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General / "Silent Weapons for Quiet Wars" an old classic
« on: June 27, 2018, 06:23:58 AM »
http://www.stopthecrime.net/docs/SILENT%20WEAPONS%20for%20QUIET%20WARS.pdf




This document represents the doctrine adopted by the Policy Committee
of the Bilderburg Group during its first known meeting in 1954.
The following document, dated May 1979, was found on July 7, 1986,
in an IBM copier that had been purchased at a surplus sale.
Silent Weapons for Quiet Wars

http://www.lawfulpath.com/ref/sw4qw/index.shtml - preface

http://www.lawfulpath.com/ref/sw4qw/

The following document is taken from two sources. The first, was acquired on a website
(of which I can't remember the address) listing as its source the book titled Behold A Pale
Horse by William Cooper; Light Technology Publishing, 1991. The second source is a
crudely copied booklet, which does not contain a copyright notice, or a publisher's name.
With the exception of the Forward, the Preface, the main thing that was missing from the
first source was the illustrations. As we began comparing the two, we realized that the
illustrations, and the accompanying text (also missing from the first) made up a
significant part of the document. This has now been restored by The Lawful Path, and so
far as I know, is the only internet copy available complete with the illustrations.
We have no first-hand knowledge that this document is genuine, however many of the
concepts contained herein are certainly reasonable, important, and bear strong
consideration.

If anyone has additional knowledge about the source of this document; has better copies
of the illustrations than the ones posted here; has any missing pieces to this document, or
has any comments which can improve upon the quality of this document, we will
appreciate your comments.

The Lawful Path http://www.lawfulpath.com/

Additional information includes confirmation that this policy was adopted by the
International

"Elites" at the first Bilderberg Meeting in 1954.

Silent Weapons for Quiet Wars

Forward

This manuscript was delivered to our offices by an unknown person. We did not steal the
document, nor are we involved with any theft from the United States Government, and
we did not get the document by way of any dishonest methods. We feel that we are not
endangering the "National Security" by reproducing this document, quite the contrary; it
has been authenticated and we feel that we are not only within our rights to publish it, but
morally bound to do so.

Regarding the training manual, you may have detected that we had to block out the
marginal notes made by the selectee at the C.I.A. Training Center, but I can assure you
that the manual is authentic, and was printed for the purpose of introducing the selectee to
the conspiracy. It has been authenticated by four different technical writers for Military
Intelligence, one just recently retired who wants very much to have this manual
distributed throughout the world, and one who is still employed as an Electronics
Engineer by the Federal Government, and has access to the entire series of Training
Manuals. One was stationed in Hawaii, and held the highest security clearance in the
Naval Intelligence, and another who is now teaching at a university, and has been
working with the Central Intelligence Agency for a number of years, and wants out
before the axe falls on the conspirators.

We believed that the entire world should know about this plan, so we distributed
internationally one-hundred of these manuscripts, to ask individuals at top level positions
their opinions. The consensus opinion was to distribute this to as many people as who
wanted it, to the end that they would not only understand that "War" had been declared
against them, but would be able to properly identify the true enemy to Humanity.


Delamer Duverus

PAGE 01

Silent Weapons for Quiet Wars

Preface

Conspiracy theories are nothing new to history. Plots to "kill Caesar" and overthrow
Rome abounded, for instance. However, it is seldom that concrete clues to such plots
come to light, and are generally known.

Silent Weapons for Quiet Wars, An Introduction Programming Manual was uncovered
quite by accident on July 7, 1986 when an employee of Boeing Aircraft Co. purchased a
surplus IBM copier for scrap parts at a sale, and discovered inside details of a plan,
hatched in the embryonic days of the "Cold War" which called for control of the masses
through manipulation of industry, peoples' pastimes, education and political leanings. It
called for a quiet revolution, putting brother against brother, and diverting the public's
attention from what is really going on.

The document you are about to read is real. It is reprinted in its virgin form, with
diagrams, as a touch of reality.

PAGE 02

Silent Weapons for Quiet Wars

Table of Contents

* Security 4
* Historical Introduction 4
* Political Introduction 6
* Energy 6
* Descriptive Introduction of the Silent Weapon 7
* Theoretical Introduction 8
* General Energy Concepts 8
* Mr. Rothschild's Energy Discovery 9
* Apparent Capital as "Paper" Inductor 10
* Breakthrough 10
* Application in Economics 10
* The Economic Model 11
* Industrial Diagrams 12
* Three Industrial Classes 14
* Aggregation 14
* The E-model 14
* Economic Inductance 15
* Inductive Factors to Consider 15
* Translation 15
* Time Flow Relationships and Self-destructive Oscillations 16
* Industry Equivalent Circuits 18
* Stages of Schematic Simplification 20
* Generalization 21
* Final Bill of Goods 21
* The Technical Coefficients 22
* The Types of Admittances 22
* The Household Industry 23
* Household Models 24
* Economic Shock Testing 25
* Introduction to the Theory of Shock Testing 26
* Example of Shock Testing 26
* Introduction to Economic Amplifiers 30
* Short List of Inputs 31
* Short List of Outputs 34
* Table of Strategies 35
* Diversion, the Primary Strategy 36
* Diversion Summary 37
* Consent, the Primary Victory 37
* Amplification Energy Sources 37
* Logistics 38
* The Artificial Womb 39
* The Political Structure of a Nation - Dependency 39
* Action/Offense 39
* Responsibility 39
* Summary 40
* System Analysis 40
* The Draft 41
* Enforcement 42

PAGE 03

Silent Weapons for Quiet Wars

TOP SECRET

Silent weapons for quiet wars
Operations Research Technical Manual

TW-SW7905.1

Welcome Aboard

This publication marks the 25th anniversary of the Third World War, called the "Quiet
War", being conducted using subjective biological warfare, fought with "silent weapons".
This book contains an introductory description of this war, its strategies, and its
weaponry.

May 1979 #74-1120

Security

It is patently impossible to discuss social engineering or the automation of a society, i.e.,
the engineering of social automation systems (silent weapons) on a national or worldwide
scale without implying extensive objectives of social control and destruction of human
life, i.e., slavery and genocide.

This manual is in itself an analog declaration of intent. Such a writing must be secured
from public scrutiny. Otherwise, it might be recognized as a technically formal
declaration of domestic war. Furthermore, whenever any person or group of persons in a
position of great power and without full knowledge and consent of the public, uses such
knowledge and methodologies for economic conquest - it must be understood that a state
of domestic warfare exists between said person or group of persons and the public.
The solution of today's problems requires an approach which is ruthlessly candid, with no
agonizing over religious, moral or cultural values.

You have qualified for this project because of your ability to look at human society with
cold objectivity, and yet analyze and discuss your observations and conclusions with
others of similar intellectual capacity without the loss of discretion or humility. Such
virtues are exercised in your own best interest. Do not deviate from them.

Historical Introduction

Silent weapon technology has evolved from Operations Research (O.R.), a strategic and
tactical methodology developed under the Military Management in England during

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Silent Weapons for Quiet Wars

