International Forecaster Weekly

Financial Vehicles of Mass Destruction

Waiting for a move from Iran, destructive financial instruments, only one solution to the end of the financial system as we know it, German favors and presidential trouble, housing purchase numbers not clear, housing foreclosures break laws, hydrofracking banned, corporate pensions a ticking time bomb.

Bob Chapman | February 29, 2012

The seven-week sanctions against Iran oil sales and the use of the banking system and the Swift Code facilities by US, UK and European governments has as yet not been effective.

Negotiations are in process with six EU nations to adopt oil contracts for up to five years. Future oil must be paid for immediately. Four of those members can barely pay for oil now. The embargo as you can see is ridiculous. Even if alternative services are found how will they pay for all of it? This has to be one of the most ill thought out schemes ever.

The financial end won’t stop payment countries can use barter, multiple currencies and gold. Talk about shooting one in the foot. This has been a case of the Illuminist’s shooting themselves in both feet. Talk about financial vehicles of mass destruction. No we have three of them if we include derivatives. We have had limited sanctions against Iran for some 30 years, yet their economy has improved. In the years to come more growth will be there. Iran is breaking the hold on the petrodollar so it must be destroyed under any ruse. It must revisit the Stone Age. This is the elitist idea of freedom and liberty.

 After discussions as far as we can discern, the Iran oil deal with India is for 45% of payment in Rupee and the balance in barter. That eliminates the dollar in $12 billion in annual oil imports from Iran to India.

Debt and trade imbalance has been and still is killing the value of the dollar and many other currencies. The dollar has been totally abused since the US left the gold standard on 8/15/71. Its end as the world reserve currency will come over the next several years. Other countries are similarly positioned and we expect eventually a return to the gold standard.

Keeping Iran out of Swift Code for bank transfers is dumb. We can assure you they will find an alterative way to transfer funds via China, Russia or India. That will weaken the dollar control even further. Whoever came up with these operations had to have no common sense. If Iran is successful, which we believe they will be, the only other way they can stop Iran is by attacking it and possibly starting World War III.

At the same time here is the US with zero interest rates forever, QE 3, $1.6 trillion in funding to bail out Europe for 1-1/2 years. Plenty of money and credit to bail out the financial community, but little or nothing for jobs and the general economy. Eventually interest rates will rise, and more problems will manifest themselves. The main problem being how long with bondholders hold on, as inflation moves higher along with rising unemployment. We something read commentary by other analysts and are profoundly disappointed when they tell us there is little inflation and that unemployment is 8.5%. They know government is cooking the books, but still won’t tell the truth.

No one in politics or on Wall Street is going to stop the deficits; that is part of how the economy is kept afloat. The only exception being Ron Paul. Perhaps the Fed, Wall Street, the City of London and all central banks think they can extend survival forever via money and credit, but they cannot. Inflation will devour them. Living has been difficult for the past five years. What you have seen is nothing. The next five years will be like living in Hades. There are no solutions for the debt of the US, UK and Europe. All will eventually collapse. There is only one solution to the end of the financial system as we know it. There are those who know and understand, who have owned gold and silver from June 2000 until now. Gold is up 530% and gold and silver shares even more. By comparison the Dow is up 6%. If you haven’t done so now you know where to go with your money.

Who is going to pay people when the government goes broke? No disability, Social Security, Medicare, Medicaid, unemployment, food stamps and everything else that government pays for.

There is no money left, the politicians have spent it all. As government reduces spending and increases taxes austerity sets in and revenue falls and deficits continue to rise as the economy moves lower.

The position of German President may be symbolic, but when he has to step down and prosecutors begin the process of lifting his immunity something bad has to be happening. Mr. Wulff is to be accused of accepting favors during his stay as Governor of the State of Lower Saxony. His judgment may have been bad and was this just one of the many indiscretions? We guess time will tell. Wulff was a personal choice of Chancellor Merkel. This happened previously when Mrs. Merkel saw her Presidential appointee Horst Kohler have to step down a couple of years ago. This is very serious business particularly at this juncture of Greek negotiations. This event weakens the hand of Germany to a slight extent and also the position of the CDU, the Christian Democratic Union.

What has been rumored last week has finally happened. Iran has become the aggressor in the oil embargo sanctions structured by the US, UK and Europe. The coming ban was to begin July 1, 2012.

Iran has halted sales of crude oil to French and British buyers. Iran will sell its crude to new customers. This action will tend to put upward pressure on oil prices. That means higher gas and diesel prices that the world consumer gets to pay for as a result of foolish US foreign policy. This is the result of Iran selling oil in currencies other than the dollar, which undermines the value and predominance of the US petrodollar. In addition, Iran has threatened to halt shipments to Greece, Italy, Spain, Portugal and the Netherlands. The EU constitutes 18% of Iran’s exports of crude oil. In the event European deliveries are shut down by Iran the EU countries have a 4-month supply as a backup. China currently purchases 22% of Iran’s oil exports. We believe the US has shot itself in the foot using these so-called sanctions, which as you can see have already been neutralized.

