International Forecaster Weekly

Now The Worst Financial Crisis Since The Great Depression

Rampant market manipulation, retirement dreams destroyed by market chaos, a war waged with money, expect more bailout money for the wealthy players, formula for the superwealthy, a new low interest rate, new liquidity is designed to flood the world economy, Volvo slammed by market changes, oceans emptying of marine traffic, airfreight traffic declines

Bob Chapman | November 1, 2008

We'll give you three good reasons why gold is not performing as it should under the current circumstances:  First reason:  manipulation.  Second reason:  rampant manipulation.  Third Reason:  incessant, nonstop, unabated, fiendish manipulation.  Remember, these evil Illuminist miscreants know, by virtue of owning, via bribe and/or compromise, most, if not all, of the relevant market owners, managers and regulators, as well as most of the relevant judges and politicians who oversee these markets, the precise trading positions for every major player in the market, including, but not limited to, commercial banks, investment banks, hedge funds, sovereign wealth funds, insurance companies, pension funds and endowments.  Also remember, they are the ones that sold most of the toxic waste and credit risk insurance that now plagues the market, and, in fact, they are the ones who created it.      And, yes, despite what they tell you, they even know, to a degree, where many of the losses lie for subprime derivatives and credit default swaps, but they of course won't tell you that they know.
    Now that these thermonuclear devices have detonated and wiped out trillions of asset value around the world, and destroyed the retirement plans of hundreds of millions of people, they now plead ignorance about these admittedly complicated instruments of mass financial destruction, saying that they were too Byzantine for anyone to understand.  While they may not have understood every term and phrase, they most assuredly knew all the basics, and don't let them tell you any differently.      Certainly, they knew enough to know that there was little or no collateral backing the promises on credit default swaps, and in many cases, that there was no insurable interest held by market players who were simply gambling that a company would go belly up.  That is how you end up with over $50 trillion worth of notional value in credit default swaps insuring only $5 trillion worth of bonds.  They also knew that the assets used as collateral for subprime bonds were produced by a system of rampant fraud from the borrower to the securitizer, a system which ignored every known and viable banking standard that had been in place for decades, and that the rating agencies were full of bull when they rated these cess-pool-assets as being AAA.  Any of these so-called professionals who claim that they did not know these facts are either lying pathologically, or they are totally incompetent and appropriate authorities should immediately and summarily terminate their professional licenses.
    Therefore, ergo, because they know everyone's trading positions and the precise location of most of the toxic waste and credit default swap counterparty liability, they were able to orchestrate a pinpoint takedown of those institutions that were expendable, and sent them unceremoniously into bankruptcy and/or liquidation in order to start the big October Surprise, thus creating an immensely negative market scenario which has include forced de-leveraging, panicked asset liquidations under duress to meet margin calls, an unwinding of the yen carry trade and a sense of mass panic and fear which they knew would give them leverage to force the Paulson Ponzi Plunder Plan down the throats of taxpayers.  Such liquidations, fear and panic have also served to eliminate a goodly portion of the non-Illuminist market participants, especially hedge funds and weaker banks that were not part of their conspiracy, or that were not in favor of their agenda to implement world government by destroying the old economic and financial systems of the US, UK, Europe, Canada, Japan, and well-established western nations in general.  They also appear to be intent on imploding Russia and OPEC nations with their attack on oil, thus damaging their sovereign wealth funds and preventing them from diversifying out of the dollar and into precious metals.
    Based on this special knowledge about market participants, which includes their trading positions and loss exposure, the Illuminati allowed Lehman to fail, and forced AIG into liquidation mode.  They also knew where the loss problems were in terms of their own exposure to Lehman and AIG fallout, and made sure that the Fed loans and bailout money were in place to address those issues, which negatively impacted them, while leaving everyone else to the dogs.
    In addition, they knew very well that the Lehman and AIG failures, along with horrific news about the tanking US economy, would cause the massive worldwide liquidation and de-leveraging we are now witnessing, as well as the accompanying and equally massive repatriation of many of the dollars that had once been exchanged for various foreign currencies to make foreign investments for purposes of diversifying assets under the now defunct, and very thoroughly disproved, decoupling theory.      Most of the exposure to the quickly declining asset values of emerging nations, as well as most of the toxic waste derivatives, can be traced to large European banks, financial institutions and hedge funds, so the contagion is very widespread.  