World War II. The original purpose of Operations Research was to study the strategic and
tactical problems of air and land defense with the objective of effective use of limited
military resources against foreign enemies (i.e., logistics).
It was soon recognized by those in positions of power that the same methods might be
useful for totally controlling a society. But better tools were necessary.
Social engineering (the analysis and automation of a society) requires the correlation of
great amounts of constantly changing economic information (data), so a high-speed
computerized data-processing system was necessary which could race ahead of the
society and predict when society would arrive for capitulation.
Relay computers were to slow, but the electronic computer, invented in 1946 by J.
Presper Eckert and John W. Mauchly, filled the bill.
The next breakthrough was the development of the simplex method of linear
programming in 1947 by the mathematician George B. Dantzig.
Then in 1948, the transistor, invented by J. Bardeen, W.H. Brattain, and W. Shockley,
promised great expansion of the computer field by reducing space and power
requirements.
With these three inventions under their direction, those in positions of power strongly
suspected that it was possible for them to control the whole world with the push of a
button.
Immediately, the Rockefeller Foundation got in on the ground floor by making a fouryear
grant to Harvard College, funding the Harvard Economic Research Project for the
study of the structure of the American Economy.i One year later, in 1949, The United
States Air Force joined in.
In 1952 the grant period terminated, and a high-level meeting of the Elite was held to
determine the next phase of social operations research. The Harvard project had been
very fruitful, as is borne out by the publication of some of its results in 1953 suggesting
the feasibility of economic (social) engineering.
Engineered in the last half of the decade of the 1940's, the new Quiet War machine stood,
so to speak, in sparkling gold-plated hardware on the showroom floor by 1954.
With the creation of the maser in 1954, the promise of unlocking unlimited sources of
fusion atomic energy from the heavy hydrogen in sea water and the consequent
availability of unlimited social power was a possibility only decades away.
The combination was irresistible.
PAGE 05
Silent Weapons for Quiet Wars
Although the silent weapons system was nearly exposed 13 years later, the evolution of
the new weapon-system has never suffered any major setbacks.
This volume marks the 25th anniversary of the beginning of the Quiet War. Already this
domestic war has had many victories on many fronts throughout the world.
Political Introduction
In 1954 it was well recognized by those in positions of authority that it was only a matter
of time, only a few decades, before the general public would be able to grasp and upset
the cradle of power, for the very elements of the new silent-weapon technology were as
accessible for a public utopia as they were for providing a private utopia.
The issue of primary concern that of dominance, revolved around the subject of the
energy sciences.
Energy
Energy is recognized as the key to all activity on earth. Natural science is the study of the
sources and control of natural energy, and social science, theoretically expressed as
economics, is the study of the sources and control of social energy. Both are bookkeeping
systems: mathematics. Therefore, mathematics is the primary energy science. And the
bookkeeper can be king if the public can be kept ignorant of the methodology of the
bookkeeping.
All science is merely a means to an end. The means is knowledge. The end is control.
Beyond this remains only one issue: Who will be the beneficiary?
In 1954 this was the issue of primary concern. Although the so-called "moral issues"
were raised, in view of the law of natural selection [1] it was agreed that a nation or world
of people who will not use their intelligence are no better than animals who do not have
intelligence. Such people are beasts of burden and steaks on the table by choice and
consent.
Consequently, in the interest of future world order, peace, and tranquility, it was decided
to privately wage a quiet war against the American public with an ultimate objective of
permanently shifting the natural and social energy (wealth) of the undisciplined and
irresponsible many into the hands of the self-disciplined, responsible, and worthy few.
In order to implement this objective, it was necessary to create, secure, and apply new
weapons which, as it turned out, were a class of weapons so subtle and sophisticated in
their principle of operation and public appearance as to earn for themselves the name
"silent weapons".
[1 This concept was never more than a questionable theory of elitist Charles Darwin]
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Silent Weapons for Quiet Wars
In conclusion, the objective of economic research, as conducted by the magnates of
capital (banking) and the industries of commodities (goods) and services, is the
establishment of an economy which is totally predictable and manipulatable.
In order to achieve a totally predictable economy, the low-class elements of society must
be brought under total control, i.e., must be housebroken, trained, and assigned a yoke
and long-term social duties from a very early age, before they have an opportunity to
question the propriety of the matter. In order to achieve such conformity, the lower-class
family unit must be disintegrated by a process of increasing preoccupation of the parents
and the establishment of government-operated day-care centers for the occupationally
orphaned children.
The quality of education given to the lower class must be of the poorest sort, so that the
moat of ignorance isolating the inferior class from the superior class is and remains
incomprehensible to the inferior class. With such an initial handicap, even bright lower
class individuals have little if any hope of extricating themselves from their assigned lot
in life. This form of slavery is essential to maintain some measure of social order, peace,
and tranquility for the ruling upper class.
Descriptive Introduction of the Silent Weapon
Everything that is expected from an ordinary weapon is expected from a silent weapon by
its creators, but only in its own manner of functioning.
It shoots situations, instead of bullets; propelled by data processing, instead of chemical
reaction (explosion); originating from bits of data, instead of grains of gunpowder; from a
computer, instead of a gun; operated by a computer programmer, instead of a marksman;
under the orders of a banking magnate, instead of a military general.
It makes no obvious explosive noises, causes no obvious physical or mental injuries, and
does not obviously interfere with anyone's daily social life.
Yet it makes an unmistakable "noise," causes unmistakable physical and mental damage,
and unmistakably interferes with the daily social life, i.e., unmistakable to a trained
observer, one who knows what to look for.
The public cannot comprehend this weapon, and therefore cannot believe that they are
being attacked and subdued by a weapon.
The public might instinctively feel that something is wrong, but that is because of the
technical nature of the silent weapon, they cannot express their feeling in a rational way,
or handle the problem with intelligence. Therefore, they do not know how to cry for help,
and do not know how to associate with others to defend themselves against it.
PAGE 07
Silent Weapons for Quiet Wars
When a silent weapon is applied gradually, the public adjusts/adapts to its presence and
learns to tolerate its encroachment on their lives until the pressure (psychological via
economic) becomes too great and they crack up.
Therefore, the silent weapon is a type of biological warfare. It attacks the vitality,
options, and mobility of the individuals of a society by knowing, understanding,
manipulating, and attacking their sources of natural and social energy, and their physical,
mental, and emotional strengths and weaknesses.
Theoretical Introduction
Give me control over a nation's currency, and I care not who makes its laws.
-- Mayer Amshel Rothschild (1743-1812)
Today's silent weapons technology is an outgrowth of a simple idea discovered,
succinctly expressed, and effectively applied by the quoted Mr. Mayer Amschel
Rothschild. Mr. Rothschild discovered the missing passive component of economic
theory known as economic inductance. He, of course, did not think of his discovery in
these 20th-century terms, and, to be sure, mathematical analysis had to wait for the
Second Industrial Revolution, the rise of the theory of mechanics and electronics, and
finally, the invention of the electronic computer before it could be effectively applied in
the control of the world economy.
General Energy Concepts
In the study of energy systems, there always appears three elementary concepts. These
are potential energy, kinetic energy, and energy dissipation. And corresponding to these
concepts, there are three idealized, essentially pure physical counterparts called passive
components.
(1) In the science of physical mechanics, the phenomenon of potential energy is
associated with a physical property called elasticity or stiffness, and can be represented
by a stretched spring. In electronic science, potential energy is stored in a capacitor
instead of a spring. This property is called capacitance instead of elasticity or stiffness.
(2) In the science of physical mechanics, the phenomenon of kinetic energy is
associated with a physical property called inertia or mass, and can be represented by a
mass or a flywheel in motion.
In electronic science, kinetic energy is stored in an inductor (in a magnetic field)
instead of a mass. This property is called inductance instead of inertia.
PAGE 08
Silent Weapons for Quiet Wars
(3) In the science of physical mechanics, the phenomenon of energy dissipation is
associated with a physical property called friction or resistance, and can be represented
by a dashpot or other device which converts energy into heat. In electronic science,
dissipation of energy is performed by an element called either a resistor or a conductor,
the term "resistor" being the one generally used to describe a more ideal device (e.g.,
wire) employed to convey electronic energy efficie ntly from one location to another. The
property of a resistance or conductor is measured as either resistance or conductance
reciprocals.
In economics these three energy concepts are associated with:
1. Economic Capacitance - Capital (money, stock/inventory, investments in buildings
and durables, etc.)
2. Economic Conductance - Goods (production flow coefficients)
3. Economic Inductance - Services (the influence of the population of industry on
output)
All of the mathematical theory developed in the study of one energy system (e.g.,
mechanics, electronics, etc.) can be immediately applied in the study of any other energy
system (e.g., economics).
Mr. Rothschild's Energy Discovery
What Mr. Rothschild [2] had discovered was the basic principle of power, influence, and
control over people as applied to economics. That principle is "when you assume the
appearance of power, people soon give it to you."
Mr. Rothschild had discovered that currency or deposit loan accounts had the required
appearance of power that could be used to induce people (inductance, with people
corresponding to a magnetic field) into surrendering their real wealth in exchange for a
promise of greater wealth (instead of real compensation). They would put up real
collateral in exchange for a loan of promissory notes. Mr. Rothschild found that he could
issue more notes than he had backing for, so long as he had someone's stock of gold as a
persuader to show his customers.
Mr. Rothschild loaned his promissory notes to individuals and to governments. These
would create overconfidence. Then he would make money scarce, tighten control of the
system, and collect the collateral through the obligation of contracts. The cycle was then
repeated. These pressures could be used to ignite a war. Then he would control the
availability of currency to determine who would win the war. That government which
agreed to give him control of its economic system got his support.
Collection of debts was guaranteed by economic aid to the enemy of the debtor. The
profit derived from this economic methodology made Mr. Rothschild all the more able to
expand his wealth. He found that the public greed would allow currency to be printed by
[2 Read The Synagogue of Satan by Andrew Hitchcock to discover the truth about Mr. Rothschild.]
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Silent Weapons for Quiet Wars
government order beyond the limits (inflation) of backing in precious metal or the
production of goods and services.
Apparent Capital as "Paper" Inductor
In this structure, credit, presented as a pure element called "currency," has the appearance
of capital, but is in effect negative capital. Hence, it has the appearance of service, but is
in fact, indebtedness or debt. It is therefore an economic inductance instead of an
economic capacitance, and if balanced in no other way, will be balanced by the negation
of population (war, genocide). The total goods and services represent real capital called
the gross national product, and currency may be printed up to this level and still represent
economic capacitance; but currency printed beyond this level is subtractive, represents
the introduction of economic inductance, and constitutes notes of indebtedness.
War is therefore the balancing of the system by killing the true creditors (the public
which we have taught to exchange true value for inflated currency) and falling back on
whatever is left of the resources of nature and regeneration of those resources.
Mr. Rothschild had discovered that currency gave him the power to rearrange the
economic structure to his own advantage, to shift economic inductance to those economic
positions, which would encourage the greatest economic instability and oscillation.
The final key to economic control had to wait until there was sufficient data and highspeed
computing equipment to keep close watch on the economic oscillations created by
price shocking and excess paper energy credits - paper inductance/inflation .
Breakthrough
The aviation field provided the greatest evolution in economic engineering by way of the
mathematical theory of shock testing. In this process, a projectile is fired from an
airframe on the ground and the impulse of the recoil is monitored by vibration
transducers connected to the airframe and wired to chart recorders.
By studying the echoes or reflections of the recoil impulse in the airframe, it is possible
to discover critical vibrations in the structure of the airframe which either vibrations of
the engine or aeolian vibrations of the wings, or a combination of the two, might
reinforce resulting in a resonant self-destruction of the airframe in flight as an aircraft.
From the standpoint of engineering, this means that the strengths and weaknesses of the
structure of the airframe in terms of vibrational energy can be discovered and
manipulated.
Application in Economics
To use this method of airframe shock testing in economic engineering, the prices of
commodities are shocked, and the public consumer reaction is monitored. The resulting
PAGE 10
Silent Weapons for Quiet Wars
echoes of the economic shock are interpreted theoretically by computers and the psychoeconomic
structure of the economy is thus discovered. It is by this process that partial
differential and difference matrices are discovered that define the family household and
make possible its evaluation as an economic industry (dissipative consumer structure).
Then the response of the household to future shocks can be predicted and manipulated,
and society becomes a well-regulated animal with its reins under the control of a
sophisticated computer-regulated social energy bookkeeping system.
Eventually every individual element of the structure comes under computer control
through a knowledge of personal preferences, such knowledge guaranteed by computer
association of consumer preferences (universal product code, UPC; zebra-striped pricing
codes on packages) with identified consumers (identified via association with the use of a
credit card and later a permanent "tattooed" body number invisible under normal ambient
illumination).
Summary
Economics is only a social extension of a natural energy system. It, also, has its three
passive components. Because of the distribution of wealth and the lack of communication
and lack of data, this field has been the last energy field for which a knowledge of these
three passive components has been developed.
Since energy is the key to all activity on the face of the earth, it follows that in order to
attain a monopoly of energy, raw materials, goods, and services and to establish a world
system of slave labor, it is necessary to have a first strike capability in the field of
economics. In order to maintain our position, it is necessary that we have absolute first
knowledge of the science of control over all economic factors and the first experience at
engineering the world economy.
In order to achieve such sovereignty, we must at least achieve this one end: that the
public will not make either the logical or mathematical connection between economics
and the other energy sciences or learn to apply such knowledge.
This is becoming increasingly difficult to control because more and more businesses are
making demands upon their computer programmers to create and apply mathematical
models for the management of those businesses.
It is only a matter of time before the new breed of private programmer/economists will
catch on to the far-reaching implications of the work begun at Harvard in 1948. The
speed with which they can communicate their warning to the public will largely depend
upon how effective we have been at controlling the media, subverting education, and
keeping the public distracted with matters of no real importance.
The Economic Model
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Silent Weapons for Quiet Wars
Economics, as a social energy science has as a first objective the description of the
complex way in which any given unit of resources is used to satisfy some economic want.
(Leontief Matrix). This first objective, when it is extended to get the most product from
the least or limited resources, comprises that objective of general military and industrial
logistics known as Operations Research. (See simplex method of linear programming.)
The Harvard Economic Research Project (1948-) was an extension of World War II
Operations Research. Its purpose was to discover the science of controlling an economy:
at first the American economy, and then the world economy. It was felt that with
sufficient mathematical foundation and data, it would be nearly as easy to predict and
control the trend of an economy as to predict and control the trajectory of a projectile.
Such has proven to be the case. Moreover, the economy has been transformed into a
guided missile on target.
The immediate aim of the Harvard project was to discover the economic structure, what
forces change that structure, how the behavior of the structure can be predicted, and how
it can be manipulated. What was needed was a well-organized knowledge of the
mathematical structures and interrelationships of investment, production, distribution,
and consumption.
To make a short story of it all, it was discovered that an economy obeyed the same laws
as electricity and that all of the mathematical theory and practical and computer knowhow
developed for the electronic field could be directly applied in the study of
economics. This discovery was not openly declared, and its more subtle implications
were and are kept a closely guarded secret, for example that in an economic model,
human life is measured in dollars, and that the electric spark generated when opening a
switch connected to an active inductor is mathematically analogous to the initiation of
war.
The greatest hurdle which theoretical economists faced was the accurate description of
the household as an industry. This is a challenge because consumer purchases are a
matter of choice which in turn is influenced by income, price, and other economic
factors.
This hurdle was cleared in an indirect and statistically approximate way by an application
of shock testing to determine the current characteristics, called current technical
coefficients, of a household industry
Finally, because problems in theoretical electronics can be translated very easily into
problems of theoretical electronics, and the solution translated back again, it follows that
only a book of language translation and concept definition needed to be written for
economics. The remainder could be gotten from standard works on mathematics and
electronics. This makes the publication of books on advanced economics unnecessary,
and greatly simplifies project security.
Industrial Diagrams
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Silent Weapons for Quiet Wars
An ideal industry is defined as a device which receives value from other industries in
several forms and converts them into one specific product for sales and distribution to
other industries. It has several inputs and one output. What the public normally thinks of
as one industry is really an industrial complex, where several industries under one roof
produce one or more products.
A pure (single output) industry can be represented oversimply by a circuit block as
follows:
The flow of product from industry #1 (supply) to industry #2 (demand) is denoted by
112. The total flow out of industry "K" is denoted by Ik (sales, etc.).
A three industry network can be diagrammed as follows:
A node is a symbol of collection and distribution of flow. Node #3 receives from industry
#3 and distributes to industries #1 and #3. If industry #3 manufactures chairs, then a flow
from industry #3 back to industry #3 simply indicates that industry #3 is using part of its
own output product, for example, as office furniture. Therefore the flow may be
summarized by the equations:
PAGE 13
Silent Weapons for Quiet Wars
Three Industrial Classes
Industries fall into three categories or classes by type of output:
Class #1 - Capital (resources)
Class #2 - Goods (commodities or use - dissipative)
Class #3 - Services (action of population
Class #1 industries exist at three levels:
(1) Nature - sources of energy and raw materials.
(2) Government - printing of currency equal to the gross national product (GNP), and
extension of currency in excess of GNP.
(3) Banking - loaning of money for interest, and extension (inflation/counterfeiting) of
economic value through the deposit loan accounts.
Class #2 industries exist as producers of tangible or consumer (dissipated) products. This
sort of activity is usually recognized and labeled by the public as "industry."
Class #3 industries are those which have service rather than a tangible product as their
output. These industries are called (1) households, and (2) governments. Their output is
human activity of a mechanical sort, and their basis is population.
Aggregation
The whole economic system can be represented by a three-industry model if one allows
the names of the outputs to be (1) capital, (2) goods, and (3) services. The problem with
this representation is that it would not show the influence, say, the textile industry on the
ferrous metal industry. This is because both the textile industry and the ferrous metal
industry would be contained within a single classification called the "goods industry" and
by this process of combining or aggregating these two industries under one system block
they would lose their economic individuality.
The E-Model
PAGE 14
Silent Weapons for Quiet Wars
A national economy consists of simultaneous flows of production, distribution,
consumption, and investment. If all of these elements including labor and human
functions are assigned a numerical value in like units of measure, say, 1939 dollars, then t
his flow can be further represented by a current flow in an electronic circuit, and its
behavior can be predicted and manipulated with useful precision.
The three ideal passive energy components of electronics, the capacitor, the resistor, and
the inductor correspond to the three ideal passive energy components of economics called
the pure industries of capital, goods, and services, respectively:
∗ Economic capacitance represents the storage of capital in one form or another.
∗ Economic conductance represents the level of conductance of materials for the
production of goods.
∗ Economic inductance represents the inertia of economic value in motion. This is a
population phenomenon known as services.
Economic Inductance
An electrical inductor (e.g., a coil or wire) has an electric current as its primary
phenomenon and a magnetic field as its secondary phenomenon (inertia). Corresponding
to this, an economic inductor has a flow of economic value as its primary phenome non
and a population field as its secondary field phenomenon of inertia. When the flow of
economic value (e.g., money) diminishes, the human population field collapses in order
to keep the economic value (money) flowing (extreme case - war).
This public inertia is a result of consumer buying habits, expected standard of living, etc.,
and is generally a phenomenon of self-preservation.
Inductive Factors to Consider
(1) Population
(2) Magnitude of the economic activities of the government
(3) The method of financing these government activities (See Peter-Paul Principle -
inflation of the currency.)
Translation
(a few examples will be given)
• Charge: Coulombs Dollars (1939)
• Flow/Current: Amperes (coulombs/ second) Dollars of flow per year
• Motivating Force: Volts; Dollars (output) demand
• Conductance: Amperes per volt; Dollars of flow per year per dollar demand
• Capacitance: Coulombs per volt: Dollars of production inventory/ stocks per
dollar demand
PAGE 15
Silent Weapons for Quiet Wars
Time Flow Relationships and Self-Destructive Oscillations
An ideal industry may be symbolized electronically in various ways. The simplest way is
to represent a demand by a voltage and a supply by a current. When this is done, the
relationship between the two becomes what is called an admittance, which can result
from three economic factors: (1) foresight flow, (2) present flow, and (3) hindsight flow.
1. Foresight flow is the result of that property of living entities to cause energy (food) to
be stored for a period of low energy (e.g., a winter season). It consists of demands made
upon an economic system for that period of low energy (winter season).
In a production industry it takes several forms, one of which is known as production
stock or inventory. In electronic symbology this specific industry demand (a pure capital
industry) is represented by capacitance and the stock or resource is represented by a
stored charge. Satisfaction of an industry demand suffers a lag because of the loading
effect of inventory priorities.
2. Present flow ideally involves no delays. It is, so to speak, input today for output
today, a "hand to mouth" flow. In electronic symbology, this specific industry demand (a
pure us industry) is represented by a conductance which is then a simple economic valve
(a dissipative element).
3. Hindsight flow is known as habit or inertia. In electronics this phenomenon is the
characteristic of an inductor (economic analog = a pure service industry) in which a
current flow (economic analog = flow of money) creates a magnetic field (economic
analog = active human population) which, if the current (money flow) begins to diminish,
collapse (war) to maintain the current (flow of money - energy).
Other large alternatives to war as economic inductors or economic flywheels are an openended
social welfare program, or an enormous (but fruitful) open-ended space program.
The problem with stabilizing the economic system is that there is too much demand on
account of (1) too much greed and (2) too much population.
This creates excessive economic inductance which can only be balanced with economic
capacitance (true resources or value - e.g., in goods or services).
The social welfare program is nothing more than an open-ended credit balance system
which creates a false capital industry to give nonproductive people a roof over their heads
and food in their stomachs. This can be useful, however, because the recipients become
state property in return for the "gift," a standing army for the elite. For he who pays the
piper picks the tune.
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Those who get hooked on the economic drug must go to the elite for a fix. In this, the
method of introducing large amounts of stabilizing capacitance is by borrowing on the
future "credit" of the world. This is a fourth law of motion - onset, and consists of
performing an action and leaving the system before the reflected reaction returns to the
point of action - a delayed reaction.
The means of surviving the reaction is by changing the system before the reaction can
return. By this means, politicians become more popular in their own time and the public
pays later. In fact, the measure of such a politician is the delay time.
The same thing is achieved by a government by printing money beyond the limit of the
gross national product, and economic process called inflation. This puts a large quantity
of money into the hands of the public and maintains a balance against their greed, creates
a false self-confidence in them and, for awhile, stays the wolf from the door.
They must eventually resort to war to balance the account, because war ultimately is
merely the act of destroying the creditor, and the politicians are the publicly hired hit men
that justify the act to keep the responsibility and blood off the public conscience. (See
section on consent factors and social-economic structuring.)
If the people really cared about their fellow man, they would control their appetites
(greed, procreation, etc.) so that they would not have to operate on a credit or welfare
social system which steals from the worker to satisfy the bum.
Since most of the general public will not exercise restraint, there are only two alternatives
to reduce the economic inductance of the system.
1. Let the populace bludgeon each other to death in war, which will only result in a
total destruction of the living earth.
2. Take control of the world by the use of economic "silent weapons" in a form of
"quiet warfare" and reduce the economic inductance of the world to a safe level by
a process of benevolent slavery and genocide.
The latter option has been taken as the obviously better option. At this point it should be
crystal clear to the reader why absolute secrecy about the silent weapons is necessary.
The general public refuses to improve its own mentality and its faith in its fellow man. It
has become a herd of proliferating barbarians, and, so to speak, a blight upon the face of
the earth.
They do not care enough about economic science to learn why they have not been able to
avoid war despite religious morality, and their religious or self-gratifying refusal to deal
with earthly problems renders the solution of the earthly problem unreachable to them.
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Silent Weapons for Quiet Wars
It is left to those few who are truly willing to think and survive as the fittest to survive, to
solve the problem for themselves as the few who really care. Otherwise, exposure of the
silent weapon would destroy our only hope of preserving the seed of the future true
humanity.
Industry Equivalent Circuits
The industry 'Q' can be given a block symbol as follows:
Terminals #1 through #m are connected directly to the outputs of industries #1 and #m,
respectively.
The equivalent circuit of industry 'Q' is given as follows:
Characteristics:
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Silent Weapons for Quiet Wars
All inputs are at zero volts.
A - Amplifier - causes output current IQ to be represented by a voltage EQ. Amplifier
delivers sufficient current at EQ to drive all loads Y10 through YmQ and sink all currents
i1Q through imQ.
The unit transconductance amplifier AQ is constructed as follows:
* Arrow denotes the direction of the flow of capital, goods, and services. The total
demand is given as EQ, where EQ=IQ.
The coupling network YPQ symbolizes the demand which industry Q makes on industry
P. the connective admittance YPQ is called the 'technical coefficient' of the industry Q
stating the demand of industry Q, called the industry of use, for the output in capital,
goods, or services of industry P called the industry of origin.
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The flow of commodities from industry P to industry Q is given by iPQ evaluated by the
formula:
iPQ = YPQ* EQ.
When the admittance YPQ is a simple conductance, this formula takes on the common
appearance of Ohm's Law,
iPQ = gPQ* IQ.
The interconnection of a three industry system can be diagrammed as follows. The blocks
of the industry diagram can be opened up revealing the technical coefficients, and a much
simpler format. The equations of flow are given as follows:
Stages of Schematic Simplification
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Generalization
All of this may now be summarized.
Let Ij represent the output of industry j, and
* ijk, the amount of the product of industry j absorbed annually by industry k, and
* ijo, the amount of the same product j made available for 'outside' use. Then
Substituting the technical coefficiences, yjk
which is the general equation of every admittance in the industry circuit.
Final Bill of Goods
is called the final bill of goods or the bill of final demand, and is zero when the system
can be closed by the evaluation of the technical coefficients of the 'non-productive'
industries, government and households. Households may be regarded as a productive
industry with labor as its output product.
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The Technical Coefficients
The quantities yjk are called the technical coefficients of the industrial system. They are
admittances and can consist of any combination of three passive parameters,
conductance, capacitance, and inductance. Diodes are used to make the flow
unidirectional and point against the flow.
* gjk = economic conductance, absorption coefficient
* yjk = economic capacitance, capital coefficient
* Ljk = economic inductance, human activity coefficient
Types of Admittances
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The Household Industry
The industries of finance (banking), manufacturing, and government, real counterparts of
the pure industries of capital, goods, and services, are easily defined because they are
generally logically structured. Because of this their processes can be described
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Silent Weapons for Quiet Wars
mathematically and their technical coefficients can be easily deduced. This, however, is
not the case with the service industry known as the household industry.
Household Models
When the industry flow diagram is represented by a 2-block system of households on the
right and all other industries on the left, the following results:
The arrows from left to right labeled A, B, C, etc., denote flow of economic value from
the industries in the left hand block to the industry in the right hand block called
'households'. These may be thought of as the monthly consumer flows of the following
commodities. A - alcoholic beverages, B - beef, C - coffee, . . . . , U - unknown, etc. . .
The problem which a theoretical economist faces is that the consumer preferences of any
household is not easily predictable and the technical coefficients of any one household
tend to be a nonlinear, very complex, and variable function of income, prices, etc.
Computer information derived from the use of the universal product code in conjuction
with credit-card purchase as an individual household identifier could change this state of
affairs, but the U.P.C. method is not yet available on a national or even a significant
regional scale. To compensate for this data deficiency, an alternate indirect approach of
analysis has been adopted known as economic shock testing. This method, widely used in
the aircraft manufacturing industry, develops an aggregate statistical sort of data.
Applied to economics, this means that all of the households in one region or in the
whole nation are studied as a group or class rather than individually, and the mass
behavior rather than the individual behavior is used to discover useful estimates of
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Silent Weapons for Quiet Wars
the technical coefficients governing the economic structure of the hypothetical singlehousehold
industry...
Notice in the industry flow diagram that the values for the flows A, B, C, etc. are
accessible to measurement in terms of selling prices and total sales of commodities.
One method of evaluating the technical coefficients of the household industry depends
upon shocking the prices of a commodity and noting the changes in the sales of all of the
commodities.
Economic Shock Testing
In recent times, the application of Operations Research to the study of the public
economy has been obvious for anyone who understands the principles of shock testing.
In the shock testing of an aircraft airframe, the recoil impulse of firing a gun mounted on
that airframe causes shock waves in that structure which tell aviation engineers the
conditions under which some parts of the airplane or the whole airplane or its wings will
start to vibrate or flutter like a guitar string, a flute reed, or a tuning fork, and disintegrate
or fall apart in flight.
Economic engineers achieve the same result in studying the behavior of the economy and
the consumer public by carefully selecting a staple commodity such as beef, coffee,
gasoline, or sugar, and then causing a sudden change or shock in its price or availability,
thus kicking everybody's budget and buying habits out of shape.
They then observe the shock waves which result by monitoring the changes in
advertising, prices, and sales of that and other commodities.
The objective of such studies is to acquire the know-how to set the public economy into a
predictable state of motion or change, even a controlled self-destructive state of motion
which will convince the public that certain "expert" people should take control of the
money system and reestablish security (rather than liberty and justice) for all. When the
subject citizens are rendered unable to control their financial affairs, they, of course,
become totally enslaved, a source of cheap labor.
Not only the prices of commodities, but also the availability of labor can be used as the
means of shock testing. Labor strikes deliver excellent tests shocks to an economy,
especially in the critical service areas of trucking (transportation), communication, public
utilities (energy, water, garbage collection), etc.
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Silent Weapons for Quiet Wars
By shock testing, it is found that there is a direct relationship between the availability of
money flowing in an economy and the real psychological outlook and response of masses
of people dependent upon that availability.
For example, there is a measurable quantitative relationship between the price of gasoline
and the probability that a person would experience a headache, feel a need to watch a
violent movie, smoke a cigarette, or go to a tavern for a mug of beer.
It is most interesting that, by observing and measuring the economic models by which the
public tries to run from their problems and escape from reality, and by applying the
mathematical theory of Operations Research, it is possible to program computers to
predict the most probable combination of created events (shocks) which will bring about
a complete control and subjugation of the public through a subversion of the public
economy (by shaking the plum tree).
Introduction to the Theory of Economic Shock Testing
Let the prices and total sales of commodities be given and symbolized as follows:
Commodities Price Function Total Sales
alcoholic beverages A fA
beef B fB
coffee C fC
gasoline G fG
sugar S fS
tobacco T fT
unknown balance U fU
Let us assume a simple economic model in which the total number of important (staple)
commodities are represented as beef, gasoline, and an aggregate of all other staple
commodities which we will call the hypothetical miscellaneous staple commodity 'M'
(e.g., M is an aggregate of C, S, T, U, etc.).
Example of Shock Testing
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Silent Weapons for Quiet Wars
Assume that the total sales, P, of petroleum products can be described by the linear
function of the quantities B, G, and M, which are functions of the prices of those
respective commodities.
P = aPG B + aPG G + aPM M
Then where B, G, and M are functions of the prices of beef, gasoline, and miscellaneous,
respectively, and aPB, aPG, and aPM are constant coefficients defining the amount by
which each of the functions B, G, and M affect the sales, P, of petroleum products. We
are assuming that B, G, and M are variables independent of each other.
If the availability or price of gasoline is suddenly changed, then G must be replaced by G
+ G. This causes a change in the petroleum sales from P to P + P. Also we will assume
that B and M remain constant when G changes to G + G.
(P + P) = aPB B + aPG (G + G) + aPMM.
Expanding upon this expression, we get
P + P = aPB B + aPG G + aPG G + aPM M
and subtracting the original value of P we get for the change in P
Change in P = P = aPG G
Dividing by G we get
aPG = P / G .
This is a rate of change in P due only to an isolated change in G, G.
In general, ajk is the partial rate of change in the sales effect j due to a change in the
causal price function of commodity k. If the interval of time were infinitesimal, this
expression would be reduced to the definition of the total differential of a function, P.
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Silent Weapons for Quiet Wars
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Silent Weapons for Quiet Wars
When the price of gasoline is shocked, all of the coefficients with round G (2G) in the
denominator are evaluated at the same time. If B, G, and M were independent, and
sufficient for description of the economy, then three shock tests would be necessary to
evaluate the system.
There are other factors which may be represented the same way.
For example, the tendency of a docile sub-nation to withdraw under economic pressure
may be given by
where G is the price of gasoline, WP is the dollars spent per unit time (referenced to say
1939) for war production during 'peace' time, etc. These quantities are presented to a
computer in matrix format as follows:
and
X1 = G Y1 = P - KP
X2 = B Y2 = F - KF
X3 = etc. Y3 = etc.
Finally, inverting this matrix, i.e., solving for the Xk terms of the Yj, we get, say,
[bkj] [Yj ] = [Xk]
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Silent Weapons for Quiet Wars
This is the result into which we substitute to get that set of conditions of prices of
commodities, bad news on TV, etc., which will deliver a collapse of public morale ripe
for take over.
Once the economic price and sales coefficients ajk and bkj are determined, they may be
translated into the technical supply and demand coefficients gjk, Cjk, and 1/Ljk.
Shock testing of a given commodity is then repeated to get the time rate of change of
these technical coefficients.
Introduction to Economic Amplifiers
Economic amplifiers are the active components of economic engineering. The basic
characteristic of any amplifier (mechanical, electrical, or economic) is that it receives an
input control signal and delivers energy from an independent energy source to a specified
output terminal in a predictable relationship to that input control signal.
The simplest form of an economic amplifier is a device called advertising.
If a person is spoken to by a T.V. advertiser as if he were a twelve-year-old, then, due to
suggestibility, he will, with a certain probability, respond or react to that suggestion with
the uncritical response of a twelve-year-old and will reach in to his economic reservoir
and deliver its energy to buy that product on impulse when he passes it in the store.
An economic amplifier may have several inputs and output. Its response might be
instantaneous or delayed. Its circuit symbol might be a rotary switch if its options are
exclusive, qualitative, "go" or "no-go", or it might have its parametric input/ output
relationships specified by a matrix with internal energy sources represented.
Whatever its form might be, its purpose is to govern the flow of energy from a source to
an output sink in direct relationship to an input control signal. For this reason, it is called
an active circuit element or component.
Economic Amplifiers fall into classes called strategies, and, in comparison with
electronic amplifiers, the specific internal functions of an economic amplifier are called
logistical instead of electrical.
Therefore, economic amplifiers not only deliver power gain but also, in effect, are used to
cause changes in the economic circuitry.
In the design of an economic amplifier we must have some idea of at least five functions,
which are:
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Silent Weapons for Quiet Wars
(1) the available input signals,
(2) the desired output-control objectives,
(3) the strategic objective,
(4) the available economic power sources,
(5) the logistical options.
The process of defining and evaluating these factors and incorporating the economic
amplifier into an economic system has been popularly called game theory.
The design of an economic amplifier begins with a specification of the power level of the
output, which can range from personal to national. The second condition is accuracy of
response, i.e., how accurately the output action is a function of the input commands. High
gain combined with strong feedback helps to deliver the required precision.
Most of the error will be in the input data signal. Personal input data tends to be
specified, while national input data tends to be statistical.
Short List of Inputs
Questions to be answered:
* what
* where
* why
* when
* how
* who
General sources of information:
* telephone taps
* analysis of garbage
* surveillance
* behavior of children in school
Standard of living by:
* food
* shelter
* clothing
* transportation
Social contacts:
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Silent Weapons for Quiet Wars
* telephone - itemized record of calls
* family - marriage certificates, birth certificates, etc.
* friends, associates, etc.
* memberships in organizations
* political affiliation
The Personal Paper Trail
Personal buying habits, i.e., personal consumer preferences:
* checking accounts
* credit-card purchases
* "tagged" credit-card purchases - the credit-card purchase of products bearing the
U.P.C. (Universal Product Code)
Assets:
* checking accounts
* savings accounts
* real estate
* business
* automobile, etc.
* safety deposit at bank
* stock market
Liabilities:
* creditors
* enemies (see - legal)
* loans
Government sources (ploys)*:
* Welfare
* Social Security
* U.S.D.A. surplus food
* doles
* grants
* subsidies
* Principle of this ploy -- the citizen will almost always make the collection of
information easy if he can operate on the "free sandwich principle" of "eat now, and pay
later."
Government sources (via intimidation):
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Silent Weapons for Quiet Wars
* Internal Revenue Service
* OSHA
* Census
* etc.
Other government sources -- surveillance of U.S. mail.
Habit Patterns -- Programming
Strengths and weaknesses:
* activities (sports, hobbies, etc.)
* see "legal" (fear, anger, etc. -- crime record)
* hospital records (drug sensitivities, reaction to pain, etc.)
* psychiatric records (fears, angers, disgusts, adaptability, reactions to stimuli,
violence,
suggestibility or hypnosis, pain, pleasure, love, and sex)
Methods of coping -- of adaptability -- behavior:
* consumption of alcohol
* consumption of drugs
* entertainment
* religious factors influencing behavior
* other methods of escaping from reality
Payment modus operandi (MO) -- pay on time, etc.:
* payment of telephone bills
* energy purchases
* water purchases
* repayment of loans
* house payments
* automobile payments
* payments on credit cards
Political sensitivity:
* beliefs
* contacts
* position
* strengths/weaknesses
* projects/activities
Legal inputs -- behavioral control (Excuses for investigation, search, arrest, or
employment of force to modify behavior)
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Silent Weapons for Quiet Wars
* court records
* police records -- NCIC
* driving record
* reports made to police
* insurance information
* anti-establishment acquaintances
National Input Information
Business sources (via I.R.S., etc):
* prices of commodities
* sales
* investments in
o stocks/inventory
o production tools and machinery
o buildings and improvements
o the stock market
Banks and credit bureaus:
* credit information
* payment information
Miscellaneous sources:
* polls and surveys
* publications
* telephone records
* energy and utility purchases
Short List of Outputs
Outputs -- create controlled situations -- manipulation of the economy, hence society --
control by control of compensation and income.
Sequence:
1. allocates opportunities
2. destroys opportunities
3. controls the economic environment
4. controls the availability of raw materials
5. controls capital.
6. controls bank rates
7. controls the inflation of the currency
8. controls the possession of property
9. controls industrial capacity
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Silent Weapons for Quiet Wars
10. controls manufacturing
11. controls the availability of goods (commodities).
12. controls the prices of commodities.
13. controls services, the labor force, etc.
14. controls payments to government officials.
15. controls the legal functions.
16. controls the personal data files -- uncorrectable by the party slandered.
17. controls advertising.
18. controls media contact.
19. controls material available for T.V. viewing
20. disengages attention from real issues.
21. engages emotions.
22. creates disorder, chaos, and insanity.
23. controls design of more probing tax forms.
24. controls surveillance.
25. controls the storage of information.
26. develops psychological analyses and profiles of individuals.
27. controls legal functions [repeat of 15]
28. controls sociological factors.
29. controls health options.
30. preys on weakness.
31. cripples strengths.
32. leaches wealth and substance.
Table of Strategies
Do This To Get This
Keep the public ignorant Less public organization
Maintain access to control point for
feedback
Required reaction to outputs (prices, sales)
Create preoccupation Lower defense
Attack the family unit Control of the education of the young
Give less cash and more credit and doles More self-indulgence and more data
Attack the privacy of the church Destroy faith in this sort of government
Social conformity Computer programming simplicity
Minimize the tax protest Maximum economic data, minimum
enforcement problems
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Silent Weapons for Quiet Wars
Stabilize the consent Simplicity coefficients
Tighten control of variables Simpler computer input data - greater
predictability
Establish boundary conditions Problem simplicity/solutions of differential
and difference equations
Proper timing Less data shift and blurring
Maximize control Minimum resistance to control
Collapse of currency Destroy the faith of the American people in
each other
Diversion, the Primary Strategy
Experience

3
General / I'm coming out today....
« on: July 26, 2017, 04:17:04 AM »
As of a few months ago I am a new convert to the flat earth theory. I dabbled in it way back in the LF days but never invested enough time to draw a correct conclusion. I felt there was just no reason to lie about it, and that there was nothing to really gain in such a grand deception. Keep an open mind if your not there yet. Don't look at pictures of the earth but look for the curvature of water over great distances. Its not there. Your only limitation to seeing is the equipment you are using.

