob_Chapman_12-1-11.mp3

Bob Chapman - The Financial Survival - 30 Nov 2011

http://www.youtube.com/watch?v=vKQLDyYudis&feature=email

Bob Chapman - The Power Hour - November 28, 2011

http://www.youtube.com/watch?v=6-2dklE4TN8&feature=email

US MARKETS

Do we need central banks at all? It’s a good question. We have had the Federal Reserve since 1913 and their management has been a disaster for Americans and a wealth builder for its owners, the Wall Street banks. It has also allowed the financial sector to control our country. It is the seat of elitist power. The Fed has debauched the US dollar via their monopoly and enriched their owners beyond belief. Any entity that has to resort to the subterfuge of using a cloaking term, such as quantitative easing has to be a scam.

The Federal Reserve and other central banks were created to inflate currencies thereby depreciating them and in that process the owners of the Fed and their colleagues’ reaped enormous profits. Entities like the Fed have been doing this for centuries. You might say such a monopoly leads to currency debauchery. Reflecting on such a track record there is no reason to have central banks. A federal Treasury is all that is needed. Not that it is perfect, it is no worse then having a privately owned central bank. We have suffered under the Fed since 1913 and it is time to terminate the Fed and return our monetary authority to the US Treasury.

In the latest turn of events the Fed has mastermind another rescue in conjunction with the ECB. Europe hurting for cash, particularly US dollars, brought England, Japan, Switzerland and Canada and ECB into their latest money creation scheme. They will lower prices on dollar liquidity swaps on 12/2/11 and extend these swap subsidies until 12/01/13. What has happened as we pointed out previously is that US money market and pension funds dropped participation in short-term bond markets in Europe from 55% of assets to about 20% of assets. That meant European banks couldn’t function. The eventual outcome would be no dollar investments in Europe until their financial house is put in order.

In addition there are on again off again stories that the IMF has been talking with Italy and Spain. Both sides deny it and behind the scenes we are told talks have in fact been going on for weeks.

We can assure you that the dollar swap is really all coming from the Fed. England and Japan are probably window dressing and Switzerland and Canada may participate. This is a Fed operation. What confuses the public is misdirection engendered in utterances by policy makers. There is absolutely no coordination, which belies confusion, which leads to lack of belief in any statements. Again, the problem is not liquidity, but solvency. They are all broke and reorganization would take years to accomplish. They cannot do what they should do, and that is purge the system, because they’ll lose control and that is the key and seat of elitist power. If they do the right thing the public will then discover what they have been up too and they’ll end up where they belong, in jail.

These dollar loans will be run through the ECB, the European Central Bank, giving euro zone banks direct access to dollars. It is all subterfuge in order to continue the force short term. Additional liquidity is a stopgap measure, which not only deceives, but also is injurious in the long run. The result is the Fed will continue to prop up European financial markets with no solution in sight moving from one calamity to another until the systemically insolvent conditions take the system down. These players have many things they can pull yet, so don’t think the system can fail soon. It could take several more years and the result will be inflation, hyperinflation and higher gold and silver prices.

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Saturday, November 26, 2011

IF Issue: Saturday November 26, 2011

Excerpts and links from the latest issue:

Bob Chapman - Radio Liberty 3rd Hour- 21 Nov 2011

http://www.youtube.com/watch?v=LLs0GFYT58Y&feature=email

Bob Chapman - Financial Survival - November 23, 2011

http://www.youtube.com/watch?v=o3Zxvf5qUpY&feature=email

US MARKETS

In Europe each time a new player is presented we find he is a Goldman Sachs’ alumnus. Recent entries are Mario Monti “appointed” PM of Italy, Lucas Papademas “appointed” PM of Greece and Mario Dragahi “appointed” President of the European Central Bank. The banks blatantly control governments and agencies presenting us with an oligarchy, which controls most of the nations on the planet. In America politicians are bought and paid for. In Europe there is a different mind set, a shared worldview of bureaucrats, technocrats, politicians and the elite bankers of world government and domination. What has happened in this process is that Goldman Sachs, JPMorgan Chase and other mega-banking has retained power for decades. They control all the players in the field, so the outcome is always in their favor. The bankers and others in turn are paid via billions of dollars in bonuses. Banks are now bank holding companies having become that to avoid failure as brokerage firms. That is the case in the US, UK and Europe.