    They also knew that this repatriation of dollars would greatly boost and support the dollar, causing quite a spectacular and very deceptive dollar rally, and creating a rush into US treasuries as a place of perceived safety, thus saving their precious bond market and creating a misguided demand for the bonds of a bankrupt nation, that nation being the USA.  After all, they have a myriad of fresh new bonds to pander to the sucker-dupes of the world as they fire up the Paulson Ponzi Plunder Plan and get ready for the next inflationary stimulus package to boost GDP, which incidentally is now negative by several percent, not by the ludicrous -.3% they would have us believe.  As usual, our government forgot to add a zero when making their nefarious hedonic calculations.  It would appear that they are incapable of getting their exponents straight.  That is what happens when your deflator is based on equally bogus official inflation figures, like the PPI and the CPI, which are usually about triple or quadruple whatever they say they are.
    This bond market support was very important to the Illuminati, because the bond market, which includes treasury bonds, is the seat of Illuminist power, and is used to export our inflation to other nations, such as China and Japan, who have a habit of diluting the value of their domestic currencies to gain unfair trade advantages by having more competitive pricing on their exports to other nations, thus maintaining their trade surpluses.  Such nations print their own fiat currencies, which they then use to buy dollars gained through their trade surpluses with the US, which dollars they then use to purchase our treasury and agency paper, thus "sterilizing" the inflationary impact of those dollars by parking them in US debt instruments and thereby keeping them out of general circulation.  They also earn a rate of return on these parked dollars, albeit a measly return that is far less than actual inflation.
    Thus, the profligate inflationary policies of the Fed are hidden from the dumbed-down American sheople, who until recently were also stupid enough to believe the lies emanating from the BLS concerning official inflation, which is understated to screw people out their social security and other federal benefits and entitlements which are set by law to increase at a pace commensurate with inflation so as to preserve the purchasing power of the beneficiaries.  This is how the Illuminati hide their evil plans from those who do not understand economics, which most Americans do not.  They also knew very well that this dollar strength, enhanced by the euro effect as oil was hammered into the low 60's and possibly lower, would serve to suppress precious metals, the idea being to stop the gold and silver alarm bells from ringing and drawing attention to the horrifying condition of our economy which they have malevolently burned to the ground by over-inflating our currency, by pushing interest rates artificially low, by creating fraudulent derivatives and asset bubbles, and also by destroying our manufacturing sector, as well as exporting our good-paying jobs, via free trade, globalization, off-shoring, outsourcing and both legal and illegal immigration.
    They have bestowed their extorted taxpayer largesse on those they wished to bail, and have withheld it from those that they wished to fail, and will continue to do so ad infinitum, as long as the sheople and their so-called representatives keep authorizing more bailout money to be created out of thin air by the Fed and our Treasury Department.  The Fed can only purchase bonds from the Treasury and then sell those bonds or issue fiat money in exchange for those bonds based on debt authorized by the Treasury and debt limits set by Congress.  The Paulson Ponzi Plunder Plan, which our traitors in Congress have approved, gives Hanky Panky Paulson, the new Vizier of Wall Street, unlimited, almost god-like power to help those who are pro-Illuminist, and to eliminate those who are not.
    The institutions which are part of the Illuminist empire will now use their Paulson Ponzi Plunder Plan proceeds to buy out the smaller fry, and because all interbank loans are now guaranteed by the FDIC, they can now speculate and earn spreads by loaning out money to other banks to their hearts content without any risk of loss, which the sheople are now on the hook for.  Enhancing the size of the spreads they earn is the now ludicrous 1% Fed funds rate, the perfect prescription for igniting more of the greed and speculation that got us into this mess in the first place, and also for destroying the bond market once the dollar rallies come to an ignominious and abrupt end.
    You can forget about any more lending to the sheople, who can no longer afford to repay anything as their economy hits the skids while they are already indebted up to their eyeballs. Even if these loans were made available, who can afford to go further into debt?  We are certain that many would try, and that would just make matters worse, extending what will already be a multi-year recession and ensuing depression.  The Illuminists are well aware of this, and certainly do not wish to take on any more losses, at least not yet.  At some point, however, they will attempt to re-inflate the economy when they feel they have steeled themselves enough to go for another home run, and that is when the re-lending will occur, albeit on a much smaller scale than before.  Meanwhile, they are using their formula for profitability to keep pumping up their balance sheets and keep stuffing nuts into their cheeks for a long and hard winter.  That formula is as follows:  Profitability = Low Volume + High Volatility + Dark Pools of Liquidity + PPT.  This is the perfect set up for insider trading.      Those on the outside should stay on the outside and let them play their little games amongst themselves.  Eventually, if you shun these reprobates, they will be forced to pick up their toys and go home because there is no one left who wants to play with them.  They are spoiled brats.  Do not empower them.