4
Jewish Studies / Judicial-inc
« on: February 08, 2012, 12:24:35 PM »
I was just debating the Holocaust with a friend and was putting together a list of resources and was wondering if judicial-inc archives were available anywhere?

5
The 15 September 2010, GEAB N°47 issue was headed « Spring 2011: Welcome to the United States of Austerity / Towards the very serious breakdown of the world economic and financial system ». Yet at the end of summer 2010, most experts believed first, that the debate on the US budget deficit would remain a mere subject of theoretical discussion within the Beltway (1) and secondly, that it was unthinkable to imagine the United States engaging in a policy of austerity because it was sufficient for the Fed to continue to print dollars. Yet, as everyone has been able to see for several weeks, Spring 2011 really did bring austerity to the United States (2), a first since the Second World War and the setting up of a global system based on the ability of the US engine to always generate more wealth (real from 1950 to 1970, increasingly virtual thereafter).

At this stage, LEAP/E2020 can confirm that the next stage of the crisis will really be the "Very Serious Breakdown of the world economic, financial and monetary system" and that this historic failure will occur in autumn 2011 (3). The monetary, financial, economic and geopolitical consequences of this "Very Serious Breakdown" will be of historic proportions and will show the crisis of autumn 2008 for what it really was: a simple detonator.

The crisis in Japan (4), the Chinese decisions and the debt crisis in Europe will certainly play a role in this historic breakdown. On the other hand we consider that the issue of government debt of countries on Euroland’s periphery is no longer the dominant European risk factor here, but it is the United Kingdom which will find itself in the position of the "sick man of Europe" (5). The Eurozone has in fact established and keeps improving all the monitoring systems needed to address these problems (6). Management of the Greek, Portuguese and Irish problems will therefore take place in an organized fashion. That private investors must take a haircut (as anticipated by LEAP/E2020 before summer 2010) (7) does not belong to the category of systemic risks, displeasing the Financial Times, the Wall Street Journal and Wall Street and City experts, trying every three months to rerun the "coup" of the early 2010 Eurozone crisis (8).

In contrast, the United Kingdom has completely missed its attempt at "preventive budgetary amputation surgery” (9). In fact, under pressure from the street and particularly more than 400,000 British who roamed the streets of London on 03/26/2011 (10), David Cameron is forced to lower his target for reducing health care costs (a key point of his reforms) (11). At the same time, the Libyan military adventure has also forced him to rethink his goals for Defense Ministry budget cuts. We already mentioned in the last GEAB issue that the British government’s financing needs continue to rise, reflecting the ineffectiveness of the measures announced whose implementation is proving very disappointing in reality (12). The only result of the Cameron / Clegg (13) duo policy is currently the relapse of the British economy into recession (14) and the obvious risk of the ruling coalition imploding after the next referendum on electoral reform.

In this issue, our team describes the three key factors that mark out this Very Serious Breakdown of autumn 2011 and its consequences. Meanwhile, our researchers have begun to anticipate the progression of the Franco-Anglo-American military operation in Libya which we believe is a powerful accelerator of global geopolitical dislocation and that it usefully illuminates some of the current tectonic changes in the relationships between major world powers. In addition to our GEAB $ index, we expand on our recommendations for dealing with the dangerous quarters to come.

Basically, the process that is unfolding before our eyes, of which the US entry into an era of austerity (15) is a simple budgetary expression, is a continuation of the balancing of the 30 trillion of ghost assets which had invaded the global economic and financial system in late 2007 (16). While about half of them had disappeared in 2009, they have been partially resurrected since then due to the volition of the major global central banks, and the US Federal Reserve in particular and its "QE 1 and 2". Our team considers, therefore, that 20 trillion of these ghost assets will go up in smoke beginning autumn 2011, and very brutally, under the combined impact of the three US mega-crises in accelerated gestation:

. the budgetary crisis, or how the United States plunges willingly or by force into this unprecedented austerity and takes whole swathes of the global economy and finance with it

. the crisis in US Treasury bonds, or how the US Federal Reserve reaches the "end of the road" which began in 1913 and must face up to its bankruptcy whatever accounting sleight of hand is chosen

. the US Dollar crisis, or how the jolts in the US currency that will characterize the ending of QE2 in the second quarter of 2011 will be the beginnings of a massive devaluation (around 30% in a few weeks).

Central banks, the global banking system, pension funds, multinationals, commodities, the US population, Dollar zone economies and/or dependent on trade with the United States (17) ... everyone structurally dependent on the US economy (of which the government, the Fed and the federal budget have become central components), assets denominated in dollars or commercial dollar transactions, will suffer the head on shock of 20 trillion in ghost assets purely and simply disappearing from their balance sheets, from their investments, and causing a major decline in their real incomes.


 
Remittance of funds by US immigrant workers to their countries of origin (first number in local currency at the dollar exchange rate end 2008/second number: the same, at the exchange rate end 2010) - Source: Wall Street Journal, 04/2011
Around the historic shock of autumn 2011 which will mark the definitive confirmation of significant trends anticipated by our team in previous GEAB issues, the main asset classes will experience major upheavals requiring the increased vigilance of all players concerned for their investments. In fact, this triple US crisis will mark the true exit from the "world after 1945" which saw the US play the role of Atlas and will, therefore, be marked by many shocks and aftershocks in the quarters which follow.

For example, the dollar may experience short-term effects of strengthening value against the major world currencies (especially if US interest rates rise very quickly following the ending of QE2), even if, six months after that, its 30% loss of value (relative to its current value) is inevitable. We can, therefore, only repeat the advice that has appeared at the head of our recommendations since the beginning of our work on the crisis: in the context of a global crisis of historic proportions like the one we are experiencing, the only rational objective for investors is not to make more money, but to try to lose as little as possible.

This will be particularly true for the coming quarters where the speculative environment will become highly unpredictable in the short term. This short term unpredictability will be particularly due to the fact that the three US crises that trigger Very Serious Breakdown in the world in autumn are not concurrent. They are very closely correlated but not linearly. And one of them, the budget crisis, is directly dependent on human factors with a big influence on the timing of the event; whilst the other two (whatever those who see the Fed officials as gods or devils think (18)) are now, for the large part, included in the significant trends where US leaders’ actions have become marginal (19).


The budget crisis, or how the United States plunges willingly or by force into this unprecedented austerity and takes whole swathes of the global economy and finance with it
The numbers can make the head spin: "6 trillion in budget cuts over ten years" (20), said the Republican Paul Ryan, "4 trillion in twelve years” retorted the 2012 candidate Barack Obama (21), "all this is far from sufficient", bids one of the Tea Party referents, Ron Paul (22). And anyway, sanctions the IMF, "the United States is not credible when it speaks of cutting its deficits" (23). This unusually harsh remark from the IMF, traditionally very cautious in its criticism of the United States, is in any case particularly justified in terms of the psychodrama which, for a fistful of tens of billions of dollars, nearly shut down the federal state absent any agreement between the two major parties, a scenario that will, moreover, soon take place again over the federal debt ceiling.

The IMF is only expressing an opinion widely shared by creditors of the United States: if, for a few tens of billions USD in deficit reduction, the US political system reached that degree of paralysis, what will happen when, in the coming months, cuts of several hundred billion dollars a year will be required? Civil war? This is the new California governor Jerry Brown (24) opinion in any case, who believes that the United States is facing a regime crisis identical to that which led to the Civil War (25).


 
Public and private sector borrowing (1979 - 2010) (in red: public/in blue: private) - Source: Agorafinancial, 04/2011
The context, therefore, is no longer mere paralysis but really an all-out confrontation between two visions of the country’s future. The closer the date of the next presidential election gets (November 2012), the more the confrontation between the two sides will intensify and take place regardless of any rule of good behaviour, including safeguarding the country’s common good: "Whom the gods would destroy they first make mad", says the ancient Greek proverb. The Washington political scene will increasingly resemble a psychiatric hospital (26) in the coming months, making "the bizarre decision" increasingly likely. If, in order to reassure themselves about the dollar and Treasury bonds, Western experts repeat in turn that the Chinese would be crazy to get rid of these assets which would thus only hasten their fall in value, it’s that they haven’t yet understood that it’s Washington and its political mistakes that can come to the decision that hastens this fall. And October 2012, with its traditional annual budget vote, will be the ideal moment for this Greek tragedy which, according to our team, won’t have a happy ending because this isn’t Hollywood, but really the rest of the world which will write the scenario’s sequel.

Whatever the case, by political choice, by closing down the federal government or by irresistible outside pressures (27) (interest rates, IMF + Euroland + BRIC (28)), it is really in autumn 2011 that the US federal budget will massively shrink for the first time. The continuation of the recession coupled with the ending of QE2 will cause interest rates to rise and thus significantly increase federal debt servicing costs, against a backdrop of falling tax revenues (29) caused by a relapse into a deep recession. Federal insolvency is now just round the corner according to Richard Fisher, president of the Federal Reserve Bank of Dallas (30).

Read more in GEAB:
. The budgetary crisis, or how the United States plunges willingly or by force into this unprecedented austerity and takes whole swathes of the global economy and finance with it
. The crisis in US Treasury bonds, or how the US Federal Reserve reaches the "end of the road" which began in 1913 and must face up to its bankruptcy whatever accounting sleight of hand is chosen
. The US Dollar crisis, or how the jolts in the US currency that will characterize the ending of QE2 in the second quarter of 2011 will be the beginnings of a massive devaluation (around 30% in a few weeks)


--------

6
General / We have arrived
« on: November 30, 2010, 05:56:39 AM »
http://www.eternityroad.info/index.php/weblog/single/we_have_arrived/


By Ol' Remus
Folks who know Remus know he is an optimist, he doesn't just expect good luck, he depends on it. However, he also learned early on to see things unadorned as the Great Philosophers Of The Day did, which is to say the great comedians; Sid Caesar, Harvey Kurtzman, Lenny Bruce, et al. The era was the last of the "NO BS" times, forthrightness was enforced, daily and personally. Nobody got away with spin, everyone kept to the simple truth as they knew it or they got eased out of impolite society and sat at the kid's table come Thanksgiving.

The statement at the top of every Woodpile Report sums it up, "On account as how we expect folks to speak their minds." It means we owe each other our true thoughts in a straightforward way. We don't have to be right but we do have to be honest. Absent that we devolve into frillery and artifice where, as the Beatles said, nothing is real. This notion is mostly past tense now, as political correctness proves`”p.c. is a clear case of substituting nomenclature for knowledge, by the way`”but there is a cadre which carries on, convinced by experience that optimism is warranted only if you see things as they are, or close enough. They carry on not as a heroic mission mind you, it's just the way they are. With that in mind, Remus has a few words for you.

It's said the ordinary man is amazed by the exceptional, and the exceptional man is amazed by the ordinary. There's every reason to believe both are about to be amazed by something breathtaking. Something stunning. Imagine everything familiar being collapsed like an accordion in the time between your morning coffee and your first midday yawn. It may happen just that way. In fact, it's difficult to see how it can happen any other way.

It's said we're in hard times, and we are in hard times. But as hard times go, these are the good days. There are those who have known hard times. Not the poverty porn hawked around by social activists or the tiresome narratives novelists flog in hopes of landing a screenplay or a speaking tour. Actual hard times, not hard times by comparison. Actual long term destitution with real privation. Times and places where fear itself wasn't even on the list of things to be feared. These are the folks to listen to.

Ahead, stretching to the horizon, lies 1932 but without the class and civility and yes, without the relative plenty. The Great Depression will be something to aspire to, where even migrant field hands drove cars to work. Actually it doesn't all lie ahead, some of it is already behind us. Truth is, we arrived a while back. We're like the Okies in that first month without rain, or the laid off employee who thought he was between jobs. The era of hustle and opportunity that's lifted all boats since Reconstruction, well, it ended a couple decades ago. We've fallen below the event horizon. Gravity is in charge now. You've entered an era of relentlessly deepening want. In not much time it will beggar belief, then plunge directly to the heart of catastrophe. You'll never again use the word hungry as lightly as you do now.

You needn't fear the Mad Max scenario 'though, there'll not be the wherewithal to support it. Nor should you fear government overmuch, other than rogue Free Corps and last ditchers. It's broke. In fact, it's broker than you are. It remains an obnoxious meddler for the moment but that's mostly habit. Meddling gets prohibitively expensive absent voluntary compliance, which is to say fear. We've already seen fedcorps metastasize from a dignified bribery/extortion racket with a credible claim to utility into a street thug operation favoring smash-and-grab looting. But more importantly, fedgov has become exclusively self-referential, a dead short in the circuitry, and thereby irrelevent to the problems at hand other than as an extravagant consumer of wattage.

Hence the Tenth Amendment movement. Uncle Sam's walking papers are being prepared in the back room. He doesn't like it one bit. Too bad. We've had a family meeting and that's the way it has to be. You see, not only is our formerly beloved Uncle paying off in trolley tokens, not only does he get violent just because he can, often over trivia, he's getting, well`”bizarre. At present he's demanding we expose ourselves to him as a condition of travel. And our kids too. The newly irrelevant seem to demand attention in, you know, odd ways.

But be of good cheer, looking way ahead, ol' Sam won't meet his end in some operatic vortex, he'll end up in the attic like the crazy uncle he is. He may break a lamp or two on the way, but go he will. Family elders will reminisce of his better days while kindly attendants help him shuffle on up there, step by step, a package of adult diapers under his arm, singing the old songs, chanting the old slogans. Our descendents will wonder why we ever took him seriously.

No, what you should really fear is scarcity. It's how we lived until about 1950. It's unAmerican to say this, but what you have is all you're likely to have and chances are you won't keep all of that. So, are you planning a mountain retreat, with a well and a hand pump, more than a tank of gas from any urban center, away from lines of drift, solar powered hot tub, blah blah? If you're not there now, or nearly so, you're not going to get there. In other words, time's up. Get your affairs in order where you are because where you are is where you're going to be. And what you have is what you're going to have.

Societies are normally this badly wounded when exiting hard times, not entering them. Which means we're in no condition for what's coming, and what's coming is something not seen since feudal times. Everything's on the table including society itself. We've run out of good outcomes. There isn't even a name for it. The Great Bottleneck, maybe. Let's hope not the Cenozoic Extinction. So far we've merely seen the water trickling between the sandbags. Even so, the alarm has been notable, full of colorful nuance and learned anecdotes about Medieval Venice and such. We've had the time for it. There'll be no time for nuance when it all fails at once. It'll be a fire-hose in the face. Events won't so much occur as uncork that which has already occurred.

We're about done stair-stepping. The ruling class and whole nations are preparing to act with blinding speed for the final feeding frenzy, anxious to cage prize morsels before decamping to their redoubts for brandy and cigars. That, my friend, is what all the positioning is about. They're maneuvering, rigging this and nudging that to get just the right deflection, always careful not to snag a tripwire prematurely, but knowing somebody will blunder eventually. Ergo, when it ruptures you'll need an egg-timer at most.

The alert and realistic observer, also known as a tinfoil hat alarmist, sees the maneuvering and what it points to. Nobody notices an oncoming feeding frenzy quite so readily as those intended be fed upon. But while you've been stockpiling and planting thorny bushes outside your windows and putting away heritage seeds, the elite has figured out they don't need to be clever to survive, they can just be somewhere else. Surely you've noticed Peruvian realtors and sellers of big boats are the new best friends of affluent America. And how they've been keeping company with suppliers of portable wealth.

You may think it comforting we're all in this together. We're not all in this together. You and yours are on your own, or at most you and yours and those trusted few with whom you can ally. Remus has told you many times: stay away from crowds. They're indifferent at best, most are opportunists calculating an advantage at your expense. Some are outright vermin. America isn't Cherry Blossom Valley in 1932 where folksy neighbors look out for one another and leave a picnic ham on the porch of those in need. No no. This time your odds are many millions to one. Against.

You may believe being a productive and honest citizen is an asset. It isn't. If you listen carefully you'll hear yourself being positioned as an enemy of all that is good and wonderful. For instance, if you oppose the regime's serial squandering and`”gasp! are a veteran`”you're an incipient terrorist, if you criticize Obama by name you're a crypto-racist, if you're a boomer you wantonly plundered the nation's future for personal gain, if you take responsibility for your own life and expect the same from others you're an anti-social lone wolf. Even toddlers are a "security risk" now, it's their new entry-level crime. Nobody escapes.

Creating criminals is not only righteous fun and practically free, it can be enormously profitable. You'll notice the Soviets didn't vilify the impecunious. You'll notice the various untermenchen of the Third Reich had confiscatable wealth. There's no mystery why wealth redistribution, not wealth creation, became the model for contemporary economics. Liquidate Peter to pay off Paul. Simple, democratic and progressive.

"Fighting crime" is one instance where government employees can pay their own salaries and return a profit. Even the Department of Truth gets something, those perpwalk videos rattle the folks like direct threats never could. Business is good and expands relentlessly. Think of political correctness as field-testing prospective bills of attainder. If you're a solid citizen with something to lose, watch out, it's unlikely their retina-scan library has much of a section for street people with nothing worth having. Maybe it helps to know there's little new in all this. When Sherman marched through Georgia, well beyond his supply lines, he took the latest Census and tax rolls with him as a ready-made shopping list.

Perhaps you believe this time it will be different, that the safety nets put in place since the Great Depression will be there for you. They won't be. Those safety nets ballooned into the colossal boondoggles that helped bankrupt them in the first place. Any first-aider knows to first stop the bleeding. That would be you. The rhetoric will say otherwise, but one way or another you'll be amputated like gangrene. It has never been different and it isn't different this time.

The storm is breaking. If you paid attention to the forecasters that saw things clearly, Perot and Paul and Orlov and all the others during your entire adult life`”good for you. If you recalibrated your expectations accordingly and took charge of your own well being, good for you. The storm won't last forever, quite, but it will bring low those it doesn't maim or destroy. There won't be any bystanders. The prudent and prepared may make it. Some of them anyway. Maybe even most of them. Lord help the rest. Nobody else will help them.

Cross-posted at yer ol' Woodpile Report.




7
Money & Markets / THE SILVER ALPHA
« on: November 22, 2010, 02:29:53 AM »
http://www.gold-eagle.com/editorials_08/willie110410.html


A love affair with silver is so natural. The fundamentals are astoundingly positive and bullish in price prospects. My basic argument has been repeated many times. Industry has countless uses for silver, significant demand. But industry has only miniscule isolated uses for gold, in trivial demand. So silver wins on the Demand side of the equation. Central banks own a huge amount of gold. They frequently sell it, even through their slippery surrogate the Intl Monetary Fund. The central banks own zero silver. So silver wins on the Supply side of the equation. My motto is that gold fights the major political and financial war, but silver will ride in on a shiny white horse and take much larger spoils. That effect has already begun. To be sure, if multi-$billion profit is desired, gold offers greater practical potential than silver. Since the significant game changing FOMC meeting on September 21st, where the loud & clear message delivered to the world financial markets was made by megaphone, the impact has been emphatically stark. Take closing prices on September 21st versus October 29th, just five weeks, the silver price had risen from $20.64 to $24.56, up 19.0%. During the same timespan, the gold price had risen from $1274.30 to $1357.60, up 6.5%. My claim, a loose forecast often repeated, has been that the silver breakout gains would be at least double and possible triple the gold gains. We have seen exactly that in recent weeks.

An extremely fuzzy factor is the CFTC attention. The Commodity Futures Trading Commission is supposedly investigating the Big Four Banks for outsized concentrated short positions in the silver market, for alleged naked shorting of silver, and for collusion with other banks. Commissioner Bart Chilton has stirred the kettle a bit, more words than deeds. Some find encouragement. The impact from a rising silver price due to the threat of prosecution is much greater than the likelihood of court action itself. Some class action lawsuits against JPMorgan have begun, but unclear on substance. They crop up every couple weeks, the latest citing a RICO aspect. Let's wait to see any liquidation of their short positions. Let's see if national security is invoked in defense. Greenspan routinely used national security to refuse answers on the gold inventory status, even before the USCongress. Unless and until such action occurs, the CFTC chirping is just that, noise from the control room at the behest of bankers. By the way, the Big Four positions are naked short positions in all likelihood. They appear immune from posting collateral, as required by the metals exchanges. Good Morning New York resulted in almost a full $1.00 drop in the silver price on Wednesday, a pounce before the announced QE decision by the US Federal Reserve with its statement. The full impact of the ambush decline was reversed by afternoon, and on Thursday morning $25.50 was reached in continued momentum.

SUPPLY & DEMAND BASICS
Silver total demand was essentially flat in 2009 versus 2008, as the world adjusted to a major meltdown late in 2008. During the extraordinary disruptions, disturbances, and sudden insolvencies, JPMorgan liquidated much of the inherited (commandeered) precious metals accounts from Bear Stearns and Lehman Brothers. In the case of Bear Stearns, a solid argument can be made that they were targeted due to their long gold account. In the case of Lehman, they were targeted in order to consolidate the power structure in the twin monoliths at JPMorgan and Goldman Sachs. On silver demand, the bulk of the 11.9% decline in the 2009 fabrication demand was primarily driven by the global financial crises. The reduced drop in industrial requirements took it to the lowest level since 2003. Total fabrication demand totaled 729.8 million oz and industrial demand was 352.2 moz in consumption. Much of the decline in factory demand was attributed to the car industry.

Implied net silver investment increased by a staggering 184% to 136.9 million oz last year, reaching its highest level in 20 years. Silver is not viewed as just another industrial metal anymore. Overall jewelry demand fell slightly by 1.1% in 2009 to 156.6 moz, a testament to the historical norm. It falls with a bull market, not to contradict it, but to confirm it!! That is the opposite message to what the official gold industry often preaches. In fact, India and China posted increases in jewelry demand last year, outside the global trend. Silverware demand rose by a decent 4.6% to 59.5 moz, largely due to a surge in Indian fabrication. Their middle class grows impressively.




As for supply, the silver mine production rose by 4.0% to 709.6 moz in 2009. Gains came both from primary silver mines and output from auxiliary mining by-product. The strongest growth came from Latin America, where silver output increased by a hefty 8%, the biggest gains logged in Argentina and Bolivia. Again Peru was the world leader in silver production in 2009, followed by Mexico, China, Australia, and Bolivia. All of these countries saw increases last year except for Australia, where output was dragged down from the lead/zinc sector, with the by-product impact. Some mines are devoted solely to silver targets, called primary silver projects. Global primary silver output saw a 7% increase in 2009, accounting for 30% of total mine production last year. The cash operating costs for primary silver mines remained relatively stable, rising by less than 1% to $5.23/oz in 2009. The big story is the huge decline in net silver supply from above ground inventory stocks, which were reduced by 86% to 20.2 moz in 2009. The drawdown was driven mostly by the surge in net investment, higher de-hedging (the active reduction in forward sale contracts), lower government sales (like official mints), and a drop in scrap supply. The scrap supply came down by 6% from 2008, enough to register a 13-year low of 165.7 moz. It was the third consecutive year of losses in the scrap category. Government stocks of silver, the feeder in official coin mint programs, fell by an estimated 13.7 moz last year, to reach their lowest levels in more than a decade. Data was supplied by the Silver Institute (SEE LINK).