This data shows up in this section because of its importance and to alert you again to reporting fraud not only by government, but also by corporate America and their mouthpieces.

The National Association of Realtors reported that sales of existing homes jumped more than 3% in January, a 2-year high. In December, the existing homes sales number was reported to be 4.61 million, up 5% from November. The sales for January 2012 were reported at 4.57 million. That was a drop not a gain. The NAR fraud allows them to deliberately control perception of the housing market for the masses that are generally not exposed to proof of such fraud.

In addition, the NAR recently revised lower all existing housing sales from 2007 through October 2011 by 14%. That means seven of every 100 home sales reported over five years was fraudulent. This allowed the real estate industry to make higher sales than they might have made otherwise, thereby defrauding the public.

The NAR is a fraud and most of governmental and corporate reporting today is as well. We have banking and some businesses being allowed to carry two sets of books.

You can compare NAR numbers with mortgage purchasing applications week to week last week. The 4-week moving average fell 3.2% and that index has fallen 12% year-on-year. Some buyers over the past three months should sue these crooks.

Over the next 2-1/2 to 3 years the US real estate market will be hit hard – end foreclosures to add to the already over abundance of such real estate foreclosed inventory. Now that most of the lower end homes have been dealt with it is time to take on the expensive homes. Many of those lower priced homes will become rentals and that should continue to put pressure on prices.

Banks have let high-end owners in default live in homes free for up to three years for technical reasons and to hide inventory. These figures are available to everyone, but we hear just the opposite on financial channels. Like everyone else in business there is little validity in his or her statements. Once these homes are unleashed banks and government will find very few buyers. The banks paid a paltry fine of $26 billion or $0.02 on the dollar versus what they defrauded the American public out of. The foreclosure party is over. The former owners will be removed and the homes put up for sale. The high end of the market is finally about to be hit. They are about to complete their 50% to 60% drop.


            Affirming what anecdotal evidence has suggested about the mortgage crisis, an audit out of San Francisco has found that more than 80% of foreclosures broke some kind of law.

            City officials requested the audit that examined 382 randomly chosen foreclosures that occurred from January 2009 through October 2011. The findings revealed that 84% of the files involved “what appear to be one or more clear violations of law.” The violations included not giving homeowners warning that they were in default on their loans (6%), not giving homeowners adequate legal warning their property was being sold (10%), backdating of documents (59%) and transfers of loans by entities that had no business doing so (45%).

            Another disturbing discovery related to the Mortgage Electronic Registry System (MERS). In 1995 the bigger banks created MERS as a privately owned electronic system for registering mortgage sales that was supposed to replace local county recording. In the words of the New York Attorney General’s Office, they did so “to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages.” The San Francisco audit found that in 58% of cases, the loan beneficiary listed on the deed of sale was different from the one listed in the MERS database.

            Kathleen Engel, a professor at Suffolk University Law School in Boston, told The New York Times: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

Bob Chapman - National Intel Report - Feb. 21, 2012

Bob Chapman - Discount Gold and Silver Trading - 22 Feb 2012

Bob Chapman - Dr. Deagle Nutrimedical Report - Feb.22, 2012

Bob Chapman - Pastor Butch Paugh - Feb. 22, 2012

Bob Chapman - The Sovereign Economist - 23 Feb 2012

Bob Chapman - Gold Radio Cafe - February 24, 2012


            In a victory for opponents of the drilling process known as hydrofracking, a New York State judge ruled on Tuesday that the upstate town of Dryden in Tompkins County can ban natural gas drilling within its boundaries.

            In August, Dryden’s Town Board used its zoning laws to pass a drilling ban, one salvo in a battle that is playing out nationwide as energy companies move to drill in densely populated areas. A month after the ban’s passage, Anschutz Exploration Corporation, a Colorado driller with 22,200 acres under lease in the town, filed a lawsuit arguing that the town’s authority did not extend to regulating or prohibiting gas drilling.

            In a decision issued on Tuesday, Justice Phillip R. Rumsey of State Supreme Court said that state law does not preclude a municipality from using its power to regulate land use to ban oil and natural gas production. The ruling is the first in New York to affirm local powers in the controversy over drilling in the Marcellus Shale, a gas deposit under a large area of New York, Pennsylvania and Ohio.

            It is a victory for hydrofracking opponents as New York State regulators revise an environmental impact document and propose drilling regulations to decide whether to allow the drilling and under what conditions. Dozens of other municipalities in New York have also adopted drilling bans and limits.

            “The communities targeted for drilling need the power to determine for themselves when, where and if fracking is permitted,” Katherine Nadeau, the water and natural resources program director for Environmental Advocates of New York, said in a statement. She said the ruling would energize “the dozens, if not hundreds, of cities and towns concerned with industrial gas drilling.”

