International Forecaster Weekly

Financial Troubles For Many Nations In The New Year

New year new troubles for big nations, Italy controls its cash, a third year of inflationary depression, Fannie Mae in the courts for obstructing, lowest employment in years, a cycle of new changes socially, politically, economically, the sky has not fallen in... yet.

Bob Chapman | December 28, 2011

2012 is going to be quite a year with falling economies in the UK, Europe, the US, China, Japan and the remainder of Asia. Latin America, and Mexico by comparison should fare fairly well overall. England is in a death spiral. Europe is next, the US is not far behind and China and Japan will soon join the disjoined group. We are about to witness the end of the period that developed since the end of WWII. That is economically, financially, socially and politically. The transition into the future is going to be borne out of chaos. If you have any doubt just look at the recent legislation passed in the US allowing the president to pick up and incarcerate, torture or murder dissidents. Americans will be labeled terrorists for any reason government decides. This is corporatist fascist dictatorial government. We have as well reports from Marion Monte, a top Illuminist, who was appointed Italy’s PM that he wants business to stop making large transactions in cash. Cash will be limited to $1,300 per transaction down from $3,250. That should bring the economy to a halt, create a thriving black market and drive buyers into US dollars and gold and silver coins. They obviously want to bring the Italian economy to its knees. As a result Italian consumer confidence in December fell to its lowest level in 16 years. Their sentiment index is 91.6, the lowest since 19096. Next the fascist appointed plans to make net asset audits to identify people who spend more than they will officially earn. This will become a worldwide trend. These orders should emasculate savings in Italy, the least-indebted nation in Europe. They are switching out of the euro into other currencies and gold and silver. Italy may be broke, but Italians are not. Banks pushed for the cash limit so people would start using credit cards from which the banks extract 2%. Older Italians will get hit hard; 7.5 million have never even had a bank account. The bankers and dictators never give up and you all are about to find that out. It is expected the greatest upheaval will be in the US, as their way of life comes to a halt. The catalyst could be a rigged election next November. Americans know if Ron Paul is not elected they are doomed. In addition, insolvency will touch every family in America bringing on an aggressiveness and warrior mentality that heretofore the world has never seen. If these elitists think they are going to get away with this they are sadly mistaken.

No one wants to call it that, but the UK, US and Europe in February will be entering into a third year of inflationary depression. In the US the S&P has already cut their credit rating and another is on the way. In fact cuts in credit ratings are going on worldwide, although it is particularly significant for the US, as their dollar is the world reserve currency. 2012, a big election year, opens amid confusion and social, economic and political confusion. There is a tremendous push to destroy the US Constitution and its constrictions on rule and government. The US government is in the process of being overthrown with the assistance of the president and Congress, and the American people do not have a clue as to what is going on. The US government has set up internment camps and authorized the arrest of anyone who disagrees with it. These edicts are sure to be followed by violence. The question is will the American military kill its own citizens? We hope not, because it is a battle they cannot win. This will be a battle for liberty and freedom and those guiding our fascist government will find there will be no Mr. Nice Guy this time.

The world sees the lowest employment in ten years - the period that followed the dotcom stock market collapse in 2000. Unemployment averages more than 20% and it is not improving. This is what leads to massive social disruption and was it not for the social safety net in place since WWII major problems would already be underway. Many nations are running out of money and credit, so the ability to fund these debt borne solutions is coming to an end. A good example of that is Europe’s colossal refunding of debt this coming year. The chances of raising trillions of dollars are remote and that is why the ECB has created money and credit from out of thin air to accomplish this. In the US, the Fed will do the same thing. The result is monetization, higher inflation, in a period of lower wages and economic stagnancy. We will further address these problems in our next issue. History is no longer made in years; it is now made in minutes.

It is important to note that there has been little balanced reporting of the events surrounding the MF Global episode.