IMPACT OF Q.E. CANCER
The big event on the horizon has been the US Midterm Elections, just completed. Its outcome was close to poll expectations. Many decisions have been delayed. Much policy detail has been withheld. Unfortunate pauses to major programs have come as a result. A palpable dread can be identified and pointed to. Difficult unpopular decisions will now be made. Some of the decisions will involve continued bank sector welfare after failed fiduciary responsibility. Some of the next programs or legislation will involve devious political and legal cover for criminal bond fraud related to the mortgage industry, which is fully in the open for dissection, outcry, and acrimonious debate. The keen observers should watch for cleverly constructed escape routes without the consequences of voter backlash. Furthermore is the issue of political partisan gridlock. Only weak brain stems would call the gridlock constructive or a good thing in the current setting. When a nation is mired in a financial crisis, requires leadership, demands restructure, and urgently needs reform, any inaction from gridlock is like fighting over the steering wheel on a big tractor trailer truck unable to manage a winding road, certain to careen over the cliff. Activists should demand that private bank accounts be investigated of a long list of leaders, past and present.

The most reliable and expert sources within my contacts mention a specific point, with consistency. When the US elections are over, and after the USFed gives some guidance on the QE2 Launch for monetized debt, the system will experience tremendous added strains and will gradually show signs of breakdown again, in accelerated mode. This time, unlike September 2008, efforts to stabilize will not be possible. The system will degrade, since critical supports, control cables, and buttresses have been removed in the last several months. Next comes deeper breakdown. The Midterm Elections served at the roadblock event, the beacon on the horizon, the delayed lit fuse. The actions taken in November will involve both the US captains and foreign entities. The US policy makers can act without as much concern of voter backlash. The foreign financial decision makers can act with knowledge that the USGovt, the USFed, and Wall Street will not make a single solitary move toward bank system reform, toward bank debt restructure, or toward debt liquidation on the balance sheets. Instead, the US will redouble the magnitude of what failed, their established habit, their engrained failure in policy, their legacy.

The main worry by the USFed and USDept Treasury will center on foreign creditors and abandonment. US bank leaders will ramp up the monetization under the QE2 banner with added motivation. Trade war stokes the fires of hostility, angst, and rebuke. Foreign creditors are worried that their debt security paper is being diluted. Its value will be diminished, but later in time. Expect a new European Dollar Swap Facility to be announced soon, but with less delay than the last one. They must match and offset the power of the QE2 initiative. The Bank of England matched cancer with cancer, announcing a fresh 200 billion Pounds in monetized debt on Thursday. The Euro Central Bank matched move will come later. It could be urgently declared by EU in next several weeks. They must defend against a rising Euro currency. Do not be trapped into thinking a USTreasury Bond rally means a USDollar coincident rise. The USTBonds are paid from the Printing Pre$$, which means no source of funds to convert. The Jackass still believes 2.0% is an important 10-year USTreasury yield target. All hell breaks loose after the target is hit, as the USTBond bubble is likely to give off massive greenhouse gas afterwards.

UNWIND OF TREMENDOUS SUPPRESSION
When professional equity analysts ply their craft in examining the merits of a certain stock, they often use a simple statistical technique. They fit a model of the growth in a stock Y versus the sector X in which it trades, like BAC (Bank of America) versus the BKX (bank index). They fit a model of the growth of a major stock Y versus the X market backdrop, like IBM versus the S&P500 index. A stock Y performs well if it does better than its sector or does better than the entire market. That shows up as a BETA over 1.0 within the fitted model often using data as weekly change entries in price for X and Y. Take silver as Y and the entire commodity arena as X, as measured for instance by the CRB index. Clearly silver rises and falls with the commodities, and even makes swings with more volatility than other items. That testifies to a high silver BETA. Lately, the silver move has been powerful, much bigger than other commodity items since it is being recognized as a currency hedge, a safe haven asset, with the menace of lawsuits and investigations hanging overhead. In fact, Silver is a currency, if pure money can be classified as currency at all. Like gold, silver is a super-currency.




The important aspect to highlight in the linear price change model is the ALPHA component. When an asset or stock has a particular advantage or unique strength, it can outperform its entire class. Take for instance a pharmaceutical firm with a vaccine discovery, or a computer firm like Apple with a nifty IPod winner, or a mining firm with a huge ore discovery or great process improvement. Silver and gold each share a robust ALPHA feature that is not often mentioned, even in the gold community. As the monetary system crumbles further, as the big banks topple amidst insolvency, as the sovereign debt for certain nations defaults, as the USGovt deficits spiral endlessly into the $trillions, the concept of real money is being questioned by important chambers of global finance. Money wants to escape the false monetary clutches, and find true safe haven. Sound money is sought out with increased vigor and even urgency to preserve wealth. At the same time, the whiff of illicit activity from at least two decades of enormous alleged naked short positions has conspired to suppress the price of gold & silver. The slow healing of the market alteration reveals the manifestation of the Silver Alpha, during its release.

The monetary system works gradually to shine a bright light on the shady precious metals market, and to force disclosure of the puny bullion volume at the official metals exchanges. Angry depositors like the Chinese and Arabs have been demanding their bullion for return back home, no longer trusting the London and New York custodians. They have become alerted to illicit gold leasing as a common practice. The fraud of the USGovt balance sheets, recording deep storage gold as a ledge item, only adds to the motive to bring the gold market to a full proper accounting. The fast rising lethal USGovt deficits have brought cries to prove the collateral for new debt added upon old debt, in an uncontrollable debt episode. The world pursues gold & silver, suspecting the USGovt has a pittance in collateral. Foreign creditors are angry that the gold & silver they hold has been pushed down in price by chronically deployed devices.

The consequence is that SILVER possesses a high ALPHA. What lifts the ALPHA is many factors, each powerful. The Silver price will rise much more than price inflation. The Silver price will rise in response to money fleeing corrosive vehicles like the major currencies, whose basis is not gold but rather rapidly growing debt resting upon fractured banking and economic foundations. The Silver price will rise as the USTreasury Bond bubble becomes more widely recognized. The Silver price will rise as greater volumes of freshly printed money undermine the USDollar amply behind controlled activity. The Silver price will rise more than most analysts anticipate out of the sheer movement toward release from controlled markets that hold down the price after a mountain of silver has been shorted into the market, probably with little or no collateral. THIS IS THE ESSENCE OF ALPHA!! The shorts are being squeezed, in clear fashion since August. The short quantity for Silver is well beyond a full year of annual global output from the mining industry. Metals exchanges have worked busily to produce 'Synthetic Inventory' since it likely does not exist. As the markets work toward a freely traded system that seeks a true equilibrium, the Silver price will move past $100 per ounce as hyper-inflation blossoms on the monetary and economic sides. But first it will surpass the $40 price, maybe by late 2011 or early 2012. The silver ALPHA is big, and that fact will be quite evident very soon, if not already. My forecast is for a $29 to 31 price for Silver by mid-January. Both December and January are strong seasonal months for silver, just like September. Notice how silver is outperforming the commodity group, and shows a BETA over one.




INELASTICITY PARADOX
In many recognized markets, a higher price dampens demand, and a higher price adds to new supply. That is the normal Elastic market. Imagine the price of beef steak like tenderloin or porterhouse or T-bone, even the high end eye of the round. Suppose the steak price rose 10%. Two things would happen in the steak market. Demand would reduce as consumers would turn to pork or chicken or fish to a greater extent, or order their steak less often. As a result, less steak would be bought. On the supply side, ranchers would be more encouraged to raise more cattle, while at the same time they would be led to slaughter more of the herd. More steak would come to market. That is what Elasticity is, a direct market impact from price.

Actually, an interesting fine point is necessary for a deeper concept on Elasticity. Among the big battles for market share, sometimes a slighter lower price offered by a big supplier can result in impressive gains. Suppose Sony Ericsson decided to cut their cellphone prices by 5% in an attempt to win a larger slice of market share. The profit margin is sufficient to permit the tactical maneuver, as that margin would come down by 5%. Refer not to a loss leader tactic or a losing ploy in order to gain market share. They sacrifice some profits in order to wrest more market share and at the same time, they test whether the cellphone market is Elastic. If sales rise by more than 5%, then economists claim this market has strong Elasticity. Total sales revenue of greater proportion comes from a corresponding slight price reduction, thus greater profit. The most capable firms can rely upon the aggressive tactic, since they are more efficient, and can afford to take the profit risk. If the cellphone market already is loaded with strong proficient competition, with several very efficient firms battling it out, then the response of the Sony Ericsson 5% marketing plan might result in only 3% sales growth. The Elasticity would be 0.6 (less than 1.0) and thus not worth the promotion. Under such circumstances, the giant would discontinue the program. It would not be worth it. The price would slide back to where it was. If the promotion was a big hit, they might realize a 6% sales gain. That would translate to a 1.2 Elasticity and very much worth the promotion. More profits would flow.

Precious metals have an Inelastic market, a remarkable anomaly, the opposite effect at work. When the gold price falls, demand slacks off. In fact, demand for gold has never been lower in almost the last 20 years when it made a price low in 2001. It is called the Brown Bottom after the diminutive Gordon Brown, who sold half of the British gold in aid of Deutsche Bank. When the gold price rises, demand jumps. It is called a gold fever. The same effect applies to silver. So gold & silver demand is Inelastic, a counter-intuitive market. The truly intriguing part of the equation is that Gold Supply is also Inelastic, a claim made in 2005 and repeated in 2006 and 2007 in the Hat Trick Letter. As the gold price rises, supply actually falls. As the price rises, hedged mining companies divert capital to cover their hedge books, the forward sales, resulting in losses. Operations and projects have less funds to continue. Output falls from the backfire of forward output sales, all done with investment banker support.

The more accurate statement should be the supply Inelasticity combines with geological and jurisdictional factors to reduce supply over time. During the passage of time in recent years, the gold price has risen. In statistical parlance, we call this a confounding of factors, a confounding effect, impossible to separate and measure without experimental design. The gold ore deposits are deeper underground, in thinner veins, of lower yield grade (as in grams per ton). The multitude of national governments that host mining operations varies tremendously. Some are suing the mining firms like Indonesia for massive pollution runoff in the water systems. Others like Peru have worker strikes. Others like Uzbekistan engage in contract treachery to basically steal property rights. Others like South Africa introduced marxist novices to manage the electrical grid, only to cripple the output urgently needed to run underground operations. Others like Mexico are in the middle of a systemic failure, an explosion of violence during a battle for national control with drug cartels. Others like Mongolia have turned fickle, on again, off again, to the point that mining firms cannot maintain enough trust to invest heavily. Others like China and Russia have closed their doors to export.

The analytic fabric is even more interwoven. The supply of silver, in particular, is wrapped within the economic outlook and fallout. Silver is a major by-product of mining operations for copper, lead, tin, and zinc. Ore deposits that contain silver actually contain orders of magnitude more industrial metals. As these more common industrial metals endure reduced demand, due to a decline in the global economy, a reduction is seen from mining output. Therefore the associated silver output falls in tandem. Although sizeable, the silver mine output is a fraction of the major industrial metals. It runs as the tail on industrial metal mining operation dog. Matters related to silver do not drive the decisions for the majority of its mining output. As copper, lead, tin, and zinc push the decision process in business operations, the silver output follows. Silver might have numerous important and even unique industrial applications, but its niche market remains somewhat subservient to the major metals. Hence, as the global economy has entered a decline over the last three years, the global output for silver has actually come down. It has not responded to a higher silver price with much greater supply from encouraged profit. Instead, it responds to lower demand for base industrial metals.

PROPAGANDA ANGLES
The Quantitative Easing name makes the Jackass irritable, like from a sound made by running fingernails on a chalkboard. The QE nametag is hyper-inflation in official parlance. QE is ruinous to the monetary system and the major currencies. QE represents a magnificent escalation in the currency war. It motivates central bank retaliation to devalue native currencies, often called the Competing Currency War, in the defense of large native export industries. It triggers amplified gestures toward trade protection. It can be easily stated and more easily defended that the United States has done more to worsen global trade war than any nation. Its export of fraud-ridden mortgage bonds and tainted USTreasurys that support annual $1.5 trillion deficits has flooded the global banking systems, inviting sharp response. Its decision to export a significant portion of its industrial base to China, the so-called Low Cost Solution, promoted from 2001 to 2005, is an unmitigated disaster not yet recognized as such. The USGovt turned from promoter of the factory export to China early on, only to condemn its fruit harvested by China in the form of $20 billion monthly surpluses.

A tight race exists between stupidity and corruption at the policy helm. The Quantitative Easing has been hinted in August, confirmed in September, and detailed in November. The QE program has been minimized in the press for its risks, while mention has been given of its likely ineffectiveness. It has been estimated to arrive as $500 billion more in pure monetary inflation, only to rise to another $1000 billion by next year. QUANTITATIVE EASING IS PURE HYPER-INFLATION of the most egregious magnitude in modern history. The bubble is found in the USDollar, with its traded and stored vehicle the USTBond. The USFed is playing a very dangerous high wire act, with dire consequences. The main effect will be fast rising cost structure for the USEconomy. The public will react next year.

The cancer is infectious and contagious, if not a metastasis in progress. Capital is in steady profound destruction. Europe took charge of $750 billion in Dollar Swap Facility that monetized European bank debt this past June. The entire world must quarantine the US cancer, but it feels somewhat helpless. Therefore, initiatives proceed behind the scene, like the movement by the Eastern Alliance to find a USDollar alternative in global trade settlement, like The Group of Central Europe in fashioning, implementing, and executing a New Nordic Euro currency. If Germany does not launch a new Nordic Euro currency with a gold component, it will sink into oblivion, and suffer a financial collapse, the same type that United States finds itself sinking deeper into.

Propaganda extends to the Canadian Mint story. At one point a moderate amount of gold bullion tonnage was missing. Then it was reclaimed in part by accounting corrections, even nonsense like recovery of gold drips and waste on the floor. Then came the final stretch of a story that the gold bullion actually was found. Perhaps they found tungsten laced gold bars, and did a quick recovery in the dead of night, forcing losses on the supplier. Couple the mint story with the publicized deceptive IMF stories of gold bullion sales. The IMF sales announced during the last several years were most likely falsehoods, as most were probably close-outs of old USGovt leased sales. On the books, a novice could call it a sale. It was a sale, but it occurred back in the Clinton Admin days. Lease, then sale, and years later buy it back, but put press focus on the original sale and lie about the timing. Clever indeed!

RISING SPECTER OF CHAOS
The beacon event in the elections has passed. Those in power will feel free to redeem more US$-based bonds. The official story came from the USFed on late Wednesday, that $600 billion in long-term USTreasury Bonds would be bought with freshly printed money. The key is how the number exceeds the consensus $500 billion. Also, the USFed announced up to $900 billion in total asset purchases. The key is how mortgage bonds will be bought, fair game. One can be certain as an observer, a system consumer unit, that TARP-2 has been secretly launched. More toxic bank assets will be purchased. No waste of bank lobby funds will be squandered on the USCongress apparatchiks. They will be circumvented as will the annoyance. A process will resume for redeeming lost banker capital, as their death episode never ended. The big bank mortgage bond putbacks (under legal force) will proceed with dangerously high volume. The QE2 will redeem more of the acidic credit losses and thereby relieve the big banks. No TARP-2 could possibly pass as legislation, so the bankers will rely on a hidden QE2 expansion, still vast. The amount stated for QE bond purchases is a ruse. The stated volume represents a line in the sand brushed away by a banker footprint or sudden wave of seawater, even sheer expedient.

The unknown is whether the USFed will detour the high volume of toxic mortgage bonds from monetization operations into the Fannie Mae basement filing cabinets. The emphasis of the USFed in QE bond purchase details is between 5-year and 10-years duration. Look for the 2.0% TNX target to be hit easily, even shock the textbook bond analysts who point too much to heavy USGovt debt supply and ignore the monetization initiatives. The USTBond rally in the face of huge deficits is proof of never ending monetization, hardly hidden. It should be noted that the USFed will only devote 3% of purchases to TIPS. They have been purchasing the Treasury Inflation Protection Securities all along for the last year. Doing so is a travesty and violation of its security prospectus. Imagine monetizing an inflation meter, a ruinous step much like placing a thermometer in a cold glass of water next to the flu victim suffering a fever. The patient will worsen without proper treatment. What a charade! Only in America!

The inescapable truth is that as for restructure of banks, NOTHING. As for cleaning worthless credit assets on big bank balance sheets, NOTHING. As for weakening the firm grasp of the USDollar monetary presses by the big banks, NOTHING. As for permitting the housing market to clear the gargantuan hidden supply held by the banking industry, even at lower prices, NOTHING. As for the return of US industry from Asia, NOTHING. The USFed with USDept Treasury running interference will next fund programs without reform or restructure, which Joseph Stiglitz is quick to point out will not produce any positive results, and accomplish little if anything. It is like feeding a man a giant bag of oats around his head like a horse, when his legs require amputation from gangrene. He (the big banks) cannot walk (lend). By the end of 2011, expect a full discussion with debate on the need for a new QE3. Witness the ruin of currencies, part & parcel to the monetary system destruction. Gold will respond. Its highly inelastic little brother Silver will respond even more.



8
Money & Markets / The Ominous Silent Canary---Jim Willie
« on: September 21, 2010, 05:34:01 PM »
Alan Greenspan had full knowledge of his betrayal to the principles of sound money. He wrote early in his career about the only legitimate basis for a monetary system, namely Gold. His published works from four decades ago read like an indictment against his career for monetary crimes against the nation. His accommodation, giving the financial sector what they wanted, betrayed his mindset. He knew the nation courted disaster with a long delayed fuse. His quote is being circulated frequently and broadly lately, "Gold is the canary in the financial coal mine." Exactly, precisely, perfectly. Greenspan proved to be a great handler of the politicians, offering them obfuscation of the most erudite variety. They were so confused by his drivel to be immensely impressed. The Jackass was not impressed, not after the 2000 events unfolded to reveal the US as a naked asset bubble blower. Not after the same events revealed Greenspan to be an inflation engineer specializing in serial asset bubbles blown to wreck the nation. My attitude years ago was to listen to his topics of debate, to ignore the words, and to anticipate a crisis event in the sector he mentioned. It worked every time. What Greenspan brought to the nation was a nearly complete interruption to the process of capital formation by virtue of the asset bubbles he engineered. His policies undermined and destroyed capital itself. He puffed up the finance sector at the expense of the tangible economy. Industry was forfeited in the pathogenesis of managed inflation.

 

THE WAR FACTOR

To be sure, the war machine, immature during the Vietnam War, more mature for the advanced Iraq and Afghan Wars, accelerated and completed the process of saturating the nation with debt. The combination of domestic asset bubble development and war machine maturity conspired to gut the nation of industry and force it to depend upon a sequence of asset bubbles. They all busted. Few analysts dare to point a finger at the war costs, deemed sacred, rarely debated, always funded. Half the national debt of $12 trillion is attributed to war spending, hardly defensive anymore. The USMilitary expansion has become servant to its own gargantuan appetite, no longer driven by security motives. Expansion of war to secure supplies for the nation might be better explained as the global stretch of the military complex in order to secure supplies for itself. The complex is a vibrant independent enterprise. It might require new wars to secure its own supply chain in order to sustain its own operations, which increasingly depart from the objective of the people, and increasingly conform to the Syndicate objectives.

 

Deception of war motives and war purposes is replete with the same sort of deception inherent to USEconomic statistics. In Iraq, supposedly masses of troops are heading home. Those not heading home reveal a convenient reclassification. The soldier title of HBCT (Heavy Brigade Combat Team) was changed to AAB (Advise & Assist Brigade). Presto! Far fewer combat troops, but same duties, same operations. It reminds a person of economic statistic deception, relabeling what makes for an unemployed worker. The soldiers are mere accounting ledger items. The soldier death count is another statistical deception. The actual death count is at least triple the official number posted by the USMilitary. The official count is of soldiers who died on Iraqi soil, not those who were moved to hospitals outside of Iraq, like other Persian Gulf nations, a ship on the Gulf itself or the Mediterranean Sea, or even Germany. The best statistical accounting deception in the gold world is the USTreasury reporting. Gold on the USGovt balance sheets is accounted for as Deep Storage Gold, as per ore mined but not processed in a mountain. More tricks. For those Americans who engage in reading novels, the book "1984" is relevant.

 

The Jackass has a controversial forecast, initially made in autumn 2008. Expect the pressures to build eventually until the USMilitary complex, including the defense contractors and the military service contractors, are led to splinter off into a private corporation. Its business will be arms dealer and mercenary provider, with a core narcotics business segment. Those who deny this inevitable path must be blind, must be dumb, or prefer to wear underwear bearing the stars and stripes. In their wake will be a nation they once served sliding into the Third World. In their foreground will be vast wealth accumulated by the Syndicate.

 

THE FINAL BUBBLE

In the aftermath of the tech telecom bubble bust ten years ago, Greenspan actively pursued the next bubble. Historical precedence dictated that a housing decline would come in 2001 and 2002. But such an event would have spawned a powerful recession that would have killed the banks, whose main diet had become credit derivatives. The lack of regulatory oversight enabled this queer racket to expand into a mammoth hidden business, a giant casino where the Wall Street banks actually placed billion$ bets against their own clients, against the major corporations of America. To say that constituted a conflict of interest is the understatement of the decade. Its scummy effects are slowly coming to fore in the United States and Europe, in the mortgage market and sovereign debt market. The awakening has led to great anger, harming the banker image irreparably, when combined with home foreclosure disgust.

 

Greenspan encouraged a housing revived bubble ten years ago. He actively lobbied the financial markets to believe that full support for a USTreasury rally and mortgage bond rally would ensue, given the full beneficial power of monetary policy. He spoke at conferences. He gave press conferences. He interviewed with the press. He leaned on Wall Street. He preached to the USCongress. He finally swayed the financial markets. The result was that a typical housing market correction was averted. Instead, a powerful housing market rally took place, a climax rally. It sucked in every conceivable vagrant buyer, including a homeless bum in St Petersburg Florida who bought two homes without income or assets, full exploit of the NINJA loans (no income, no job or assets). What a travesty and blotch in American financial history. Even Fannie Mae entered the act, advertising on television with minority actors to encourage the last buyers to fall into the bubble trap. They succeeded, and minorities became the first victims of the wrecked, dispossessed, and bankrupted citizens.

 

The subprime mortgage chapter was a planned event, not by Greenspan, but by Wall Street firms. They went far beyond what Mr Magoo planned. They needed fresh meat to feed upon. Unqualified buyers served as cannon fodder to Wall Street bond merchants, offering hefty fees in bond securitization. Foreign investors were lined up like toy soldiers on a table for execution. The backfires are a plenty. The MERS database for title registration, intended and designed to handle the rapid trading of mortgage bonds, has been declared in several states to have no legal standing. Thus MERS has turned into a crowbar that intelligent enlightened emboldened homeowners can use to apply pressure on the banks and mortgage firms to avoid foreclosure, and live rent free in a home while still holding title. The strategic mortgage default practice, simply not paying, has spread like a mild virus.

 

Greenspan built the next asset bubble with full motive. It was a doubled chambered asset bubble, which enabled him to retire before a deep intractable crisis struck. The housing bubble grew leaps and bounds, doubling prices in some regions, called the Sand Bubbles. Arizona, California, Nevada, Florida, they all expanded, and now have contracted. The city of Miami has hosted a national jamboree for the foreclosure victims, another blight much like the tent cities. New home prices in the Phoenix area have been cut in half. Talk about the wings being burned off the rising bird, which fell hard to the ground! Millions each year have been tossed onto the national dump of foreclosures, left with no savings, no homestead, often with no job, and too often with no pension, and clearly no hope. The other bubble was mortgage finance. A great majority of the Wall Street business model transformed into leveraging profits off mortgages, either from fees off bond securitization or nasty gains from insuring against bond failures as clients lost arms and legs. The parade of client lawsuits has replaced the parade of clients seeking bond issuance. Talk about wings being burned off the financially engineered bird!

