International Forecaster Weekly

Dow Gets A Brush Cut

Dow shaved rudely, Real Estate losses taking markets down, unemployment a 5 year high, markets still acting irrationally, physical gold behavior due to comex influence, check what the Yen and the Euro are doing

Bob Chapman | September 6, 2008

This past Thursday, when the Dow received a 344+ point haircut, or should we call it a brush-cut, some in the media wondered why this huge loss had occurred? Well, pardon us, but could the root cause be that the doomed US financial system has now moved past the event horizon of a super-massive financial black hole, which was recently created by the gravitational collapse of the Subprime Death-Star's constituent mass of fraud and deceit when its internal furnace, fueled by the fusion of toxic waste bond tranches into sucker-dupe real estate derivatives, finally burned out, thanks to the advice of analyst Meredith Whitney at Oppenheimer & Co.? Aided by the privately-owned Fed and our corrupt Treasury, which want to bail out all the Wall Street fraudsters, as well as all the foreign currency manipulators who are fat with the dollars they robbed from us through free trade and globalization, at taxpayer expense (of course), while simultaneously inflating us into oblivion with an ocean of money and credit created out of nothing, our financial system has moved past the point of no return. That point of no return lies at the event horizon of a financial singularity so massive that it could take two to three years for it to cross the distance from the event horizon to the complete and utter destruction waiting at the center of the black hole. Our pitiful financial system will be bent and contorted in tortuous, agonizing movements all the way to the hell that awaits it at the menacing ball of darkness which lies straight ahead, anxious to grip it in one last deadly embrace. According to the laws of financial nature, the only things that can escape the gravity of this financial black hole are gold and silver. This is one lesson in financial physics you had better learn well and quickly. A failing grade could result in poverty and all the misery that goes along with it.

If you're still looking for the cause of the stock market's decline, consider the real estate market. From its peak in June 2006, to June 2008, two years later, the S&P/Case-Shiller Home Price Index shows that the median price of a house has dropped from about $226,000 to about $180,000. That's roughly a 20% loss in nominal value. But that does not take into account inflation, which has run at about 11% on average over that period in real percentage terms, as opposed to official percentage terms which we all know are totally bogus. So that means, in terms of 2006 purchasing power, that $180,000 can only purchase what $143,000 could purchase in 2006, and the total loss in real estate purchasing power value, ala 2006 dollars, has been almost 37%! You don't hear that from the fane-stream media! Since the total value of the real estate market in 2006, based on Fed figures, was $19.8 trillion, we have a total loss of real estate purchasing power over two years of roughly seven and a quarter trillion dollars, or if you prefer, $7,250,000,000,000!

That's over half of our entire freaking GDP as estimated for our current fiscal year - NICE GOING, MORONS - what will you do for an encore?! And we are only half way to the bottom! Soon, over a period of about four years ending in June, 2010, we could see an entire year's worth of US GDP wiped out! As the Extremely Mad Mogambo Guru (EMMG) would say: "We're all freaking doomed (WAFD)!!!" This destruction of real estate values was of course planned for the sheople by the Illuminati in another one of their "cutesy" little rip-off schemes to impoverish the US middle class. The only problem for them was, they could not off-load all the toxic waste on their sucker-dupe clients before the whistle was blown by Ms. Whitney, and these inane, neocon nitwits grossly underestimated the toxicity of the fraudulently contrived derivatives they pawned off on their clients as AAA paper in a Ponzi-scheme made possible by the repeal of Glass-Steagall by Slick Willie and his fraudster friends. Now most of the Illuminist fraudsters are insolvent, and like it or not, they are going down with us! We will provide you with the names, addresses and phone numbers of the many responsible parties when the time comes so you can show them your "overwhelming sense of appreciation!"