A recent decision by a judge seems to portend that the Lehman Bros. Holdings dispute with Barclays regarding securities in customer reserve accounts, margin accounts, as conditional is an event that could well influence the status of client accounts in the MF affair. The SEC has sided with the judge in that clients should be made whole and then the creditors will be attended too. The US Bankruptcy Judge James Peck’s ruling that told Barclays to return $2 billion in margin assets to Lehman should stand.

Relating to the MF global situation a lawyer for the CFTC has said creditors cannot put their private interests ahead of customers’ interests. Lawyers for creditors disagreed, but the CFTC says the trustee shall distribute customer property ratably to customers on the basis and to the extent of such customers’ allowed net equity claims.

The administration has already repaid $2 billion to customer accounts and is in the process of retrieving the remainder. Thus, it seems the clients will be made whole.

What is deeply disturbing is the mindless misreporting and outright lies promulgated over the past almost two months. They have been a terrible disservice to the public and the securities industry. We stated from the very beginning everyone would be made whole, and that contrary top the babble being presented to the public, that all margin accounts could be hypothecated and rehypothecated. If investors didn’t know that they should have. Ignorance of the law is no protection. They should have read their contracts. We also stated that from the beginning as well. People who have not been professionals in the brokerage business in commodities, stocks and bonds should reserve comment. Those in the industry deliberately misled the public whatever their agenda. The sky is not falling yet, although it may in the future.


Fannie Mae (FNMA) and Freddie Mac were accused in a lawsuit by California Attorney General Kamala Harris of hindering her probe into mortgage lending and foreclosure practices.

Harris wants to know if drug dealing and prostitution occur in foreclosed homes owned by the companies, whether taxes are being paid on those houses, and whether military families have been illegally evicted by loan servicers, according to the two lawsuits filed yesterday in state court in San Francisco.

Fannie Mae, the government-sponsored enterprise which issues almost half of all mortgage-backed securities, and Freddie Mac, the McLean, Virginia-based mortgage-finance company, haven’t responded to those and other questions Harris sent Nov. 15, according to the complaints.


The economy in the U.S. grew less than previously estimated in the third quarter, reflecting a smaller gain in consumer spending that is giving way to a pickup in demand this quarter as the job market improves.

Gross domestic product climbed at a 1.8 percent annual rate from July through September, down from the 2 percent estimated last month, revised Commerce Department figures showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg News projected it would hold at 2 percent. Household purchases increased at a 1.7 percent rate, down from 2.3 percent.


Fewer Americans than forecast sought jobless benefits and consumer confidence climbed, giving the world’s largest economy a boost heading into 2012.

Unemployment claims fell by 4,000 to 364,000 in the week ended Dec. 17, the lowest level since April 2008, Labor Department figures showed today in Washington. The Bloomberg Consumer Comfort Index improved to minus 45 in the period ended Dec. 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January.


Mortgage rates for 30-year U.S. loans dropped to the lowest level on record amid signs the housing market may be set for a turnaround.

The average rate for a 30-year fixed loan fell to 3.91 percent in the week ended today, the lowest in data dating to 1971, from 3.94 percent, Freddie Mac said in a statement. The average 15-year rate matched last week’s previous all-time low of 3.21 percent, according to the McLean, Virginia-based mortgage-finance company.


U.S. home prices fell in October, a government agency said Thursday, highlighting continued troubles for a weak part of the economy.

Home prices fell 0.2% on a seasonally adjusted basis from a month earlier, according to the Federal Housing Finance Agency's monthly home-price index.

The results were worse than expected and came despite a week of positive news for the housing market and broader economy. Economists surveyed by Dow Jones Newswires had expected a 0.4% monthly increase in the home price index.

Prices in September were up 0.4% from a month earlier, revised from an originally reported 0.9% increase.

Compared with a year earlier, prices were down 2.8%. October's index value was 183.0. A reading of 100 is equal to the price of homes in January 1991. The index was 19.2% below its peak in April 2007 and around the same level as in February 2004.


The U.S. Congress passed a two-month payroll tax cut extension eight days before its scheduled expiration after House Republicans dropped their objections under growing political pressure.