 

 

 

Even though gone from the scene of the crime, Greenspan ensured the final asset bubble. Perhaps unwittingly, perhaps expectantly, no matter. When home prices inevitably and inexorably fell, the great housing bubble would transform into a charred ruin. Note the contrast in Time Magazine covers. What a difference five years can make. The Jackass forewarned back in 2005 that a great train wreck would happen, severe enough to render the entire US banking system a ruined victim, from a guaranteed insolvent condition. It happened as prescribed. So behold the final bubble implicitly and passively designed by Greenspan, the USTreasury Bond. It has gained attention as a bubble, but again no asset bubbles are bad until they are broken. Wall Street encourages asset bubbles, as that is their reason for being. They then exploit the bubbles as professional vultures. As the housing wreckage and the mortgage wreckage unfolded, the safe haven was grabbed and sought in USTreasurys. The current situation actually finds the bond rally to be proof positive that symptoms scream of systemic failure. The USTreasury complex is the only game in town that seems to offer investment gains inside the paper realm. Gold is the rising star on the tangible realm. Gold has begun to distinguish itself from the commodities, since the realization has come that GOLD IS MONEY.

 

The arrival of systemic failure was guaranteed by the Clinton Admin decision to grant Most Favored Nation status to China, our next trade rival and current bitter trade enemy. That the US nation could send industry to China, enjoy the benefits of Low Cost Solutions in sustained profit margins, remove legitimate income, replace it with debt off asset bubbles, and expect as economists promised a continued decade of prosperity testifies to the lunacy, stupidity, and heretical guidance of US economists. The US corporate sector seemed to grasp at a decade extension of economic good times. The result was the rise of China, the grand accumulation of $2.5 trillion in reserve assets, and the encirclement (aka strangulation) of the American body by Chinese investment and partnerships the world over. The decision to partner with China has not been questioned much, even now.

 

Witness on this side of the Pacific Ocean an embraced USTreasury Bond bubble, blessed as good, regarded as the ultimate in safe haven. In the next several months, watch a radical change unfold in the perception of the USTreasury asset, from safe haven to next broken bubble, even a tragic path toward debt default. My sources tell of a 2006 Christmas effort to devalue the USDollar by 50%, but the plan blocked by China. Watch for the 50% devaluation to be pushed and pushed until it sticks. Boycott of USTreasurys will go global. The USTreasury auction process will turn into a fraternity celebration of onanism. In fact, with the proliferation of high frequency flash trading on the stock side, the isolated monetization of USTreasurys and good ole boy nether relief practices will mark a complementary bond style perversion. Such lone hand satisfaction requires isolation and often darkness. Talk of Greek Govt bond default will turn into a fever. Next will be Spanish Govt bond default. We will see a parade of them, including Great Britain. The year 2011 will be tumultuous, as a new currency is introduced. Germany will lead the way, and the once formidable USTreasurys will be treated to an American sunset.

 

THE GREAT ANTI-BUBBLE

Behold the powerful Gold ascendancy. What great amusement comes from watching the squirming of financial anchors and their guests, the confused banter, the ideological pretzel contortions, the shallow discourse, the nitwit criticism, the self-serving errant banter, the fiat paper ideological warfare propaganda, the abject vacancy dressed in monetary mental monotone. The struggle to comprehend the rising Star of Gold by the financial media is much more amusing than frustrating. Five years ago with the advent of the Hat Trick Letter, a frequent stream of curses was directed at the television screen during interview of supposed experts. These past weeks and months, a smile comes during interviews of the same compromised deacons committed to the ideological priesthood, striving for a piece of the paper pie. It will not come. Instead, a pink slip of paper will arrive on desks, to the tune of 80 thousand jobs to Wall Street firms, according to Meredith Whitney, the former Oppenheimer analyst. Such reductions would comprise 10% of current workforce levels. The structural decline in Wall Street profits over the last three years began with busted bubbles, but continues with a perverse replacement of stock and bond issuance by client lawsuits. The damage extends to Europe and England. See Barclays, Credit Suisse, and Royal Bank of Scotland Group. Bear in mind that the USTreasury Bond bubble has sucked most capital from the world, as even bond offerings struggle and spreads widen.

 

Behold the powerful Gold ascendancy. What great amusement comes from watching the minimization of the gold price advances by financial anchors and their guests, the envious avoidance, the denigration from the loser corner, bizarre bubble accusations. The anchors seem not to show much respect for a 300% return on investment for gold in the 2000 decade, the clear victor among asset groups. It is only gold, the pesky yellow metal. It does not really count as an investment, since it is not an approved vehicle within the paper fleet. The 1973 movie "Paper Chase" with John Houseman and the subsequent television hit series in the following decade was cool. It featured a group of Harvard Law students struggling to succeed in a rigorous program made more difficult by a surly but competent professor not prone to smiles or displays of human tenderness. It was a favorite weekly show of the Jackass, young at the time and developing unorthodox iconoclastic tendencies. The gold community has turned away from the Paper Chase, the Wall Street game, the fiat charade, the heresy on paper wheels.

 

One key family member of mine shunned the advice given in 2001 to invest 25% of life savings, my future inheritance, in a gold investment. In 2010 after the quadruple was complete, the same person expressed satisfaction in NOT having invested in gold over those same ten years, since it seemed risky and went against the grain of the system. He comes from a different age, with engrained trust for the system, a veteran of a war long ago, one who prefers not to contemplate the threats made against his son by USGovt agencies. Little satisfaction comes to the Jackass except from personal colleagues and trusted friends in the gold community who get it. One might expect similar lack of satisfaction when preaching the gold theme to family members and close friends for other people, other gold warriors. My view is that acceptance of the Gold theme is much like politics or religion, should not be forced, but other opinions need not necessarily be given too much respect. A progression has been well noted of family and friends in response to the sequence of crisis events, full shock, and personal impact to them. They go through their defining moments, their watershed decision points, but usually continue committed to the paper trail. They tend to express hope that the nation can pull out of the current morass of problems. My stern replies of worsening forecasts go unheeded, each dismissed like the last, despite the string of correct systemic breakdown forecasts. Conclusion: make new friends, stick with the gold friends, as we will rule the earth, all in time. Family and friends might be given some help later, from a different pecking order.

 

Gold reacts to many things not seen by the mainstream. It reacts to the extreme distress of the creaking dying financial system. It reacts to the failure of debt denominated monetary system. It reacts to the insolvent US Federal Reserve. It reacts to the moribund environment for capital formation. It reacts to the debt saturation. It reacts to the burgeoning federal deficits. It reacts to the 20 months of 0% that cannot kickstart the USEconomy. It reacts to the still declining housing market. It reacts to the tragic march of home foreclosures. It reacts to the tragic march of the unemployed. It reacts to the 20% of the homes mired in negative equity. It reacts to the reluctance to serve remedy, reform, or restructure by the big banks who have the USGovt finance ministry in a choke hold. It reacts to the wars that exhibit a cancer upon the presidency. It reacts to the absence of industrial base, dispatched to Asia. It reacts to the hidden lack of comprehension for the consequences of unsound money. It reacts to the ugly aftermath following two decades of falsely priced cost of money. It reacts to the failed central bank franchise system. It reacts to the end of the road for additional bubbles to blow on the American landscape. It reacts to the growing despair extended from the dark clouds hanging over the current environment. It reacts to the lack of comprehension of money itself by the brain trust posing as bank leaders. It reacts to the lack of comprehension of economics itself by the brain trust posing as economists.

 

GOLD & SILVER BREAK OUT

The mainstream financial press networks cannot grasp the meaning and potential of gold. They hate it. The broader comprehension of gold is superficial. They recognize the excess of  government deficits and debt issuance, but not their permanence. They recognize the fast vast creation of new money, but not the need for repeated episodes of more creation, to the point of total debasement. They recognize the need for safe harbor, but still cling to the notion of USTreasury Bonds offering that safety. They recognize the need for inflation to return, but not how a chronic dependence upon inflation brought the current wreckage. They recognize the inevitability of further debt burdens, but not the certainty of debt default. They recognize the need to reduce the US debt to manageable levels, but not the wicked foreign response in global revolt. They recognize the foreign angst over the USDollar and its teetering condition, but not the global revolt against it. They recognize the missing collateral reserves in the banking system, but not how gold used to serve that purpose. They recognize the sickness of the debt based monetary system, but not the ultimate requirement for a complete overhaul of the monetary system. They recognize the rise in the gold price, but not its identification as money in a moneyless world. They recognize the broken system, but believe it can be righted, if only naively by the passage of time. They confuse legal tender with money. They do not understand gold, but they will, probably when it is too late. GOLD IS BOTH THE STORE OF VALUE AND THE BALLAST IN THE BANKING SYSTEM. It offers stability, but seems like dead weight to the ignorant.

 

The gold price has broken out to new highs. This is just the beginning. The silver price has broken out to new highs. This is just the beginning. The mainstream has no idea how high the gold & silver prices can reach. My response is simple. No effort has come to reform the financial foundation. No effort has come to bring remedy the broken platforms. No effort has come to restructure its workings. The first steps involve liquidation of the vast swaths of badly impaired, often worthless bonds that clutter the banking system like discarded rags in a sewer pipe. No effort will come either, since orders to repair the financial platforms would bring about sudden death to the big banks that control the USGovt and its finance ministries. Gold understands all this very well. Gold realizes that no Big Fix can come without trashing the entire power structure, turning the system upside down, and giving invitations to criminal prosecution. The Gold price is constantly and steadily fed strong nourishment.

 

The gold & silver prices have broken out to new highs. Tremendous heights will be achieved. We will see $2000 gold, then later $3000 gold. We will see $40 silver, then later $70 silver. It is pre-ordained. It is written. It will be done. Nothing is fixed nor will be fixed. Much money has been wasted, and more will be wasted. Each round of economic stimulus pushes the gold & silver price higher. Each round of big bank bond redemption pushes the gold & silver price higher. Each round of sanctioned official debt monetization pushes the gold & silver price higher. Each round of inaction from political delay or stalemate pushes the gold & silver price higher. The only lack of satisfaction from the leaps higher in precious metal prices comes from knowing that the world as we know it will change, as the landscape shows evidence of economic scars. Supply chain disruption, price inflation, lost financial security, social unrest, and growing chaos will make it difficult to enjoy the strong purchasing power from a high gold & silver price from personal holdings in investment. But the alternative is so much worse than not holding them in investment. Gold & silver are a vote of no confidence in the paper system. Gold & silver are vast life boats during a tsunami. Gold & silver are a stake in the future.

 




 

Gold fights the big political battles, but silver takes the greater spoils. Behold gold on the verge of a powerful breakout. Gold is not an inflation hedge, but rather a monetary system failure hedge. Gold is not a dead asset, but rather the ultimate form of money. Gold is not an investment without yield, but rather the a store of value serving as ballast for the global banking system. Each round of stimulus, bond redemption, bank aid, and annual government deficit lifts the gold price potential another $1000, and the silver price another $20. Silver is favored on the supply side of the price dynamics, and silver is favored on the demand side of the price dynamics. Massive supply shortages are being reported and realized. Just this week a private off market silver sale took place in the multi-million$ at a $24.50 price, according to an information source. The disparity between the physical market and paper market will remain wide, even as both price structures move higher.

 




 

JPMorgan is on the extreme defensive. While the new Financial Regulation Bill might have caused some disarray of the price suppression gamers, the bill surely has emboldened precious metals investors. By the way, a deep contact informs that Bank of America suffered a death experience on the weekend of July 24th, the same weekend that the London Bullion Market Assn went dark on reported data. Around the same time the Bank For Intl Settlements was fumbling around with phony stories regarding their 340 ton Gold Swap contract. The truth is... the BIS bailed out the London metal exchange, on the edge of default, which has suffered repeated gold raids. They have been forced to defend against a sequence of coordinated raids, all legal, demanding vast gold bullion and obtaining it. The BIS bailed out not commercial banks, not the Portuguese central bank, but the London metal exchange. The LBMA is struggling to avoid completely empty inventory. More BIS backdoor supply handoffs will come. Expect the gold raids against London to continue until the corrupt Anglo bankers are plowed under like a weeded lawn laced with rubbish. Soon a big bank will fall, from the incremental drain from losses defending the gold price without success. My guess is Bank of America. It will be absorbed by the titans on Wall Street, the corrupt monoliths. Eventually only two will stand, by the time the USTreasury default approaches.

 

http://news.goldseek.com/GoldenJackass/1284667200.php

9
General / Video series on Nibiru/zena/planet x
« on: September 21, 2010, 05:29:28 PM »
http://www.youtube.com/watch?v=vpbiuKTtMZo

There are twelve parts ten minutes each and he ties a lot ofthings together.

10
Money & Markets / CRISIS REDUX: ROAD TO PERDITION
« on: July 12, 2010, 02:23:43 AM »
Time to awaken to a new dreadful reality. Just like autumn 2008, all over again, the stock market is breaking down in a powerful visible manner, after nothing was fixed with the vast financial structures but much money was spent. If only the USGovt had decided to address the problems instead of funding the myriad liquidity facilities, which by the way serve as a virtual banking system. If only the USGovt had decided to address the problems instead of funding the US Federal Reserve equity reserves, as in excess bank reserve lures. If only the USGovt had decided to address the problems instead of funding the bank preferred stock and bank executive bonuses. If only the USGovt had decided to address the fundamental need for capital formation toward job growth instead of simple extensions of jobless benefits. If only the USGovt had decided to address the dire need to liquidate impaired assets instead of warehousing them, which has produced a form of constipation within the bank system loan processing. If only the USGovt had decided to address the cancerous large corporations too big to fail that must be permitted a funeral, instead of letting them continue to control vital government finance ministries. If only the USGovt had decided to address one of the root causes of USEconomic deterioration, namely endless war, so that more funds would be available for that essential capital formation and job growth, not to mention state budget plugs, as the 50 states suffer from massive capital drain through taxation re-routed to the federal level.

When no solutions are achieved, even no solutions pursued, the sugar high vanishes, the adrenalin rush wears off, and the underlying root causes return as the same symptoms to the sick patient. With no remedy, the symptoms turn much worse!! The symptoms return with a vengeance, as seen right now. Shocks to the body economic are imminent, assured by lack of required credit for almost two years, compounded by the Gulf of Mexico toxic event applied to the Southern appendages.

One of the hidden devious factors is that the supposedly excess bank reserves parked at the USFed are actually Loan Loss Reserves attracted by the USFed itself, by virtue of interest yield offered. Banks are running naked and insolvent and constipated. The extraordinary measures have worn off, as has political will to sustain them. A rot has permeated the USEconomy. Personal bankruptcies are up 14% in the first half of 2010, hardly a sign of a recovery. Home sales are down, no longer buttressed. Foreclosures are unrelenting, the American Tragedy. Retail sales are down. Factory orders are down. California might look worse than Greece. About one million Americans have dropped out of the jobs market in the last two months. Eight million jobs have been lost in the recession that never actually ended. The rolls of people unemployed but not receiving a jobless insurance check amount to 9.2 million. The USFed has begun to eye the Printing Pre$$ once again. Internal battles within the USFed center upon asset deflation and resumed bond monetization. The august body serving on the US Federal Reserve Board argue in heated fashion about QE2, a Round #2 of powerful monetary printing, bond purchase, and financial market tampering, with predictably destructive capital formation effects toward which they remain unaware.





Urban Bread Line

Beware the new Modern Day Bread Lines. The new bread line is from job fairs, where unemployed workers seek to become the breadwinner again, a desperate struggle for families to survive. People queue for a job fair in New York in this photo. The share of the US population at working age with jobs in June fell from 58.7% to 58.5%, a big drop from 63% just three years ago.

U.S. STOCK MARKET SLIDING OVER THE CLIFF
The S&P500 stock index carries added meaning, since the large swath of US citizens who are not insolvent choose to react strongly to the assaults on stock account wealth. Paper wealth is fast vanishing, part of the convulsions witnessed to the fiat paper monetary system. First the US banking system died in autumn 2008, still an unrecognized fact. Next the global monetary system is dying. Denial is rampant. The people react with fear, alarm, and anger when their pension and mutual funds suffer significant loss. Those funds suffered significant loss in autumn 2008, and they are on the verge of suffering a similar loss in the next several weeks. My sincere considered opinion is that the stock market breakdown is part of a plan, one to permit or even force a political change toward a powerful grandiose second event of inflation. Fiscal stimulus and monetary accommodation have been withdrawn in the past few weeks, as the mythical recovery is permitted to take root. Its fruit is rotten, infested, and trampled. A shock to public sentiment will open the flood gates to a new bigger round of monetary inflation. The first one was all for the big bankers. The second one will be all for the USEconomy, on the verge of a powerful breakdown, if not collapse, since no remedy has been pursued since Lehman Brothers failed, while both AIG and Fannie Mae required the cover of federal sponsored darkness.




The S&P stock index decline will be at least as bad as the autumn 2008 decline. Claims of Price/Earnings ratios being low are pure deception, since earnings are derived from lax accounting rules. The indicators are dire, strong, and undeniable. The 50-day moving average (in blue line) is soon to cross below the 200-day MA (in red line). Small armies of technical analysts do indeed notice this vital signal, a reliable one hardly shrouded in mystery or abstruse theory. The 50-day MA used to serve as a support since autumn 2008, but now it is acting as a ceiling of resistance (in green circles). Notice the transition it endured in February 2010, flipping to resistance. Other similar MA indicators come with the 20-week MA crossing below the 50-week MA, a matching event in progress, but a little slower in developing. The bearish MA crossover is a clear Death Cross signal. A powerful decline is imminent and unavoidable, one to shake the world financial markets globally. It will permit political policy change to come, as sentiment will turn to fear. Look for the S&P500 index to retest the March low, which reached 666, the signatory number within certain spiritual chambers. Any US stock rout will be matched in the London FTSE and European bourses.

A queer statistic has emerged that underscores the perversion that is Wall Street and the stock market. High Frequency Trading has not gone away. A couple months ago, when it was exposed during a single day swoon event, such trading was responsible for 83% of the entire New York Stock Exchange trade volume. Somehow the word 'Incest' comes to mind as the bank cartel competes toward a liquidity climax with fewer able bodied players remaining each year. A liquidity analysis by Abel-Noser indicates that the US stock market has morphed into a concentrated pool where the top 99 stocks account for 50.1% of total domestic trading volume. In June, the top 20 stocks accounted for 28.9% of all domestic volume, an increase to record level logged each month. The HFT algorithms are forced methodically in a reduced number of only the most liquid stocks. The game actually results in gradual removal of players from the market. The US stock market could eventually degrade into an arena without volume. At that time, large pension and mutual funds will be forced to consider that their vast portfolios might find artificial value like the volume-less mortgage bonds tucked away in the bank balance sheets. They might be difficult to redeem.

GOLD OCCUPIES A DIFFERENT PLACE
The effect will differ from the past, due to the Paradigm Shift in full force. The effect on the gold & silver prices will surely include some initial downside movement. However, this time around, with sovereign debt under heavy siege, the way it plays out will be very different. However, this time around, with gold having taken a reserve currency role, the way it plays out will be very different. However, this time around, with USFed balance sheets badly bloated, the way it plays out will be very different. Imagine a powerful stock market decline panic with a coincident crisis in sovereign debt. USTreasury Bonds might still attract big money, but this time it is hardly Smart Money, since the USTBond is scheduled to be the last sovereign debt targeted for attack. Usage of new government debt to prevent the disaster in asset prices will force a vicious cycle of ruin, which will undermine remaining confidence in all things paper. Gold has in the last several months claimed an important spot at the opposite head of the monetary reserve dinner table. It is a key ingredient in non-Anglo backroom restructure initiatives. The United States bankers are trapped in quasi-depression 18 months deep into a Zero Interest Rate Policy climate, after Round #1 of Quantitative Easing is complete, and wasted fiscal stimulus that sent the annual budget deficit above 10% of GDP.

Recall a Jackass Axiom: The first nations that abandon the USDollar and the US$-based financial system, both with banking and commerce, will be the leaders in the next chapter, part of the Paradigm Shift and its effect. Recall the Sound Money Corollary: The next global reserve currency cannot be paper based, operating by fiat and faith, since no paper currency can replace a fiat paper global reserve currency. Thus the Intl Monetary Fund and their ill-conceived Special Drawing Rights plan would serve as a mere raft of papyrus reeds, tied together, heading toward a dangerously high waterfall.

Gold lies at the nexus of the systemic vulnerability, the linchpin holding the fiat system together, whose controlled price mechanism is ready to release. The interference to prices has damaged a host of markets anchored to the USDollar, since few seek equilibrium, most being distorted. Without the constant props, these markets would all likely collapse of their own weight toward significantly lower price levels, real levels. The effect on the gold price from Round #1 was a push down followed by a powerful boomerang up to new highs. The effect on the gold price from Round #2 will be similar in direction but more powerful in upward movement. Think $2000 gold !!




OMINOUS COMPARISONS OFFER WARNING
Realities are soon to force emergency changes to official policy. We are about to observe a repeat of the Great Depression stock decline pattern, with pattern recognized broadly, despite all the printed money squandered. That pattern was identified by a strong recovery off a nasty decline, mislabeled a return of a stock bull by the compromised, followed by even lower price levels. A titanic battle is underway. On one side is the political cabal that stands ready to exploit the situation to carry out its political agenda of concentrated power, even emergency power like martial law or at least rationed supply. On the other side is the Weimar option of hyper-inflation, as the extreme new money creation leaks into the system and forces prices of everything upward.

A dynamite type risk exists, unfortunately. If much higher price inflation becomes engrained and recognized, if the official price inflation statistics begin to reflect reality, then grand powerful effects would come to the bond market. Worse still, grand powerful effects would come to the shadowy appendage to the bond market, the credit derivatives. Refer to both the Interest Rate Swaps and the Credit Default Swaps. Recall the USGovt has a huge conflict of interest.

They sell USTreasury Bonds. They have issued over a fresh $Trillion each year for the past two years, enough to threaten their bond structures. So decline to the USEconomy and the US stock market coincides with their objectives and motives. They must create more bond demand to match the extraordinary supply. Heavy duty price inflation would kill the plan. But a stock breakdown fits well with the plan. Heavy duty price inflation would ignite a credit derivative explosion, or a series of explosions, as their long fuses are both hidden and criss-crossed. These fuses would be easily lit from a bout of broad price inflation.

The key to holding the USEconomy hostage is the excess reserves held in the USFed vaults, and the tighter lending rules among banks. Bear in mind that three types of credit creation exist in the USEconomy. In order they are 1) vendor finance (which has largely vanished), 2) bond securitization (which has largely vanished), and 3) bank loans (which have largely vanished). So the USEconomy is being strangled. One could say that vendors and bond issuers and banks recognize the heightened risk of falling collateral value and weakening income streams. They react by lending less.







The current economic decline might have much more powerful trouble spots ahead. The US housing market has begun a powerful resumed second decline. Somehow, university textbooks in Economics curriculum failed to cover the current situation of extraordinarily high bank inventory of foreclosed homes, working opposite to an extraordinarily strong decline in home purchase applications, amidst a banking system heavily dependent upon $100 billion temporary intermediate credit lines, while the big banks park their Loan Loss Reserves at the USFed, and the USFed struggles to avoid repeated powerful Quantitative Easing programs. (That last very long sentence should be read a few times in repetitive fashion.) If truth be known, prominent Think Tanks fund many university professor chairs, thus perpetuating an education process that inculcates fallacious theories.