            The Dryden case, however, is sure to prompt further litigation. Thomas West, the Albany lawyer representing Anschutz, said the company might appeal or instead pursue a “takings” claim against the town — based on the principle that private property should not be taken without just compensation. Mr. West said the company had spent more than $5 million securing land leases from Dryden property owners and could claim the lost value of its assets, including any profits it would have derived from exploiting the mineral rights under the land.

            “It could be a very large claim,” he said.

            Efforts on Tuesday night to reach lawyers for the town of Dryden, with a population of about 14,000, were not immediately successful.


            The bailouts of October 2008 ended in some very rich people keeping their money. They did not wind up like the employees of Lehman Brothers, which was allowed by the Secretary of the Treasury to fail.

            The Federal Reserve is now in damage-control mode. Ron Paul has inflicted a lot of damage. This is only going to get worse.

            In October 2008, today’s Treasury Secretary was the president of the New

York Federal Reserve Bank. He was at the center of the crisis.

            Unlike the CEO’s of Goldman Sachs and other major players, he has always been salaried, but he does not have the money to pay defense attorneys $500 an hour. But he may soon have to do just that.

            Lehman Brothers Holdings Inc. (LEHMQ) and its creditors late

Thursday said they want to subpoena Treasury Secretary Timothy Geithner to question him under oath over allegations J.P. Morgan Chase & Co., (JPM) illegally siphoned billions of dollars from the collapsing investment bank in the days before it filed for the largest bankruptcy in U.S. history.

            In a filing accompanying Lehman’s filing, made in U.S. District Court in Washington, DC, Lehman’s official committee of unsecured creditors said Geithner has thus far refused to comply with an Aug. 9, 2011, subpoena, and it wants a court to force Geithner to give a deposition by a March 16 deadline, 2012. “Despite being a crucial, fact witness on these issues, Secretary Geithner has refused to appear at a deposition in accordance with a valid subpoena issued by the Committee,” the committee’s lawyers said in the filing. Geithner was president of the Federal Reserve Bank of New York at the time of the Lehman collapse.

            Geithner has a problem. He will not be able to fool lawyers the way he fooled Congress about his tax returns. He will not be able to blame it all on TurboTax software.

They will get him on the witness stand, at some point. He will be forced to tell the lawyers what the chain of events was in the biggest bailout in history. If he takes the Fifth Amendment, he will find himself unemployed. In any case, he is now facing legal fees that we would not wish on anyone. If the lid is ever taken off this can of worms, the public will find out about the nature of crony capitalism. With lawyers involved, and millions of dollars at stake, the lid will be taken off.

Over time, the voters’ trust in the existing system will disappear. Then will come a political day of reckoning. It will take an economic crisis to accomplish this, but that crisis is coming.


            Corporate pensions increasingly look like an economic time bomb for the government.

            Federal officials have assumed responsibility for hundreds of troubled pension plans in recent years. Those takeovers could accelerate as baby boomers start to retire, with taxpayers potentially needing to pay tens of billions of dollars to keep the private plans alive.

            "This is going to have massive implications for the country but particularly following on the heels of the latest economic downturn," said Richard Shea, a lawyer specializing in employee benefits at Covington & Burling. "Pension benefits are being frozen and closed down at an alarming rate."

For many of the 44 million Americans with pensions, employers have not set aside enough money to provide them a stable income through retirement. Publicly traded companies face a combined pension shortfall of $458 billion, according to a recent report by the bank Credit Suisse.

            The cost of rescuing these plans has saddled the federal Pension Benefit Guaranty Corp. with a $26 billion deficit, the highest in its 37-year history. The situation will likely worsen as more companies decide they can no longer afford their pension commitments and stick the government with the bill.

"This is a death spiral," said a representative of the pension industry. "It may not happen over the course of the decade, but we end up in a situation where we need a taxpayer bailout."

            The problem has become severe enough that the director of the Pension Benefit Guaranty Corp. has publicly campaigned against American Airlines — which filed for bankruptcy last year — for trying to end its retirement plan and dump its obligations on the government.

            "Before American takes such a drastic action as killing the pension plans of 130,000 employees and retirees, it needs to show there is no better alternative," Josh Gotbaum, the director, said in a statement this month. "Thus far, they have failed to provide even the most basic information to decide that."

The issue is getting minimal traction with lawmakers who are focused on another, equally pressing retirement debacle with clearer partisan battle lines: state and local government pensions.

            Congressional Republicans continue to push measures to rewrite the rules for underfunded state and local government pensions, while Democrats — backed by public employee unions — rally to shield those programs from cuts.

But Karen Friedman, policy director at the Pension Rights Center, is trying to shift the lobbying on reforming corporate retirement plans into high gear. Her advocacy group is sponsoring a Wednesday conference on Capitol Hill about restructuring pensions with the Urban Institute, a think tank, and the law firm Covington & Burling.

            "This is the time to address these issues," she said, "so that we can ensure that we stop a crisis in the future."