The plan will go to President Barack Obama for his signature. It would extend a two-percentage-point payroll tax cut, continue expanded unemployment benefits and head off a reduction in Medicare payments to doctors through February. Lawmakers plan to negotiate on a longer-term extension in the new year.


Sales of new U.S. homes rose in November to a seven-month high, adding to evidence of stabilization in the housing market.

Purchases of single-family properties increased 1.6 percent to a 315,000 annual pace, figures from the Commerce Department showed today in Washington. The gain pushed the number of new homes on the market to a record low.


Orders for U.S. durable goods rose in November by the most in four months as an increase in demand for aircraft outweighed declines in spending on computers and equipment.

Bookings for equipment meant to last at least three years rose 3.8 percent after no change in prior month that was previously reported as a decline, data from the Commerce Department showed today in Washington. Demand for business equipment excluding military hardware and aircraft dropped 1.2 percent in November, the biggest decline since January.


The U.S. Securities and Exchange Commission sided with the Lehman Brothers Holdings Inc. (LEHMQ) brokerage in a $3 billion dispute over assets with Barclays Plc (BARC), saying a judge ruled correctly that the U.K. bank’s claim to securities in customer reserve accounts was conditional.

If the SEC prevails, Barclays may lose its claim to as much as $1.3 billion reserved for customers, according to an SEC court filing yesterday.

Michael O’Looney, a Barclays spokesman, declined to comment on the SEC filing.

Barclays and Lehman Brothers Inc. both appealed U.S. Bankruptcy Judge James Peck’s ruling that told Barclays to return $2 billion in margin assets to the bankrupt brokerage, and said it had “only a conditional right” to $769 million in the customer reserve account. Brokerage trustee James Giddens is fighting Peck’s order to give the bank at least $1.1 billion, and possibly the $769 million, if it leaves enough in the reserve account to satisfy remaining customer claims.

As much as $1.3 billion in reserve assets can’t go to Barclays if customers suffer as a result, and Giddens has said he needs the assets to satisfy claims, the SEC said in the filing. In addition to the $769 million, a second pool of funds, $507 million in margin for customer transactions at the Options Clearing Corp., raises similar issues, the SEC said.

SEC Notice

SEC staff members told both parties in 2008 when Barclays bought Lehman’s North American business that they might violate a customer protection rule if Barclays took the assets, according to the filing.

The dueling between London-based Barclays and trustee Giddens follows a bankruptcy court trial held in 2010 before Peck in Manhattan. Both sides are due to file court papers today in their appeals.

The district court case is Giddens v. Barclays Capital Inc., 11-cv-06052, U.S. District Court, Southern District of New York (Manhattan).


Bob Chapman on Liberty Coin & Precious Metals Radio “America is Doomed if Ron Paul is Not Elected”


Bob Chapman "United States is doomed if we don't elect Ron Paul prt 1


Bob Chapman - Radio Liberty - December 19, 2011




Freedom Files with James Burns


Bob Chapman - The Sovereign Economist - 23 December 2011


Liberty Talk Radio!! with Economist Bob Chapman!!

By Alex Horbol


Bob Chapman - USAprepares Radio Show - December 20, 2011


MF Global Holdings Inc.’s creditors can’t put their private interests ahead of customers, a lawyer for the Commodity Futures Trading Commission said in a dispute over how the law treats customer claims in relation to those of creditors.

A lawyer for creditors of the brokerage’s bankrupt parent company uses an “erroneous interpretation of the law” that would privilege creditors over customers of the failed operating unit, MF Global Inc., the CFTC said in a letter filed in Manhattan bankruptcy court yesterday. Customers are seeking the return of an estimated $1.2 billion in funds missing from segregated accounts since the futures broker failed on Oct.31.

“The trustee shall distribute customer property ratably to customers on the basis and to the extent of such customers’ allowed net equity claims, and in priority to all other claims,” Robert Schwartz, a lawyer for the commodities regulator wrote, citing CFTC regulations.

MF Global Holdings, once run by former New Jersey Governor and Goldman Sachs Group Inc. (GS) co-chairman Jon Corzine, filed the eighth-largest U.S. bankruptcy after a wrong-way $6.3 billion trade on its own behalf on bonds of some of Europe’s most indebted nations.