One of our subscribers in Brussels sent us a copy of “A European Mechanism for Financial Stability.” The present danger is seen in sovereigns heavily in debt and the heard effect of hedge funds. They say they won’t allow speculators to govern their societies. If they are serious why don’t they ban them from their markets? A universal ban would be even better and they could throw in derivatives for good measure.

Europe still does not have a longer-term structural solution to their debt crisis and none is in the offering. Germany cannot sell its total tranche of bonds and Mrs. Merkel says that if Germany can only sell 65% of its bonds how can Eurobonds or bonds of the six insolvent nations sell theirs? The debt crisis is burrowing even deeper like a large worm undermining the entire continent. Worse yet, we just found out that the Bundesbank usually holds back bonds for market making operations, thus, they only sold about half of the issue. If the crisis continues to deepen Germany and the other euro zone nations will have to reexamine where they are headed. As we know all currencies and debt rates are increasing, which ties the banks of all the participants, including the solvent ones. Even with the German bunds, who is going to want to hold debt in a country that will have to guarantee one-half or more of the debt of other countries? At the same time the call goes out for strict supervision and enforcement of budget discipline. We have lived in these countries and that is not possible for any sustained period of time.

The Spanish election turned out as well as could be expected Calling for a vote on November 20th, the anniversary of Generalisimo’s death, turned out to be the kiss of death for Socialist PM Joe Luis Zapatero. There are too many people who liked Franco. The PP is a pro business party and already governs 11 of 17 of the country’s autonomous regions. If PP beats the Socialists in their stronghold in March, the PP will be in power for a number of years. Zapater’s legacy to the PP will have its work cut out for it with 22% unemployment and almost 7% yields to contend with. They will have to also try to restore the country’s AAA rating. Many voted for the lesser of two evils.

In France we have another case of government bailing out the banks and other euro zone members. These efforts could cost France its AAA rating. We’ll know in mid-January, but it does not look good.

Funding costs on a 10-year bond level are up and they look like they are going to stay there. Major countries are still paying close to 7%, which is the highest funding cost since the creation of the euro. The spread between French and German rates is about 2%, which is unheard of. The euro continues to be hammered vs. the dollar and the same is happening worldwide in stock markets. Most two-year paper has risen in yield over the past month. France is paying close to 4% versus .40% in Germany and in the US .28%. In Europe these bond markets could not function without the assistance of the ECB and the money and credit creation of sovereign governments, some banks are showing desperate signs. The biggest bank in Italy, Unibank, has to refinance $51 billion of bonds shortly. Their bond yields are now over 10%. Only the ECB can bail them out like the Fed bailed out banks in the US and Europe three years ago.

While this transpires 70% of Americans are unaware of the seriousness of what is taking place in Europe. Wait until 2012. Banks alone have to raise $660 billion of maturing debt, most 10-year paper is selling above 7-1/4%, which is a sign that they all need the help; Greece, Ireland and Portugal has already received. Remember, we are talking $6 trillion just to bail these countries out and to keep their economies going sideways. The solvent countries cannot come up with that kind of money without failing themselves. You have to ask why did the bankers let things go so far? They deliberately impeded the system, because they cannot be that stupid. Then there is the matter of capital flight. This year Greek banks have lost 20% of their deposits. We hope they bought gold and silver. We ask are Italian and Spanish deposits next? Over in Hungary Moody’s has cut their debt to non-investment grade. In the wake of that announcement France’s Sarkozy and Germany’s Merkel tell us that the ECB will act appropriately, whatever that means. These leaders do not know what to say or what to do. The situation is unsustainable, but we wouldn’t be surprised if this phase lasted into late January. Remember, Europe virtually closes down from December 7th until January 10th. This while the future of the European banking system is in dire trouble. While this transpires we wonder how many derivative failures there are and what their consequences could be? At last we heard from the US government, US bank exposure was $670 billion, mostly in credit default swaps. If the six European countries default on their debt, US banks cannot possibly stay solvent. The knack on contagion could take the US banking system down with it. In Europe there is no question that all European banks will have to be recapitalized by the countries in which they do business. In fact, it has already begun, just as it did in the US three years ago. That makes their currencies worth much less and gold and silver worth much more.