Recall that the entire 2002-2005 USEconomic expansion was built atop the housing & mortgage bubble, a chapter fully endorsed by even the erudite prestigious among the national economic counselors. To be sure, the May end to the home tax credit has made an effect. The housing market will enter its fourth consecutive year of decline. My ongoing forecast stated since 2007 was for two years of home price bear market. My 2008 forecast was for two more years of home price bear market. My 2009 forecast was for two more years of home price bear market. My 2010 forecast is for two more years of home price bear market. That is a better and more credible approach to forecasting then a more honest approach: ENDLESS HOUSING BEAR MARKET.

The upcoming S&P500 stock plunge will serve a purpose, perhaps a planned purpose. It will permit the USGovt to announce with expedience a resumed Quantitative Easing in order to prevent an economic collapse. Renewed stimulus and accommodation will be rendered a snap, easy as pie, with no political obstacles. Deficits be damned, the system must be saved !!

The Gulf of Mexico disaster will soon spread like an oil-soaked wildfire of economic destruction down South, which could easily affect the supply chain with grain delivery up the Mississippi River. Barges with oil-soaked hulls will not be permitted up the river. In fact, electricity power generating stations along the coast are at risk of shutdown, due to the likelihood of oil entering the water intake valves. Rumors of evacuation plans have been circulating, confirmed by USMilitary sources. The great majority of US states are at the end of their rope with budget shortfalls and benign federal neglect, certain to result in broad layoffs, even dismissal of police and teachers and garbage collectors. These three groups of workers are commonly viewed as most critical.

Mega-trend comparisons offer further strong warnings, reflecting powerful changes compared to autumn 2008. They pertain to the USGovt debt picture with horrendous $1.5 trillion annual back-to-back deficits. They pertain to the monthly $200 to $300 billion federal debt issuance that has become a standard billboard feature, along with newfound scrutiny toward the USTreasury complex regarding bid sources, primary dealers, and monetization. They pertain to the new reality of the 10-year USTreasury yield (TNX) that used to be hovering around 4.0% level but is now under the 3.0% red light level. They pertain to the US housing market set for a surprising sinkhole event, since supply is not only rising, but is hidden, while demand is falling, absent the tax credit stimulus. A nasty shock event from liquidity drought is coming right around the corner. First sight will be the SPX in a heavily publicized tumble. It will scare the USCongress for sure, inviting hasty reaction. The plunge will scare the wits out of the US public again, fearful of their savings.

Four other mega-trend factors hover with a nasty specter. 1) The nation of Mexico is in the midst of a failed state breakdown into pure chaos. 2) The Gulf of Mexico is fast turning into a kill zone, both ecologically and economically. 3) The European Bank Bailout with its $1 trillion in aid fixed absolutely nothing across the Atlantic, but did send a few $100 billion into USTreasurys. 4) Refusal to permit big financial firms to fail removed reform and restructure entirely, whose 20 months of progression since autumn 2008 has taken a heavy toll.

RENEWAL OF EXTREME MONETARY STIMULUS
The US money supply shows powerful declines in circulating money. Contrast this graph to that of the broad money supply, which counts funds tucked away in the bank vaults and the USFed itself, ensuring no usage for lending capital. Broad money supply is skyrocketing, as money velocity is careening downward. The Leading Economic Indicators look ominous. None of these many factors were showing such dire signals 20 months ago (maybe LEI was). Anyone who believes the USFed and financial runners in the USGovt will not reverse course and begin Quantitative Easing Round #2 are just plain simple-minded. A confirmation signal comes from the sub-3% long bond among USTreasurys. Recoveries coincide with the long bond yield rising, not falling. This contradiction of recovery claims escapes most economists, who often show little insight.




As the USEconomy falters in the second half already underway, instead of recovering, the USGovt will soon announce the expedience of a resumed Quantitative Easing in order to prevent an economic collapse. The USGovt will also soon work toward a massive economic stimulus plan in almost emergency atmosphere, which might actually contain some stimulus, unlike the last evasive political display. The states will send governors to WashingtonDC directly, in acts of desperation.

The entrenched economists will continue to harp for more of the same non-remedies that have failed to avert systemic tribulation. Keynesian abuses have rendered the nation into a policy corner, as bankers with economists at their side press harder on what has failed to work !! Private discussions among bankers reveal a palpable worry, as typical remedies have accomplished nothing. We hear of much less bang for the buck. We hear shallow thinking like volume of stimulus being important, whereas quality of stimulus is hardly mentioned, a Santelli theme on CNBC. The choices seem like polarized options. Solutions are sorely and universally absent.

Look out below. Investors had better be in gold & silver heavily. It is time to roll out the new currency (Nordic Euro) backed in part by gold, and maybe oil too. Buy with both hands any further hefty discount offered on physical metal gold & silver. This time, the COMEX and London Metals Exchange are at greater risk than in autumn 2008 since so much physical metal has been withdrawn in recent months. The paper gold & paper silver markets must be watched closely, for worsened divergences from the physical market. Physical gold & silver demand is enormous. Vast inventory supply in silver is exiting the metals exchanges, without much reporting. Rising potential for an event can be detected.

ABSENT LIQUIDATION, REFORM & RESTRUCTURE
Add the absent economic stimulus and absent monetary accommodation, the newest features after hollow political resolve supposedly has entered the room. The Obama Admin, like the Bush II Admin, does not comprehend that liberal money creation actually destroys capital, destroys businesses, and destroys income. The US political leaders and banking leaders have not learned the lesson of economics in half a century. Worse, the Obama Admin tax hikes are soon to kick in. They must pay for the Health Care Program. Many monthly health care payroll plans will triple in cost. Tragically, the banking and political leaders are caught in a bind fashioned from their own deceptions. They have been talking about a USEconomic recovery, fragile though it may be, a recovery they urge needs more nurturing. It needs more reality instead. So the bankers and politicians will let the USEconomy swim without life preservers, ride the bicycle without the training wheels, walk without crutches. A bad chapter is soon to be written. At least the economists in charge will be able to produce more demand for USTreasury Bonds, the most important bond they sell. The public, the investment community, might soon catch on. The USGovt and Wall Street have never made any legitimate effort to reform or restructure. Their entire purpose has been to secure as much bank aid as possible, and block any bonafide reform.

The tax cut stimulus is going away. The car purchase tax credits are going away. The mortgage bond monetization program is going away. The jobless benefit extension beyond 99 weeks is going away. The lack of job prospects is not going away. The missing incentive for business expansion is not going away. The vast budget gaps and pension obligations for many US states is not going away. The home foreclosures and bankruptcies are not going away. The challenges in securing credit and loans is not going away. The syndicate control of the USDept Treasury is not going away. The sacred defense budget is not going away.

http://www.gold-eagle.com/editorials_08/willie070810.html

11
Just as LEAP/E2020 anticipated many months ago, and in contrast to the reports coming out of the media and the « experts » during these past few weeks, Greece really has the Eurozone behind it to give support and credibility (especially concerning good management in the future, the only guarantee of an escape from a damnable cycle of growing public deficits (1)). There will not be, then, any Greek default of payment even if the commotion over the Greek situation really is an indication of a growing awareness that money to finance the huge Western public debt is becoming increasingly difficult to find: a situation now « untenable » as a recent report of the Bank of International Settlements underlined.

The fuss made over Greece by the English and US media in particular tried to hide from the majority of the economic, financial and political players the fact that the Greek problem wasn`t a sign of an upcoming Eurozone crisis (2) but, in fact, an early warning of the next big shock of the global systemic crisis, that is to say a collision between, on the one hand, the virtual British and US economies founded on untenable levels of public and private debt and, on the other hand, the double wall of borrowing, maturing from 2011 onwards, combined with a global shortage of available funds for refinancing at low rates.

As we have explained since February 2006, at the time of our anticipation of its imminent arrival, one mustn`t forget that the current crisis has its origin in the collapse of the world order created after 1945, of which the United States was the support, assisted by the United Kingdom. Also, in order to understand the real effect of events caused by the crisis (the Greek case, for example), it is useful to relate their significance to the structural weaknesses which characterise the heart of the world in full meltdown: so, for our team, the « Greek finger » doesn`t cite the Eurozone as much as the explosive dangers of the exponential financing needs of the United Kingdom and the United States (3).


 
2010 projected sovereign debt issuance (Total: 4.5 trillion USD) - Sources: IMF / Hayman Advisors / Comcast, 03/2010
Subscribers should be aware that during a period when financing requirements exceed available funds, as is the case today, the sheer amount as regards sovereign debt issuance is more important than the ratios (amounts in relative value). This is shown by a very simple example: if you have 100 Euros and you have two friends, one « poor », A, who needs 30 Euros and the other « rich », B, 200 Euros. Even if B can pledge his expensive watch, worth 1,000 Euros, to you, whilst A only has a 20 Euro watch, you can`t help B since you haven`t sufficient funds available to fulfill his financing requirements; however, in discussing a pledge and interest, you can decide to help A. Putting it in this perspective thus invalidates all the arguments based on the debt ratio: in fact, according to their logic, you would obviously help B, because his debt ratio is clearly more favourable (20%) than A`s (150%). But in the world of the crisis, where money is not available in unlimited quantities (4), the theory hits the wall of reality: wanting to do something is one thing, being able to do it is another.

So then, LEAP/E2020 asks two simple questions:

. who will be able/want to help the United Kingdom after the 6th May when its political chaos will inevitably expose the advanced meltdown of all its budget, economic and financial parameters?
The financial situation is so serious that the technocrats running the country have devised a plan, submitted to the parties contesting the next General Election, in order to avoid risking a power vacuum which could lead to a collapse in Sterling (which is already very weak) and British treasuries (Gilts) (the Bank of England having bought 70% of those issued over the last few months): Gordon Brown would remain Prime Minister even if he loses the election, unless the Conservatives were able to garner sufficient votes for outright victory (5). In effect, with an economic and political crisis as a backdrop, the polls lead one to think that the country is turning to a « Hung Parliament », without a clear majority. The last time that happened, in 1974, was a kind of political preliminary to IMF intervention eighteen months later (6).

For the rest the Government puts a positive spin on the statistics to try and create the conditions for a victory (or a managed defeat). However the reality is depressing. British real estate is trapped in a depression which will prevent prices reaching their 2007 levels for many generations (in other words, never) according to Lombard Street Research (7). The three parties are preparing to face up to a catastrophic post-electoral situation (8). According to LEAP/E2020 the United Kingdom could well suffer a « Greek (9) » event with British leaders announcing that the country`s situation is substantially worse than that disclosed before the election. The numerous meetings, at the end of 2009, between the Chancellor of the Exchequer, Alistair Darling, and Goldman Sachs is a very reliable indicator of sovereign debt manipulation. As we wrote in the last GEAB issue, all one needs to do is follow Goldman Sachs to know where the next risk of sovereign debt payment default lies.


 
US Federal Government financing requirements (2010-2014) (10) (in trillions USD) `“ Dark: the federal deficit / Light: maturing debt (future short term borrowing not included) - Sources: Moodys / S&Ps / Treasury Dpt / New York Times, 03/15/2010
. who will be able/want to back the United States once the British fuse (11) has started burning, causing panic in the sovereign debt market in which the United States is, by far, the largest issuer?
Especially since the size of sovereign debt needed corresponds with the start of the expiry, beginning this year, of a mountain of US private debt (commercial real estate and LBO due for refinancing, amounting to 4.2 trillion USD of private debt expiring in the United States between now and 2014 (averaging one trillion USD a year (12)). Purely by chance, it is the same amount as new global sovereign debt issuance for 2010 alone, of which almost half is by the US Federal Government. Adding to that the financing needs of the other economic players (households, businesses, local authorities), the United States must find nearly 5 trillion USD in 2010 to avoid « running dry ».

Our team anticipates two replies just as stark:

. as regards the United Kingdom, the IMF and the EU, perhaps (13); and we`ll be watching, from this summer, the « Bank of England battle (14) » to try and avoid a simultaneous collapse in Sterling and UK public finances. In all cases Sterling will not come out undamaged and the crisis in public finances will engender an austerity plan of unprecedented size.

. as regards the United States, no one; because the size of its financing requirements exceeds the capacity of other players (including the IMF (15)) and, in winter 2010/2011, this event will lead to the explosion in the US Treasury Bond bubble founded on a huge increase in interest rates to finance sovereign debt and private debt refinancing needs, causing a new wave of financial institution bankruptcies. But it isn`t only countries that can default on payment. A Central Bank can also go bankrupt when its balance sheet consists of « ghost assets (16) » and the Fed will have to face up to a real risk of bankruptcy, as analysed in this GEAB issue.
Winter 2010 will, equally, be the stage for another destabilised event in the United States: the first major elections since the beginning of the crisis (17) when millions of Americans will probably express their feelings that they have had a « belly-full » of a continuing crisis (18), which doesn`t affect Washington and Wall Street (19), and which creates US public debt which is now counter-productive: a borrowed Dollar now causes a loss of 40 cents (see chart below).


 
Diminishing marginal productivity of debt in the US economy (in USD) (GDP/Debt ratio 1966-2010) - Sources: EconomicEdge, 03/2010
One may not be in agreement with the answers given by our team to the two questions asked above. However, we are convinced that these questions cannot be ignored: no analysis, no theory on world developments over the next three quarters is credible if it doesn`t provide clear replies to these two questions: « who will be able/want to? ». From our side, we think the same as Zhu Min, the Deputy Governor of the Chinese Central Bank, that « the world hasn`t enough money to buy any more US Treasury bonds (20) ».

In this issue our team has, therefore, decided to make a progress report on the major risks weighing on the United Kingdom and the United States, and anticipate developments over the next few months in the growing context of a "velvet war" between Western powers (financial, monetary and trade war). We will also disclose a series of recommendations for facing the double shock of British and US financing needs.


---------
Notes:

(1) The United Kingdom must impose this type of restrictions itself after the next General Election or certainly via direct IMF intervention; whilst the United States is unable to do the former without a major crisis affecting its public debt.

(2) Not only was the fear disseminated by experts throughout the interviews given by them without foundation but, in addition, the Greek case has duly served to push the Eurozone into equipping itself with the instruments and procedures which it was missing in the field of governance. We will not even mention the clear frustration of numerous commentators and experts who dreamt of seeing Germany refuse its support and/or who made the Greek case the living proof of their economic theories on monetary zones. On this topic, the LEAP/E2020 team wants to give a reminder of its own view: economic theories, whether about monetary zones or other subjects, are as much use as horoscopes. They make no mention of reality, but say all on the thoughts of their writers and about those they « target » with their analyses. A monetary zone only exists and lasts for so long as there is a strong and lasting political will to share a common destiny, as is the Eurozone`s case. To understand, one should study history, not the economy. So, in order to avoid constantly repeating his biased babyboomer and dogmatic theories, a Nobel prizewinner for economics, like Paul Krugman, would be better studying history. That would allow the readers of the New York Times and numerous other publications which duplicate his work throughout the world to stop mistakenly focusing on the few trees which hide the forest.

(3) As we have often reminded subscribers for more than a year now, it is quite clear that some Eurozone countries face substantial financing needs and, precisely, that helps to create a difficult environment for all large-scale public debt refinancing, knowing that the United States and the United Kingdom are the two « champions » in all categories of financing/refinancing needs.

(4) We emphasize this fundamental fact: state bailouts of the banks then, and, from hereinon, the risk of bankruptcy of the same states, illustrate the fact that contrary to the soothing articles which populate the media, money is not available in unlimited quantities. When everyone needs it, it's the moment when one becomes aware of the fact.

(5) Source: Guardian, 03/30/2010

(6) Source: BBC / National Archives, 12/29/2005

(7) Source: Telegraph, 04/06/2010

(8) Source: The Independent, 04/06/2010

(9) The new Greek leaders announced after their election victory that the country`s budget situation was much worse than previously stated.

(10) These estimates are based on official Federal Government forecasts which, according to LEAP/E2020, are way too optimistic not only as regards tax receipts (which are no longer reliable) but also as regards the costs of stimulating the US economy (which are higher).

(11) In numerous GEAB issues since 2006 we have extensively recounted the structural ties between the City and Wall Street and the role of a « float » that the United Kingdom plays in relation to the US ship. On this occasion, the distrust over London`s debt will irrevocably cause mistrust over Washington`s.

(12) Source: Brisbane Times, 12/15/2009

(13) Perhaps, because there isn`t any mechanism in the EU requiring financial support to be provided, especially for a country which has, for decades, refused to take on any restrictive obligation with its European partners. The « splendid isolation » can become a terrible trap when the wind changes. So, that leaves the IMF`¦ whose coffers Gordon Brown was mysteriously keen to fill last year!

(14) Contrary to the Battle of Britain (06/1940 `“ 10/1940), in which RAF pilots, helped by radar, prevented the Nazi invasion of the British Isles, the « pilots » of the City financial institutions, helped by the Internet, will help to aggravate the problem by fleeing to Asia or the Eurozone.

(15) LEAP/E2020 pointed out at the beginning of 2009 that, after summer 2009, it would be impossible to channel the crisis. Last year, an IMF, recapitalised at 500 billion USD (following the London G20 meeting) could still have covered US financing needs. In addition to the fact that this total amount is no longer available because the IMF was obliged to pay out more than 100 billion USD in aid to the countries most affected by the crisis, this year making available a similar sum would only represent 10% of the US` short term requirements; in other works a drop in the ocean.

(16) As demonstrated by the information eventually supplied by the Fed on the condition of its balance sheet. Sources: Huffington Post, 03/22/2010; Le Monde, 06/04/2010

(17) The 2008 Presidential election had been synchronous with the perception of the beginning of a crisis. In November 2010, electors will express their views after two full years of crisis. A big difference.

(18) Different to Wall Street`s and Washington`s utterances, the crisis is still here and US small businesses are more and more pessimistic. A very useful detail for understanding US statistics: they generally don`t take small businesses into account in assembling their various numbers. When one knows that, in the United States as well, small businesses constitute the bedrock of the economy, that puts the value of these statistics (even if not falsified) into perspective. Source: MarketWatch, 04/13/2010

(19) To evaluate the size of the US socio-political problem, it isn`t as much the relationship in the Democrat/Republican struggle that will be interesting to follow, but the progress made by extremists at the heart of, and the unfolding of events outside of, the two parties.

(20) Source: Shanghai Daily, 12/18/2009


12
Money & Markets / Economic Crash Forecast for 2010
« on: May 07, 2010, 05:53:24 PM »
 
   
   Sunday, April 18, 2010
Economic Crash Forecast for 2010
 
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Economic Crash Forecast for 2010



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3/24/10
Note from David: We are not sure who authored the original list of economic forecasters but we have separated them into secular and, below that, prophetic. We don`t stand behind any individual's forecast but one thing is clear: the signs they are reading is pointing them to a collapse in 2010. Prophetic voices below are in agreement. Because we had so many dreams and prophecies to this effect a few years ago, I told you there would be two waves of economic destruction. The first wave would come and go and things would recover some but then the second wave would bring a depression. Many gifted economists predicted at least the first wave. Well, we had the first wave and some recovery has come. Now some of the best and brightest economists are predicting the second wave to be far worse. This will bring the new world economic order and then political order of the Beast. Because of what I now know is coming, I suggest you get away from the big cities and walk with the Lord in His Biblical economy: 2 Corinthians 8 & 9; Matthew 6; Luke 6:38. Give, share, love and God will give unto you.
Secular Voices
Bob Chapman
First 6 months of 2010, Americans will continue to live in the 'unreality'...the period between July and October is when the financial fireworks will begin. The Fed will act unilaterally for its own survival irrespective of any political implications ...(source is from insider at FED meetings). In the last quarter of the year we could even see Martial law, which is more likely for the first 6 months of 2011. The FDIC will collapse in September 2010. Commercial real estate is set to implode in 2010. Wall Street believes there is a 100% chance of crash in bond market, especially municipals sometime during 2010. The dollar will be devalued by the end of 2010.

Gerald Celente
Terrorist attacks and the "Crash of 2010". 40% devaluation at first = the greatest depression, worse than the Great Depression.

Igor Panarin
In the summer of 1998, based on classified data about the state of the U.S. economy and society supplied to him by fellow FAPSI analysts, Panarin forecast the probable disintegration of the USA into six parts in 2010 (at the end of June `“ start of July 2010, as he specified on 10 December 2000

Neithercorps
Have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. The behavior of the Fed, along with that of the IMF seems to suggest that they are preparing for a focused collapse, peaking within weeks or months instead of years, and the most certain fall of the dollar.

Webbots
July and onward things get very strange. Revolution. Dollar dead by November 2010.

LEAP 20/20
2010 Outlook from a group of 25 European Economists with a 90% accuracy rating- We anticipate a sudden intensification of the crisis in the second half of 2010, caused by a double effect of a catching up of events which were temporarily « frozen » in the second half of 2009 and the impossibility of maintaining the palliative remedies of past years. There is a perfect (economic) storm coming within the global financial markets and inevitable pressure on interest rates in the U.S. The injection of zero-cost money into the Western banking system has failed to restart the economy. Despite zero-cost money, the system has stalled. It is slowly rolling over into the next big down wave, which in Elliott Wave terminology will be Super Cycle Wave Three, or in common language, "THE BIG ONE, WHERE WE ALL GO OVER THE FALLS TOGETHER."

Joseph Meyer
Forecasts on the economy. He sees the real estate market continuing to decline, and advised people to invest in precious metals and commodities, as well as keeping cash at home in a safe place in case of bank closures. The stock market, after peaking in March or April (around 10,850), will fall all the way down to somewhere between 2450 and 4125 during the next leg down.

Harry Dent (investor)
A very likely second crash by late 2010. The coming depression (starts around the summer of 2010). Dent sees the stock market--currently benefiting from upward momentum and peppier economic activity--headed for a very brief and pleasant run that could lift the Dow to the 10,700-11,500 range from its current level of about 10.090. But then, he sees the market running into a stone wall, which will be followed by a nasty stock market decline (starting in early March to late April) that could drive down the Dow later this year to 3,000-5,000, with his best guess about 3,800.

Richard Russell (Market Expert)
(from 2/3/10) says the bear market rally is in the process of breaking up and panic is on the way. He sees a full correction of the entire rise from the 2002 low of 7,286 to the bull market high of 14,164.53 set on October 9, 2007. The halfway level of retracement was 10,725. The total retracement was to 6,547.05 on March 9, 2009. He now sees the Dow falling to 7,286 and if that level does not hold, `I see it sinking to its 1980-82 area low of Dow 1,000.` The current action is the worst he has ever seen. (Bob Chapman says for Russell to make such a startling statement is unusual because he never cries wolf and is almost never wrong)

Niño Becerra (Professor of Economics)
Predicted in July 2007 that what was going to happen was that by mid 2010 there is going to be a crisis only comparable to the one in 1929. From October 2009 to May 2010 people will begin to see things are not working out the way the government thought. In May of 2010, the crisis starts with all its force and continues and strengthens throughout 2011. He accurately predicted the current recession and market crash to the month.

Lyndon Larouche
The crisis is accelerating and will become worse week by week until the whole system grinds into a collapse, likely sometime this year. And when it does, it will be the greatest collapse since the fall of the Roman Empire.