Well, if the subprime derivative losses and the reduced real estate market values are not enough to convince you, then how about our unemployment statistics, which in reality are double to triple the ludicrous figures we got from the Bureau of Lying Statistics, whose fiction writers tell us that we lost 84,000 jobs last month, and that the rate of unemployment is 6.1%, a five-year high. When was the last time you heard any kind of news announcement relating to a massive rehiring of workers, or the massive creation of new, good-paying jobs? What we get instead are reductions to the number of jobs lost by creating government jobs that will be eliminated as fast as they are created as tax revenues tank, by not counting those unfortunate souls who have run out of benefits, by creating jobs out of nothing (like we create money and credit) using the Birth-Death Model, by not counting reductions in pay for those that are rehired, known as underemployment, and by not counting job losses suffered when full-time jobs are reduced to part-time jobs. The bogus figures we get from our government are a joke. They are laughable. But even the official figures stink. This state of affairs on the employment front provides plenty of reasons to sink the stock markets. The stock markets are dependent on consumer spending for growth, spending which is being shut off like a water spigot as more and more people join the ranks of the unemployed. Try freeing up enough money to spend on discretionary consumer goods with the meager proceeds of an unemployment check! Good Luck! And now those with lucrative jobs are standing in the unemployment lines with the peons as the economy gets hit across the board. Why do think all those mortgage loan defaults are creeping into the prime, jumbo and option ARM loans? One out of every three Americans will be unemployed when our economy bottoms out over the next two to three years! Put that in your pipe and smoke it for a while. Buy gold and silver now, while you still have the income and assets to do it, or get sucked into the black hole!!!

Hey look, over there. It's a bird. It's a plane. No, it's "super-dollar," and his side-kick, "super-yen!" Yes, they're faster than a Wall Street derivative salesman, more powerful than a negative lease rate, able to make precious metals wilt in a single bound, as they fight to maintain fraud, injustice, and the Wall Street way! The cartel has pulled out all the stops. They have massively fudged CPI, GDP and unemployment in order to support the dollar.

They have used the super-yen to give the stock markets another case of yellow fever by hitting the yen carry traders, in order to cause the specs to cough up their gold and silver positions to meet margin calls, and to cause a flight into the perceived quality of treasuries to support the dollar. The yen has strengthened from 110.516 yen per dollar on 8/15/08 to 106.311 yen per dollar on 9/5/08, and the yen's rise against the euro has been nothing less than spectacular, as it has strengthened from 169.358 yen per euro on 7/28/08 to 151.549 yen per euro on 9/5/08, meaning that it now takes about 18 fewer yen to buy one euro than it did only five weeks ago - whew! That yen strength has decimated Euro Zone carry traders and has acted as a large counterbalance against precious metals, which have risen by leaps and bounds against the euro as the metals are normally priced in dollars. These yen machinations have pushed foreign markets down to force foreigners to sell their assets and use their foreign currency proceeds to buy treasuries, which can only be bought with dollars, like oil, in order to draw more dollar support. They have also, over the course of the past month, boosted open interest in USDX futures by nearly 20,000 contracts, with the most recent contract count standing at 50,630, which is very high. They have hammered oil from 147 to 106, thus curtailing the use of petrodollars to purchase euros, which has sent the euro plummeting, along with EU economies, whose central banks, the BOE and ECB, have recently colluded with the Fed to keep rates the same, dooming their economies to rampant inflation and supporting the dollar, while insuring lower European export prices for US consumers to keep the EU exporters more competitive.

They even put a short-squeeze on the specs and their naked shorts on the Maleficent 19, thus hitting oil, precious metals and other winning commodities positions to cover margin calls, and never mind that you could still illegally naked-short every other company with impunity. This hit oil big-time, and it caused a large hedgie, that was insanely long in oil, to fail, and the net result was to drain away petrodollars to prevent the OPEC nations from converting them to euros, thereby weakening the dollar. OPEC nations like to go shopping in the EU, which is where they greatly prefer to spend their money instead of spending it in the US, and hence their desire to convert their petrodollars into euros. In addition, the repo pool did overtime to produce treasuries for purchase by the liquidating specs and the bank's that took in all their margin call money, thus absorbing the dollars flushed out by the oil takedown and keeping those dollars from being sold off or from being pushed directly into the system, which would have produced dollar weakness and would have exacerbated inflationary pressures.

The central bank collusion continues as the short squeeze is put on the dollar shorts a while longer. We have scum-bag incumbents to save, don't you know? When we sneak past 80 on the USDX, and drop below $100 per barrel on oil, we think the manipulation will likely be over, and the whole situation will reverse with an explosive vengeance. We, however, simply do not see how this charade can be continued for two more months. We see some big players moving in to intervene very soon. Russia and China know they have the Illuminati where they want them. They have stood by and watched as the Illuminists have carelessly painted themselves into a corner with profligate creation of fraudulent debt while exporting our jobs and our inflation overseas. The Illuminati have gutted the US economy, destroyed their financial and military bases of power, and made enemies out of more nations than we can keep track of anymore through bullying and violence. The Illuminati have sold us, and themselves, into the hands of the enemies, which they themselves have created, fostered and financed. It has to be the stupidest thing we have ever witnessed, and the Russians and Chinese must be standing in stunned, stupefied silence, thinking to themselves: "It couldn't possibly be this easy! All we have to do is stand aside and do little more than sell some treasuries, and we win."