This is the greatest risk the EU has ever faced and as yet no one has any solutions. The euro and the entire 27-country union are at risk. This as we predicted has no solution. The weaker states have to be cut loose and the euro has to be phased out. Article 123 of the EU Treaty, prohibiting monetary financing or central bank funding of government, is illegal. That certainly is a stopper. That means the euro zone and the EU are trapped by their treaty and would have to change the treaty and, of course, the outcome would be massive inflation. If they stick to the treaty the euro will collapse. What it comes down to is that desperate violators do not care about the law. All they want is survival. On the other hand, Germans are unwilling to sacrifice their credibility or to abandon the legal path. Crisis or no crisis there is no reason to break the rules for those who have already broken them. Monetary inflation is the direct result of bailout and purging the system is the only solution for the long-term. We do not think Germany will abandon the rules and their principals. That means they are prepared to cut loose the six insolvents and hope the core euro nations can hold together. It is not only inflation, but credibility and trust as well.

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Thursday, November 24, 2011

IF Issue: Wednesday November 23, 2011

Excerpts and links from the latest issue:

Bob Chapman on the MF Global scandal

http://www.youtube.com/watch?v=5ZDJuVqDdp8&feature=email

Bob Chapman - The Financial Survival 18 Nov 2011

http://www.youtube.com/watch?v=NIH9LQOfMxk&feature=email

Interview 413 – Bob Chapman

http://www.corbettreport.com/interview-413-bob-chapman/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CorbettReportRSS+%28The+Corbett+Report%29

Bob Chapman joins Wide Awake Radio 11-21-11

http://www.youtube.com/watch?v=ZNnJ2ZxOT_o&feature=email

Bob Chapman - The Financial Survival 21 Nov 2011

http://www.youtube.com/watch?v=WI82-uY16lE&feature=email

Bob Chapman - The Money & Wealth Show. - 11 Nov 2011

http://www.youtube.com/watch?v=9LtJMc3iCUU

US MARKETS

We continue to write about Europe, because we have too. At the moment and for at least the next several months, it will be the lynchpin and the catalyst that could bring about a financial chain reaction worldwide. In turn Europe poses the biggest risk to the US economy. European direction has changed over the past few weeks to cut loose the six problem nations and any others who cannot stand on their own and reform a core euro zone. Presently Europe is nowhere close to ending its sovereign debt crisis. Germany does not want to use the European Central Bank as a lender of last resort. As riots erupt on the streets of Greece, talks are underway to structure 50% debt write-off that was the heart of the deal structured a month ago. In the meantime lending costs, already astronomical in Greece are relentlessly moving higher in Italy and Spain. The ECB has been active in the bond market as a buyer, but only in a limited way. The French, British and US want the ECB to act like the Federal Reserve overwhelming the market, and monetizing to solve the problems of the moment. The Germans do not want to deal with the inevitable inflation that follows. The extension of the problem, the hallmark of US, UK and French monetary policy obviously doesn’t solve the problem, but eventually compounds it by creating more debt and inflation. This policy has proven over and over again to be a failure in the longer term.

Confusion still reigns in Europe, and as a result the euro has lost 3%. In fact, climbing interest rates have many panicked. Interest rates on the 2-year Italian bills rose 150 bps last week, or ½%, as CDS, Credit Default Swaps, jumped 24%. Yields on Spanish, French and Belgian bonds had the highest divergence in euro history versus the bund this past week as well. As we have pointed out over and over that there is only one safe haven and that is gold and silver related assets. We ask how can the US dollar be perceived as a safe haven as its debt grows exponentially and its credit rating is approaching another downgrading? There has been only one safe haven for 6,000 years and that is gold and if the US government thinks they are going to change that they are mistaken. The money managers and hedge funds continue to chase the same failing currencies and refuses to buy gold, which appreciated more than 20% annually along with silver for the past 12 years. What are these genius money managers thinking about? They are so cowed by the establishment and propaganda they do not dare deviate. That in the face of historically low yields, which when matched against inflation is dreadful. Doesn’t anyone think outside the box?