WALL STREET JOURNAL- (2/2010)
"You are witnessing a fundamental breakdown of the American dream, a systemic breakdown of our democracy and our capitalism, a breakdown driven by the blind insatiable greed of Wall Street: Dysfunctional government, insane markets, economy on the brink. Multiply that many times over and see a world in total disarray. Ignore it now, tomorrow will be too late."

Eric deCarbonnel
There is no precedence for the panic and chaos that will occur in 2010. The global food supply/demand picture has NEVER been so out of balance. The 2010 food crisis will rearrange economic, financial, and political order of the world, and those who aren`t prepared will suffer terrible losses`¦As the dollar loses most of its value, America's savings will be wiped out. The US service economy will disintegrate as consumer spending in real terms (ie: gold or other stable currencies) drops like a rock, bringing unemployment to levels exceeding the great depression. Public health services/programs will be cut back, as individuals will have no savings/credit/income to pay for medical care. Value of most investments will be wiped out. The US debt markets will freeze again, this time permanently. There will be no buyers except at the most drastic of firesale prices, and inflation will wipe away value before credit markets have any chance at recovery. The panic in 2010 will see the majority of derivatives end up worthless. Since global derivatives markets operate on the assumption of the continued stable value of the dollar and short term US debt, using derivatives to bet against the dollar is NOT a good idea. The panic in 2010 will see the majority of derivatives end up worthless. The dollar's collapse will rob US consumers of all purchasing power, and any investment depend on US consumption will lose most of its value.

Alpha-Omega Report (Trends Forecast)
Going into 2010, the trends seemed to lead nowhere or towards oblivion. Geo-politically, the Middle East was and is trending towards some sort of military clash, most likely by mid-year, but perhaps sooner...At the moment, it seems 2010 is shaping up to be a year of absolute chaos. We see trends for war between Israel and her neighbors that will shake every facet of human activity...In the event of war, we see all other societal trends being thoroughly disrupted...Iran will most likely shut off the flow of oil from the Persian Gulf. This will have immense consequences for the world`s economy. Oil prices will skyrocket into the stratosphere and become so expensive that world`s economies will collapse..There are also trend indicators along economic lines that point to the potential for a total meltdown of the world`s financial system with major crisis points developing with the change of each quarter of the year. 2010 could be a meltdown year for the world`s economy, regardless of what goes on in the Middle East.

Robin Landry (Market Expert)
I believe we are headed to new market highs between 10780-11241 over the next few months. The most likely time frame for the top is the April-May area. Remember the evidence IMHO still says we are in a bear market rally with a major decline to follow once this rally ends.

John P. Hussman, Ph.D.
In my estimation, there is still close to an 80% probability (Bayes' Rule) that a second market plunge and economic downturn will unfold during 2010.

Robert Prechter
Founder of Elliott Wave International, implores retail investors stay away from the markets`¦ for now. Prechter, who was bullish near the lows in March 2009, now says the stock market `is in a topping area.`predicting another crash in 2010 that will bring stocks below the 2009 low. His word to the wise, `be patient, don`t rush it` keep your money in cash and cash equivalents.

Richard Mogey
Current Research Director at the Foundation for the Study of Cycles- Because of a convergence of numerous cycles all at once, the stock market may go up for a little while, but will crash in 2010 and reach all-time lows late 2012. Mogey says that the 2008 crash was nothing compared to the coming crash. Gold may correct in 2009, but will go up in 2010 and peak in 2011. Silver will follow gold.

James Howard Kunstler (January 2010)
The economy as we`ve known it simply can`t go on, which James Howard Kunstler has been saying all along. The shenanigans with stimulus and bailouts will just compound the central problem with debt. There`s not much longer to go before the whole thing collapses and dies. Six Months to Live- The economy that is. Especially the part that consists of swapping paper certificates. That`s the buzz I`ve gotten the first two weeks of 2010.

Peter Schiff (3/13/2010)
"In my opinion, the market is now perfectly positioned for a massive dollar sell-off. The fundamentals for the dollar in 2010 are so much worse than they were in 2008 that it is hard to imagine a reason for people to keep buying once a modicum of political and monetary stability can be restored in Europe. In fact, the euro has recently stabilized. My gut is that the dollar sell-off will be sharp and swift. Once the dollar decisively breaks below last year's lows, many of the traders who jumped ship in the recent rally will look to re-establish their positions. This will accelerate the dollar's descent and refocus everyone's attention back on the financial train-wreck unfolding in the United States. Any doubts about the future of the U.S. dollar should be laid to rest by today's announcement that San Francisco Federal Reserve President Janet Yellen has been nominated to be Vice Chair of the Fed's Board of Governors, and thereby a voter on the interest rate-setting, seven-member Open Markets Committee. Ms. Yellen has earned a reputation for being one of the biggest inflation doves among the Fed's top players." Schiff is famous for his accurate predictions of the economic events of 2008.

Lindsey Williams
Dollar devalued 30-50% by end of year. It will become very difficult for the average American to afford to buy even food. This was revealed to him through an Illuminati insider.

Unnamed Economist working for US Gov't (GLP)
What we have experienced the last two years is nothing to what we are going to experience this year. If you have a job now...you may not have it in three to six months. (by August 2010). Stock market will fall = great depression. Foreign investors stop financing debt = collapse. 6.2 million are about to lose their unemployment.

Jimmy "Doomsday"
DOW will fall below 7,000 before mid summer 2010- Dollar will rise above 95 on the dollar index before mid summer 2010- Gold will bottom out below $800 before mid summer 2010- Silver will bottom out below $10 before mid summer 2010- CA debt implosion will start its major downturn by mid summer and hit crisis mode before Q4 2010- Dollar index will plunge below 65 between Q3 and Q4 2010- Commercial real estate will hit crisis mode in Q4 2010- Over 35 states will be bailed out by end of Q4 2010 by the US tax payer End of Q4 2010 gold will hit $1,600 and silver jump to $35 an oz.

George Ure
Markets up until mid-to-late-summer. Then "all hell breaks lose" from then on through the rest of the year.
Prophetic Voices
Neville Johnson
As I thought and prayed about the past year I felt the Lord say to me that 2010 was a year of labor pains, with the contractions getting closer and closer together towards the end of the year.

Rick Wiles
Use the first 6 months of 2010 to prepare for the last 3 months of 2010. Purchase everything you need while you still can. Pay off your debts. Judgment is coming upon America (she will be shaken physically, financially, and spiritually)- not the end of the USA, only TEOTUSAAWKI- supply chain will be disrupted for years, admitted insolvency- handed over to allies for pennies on the dollar. POSSIBILITIES: (not prophecies) EMP attack, China Russia NK cyber attack, delayed Y2K bug.

Sadhu Sundar Selvaraj
Starvation and famine/financial problems will develop. Terrorist attacks. Banks close. Tsunami. 7 new diseases worse than swine flu.

Amos Scaggs
The ultra-rich will go broke. I don`t mean go bankrupt I mean go broke, no money. I saw ultra rich people working for food because they were broke. This will happen by mid-February 2011.

Andrey Rasshivaev
At the very end of the year of 2007 I have received a revelation from God that the coming 2008 year was going to be the year of the beginning of outpouring of God's judgment upon this world...About half a year ago God has given me a further revelation. He reveled me that the crisis was just the very beginning. The world is going to face the total and complete economical and financial collapse in August-September of this new 2010 year.

Greg Evensen
Economic meltdown and possible martial law in the mid summer 2010.

Larry Randolph
... there is yet a seven-fold shaking of greater magnitude coming that will produce enormous and perhaps catastrophic disruptions on economic, political, geophysical, atmospheric, and spiritual levels.

Weather Bill
Huge earthquake in America in September 2010. This EQ to come is going to start the swift downfall of America

Unnamed (dream from mid 2006)
... I saw boom and bust cycle, and the bust years were light gray to really dark gray with the light gray being the less severe, and the dark gray more severe. I could see over the past few cycles, each of the periods of bust were getting more and more severe. I saw the year 2010, that year was pitch black. Anyone who didn't prepare would lose everything, and it was so devastating, USA would never recover... and there is but one way to prepare for anything and that is to trust Jesus for everything. I keep seeing hyperinflation. Food prices soar so high that if you ordered a small fry you it can cost like $20.00. Think of paying $60 for one potato. I keep seeing prices that would today they would only charge at a high class extravagant restaurant for just small bits of food. Then I have had many dreams where the American dollar collapses and there is no more cash, just paper I.O.U's. No one will be able to get a loan, even if already approved and already have the paperwork done. This seems to trigger some kind of religious revival because people seek comfort from God in all of this suffering.

Harold Eatmon (1990)
I had a vision of the stock market soar and then crash. After the crash, many big business corporations and private parties bought up stocks because of the low cost to buy in. Then I saw the market begin to climb again in a short period of time. Then it crashed again bringing tremendous loss, ruin and devastation to all who bought in the first time. This is what I have labeled "Two Black Mondays" . The time period between the Two Black Mondays was very close together. I could not tell exactly how close. There are some tell tale signs indicating the season and the setting. I saw the season to be when *"the leaves fall to the ground"* then the first crash would occur."Like Joseph in Genesis, I believe America will have fat years of financial blessing. I also believe there are coming lean years of financial difficulty for America. [Note: while this doesn't give an exact date, this prophecy was dead on accurate- the markets crashed -777 points on MONDAY 9/29/08, roughly 1 week into the FALL (leaves fall to the ground.) The markets then rebounded OVER A SHORT PERIOD OF TIME (from April 2009 to October 2009 the markets rallied nearly 4000 points!) and everyone bought back in. According to this prophecy, the next huge crash will happen on a Monday. Eatmon even accurately predicted the coming 'fat years' and the now present 'lean years']

Garret Crawford (5/28/09)
The first thing I recall in this dream is I was lying in bed, reminiscing about a strange dream I had seen. In this dream, I had met a young, red-haired man who was the nephew of author Tom Clancy. After getting out of bed, it had crossed my mind that I had to go over to a friend of mine's home for something and he was expecting me. I got in my car and drove over to his home; I walked up the step and opened the door. As I swung the door open, I saw two men whom I had never met before, sitting in my friend`s living room. One was a heavy-set man and the other was a younger fellow with red hair. The red-haired man was setting up a camera and tripod, as if he was going to film me, like in a documentary. At this point, I knew that he was in fact Tom Clancy`s nephew. I walked over to him and asked `Do you believe in prophetic dreams?` He replied with a yes. I then told him that the Lord revealed to me this morning that I would be meeting him. After this encounter I found that the two men were impressed with this miracle and that allowed me to be able to talk with them about many things. After some conversation and time had passed, one of the men, either my friend or the heavy-set companion of the nephew, said to me, `You know, I never forgot what you said about the market crashing; I still think about that.` (I guess he was referring to the dream I had about a year ago where I feel the Lord showed me two crashes of the market.) `Yesterday the market dropped like a hundred-and-something points; I think you were right on.` (I had the dream on the 28th, so if the dream was correct there should have been a loss of over 100 points on the 27th. I looked it up and found the market closed down 173 points on the 27th. So maybe this was just a sign that an all-knowing intelligence was at work in my dream.) I solemnly responded to him that that wasn`˜t the crash. I told him to expect something closer to the market index crashing to 5000 (or losing 5000 points, I can`t remember exactly. I never perceived in the dream that this one-day loss of 100+ points would directly precede the greater crash, but that it would be a way down the road. I think the man's comment represents the worldly, hopeful belief that the worst is over or that only a little pain will be felt. But to the lost's surprise, the crash that is soon to come will be beyond their worst fears.)

Pastor Leo Strathman
Yes, My Children, Judgment is coming this year. It is coming worse than it has ever been before. My Children, My Children, My Children, Look to Me for the things coming upon the world. It is going to scare men's hearts, put fear in men's hearts, and men are going to die for fear. Those who are NOT Trusting in Me. Those who are NOT Trusting in My Word. NOT Trusting in Me and My Word. NOT Looking To Me. Yes, My Children, this world is going to turn upside down. Your world, your world, is going to turn upside down, the likes of which you have not ever seen. Judgment is coming. It is at the door and it will be this year, says the Lord. It will multiply. It will increase. It will get worse and worse and worse. Yes, My Children, your finances will get worse, food will get higher, gasoline will go higher. Everything that you have to purchase will go higher and the money will be worth less. My Children, there is a great famine coming on the land, mostly it is created. It is a created famine. But, My Children, you must Look To Me...

Robert Holmes
On October 21, 2008 the Lord said to me (of the global economic crisis): `It will be a dead cat bounce,` meaning it will go down fast, bounce back then fall again. In April 2009, after some growth had taken place, the Lord affirmed, `Don`t get too excited about the market news, it will crash again.` In September 2009, He commented on stock market prices (as measured by the Dow Jones), `It will be a W curve`. Though it will improve through to mid 2010, it will crash again under `the weight of debt`.

Deryn Johnstone (1/25/2010)
"We will experience a worldwide economic upheaval resulting in the collapse of our monetary system. This economic crash will come suddenly, sending shockwaves throughout the world. It will be the opening of the establishment of a new one-world monetary system under a new one-world government. When this worldwide economic disaster hits, it will be unlike anything we have ever experienced. The world will be thrown into a state of shock. Panic and fear will grip the hearts of the people everywhere. They will be confused, not knowing what to do or where to go. During this time, the people of God will be clearly distinguished from the world by God's supernatural provision in their lives. It will not be the absence of problems and adversity among God's people that will be a witness to the world, but in the midst of this financial crisis the world will see God's strong arm of provision for His people.

Michael Johnson
Let me preface my words tonight by saying that even though we see fearful things coming to this nation and this planet, we must realize and recognize that `God has not given us a spirit of fear. This year I see things happening very quickly-an acceleration of things in the natural and the supernatural...I see false prophets, self appointed and self seeking-arising in this nation, speaking words of peace and prosperity-prophesying for money and gain-they will receive great notoriety, but a sudden turn of events will expose their greed and deception...I see the collapse of our economy bringing about a new monetary system, a new form of government and a new national religion...I see Americans continuing to be lulled into a false sense of security because of continued forecasts of a booming economy. However, I see this brief economic spurt giving Christians and churches a short window of opportunity to get their houses in order. However, I see this window of opportunity closing. I see us waking up one morning to the announcement that our nation is broke and that drastic measures, which have been in motion for some time-must now be taken. The collapse of our economy is spoken of in the book of Lamentations... Now the good news: I see the church, responding to the condition of our nation, awaking out of its slumber and sleep, and going forth as a might army. I see the church coming out of hiding, falling on its face!

Robert L
What is going to happen this year? 1. The stock market in America will not only crash, it will no longer exist 2. The President of the USA will foolishly bring sanctions on the nation of Israel 3. There will be a great earthquake that stretches from the Atlantic Ocean to the Pacific 4. The greatest fear will be none of these things; it will be the lack of food men will fear most. The sad truth is that even after all these things have taken place in 2010, most will not repent and turn back to God, most will become even more corrupt as we speedily rush toward the end of time.

Samuel Garcia (11/04/07)
Last night/this morning I had a dream that I had in two parts. The first part I awoke and asked THE LORD to give me further understanding of and then I went back to sleep and THE LORD gave me the second part of the dream. In the first part of the dream I felt like I had just left church, it being Sunday and I was headed towards the store I work in which is a check cashing store; as I approached it I noticed that it was closed and that alarmed me because it was open when I left to go to church in the morning, so that concerned me but I did not see my bosses car so I decided to call her but I got a recorded message from the operator about the phone being out of service or something like that. I also noticed that I did not see any cars driving in the streets and it seemed like it was around Christmas time; then I woke up. The second part of the dream started exactly in the same location the first part started -- in back of the store; then I walked towards the front of the store and I noticed that the store was closed again but then I looked a second time and the store had become a ONE DOLLAR BARGAIN STORE but it seemed like it had shifted. The store had shifted and it was in a location where a massage parlor currently is. So I went inside and asked what appeared to be a security guard what had happened to the people that owned the check cashing store and the guard assured me that that family was well and in good health. I did notice that inside the DOLLAR STORE the items were in a open box and low quality and they seemed to be Christmas accessories. I stepped out of the store and felt that I was in the future and it was anywhere between 2008 and 2010 and I told the guard that I was aware that I was in a dream but as I said that I felt myself leaving the dream; then I woke up. I felt that the dream basically was saying that a MAJOR economic collapse was going to happen in this country due to the fact that I did not see any cars driving in the street and that the check cashing store which requires you to have large sums of money has become a ONE DOLLAR STORE with poor quality items.

Dennis Cramer
DREAMS! 2010 will be a year where ALL Believers will see a dramatic increase in the number of spiritual dreams they experience. Seventy-five percent of them will be warnings. Take heed.

Elaine Tavolacci (January 2010)
Yes things in the natural will continue to grow darker but don`t look to the media keep your eyes on Jesus. He is your source and He is your deliverer. Yes there is a changing of the guard. Some of you are confused because you have also been hearing many prophetic words from credible prophetic voices that seem to be contrary to one another. We are hearing that we are coming into a season of a great move of the Holy Spirit but we are also hearing that we are coming into the worst days in history. Who are we to believe? Both are accurate. It is like looking into a diamond. The Lord is showing some people one facet of the diamond who are seeing the brilliance of it, some are seeing the transparency of it but there are others that are looking into the other side and seeing the flaws. As you stay connected to the giver of life you will be safe in the secret place and experience the awe of God in your life in 2010.

Gene Redlin
You hear in media that things will be OK. Things are recovering. Strained optimism is everywhere. They are nothing more than signs in the tea leaves. False hope is rebounding everywhere. Even those who are MY Prophets are saying things will be fine. That is true, but not for all people and not for a long time...The only thing supporting this economy is hope in government, hope in systems, hope in hope. Until Hope in ME is restored there is no hope. Only hopelessness. The greed and excess that caused Baal to fall has not yet been removed from a system with evil as it's intention. This is more than just a floating higher balloon driven by so much hot air, this is an illusion. People have become prisoners of hope. There will be one more drastic downturn soon. Efforts will be made to hold this off until after the political season. It will only make things worse. Corruption to be removed is at the heart of this judgment. Once this downturn is completed it will be a very long time until recovery can take place. Well into the decade to come. 2015. Oil prices will soar, for a short time. Gold will go up in value for a very short time, housing will not recover for a very long time, Unemployment is going to stay very high. This will be a time for you to learn to TRUST in MY provision. For some it will be ravens by the Brook. For others a cruz of oil and a little meal. Fear not. It's all part of an adjustment that must come. It will mean a currency devaluation that will stagger many. Wealth will be destroyed. It will mean that many will come to the end of themselves. True wealth will be found, and it's not in worldly systems. It's time for truth and justice to be restored. The old systems have become a false God. It was essential that this idol come down. I will have no other God's before ME. I stand above any man's market or economy. When I call a famine or prosperity I call for it and it will happen. Be certain, I will take away anything that tries to substitute itself for dependence on ME. Particularly those called by my name must repent of dependence on the world for their provision as if they have forgotten my name as Jehovah Jireh. I am the Lord your God, there is no other. There will be more change in this decade then you ever imagined. Restoration of many things. Tearing down of others. Seeming disasters beyond understanding. Amazing miracles. Discoveries. Peace. War. Resolution. Birth. Death. Pain. Joy. Challenges to everything you believe. Then affirmation of that Faith you hold so dear. You will be refined as by fire. And it has ever been thus. And will be. The end of 2010 will be the beginning of these things.

13
Money & Markets / Over-Arching Sovereign Debt Crisis
« on: March 05, 2010, 05:44:35 PM »
Over-Arching Sovereign Debt Crisis
by Jim Willie, CB. Editor, Hat Trick Letter | February 23, 2010
Print
Neither the US financial press nor the US bank leaders take the sovereign debt crisis seriously. Even the USCongress seems totally unaware of the growing global intolerance for government debt out of control. The issue is rollover of short-term debt, size of the overall debt burden, borrowing costs to sustain the debt, annual deficits that accumulate further debt, and size of debt versus economic size. The United States projects a certain degree of arrogance that foreigner must continue to finance the USGovt debt at a time when the evidence gathers on loud suspicious activity in the USTreasury auctions. The US travels down a road to debt default also, as the mask of corrupt USTBond management is removed. The plight of Europe will strike the United States and United Kingdom, as contagion is ripe. The claim of containment incites laughter. The Euro currency has finally begun to stabilize, which will make all the more apparent a global bull market in the Gold price. The Gold price in almost every major currency is rising. In the US$ it will be last.

USTREASURY AUCTION BID RESULTS

Analysts have noticed the drop-off in Indirect Bids, which means central banks participate less. Analysts have noticed the lack of identification of Direct Bids, which means the USGovt is lying through their teeth as they monetize the debt. Analysts have noticed the new ledger item called Household as bidder, which reeks of accounting fraud in creation of a catch-all category. The USFed and USDept Treasury can no longer hide their enormous monetization of USGovt debt. Some reports mention that bond professionals are extremely anxious about the results of recent USTreasury auction. A huge jump in the Direct bidders took 24% of the auction supply. The apparent lack of transparency behind this group has increased speculation that the USFed could be directly buying its own auctions, so as to prevent both an auction failure and a sudden rise in yields. Safe haven, my foot!

Indirect bidders is widely viewed as the most important category. It defines the success or failure of the auction, since foreign central banks are entered from thisategory. A 30-year bond auction came in with a pathetic 28% bid as Indirect, far below the 36 to 40% levels seen across year 2009. This is worth watching for establishment of trend before billboard alarms (AMBER ALERT) are made. The Direct bid ratio (in yellow) looks fishy. The USFed & USDept Treasury would use this category to attempt to hide the elephant in the living room, calling it an extra oversized sofa. Failure to identify these mythical bidders will fuel speculation of devious concealment of monetization, far greater than the official Quantitative Easing programs that are heralded as coming to an end in mid-March. The ugliest deception is the usage of the Household category to pretend that Fannie Mae and its fat gang of sewage treatment managers are actually buying USTreasurys. Press networks are oblivious to the con game. See past Hat Trick Letter member reports for details, fully cited and analyzed.



A napkin argument is relevant here. The foreign accumulation of new USTreasury debt is tiny compared to what USTBond debt is issued and auctioned. Nobody seems to be capable of primary school mathematics, once graduation to Wall Street and USGovt service is achieved. If new debt is five times what foreigners are buying, then after factoring the domestic bond fund absence like PIMCO (they hate bonds nowadays), one can quickly conclude that the USFed/Treasury tarnished tagteam are monetizing 60% to 80% of all new debt issuance. Isolation is here, but must be more fully recognized.

USTREASURY DEFAULT RUMBLINGS
The Greek tragedy has an American conclusion. It is written in stone, but US leaders and the US population are blinded by a generation of dominance and privilege, turned hegemony. Like a tsunami, the tragedy will strike the WashingtonDC shores and rip its financial seawalls. A sequence is at work, with Southern Europe next in line, then England, finally the United States. The financial foundation data demands it. The denials ignore reality. The isolation of the USGovt debt finance machinery, and exposure of its abused Printing Pre$$ assure a default event, or at least a path to such a default. It will probably not be recognized any more than the 911 coup d'etat over eight years ago by the security establishment.