They must be flabbergasted that the dopey Illuminists have played right into their hands. The members of the Sino-Russian alliance will from this point forward be on their best behavior as the elitists continue to try to provoke them into wars to weaken them and level the world playing field, and the whole world will stand by in wonder trying to figure out why the Russians and Chinese have become such rational and fair players. It is hilarious in a way that even tops the comedy acts we call political conventions. Rothschild and Rockefeller must be mortified.

Can you imagine that our government, despite what must be mounds of contrary evidence, is saying that Russia was the aggressor in Georgia? Have these people no shame? World opinion is going to quickly turn against us, even more so than it has already. People around the world are sick of this crap, and they are going to get together to do something about it. You can rest assured about that. We are about to get some major payback for allowing the Illuminati to rape, pillage and burn their way around the globe with barely a whimper coming from us.

Investors, both public and private, amateurs and professionals, are sick of the markets acting irrationally. Throw all your black box fundamentals out the window, as reality is now whatever the cartel says it is. This growing aggravation with schizophrenic markets might also account for some of the market weakness we have seen lately, just as Jim Cramer suggested. Until the SEC and the CFTC start doing their jobs and start acting like regulators instead of elitist bootlickers, we could see a complete abandonment of these markets. We see a point at which only physical sales will be used to determine commodity prices. You want it, you pay for it according to the physical market, meaning the spot prices in the spot markets, which will no longer consider action in the casinos when determining prices.

You had better empty the gold and silver from the COMEX cupboard, or you specs are going to continue to get reamed over and over again, ad nauseam. When will you figure out that these markets are rigged and that the government tells the commercials everything about your trading positions? The commercials bought precious metal (PM) longs from the specs behind everyone's back on the private OTC after scaring the specs off with large purchases of short positions on the public COMEX. These longs then serve to cover their ever-growing number of shorts. They know where all your stops are. The CFTC and/or the COMEX tells them. Then comes more huge short sales on the COMEX as the cascade of spec losses mount while they get vaporized by their idiot black boxes, and the commercials' shorts are making them a fortune. They then buy some longs or cover their shorts slowly as they work off their inventory of shorts at a profit, using sales and leasing to tamp down any overactive rallies. Then comes the sudden short-covering rally, and soon they are selling their OTC longs back to their spec dupes for even more profits, after which they go back to the casino at the COMEX to start the cycle all over again with massive short-selling. One definition of insanity is doing the same thing over and over again and expecting different results. Can we get a witness here!

Physical gold and silver everywhere through private dealers are totally gone or very scarce, yet prices are going down. Why? Because you left the COMEX cupboard full, and as long as they have that gold and silver to work with they can continue to paper you to death. Get a freaking clue, people! Pay cash for the COMEX gold and silver. You have the money. Use it, or they will continue to hand you your derriere on a platter. Gees Louise. And stop funding the ETF's. Their holdings are being leased against you. Use the money you have invested in the ETF's to bankrupt the COMEX gold and silver hoards and stop playing into their hands. You people have massive redemptions coming up if you don't produce soon, so time is of the essence. You are going belly up if you continue to roll over and play dead for these reprobates like some sort of pet dog. Move it!!!

All the shenanigans and machinations will soon end when we come upon the next big shoe to drop. Be it a war, a major bank failure, the nationalization of Fannie and Freddie, the breaking of OPEC dollar pegs, or a huge treasury sell-off by some very angry nations, it will be GAME OVER for the cartel. Take advantage of these wonderful bargains in gold, silver and their related shares now, because this is the last time you will ever see prices like this again. The cartel has blown The Big Sting Two. Their stocks, bonds and derivatives are tanking by the minute, and they are out of time for a big stock rally because the data has turned against them and they can no longer hide behind false statistics. These morons have been set up by China and Russia for the biggest bear rally in bond and treasuries of all time, and they are giving them every reason to sell treasuries and GSE paper. Meanwhile, seasonal support for the metals will keep them well-bid and the cartel will not be able to break them. It is now just a matter of waiting for the next major catastrophe, and then clean up with gargantuan profits. Forget the wall of worry that the elitists are fraudulently trying to build around precious metals, and keep focused on the big picture. Go long and stay long, and enjoy watchin these reprobates squirm as their precious system explodes and goes down in flames like the Hindenberg.