In America Operation Twist, which has seemed to have faded from memory already has been a failure. How do you solve a debt crisis with more debt? Something the Europeans should take note of. But, they won’t, because that is today’s accepted poison. That in spite of its failure in the past. The end goal of Twist was lower mortgage rates, which really hasn’t happened. Who cares though? There are six million foreclosed homes in sale inventory and that will increase to 8 to 11 million over the next four years. We’d call this an exercise in futility.

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Wednesday, November 16, 2011

IF Issue: Wednesday Nov 16, 2011

Excerpts from the latest issue:
Corbett Report Interview 408 – Bob Chapman

http://www.corbettreport.com/interview-408-bob-chapman/

Interview 408 – Bob Chapman

http://www.corbettreport.com/interview-408-bob-chapman/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CorbettReportRSS+%28The+Corbett+Report%29

Bob Chapman - The Financial Survival 11 Nov 2011

http://www.youtube.com/watch?v=8MrnUrbC6go&feature=email

Bob Chapman - HoweStreet.com Radio with host

Phil Mackesy:

http://talkdigitalnetwork.com/2011/11/corzine-cftc-get-it-wrong/

Bob Chapman: The Collapse is Coming!

http://www.youtube.com/watch?v=eCG4hv6Ds2k&feature=email

Bob Chapman: Surviving The Banker Sociopaths 1/2

http://www.youtube.com/watch?list=PLD2DD1CF2245D0675&v=2Ai4cgWzRiw&feature=player_embedded

Bob Chapman - The National Intel Report with John Stadtmiller -08 Nov 2011

http://www.youtube.com/watch?v=o9_96J09r9s&feature=email

Dr Deagle Show 111109 1/3 - BOB CHAPMAN - COMING

http://www.youtube.com/watch?v=Gi66ivhliQY

Dr Deagle Show 111109 2/3 - BOB CHAPMAN - COMING ECONOMIC STORM

Dr Deagle Show 111109 3/3 - BOB CHAPMAN - COMING ECONOMIC STORM

http://www.youtube.com/watch?v=dT9b2mbaLFQ

Bob/the Power Hour with Joyce

http://archives2011.gcnlive.com/Archives2011/nov11/PowerHour/1114111.mp3

Bob Chapman w/ Kerry Lutz

http://bit.ly/bob-chapman-11-14-11

Bob Chapman - The Financial Survival 14 Nov 2011

http://www.youtube.com/watch?v=8F1wpjPe7no

US MARKETS

It wasn’t all that long ago that industry estimates were that the issuance of credit default swaps in Europe, CDS, were about $18 billion. At the same time on the street it was estimated that the exposure was $75 billion. We estimate $150 billion - this represented insurance on the holders of bonds issued by Greece, Portugal, Ireland, Spain and Italy. The Bank for International Settlements says that figure is now $518 billion. As we have noted before the big problem is counterparty risk. When CDS, credit default swaps, are triggered to default will the counterparties pay up? Even if writers are buying from one another someone has to get caught holding the bag and loose money. That is where the risk comes in.

We are seeing a change in tactics by Europe’s politicians as they head toward allowing euro zone members to leave the arrangement. The realization is that no matter what, the five weak nations cannot compete with the stronger euro zone countries. They want legislation for their exit and to allow them to remain in the European Union. They obviously know that if they all or in part leave the euro they’ll probably default as well, in whole or in part. The derivative writers contend if the owners of bonds agree to take a 50% loss on bonds then the insurance doesn’t take effect. Fitch, the rating service says yes it is a payable default. We will see who is correct. We agree with Fitch.