Little do the US bankers and leaders seem aware, but the Greek crisis will circle the globe and strike America. The initial gong was Dubai, actually with a prelude in Iceland that smacked both British and Dutch banks. Dubai hit home, since it meant the credit crisis had struck again, the problem not resolved. In fact, nothing has been resolved, as all things debt related are greater in magnitude and suffering from worse leverage. The PIIGS nations of Europe are all soon to be swept away and forced to suffer the shame of debt default, a return to former domestic currencies, and steep currency devaluations, amidst considerable contract adjustments. The sovereign debt crisis will be be confined to the smaller European nations. It will spread to the United Kingdom and the United States, the greatest debt and bond offenders. They have abused debt in sustenance of financial asset bubbles kept aloft in grandiose juggling acts. They have abused debt to preserve relics of an empire long faded. What we see is a fiscal crisis of the Western world. The faulty foundation for the Euro currency and EU economies is the crux of the current problem under the microscope, since no mechanism exists for a bailout of any government by the European Union, other member states, or the European Central Bank. Short of withdrawing (or being expelled) from the European Union, the only options for Greece are to reduce the deficit, default on government debt, or receive a bailout. No decision will be quickly or easily reached. As stated before, German leaders will pretend to offer assistance, attach difficult conditions for aid, and walk away when not met. They want expulsion and an end to $300 billion in annual welfare for wrecked nations carried in the South, a grand impairment to the German savings and standard of living.

The flaws of chronic government deficits, expanding government functions, and fractional banking have resulted in what Niall Ferguson of the Financial Times calls the fractal geometry of debt. Most Western economies are vulnerable, including the largest, as contagion is ripe. The Keynesian approach has very possibly run its course, without recognition by those who continue to pull its debt levers and expect similar effects as seen 20 years ago. For two years, the Hat Trick Letter has claimed a painful systemic cycle is in progress in a global restructure of monetary and banking systems. Governments find themselves helpless to promote growth, as the hallowed multipliers are out of gear altogether. Stimulus rings hollow. Globalization has rendered the older industrialized economies vulnerable, with their higher wages, pollution control costs, and regulatory burdens. The increasingly common practice of pushing sovereign debt to short-term scheduled rollovers has begun to backfire. Clinton & Rubin started that trend, now in backfire mode.

Debt default, just like for businesses, tends to occur when debt rollover cannot be refinanced. As the crisis intensifies inside Europe, the USDollar rises. Funds are in migration away from the Euro currency wherever possible. The rising US$ exchange rate actually weakens the prospects for a USEconomic recovery, where re-industrialization is urgently needed. That is correct. The US must rebuild its factories and promote export businesses, a reform nobody in the USCongress or Wall Street dare mention. The higher US$ exchange rates translate to a double edged sword, higher export prices from the US producers and higher cost structures to the foreign economies. See the commodity index in Euro terms. The bankers and politicians in Europe must halt the Euro decline, or else face rising systemic costs across the European Union economy. The stimulus for exporters with a lower Euro has a backfire to control, with costs. Their price inflation at all levels is rising fast. Watch the Euro stabilize.



RECOGNITION OF HIGH US DEBT RISK
USGovt debt is a disaster, not the least a safe haven. The new 2010 budget is projected even by White House estimates to exceed 100% of GDP within two years. The long-run projections of the US Congressional Budget Office suggest that the US will never again run a balanced budget, as in NEVER. Both this year and last year, the federal deficit is near 10% of GDP, the size of the national economy and new standard measure of limited tolerance. Heavy debt burdens, in addition to diverse insolvency (in households, federal, banks, and trade) create a tremendous drag on economic growth. Two main forces prevent higher USTreasury Bond yields. Purchases of USTreasury and USAgency Mortgage Bonds by the USFed and USDept Treasury in major monetization operations is the domestic solution. Purchases of the same bonds by Chinese, Japanese, British, and OPEC nations is the foreign solution. With the mid-March plan to halt the USGovt official Quantitative Easing program, and the outright sales by the Chinese of USTreasurys, the ISOLATION HAS BEGUN. The risk stands squarely with the USDollar. JPMorgan will secretly continue to buy USTBonds and control long-term rates the usual way, by force, by usage of Interest Rate Swaps, their secret weapon. Not only USTreasurys in a bubble, they are the most corrupted market.

Last week Moodys Investors Service warned that the Aaa credit rating of the USGovt should not be taken for granted. The premier rating will come under pressure in the future unless additional measures are taken to reduce chronic budget deficits. Niall Ferguson wonders about the clarion call by Larry Summers, who asked the quintessential question before he returned to work for the Obama Admin. Summers appropriately asked, "How long can the world's biggest borrower remain the world's biggest power?" Upon reflection, the sovereign debt crisis of the West has begun in Greece, the birthplace of Western civilization. Soon it will traverse the channel to Great Britain, the home of the last great Empire. The crisis will reach the last bastion of Western power, on the other side of the Atlantic. The United States will face a steady stream of powerful shocks to its sprawling Empire, supported in recent years by deep bond fraud and military aggression, not a good combination. The global reserve currency will not prevent the credit crisis from hitting USGovt debt. My forecast is for a technical USTreasury default, without full recoginition, even while the USGovt is given a triple-A rating out of largesse mixed with intimidation. Refer to coerced debt forgiveness.

Taleb advises a short of USTreasurys. He points to a broken USGovt fiscal condition, reckless bank leadership, and a situation actually worse than a year ago (not better). Nassim Taleb, author of "The Black Swan" advises the entire planet earth should invest against the USTreasury Bonds, and to anticipate their decline. He was specific, that as long as Bernanke is USFed Chairman and Lawrence Summers is White House economic adviser, the Obama Admin will conduct policy in a manner to bring a path to ruin for USTreasurys. In the last two years, the USFed and USGovt have lent, spent, or guaranteed $9.66 trillion to lift the USEconomy from the worst recession since the Great Depression, according to data compiled by Bloomberg. The results have hardly even achieved stability. Conditions have deteriorated enough to result in annual $1.5 trillion budget deficits, mostly inherited from the past administration. Taleb said, `Deficits are like putting dynamite in the hands of children. They can get out of control very quickly. The problem we have in the United States, the level of debt is still very high and being converted to government debt. We are worse off today than we were last year. In the United States and in Europe, you have fewer people employed and a larger amount of debt. Democracies cannot handle austerity measures very well. We are going to have a severe problem." He referred to cutting USGovt spending, without mention of the endless wars and grandiose siphons of funds by Wall Street and the Pentagon. Fiscal spending cuts are to occur in the Second Half, as in year 2012.

The litmus tests of USTreasury deep instability are A) the recognized monetization of USGovt debt, B) the size of the USGovt deficits, and C) the inability for the USEconomy to recover from insolvency. All three tests are in the process of failing here and now, raising attention for eventual default. As a result, Moodys issued a statement on the USGovt debt rating. It should be junk bond B level grade. Some claim that none of the major debt rating agencies will downgrade the USGovt debt. It could happen. Moodys stated, "The ratios of general government debt to GDP and to revenue are deteriorating sharply, and after the crisis they are likely to be higher than the ratios of other Aaa rated countries. If the current upward trend in government debt were to continue and become irreversible, the rating could come under downward pressure. The trend and the outlook would be more important than any particular level of debt." The more likely outcome is a serious decline in the USDollar after a more clear certain path for Europe. A repaired, reformed, renewed smaller Euro currency would be the potential death knell for the USDollar. The European continent will consolidate, an event certain to return attention to crippled USGovt and USEconomic financial conditions.

EURO CURRENCY UNCERTAINTY
The continent of Europe has never been more uncertain in its future in at least three decades. The European Monetary Union had a flawed plan for shared common currency usage, whose failure was forecasted (not by the Jackass) by critics to its architecture upon its birth in 1989. In the last several weeks, the plight of the deeply indebted and broken insolvent Southern European nations has dragged down the Euro currency. Uncertainty abounds on eventual debt rescue for Greece. For hereditary genetic reasons, for national welfare backlash reasons, for systemic design deficiency reasons, the Euro will not face ruin, but instead face consolidation. Germany leads the process, and will force out Greece, then Italy, later Spain & Portugal. Their nationally marked Euro Bonds have been trading at non-German levels for over two years. Such is a clear indication of multiple Euros masquerading as a common currency, inviting arbitrage and breakdown.

The Euro currency chart shows signs of stability. The stochastix have been oversold for two solid months. The price action in the last two weeks seems to loudly indicate stability in the Doji Stars, marked by open and close nearly equal, but with noisy intraweek high and low. The technical traders in the vast FOREX pits have started to cover their massive shorts. The attempt to establish the Euro as the basis of a new carry trade will be interrupted by the Germans, who will let Athens go. The Greeks will not be able to make interest payments. The nasty fact of life is that Greek Govt debt is scattered all over banks in Germany, France, England, and Switzerland. So expect powerful ripple effects to debt default and bond writedowns. A key to watch is riots. The Gold price will rise in US$ terms when the Euro shows signs of a leveling process. One warning signal to keep an eye on is the 20-week moving average crossover of the 50-week moving average. The Doji Stars oppose the MA Crossover, the former hinting of a rally upward, the latter hinting of a continued leg down to the 130 level.



A predictable aberration is evident. Whenever the USTreasurys look like they are on the brink of a meaningful breakdown, a Stock decline occurs, and funds flow heavily into USTreasurys. Last week, the Gold/Euro price chart showed an early breakout. The Gold price in Euro terms should be interrupted when the Euro achieves some stability. The beginning of a rally in Gold in all currencies seems underway, a movement kicked off by the European debt problems. The Gold breakout in Euro terms is possibly soon to be joined by breakouts of Gold in British Pounds, Gold in Japanese Yen, and Gold in Swiss Francs, with the Gold breakout in USDollars last. When the surge is universal, Gold will be perceived as a currency in full direct competition with the tainted fiat paper currencies! The critical lack of gold bullion in the London metals exchange sets the stage for numerous events shrouded in breakdown, and a broadly rising Gold price. Do not be fooled by a correction in the Gold price in US$ terms. It is rising across foreign currencies, in an environment of extreme gold bullion shortage. The end of the Q1 gold price correction is near. Many investors sense nothing happening in the gold arena. Not true! The entire foundational structures for the fiat monetary system are crumbling under the financial market floors. The support pillars are fragile and weak if not vanished and missing. The Powerz keep the game going mainly to perpetuate their trillion$ frauds further. Reform and remedy is not their plan. The objective is theft and pillage to the end.

VULNERABLE EUROPEAN BANKS
A Pan-European sovereign debt crisis is unfolding, appreciated in Europe, minimized in the United States. After removing mountains of ruined bonds from private banks, government debt risk is extremely acute. A trade took place, transferring risk from big banks to the government balance sheets. In the process, sovereign debt has weakened dangerously even as the debt problem has been amplified. The implicit leverage has effective been increased, but without benefit of the natural firewalls installed at financial institutions. Furthermore, and worse, European banks have an order of magnitude more assets than their economic size. A default cascade comes, as leverage is out of control. A run on private banks is assured. For at least Europe, it is game over as debt is not resolvable and tolerance is nil. The Greek chapter might be a diversion from the core problem soon to erupt. Excess liabilities and leverage make for a witch's brew. The de-leverage process will knock many structures to the ground. Europe has a recent history replete with riots in urban streets, more than anywhere in the western world. Expect riots across all Southern Europe. Instead of a domino effect like what was feared by the Lehman collapse, a domino effect is at risk of slamming sovereign debt on a global basis. The process is beginning. See the mammoth private bank assets, which easily eclipse their national economic sizes. Leverage is enormous in Europe, just like in the United States and England. Notice several Greek banks with adjusted leverage of nearly 90 times, whose assets are nearly 30% of the Greek GDP. Thanks to Reggie Middleton for an excellent graph, and an excellent point to make.



DOOMED SOVEREIGN ALCHEMY
A leading bank analyst believes that ultimately, sovereign alchemy will fail. Egon von Greyerz is manager of the Matterhorn Asset Mgmt fund. He said, "When we look at the world economy today, wherever we turn, we see a wall of risk. And sadly this is an insurmountable wall of risk with risks that are totally unprecedented in history. There has never before been a potentially catastrophic combination of so many virtually bankrupt major sovereign states (US, UK, Spain, Italy Greece, Japan, and many more) and a financial system which is bankrupt but is temporarily kept alive with phony valuations and unlimited money printing. But governments will soon realise that they are not alchemists who can turn printed paper into gold. The consequences of the global financial crisis are potentially catastrophic." He describes an era coming to a close. The era was identified by a grand illusion, that governments through their central bankers could create prosperity from virtually unlimited money creation, vast expansion of debt, and migration away from industry. It will end in disaster. See "Sovereign Alchemy Will Fail" on the Matterhorn website (CLICK HERE).

Von Greyerz makes several key points. Investors have ignored the risks of excessive debt. They have bid up the stock and bond markets, even reduced the important spreads in bonds versus government type. He wrote, "All the so-called experts have declared that it is impossible to identify the problems in the financial system in advance. For example, Greenspan, Bernanke, Geithner, other central bankers, and government officials as well as Blankfein of Goldman Sachs and many bank heads have all stated that they could not see it coming. Either they are lying or they are stupid. Sadly, it is most likely the former... The plight of the US states is just as bad. Out of 50 states, only 4 are expected to have a balanced budget in 2010. Up to 40 states, including California, New York, Florida, Illinois, Michigan, Ohio, North Carolina, and New Jersey, are virtually bankrupt. It took almost 200 years for US Federal debt to reach $1 trillion which it did in 1981. In 2009 the debt increased by $1.9 trillion in just that year to $ 12.4 trillion. In the next ten years the US debt is forecast to reach $ 25 trillion." Debt is accelerating, typical of any bubble. Its finance will be impossible.

The policy choices are all bad, since bankers and politicians (owned by bankers) have backed themselves into the corner. What remains are 'Lose-Lose Options' clearly. Governments must continue to borrow and print money or they can reduce government spending. Each choice leads to ruin. Proposed austerity programs forced upon European nations are better described as Poison Pills, the outcome of which is a death spiral in debts and economic recessions. The travesty is seen with imposed national deficits forced upon Greece, and soon Italy & Spain, below the 3% level. Not one single country within the EU is below the 3% limit versus GDP, not even Germany. And the effect of the austerity programmes will lead to such a major contraction of the economies that tax revenues will collapse, further exacerbating the plight of these countries.

The alternative for governments, within the crumbling European Union and the deteriorating United States, is to print or borrow more money. Against a backdrop of rising deficits, rising unemployment, and persistently insolvent banking systems, they have no choice. The end game will be paved by hyper-inflation, worse than even what is seen today. Von Greyerz wrote, "Both the UK and the US are set upon a course of self-destruction. We will see trillions of pounds and dollars printed in the next few years. But the only buyers of these government securities will be the US and UK governments. The rest of the world will dump their holdings which will result in both the dollar and the pound dropping precipitously and interest rates rising substantially.. The effect of a collapsing currency will be a hyper-inflationary depression. This is the inevitable outcome for the UK and US, and there is sadly no action that the governments of these countries can take to alter this course."

14
General / The Jews Are Not A Race By Dr. Alfred M. Lilienthal
« on: February 08, 2010, 03:25:08 PM »
Dr. Alfred M. Lilienthal, historian, journalist and lecturer, is a graduate of Cornell University and Columbia Law School. During the Second World War, he served with the US Army in the Middle East. He later served with the Department of State, and as a consultant to the American delegation at the organising meeting of the United Nations in San Francisco.

Since 1947, he has been at the forefront in the struggle for a balanced US policy in the Middle East. He is the author of several acclaimed books on the Middle East, including The Zionist Connection. He now lives in Washington, DC.

On December 18, 1993 Dr. Lilienthal celebrated both his 80th birthday and the 40th anniversary of his first book, What Price 'Israel'? Dr Lilienthal, who is a courageous anti-Zionist Jew, was joined by more than 200 guests who travelled from all over the United States to attend. The following excerpt is taken from this first book, What Price "Israel" ?


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Today, to trace anyone's descent to ancient Palestine would be a genealogical impossibility; and to presume, axiomatically, such a descent for Jews, alone among all human groups, is an assumption of purely fictional significance. Most everybody in the Western world could stake out some claim of Palestinian descent if genealogical records could be established for two-thousand years. And there are, indeed, people who, though not by the widest stretch of imagination Jewish, proudly make that very claim: some of the oldest of the South's aristocratic families play a game of comparing whose lineage goes farther back into 'Israel'. No one knows what happened to the Ten Lost Tribes of 'Israel', but to speculate on who might be who is a favored Anglo-Saxon pastime, and Queen Victoria belonged to an 'Israelite' Society that traced the ancestry of its membership back to those lost tribes.

Twelve tribes started in Canaan about thirty-five centuries ago; and not only that ten of them disappeared - more than half of the members of the remaining two tribes never returned from their "exile" in Babylon. How then, can anybody claim to descend directly from that relatively small community which inhabited the Holy Land at the time of Abraham's Covenant with God ?

The Jewish racial myth flows from the fact that the words Hebrew, 'Israelite', Jew, Judaism, and the Jewish people have been used synonymously to suggest a historic continuity. But this is a misuse. These words refer to different groups of people with varying ways of life in different periods in history. Hebrew is a term correctly applied to the period from the beginning of Biblical history to the settling in Canaan. 'Israelite' refers correctly to the members of the twelve tribes of 'Israel'. The name Yehudi or Jew is used in the Old Testament to designate members of the tribe of Judah, descendants of the fourth son of Jacob, as well as to denote citizens of the Kingdom of Judah, particularly at the time of Jeremiah and under the Persian occupation. Centuries later, the same word came to be applied to anyone, no matter of what origin, whose religion was Judaism.

The descriptive name Judaism was never heard by the Hebrews or 'Israelites'; it appears only with Christianity. Flavius Josephus was one of the first to use the name in his recital of the war with the Romans to connote a totality of beliefs, moral commandments, religious practices and ceremonial institutions of Galilee which he believed superior to rival Hellenism. When the word Judaism was born, there was no longer a Hebrew-'Israelite' state. The people who embraced the creed of Judaism were already mixed of many races and strains; and this diversification was rapidly growing...

Perhaps the most significant mass conversion to the Judaic faith occurred in Europe, in the 8th century A.D., and that story of the Khazars (Turko-Finnish people) is quite pertinent to the establishment of the modern State of 'Israel'. This partly nomadic people, probably related to the Volga Bulgars, first appeared in Trans-Caucasia in the second century. They settled in what is now Southern Russia, between the Volga and the Don, and then spread to the shores of the Black, Caspian and Azov seas. The Kingdom of Khazaria, ruled by a khagan or khakan fell to Attila the Hun in 448, and to the Muslims in 737. In between, the Khazars ruled over part of the Bulgarians, conquered the Crimea, and stretched their kingdom over the Caucasus farther to the northwest to include Kiev, and eastwards to Derbend. Annual tributes were levied on the Russian Slavonians of Kiev. The city of Kiev was probably built by the Khazars. There were Jews in the city and the surrounding area before the Russian Empire was founded by the Varangians whom the Scandinavian warriors sometimes called the Russ or Ross (circa 855-863).

The influence of the Khazars extended into what is now Hungary and Roumania. Today, the villages of Kozarvar and Kozard in Transylvania bear testimony to the penetration of the Khazars who, with the Magyars, then proceeded into present-day Hungary. The size and power of the Kingdom of Khazaria is indicated by the act that it sent an army of 40,000 soldiers (in 626-627) to help Heraclius of the Byzantines to conquer the Persians. The Jewish Encyclopedia proudly refers to Khazaria as having had a "well constituted and tolerant government, a flourishing trade and a well disciplined army."

Jews who had been banished from Constantinople by the Byzantine ruler, Leo III, found a home amongst these heretofore pagan Khazars and, in competition with Mohammedan and Christian missionaries, won them over to the Judaic faith. Bulan, the ruler of Khazaria, became converted to Judaism around 740 A.D. His nobles and, somewhat later, his people followed suit. Some details of these events are contained in letters exchanged between Khagan Joseph of Khazaria and R. Hasdai Ibn Shaprut of Cordova, doctor and quasi foreign minister to Sultan Abd al-Rahman, the Caliph of Spain. This correspondence (around 936-950) was first published in 1577 to prove that the Jews still had a country of their own - namely, the Kingdom of Khazaria. Judah Halevi knew of the letters even in 1140. Their authenticity has since been established beyond doubt.

According to these Hasdai-Joseph letters, Khagan Bulan decided one day: "Paganism is useless. It is shameful for us to be pagans. Let us adopt one of the heavenly religions, Christianity, Judaism or Islam." And Bulan summoned three priests representing the three religions and had them dispute their creeds before him. But, no priest could convince the others, or the sovereign, that his religion was the best. So the ruler spoke to each of them separately. He asked the Christian priest: "If you were not a Christian or had to give up Christianity, which would you prefer - Islam or Judaism?" The priest said: "If I were to give up Christianity, I would become a Jew." Bulan then asked the follower of Islam the same question, and the Moslem also chose Judaism. This is how Bulan came to choose Judaism for himself and the people of Khazaria in the seventh century A.D., and thereafter the Khazars (sometimes spelled Chazars and Khozars) lived according to Judaic laws.

Under the rule of Obadiah, Judaism gained further strength in Khazaria. Synagogues and schools were built to give instruction in the Bible and the Talmud. As Professor Graetz notes in his History of the Jews, "A successor of Bulan who bore the Hebrew name of Obadiah was the first to make serious efforts to further the Jewish religion. He invited Jewish sages to settle in his dominions, rewarded them royally... and introduced a divine service modeled on the ancient communities. After Obadiah came a long series of Jewish Chagans (Khagans), for according to a fundamental law of the state only Jewish rulers were permitted to ascend the throne." Khazar traders brought not only silks and carpets of Persia and the Near East but also their Judaic faith to the banks of the Vistula and the Volga. But the Kingdom of Khazaria was invaded by the Russians, and Itil, its great capital, fell to Sweatoslav of Kiev in 969. The Byzantines had become afraid and envious of the Khazars and, in a joint expedition with the Russians, conquered the Crimean portion of Khazaria in 1016. (Crimea was known as "Chazaria" until the 13th century). The Khazarian Jews were scattered throughout what is now Russia and Eastern Europe. Some were taken North where they joined the established Jewish community of Kiev.

Others returned to the Caucasus. Many Khazars remarried in the Crimea and in Hungary. The Cagh Chafut, or "mountain Jews," in the Caucasus and the Hebraile Jews of Georgia are their descendants. These "Ashkenazim Jews" (as Jews of Eastern Europe are called), whose numbers were swelled by Jews who fled from Germany at the time of the Crusades and during the Black Death, have little or no trace of Semitic blood.

That the Khazars are the lineal ancestors of Eastern European Jewry is a historical fact. Jewish historians and religious text books acknowledge the fact, though the propagandists of Jewish nationalism belittle it as pro-Arab propaganda. Somewhat ironically, Volume IV of the Jewish Encyclopedia - because this publication spells Khazars with a "C" instead of a "K" - is titled "Chazars to Dreyfus": and it was the Dreyfus trial, as interpreted by Theodor Herzl, that made the modern Jewish Khazars of Russia forget their descent from converts to Judaism and accept anti-Semitism as proof of their Palestinian origin.

For all that anthropologists know, Hitler's ancestry might go back to one of the ten Lost Tribes of "Israel"; while Weizmann may be a descendant of the Khazars, the converts to Judaism who were in no anthropological respect related to Palestine. The home to which Weizmann, Silver and so many other Ashkenazim Zionists have yearned to return has most likely never been theirs. "Here's a paradox, a paradox, a most ingenious paradox": in anthropological fact, many Christians may have much more Hebrew-"Israelite" blood in their veins than most of their Jewish neighbors.

Race can play funny tricks on people who make that concept the basis for their likes and dislikes. Race-obsessed people can find themselves hating people who, in fact, may be their own racial kith and kin.

 

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