Customer Distributions

While it filed for Chapter 11 bankruptcy to apportion returns to creditors, including bondholders and lenders such as JPMorgan Chase & Co. (JPM), a trustee appointed under the Securities Investor Protection Act, James Giddens, is overseeing distributions to customers at MF Global Inc.

Martin Bienenstock, a lawyer for a committee of unsecured creditors of MF Global Holdings, had said in a letter to Judge Martin Glenn on Dec. 21 that rules governing the commodity industry conflict with the bankruptcy code, and “move general property into customer property beyond the extent” permitted by bankruptcy law.

Bienenstock also said that some rules regulating commodities exchanges wouldn’t apply to MF Global Inc. because the brokerage doesn’t qualify as a Chapter 7 debtor under bankruptcy law.

The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).


Two four star Marine generals have written a stunning op-ed in the New York Times which demands that President Obama veto the National Defense Authorization Act, a bill that allows the government to use the military to indefinitely detain American citizens without due process.

Charles C. Krulak and Joseph P. Hoar, both 4 star Marine generals, published the piece on December 12. The op-ed starts with a direct demand that President Obama veto the NDAA bill in order to protect our country from the “false choice between our safety and ideals.”

It then gets into one of the most blatant anti American treasonous provisions in the history of the United States.

One provision would authorize the military to indefinitely detain without charge people suspected of involvement with terrorism, including United States citizens apprehended on American soil. Due process would be a thing of the past.

Some claim that this provision would merely codify existing practice. Current law empowers the military to detain people caught on the battlefield, but this provision would expand the battlefield to include the United States — and hand Osama bin Laden an unearned victory long after his well-earned demise.

The generals then go on to cite the fact that most in the military have not even asked for this extreme new power.

Sadly, many at the Pentagon are openly planning on unleashing the military on the American people and if we do not see more high level military personal speak out against this and other tyrannical bills America is finished as we know it.


Just over a week ago, equity mutual funds globally had the second-biggest one-day outflow of money in 2011, capping four straight weeks of net redemptions, according to data from EPFR Global. Worldwide, investors have yanked $34 billion out of equity funds this year and put $75 billion into bonds.


One e-mail chain refers to the transfer of roughly $200 million that MF Global owed JPMorgan Chase on Oct. 28 — the firm’s last business day before it filed for bankruptcy…That official, Edith O’Brien, a treasurer at MF Global, is considered a “person of interest” in the investigation, said two of the people, who added that authorities expected to interview her in the coming days. It was not clear who had directed Ms. O’Brien, whose job was to oversee the customer money, to make the Oct. 28 transfer. The roughly $200 million that JPMorgan Chase received is said to be entirely customer money…

After the transfer, JPMorgan, one of MF Global’s main banks, questioned Mr. Corzine about the source of the money…Mr. Corzine testified that Ms. O’Brien assuaged any concerns that MF Global had been improperly using customer cash…

But JPMorgan was not satisfied. The bank once again contacted Mr. Corzine, this time requesting a guarantee in writing. Mr. Corzine handed the request to his general counsel, Laurie Ferber. Ms. Ferber would not authorize the document… [one of the two, maybe both, is in very big trouble]



US Q3 GDP was revised lower, to 1.8% from the previous 2%. Consumption was revised lower, to 1.72% from 2.3%.

Corporate profits were also less than originally guessed. Earnings were revised to 1.7% from 2.1%.

The savings rate declined to 3.9% from 4.8% as consumers keep dipping into reserves or credit to maintain living standards. Real after-tax income declined 1.9%, the biggest decline since Q3 2009.


The Federal Reserve Bank of Chicago said Thursday that its headline National Activity Index fell to -0.37 in November after being revised up to -0.11 in October, with production-related indicators at their lowest level since April. A negative reading for the Chicago activity index points to below-trend growth, and 51 of the 85 indicators used in the compendium of available and forecast data deteriorated sequentially.