At least for the moment bond yields in Europe seem to be finding balance and the euro seems to want to do the same. Pressure is still being applied and yields will probably move up over the next six weeks and we could see the euro at $1.30. the French and Germans are exposing a smaller euro zone finally facing reality, although the euro was all they cared about in the first place. Excepting Germany, most bonds were lower.

At the beginning every sovereign was going to be bailed out if necessary. Germany believed 2 years ago it would cost $1 trillion, we said $4 trillion. When Germany admitted to $3.5 trillion two months ago they knew then they and the other solvent countries couldn’t carry the burden without going under themselves. That was very short sighted of Germany. If they had made these decisions earlier they wouldn’t have had to make them now in a crisis where the problems are spiraling out of control. What poor preparation and planning. This should have been over last summer, but no they had to have their summer vacations. These people live in la la land. This corrupt socialist model does not work as many socialist countries have discovered.

The future of the euro zone is sealed. There will be six less participants a year from now. The European economy will have 1% negative growth next year and lower growth the following year. In Europe several more members will be forced to phase out the euro and return to their own currencies. We see this as the best option Europe’s one-worlders can hope for. What we are seeing is not a liquidity issue. These five countries are broke and all the saviors can do is throw good money after bad.

We hear morbid stories of the terrible results of changing currencies, some of which are true. You know what the problems are. You just avoid them. Everything has to be done ahead of time. You simply trade in each euro for ½ drachma or lira and seven days later there are no more exchanges. There is a 50% devaluation and a total default on debt. The government in question has to either bail out the banks or lets them go under. Either way a new banking system has to be put in place. In order to prepare for such events you simple exchange euros for gold and silver coins and bullion. Only keep enough euros to survive.

The troubles in Europe are not going to go away anytime soon. Expect two years or less before the euro is history. This will cause a rising dollar temporarily, but do not be deceived, it won’t last long.

Just to show you how rapid the deterioration has become, Italian banks borrowed $152 billion at the end of October, up from $144 billion in September. Italy’s $2 trillion plus in liabilities exceeds the four other countries in trouble. The banks holding these bonds as collateral are seeing their value erode, which means they cannot lend as much money as they would like to lend. In addition, banks have also purchased these bonds and as they fall in value it reduces their capital base. They cannot lend as much and may have to raise additional capital. That is in addition to raising funds to meet the BIS requirement of 9% reserves.

Italy’s PM Silvio Berlusconi as of this writing has not stepped down and as a result the yield on the Italian 10-year notes rose. These are killer rates, because Italy has to sell $204.2 billion in notes in 2011 and $231.9 billion in 2012. Italy, like all the other sovereigns that are in austerity programs, has already slipped into recession in addition to a natural slow down in the European Union. That will make all these nations have a difficult time increasing revenues.

Italy is now the key not Greece, and the very fact that France’s Sarkozy and Germany’s Merkel are pushing for legislation to allow sovereigns to exit the euro zone but stay in the EU is very telling. European and US stock markets sold off on the news, but the US’s Working Group on Financial Markets brought the markets right back up. In case you hadn’t noticed there are no longer free markets. Most everyone in the investment community knows the markets are being manipulated but no one says anything. That is because all they have to do is watch what the US is doing and follow suit. These actions, of course, make it much more difficult for the nations to sell their bonds and notes and the yields they must pay go higher. There is now no question the euro zone will change. The weak six countries will soon leave and eventually we see an end to this unnatural union. The healthy nations will concentrate on bailing out their banks, which will cost taxpayers a fortune. The bankrupt nations will have to nationalize banks. Depositors will lose 50% to 90% of their deposits. Those subscribers in Europe get out of those banks now. Take those funds and buy gold and silver shares, coins and bullion. In the healthier countries do the same thing, because we do not know how big the losses will be? No one knows how bad this will get.

Pages

Wednesday, December 7, 2011

IF Issue: Wednesday Dec 7, 2011

Saturday, December 3, 2011

IF Issue: Saturday Dec 3, 2011

Saturday, November 26, 2011

IF Issue: Saturday November 26, 2011

Thursday, November 24, 2011

IF Issue: Wednesday November 23, 2011

Wednesday, November 16, 2011

IF Issue: Wednesday Nov 16, 2011