    The specs have been chased out of the COMEX by monstrous losses caused by criminal manipulations and via strong-arming from the SEC, which continues to threaten them by cutting off their short-selling capabilities and by forcing them to publicly disclose their short positions.  They also have hundreds of billions of losses on AIG and Lehman bonds and credit default swaps hunting them down like dogs in the completely unregulated, totally opaque OTC markets and, unless they are Illuminists, they will be left to die of thirst in the financial desert while the Illuminist firms all get watered with bailout funds from Vizier Hank and his supposed overseer, Buck-Busting Ben.  We must therefore no longer count on spec support, and must run the bullion banks and the casinos out of their gold and silver by purchasing it for cash and taking possession of it.  Also, producers must start hoarding their production, putting it in mothballs until the pricing is restored to some semblance of fairness and reality in the paper markets, or start opening up their own retail outlets to bypass the wholesale markets and their ludicrously low prices.
    Meanwhile, you, the gold and silver community, must not be intimidated by their despicable naked-shorting and forced de-leveraging which is hammering resource stocks, and must continue to support the share prices of your producers lest the Illuminists buy them out for pennies on the dollar and monopolize future supply. That is a disaster which you cannot afford to let happen, and now the Fed can give Barrick and its ilk all the billions in loans, such as the commercial paper program, that they could ever want in order to buy out any of the smaller fry that suit their fancy.  Just keep loading up at these bargain-basement prices and wait for the explosion, because it will come.  The Fed and its member banks cannot sterilize dollars forever.  At some point, all the holders of treasuries are going to bolt for the exits and Weimarize us and/or the fraudsters will be forced to start re-lending lest deflation take over and destroy everything before they have completed their final rip-off of the sheople with the Big Sting Two, sending us into hyperinflation, and gold and silver into the stratosphere. No one wants toxic waste anymore, and that now includes not only subprime paper, but treasury paper as well.  That means direct monetization, hyperinflation, and higher gold and silver prices.
    The Federal Open Market Committee Wednesday lowered its target for overnight interest rates by a half point to 1.0%. At the same time, the central bank signaled that downside risks to growth remain, indicating that more rate cuts could come. The extraordinary financial market stress over the past month has put the economy at greater risk of a recession. The vote to lower the Fed funds rate was unanimous. At the same time, the Fed lowered the discount rate to 1.25%.
    The Federal Reserve said Wednesday that it will supply new lines of credit to the central banks of Brazil, Mexico, South Korea and Singapore to help those countries deal with the global credit crisis.
The Fed will provide up to $30 billion to each of the central banks. It is the latest in a series of "swap" arrangements where the Fed provides dollars in exchange for reserves of the other nations' currencies.
    The central bank said the new credit lines, like those already established with other countries, are designed "to help improve liquidity conditions in global financial markets" by increasing the global availability of U.S. dollars.
    The Fed had previously established reciprocal swap arrangements with the central banks of Australia, Canada, Denmark, England, Japan, New Zealand, Norway, Sweden, Switzerland and the European Central Bank.
    Given that Treasury issued a statement this week that the Government unconditionally guarantees agency paper, agency yields should be roughly equivalent to the yield Treasury bonds. The guy from Pimco, El Arian is lying to the public, just like his boss Bill Gross, when he issued a statement yesterday morning saying that agency debt is unusually wide to Treasuries because of lack of liquidity. That's false and he knows it. Any kind of liquidity premium, in what is supposed to be the credit-default risk-free sector of the market (i.e. Government bonds), would maybe command a 10 basis point premium until the paper is absorbed by investors looking for Treasuries (or their equivalent, which agency paper now is).
    The FACT is simple. Agency debt is trading at 100-plus basis point premiums to U.S. Treasuries because the rest of the world is now reducing its appetite for U.S. Government-backed paper and the agency debt spreads reflect THE RISK OF U.S. GOVT DEFAULT. Why? Because the U.S. Government debt and U.S. dollar currency that it's issued in is BACKED BY NOTHING.
    The U.S. economy contracted at a 0.3% annualized rate in the third quarter, as consumer spending declined at the fastest pace in 28 years, the Commerce Department estimated Thursday. The drop was close to economists' expectations that the economy would shrink 0.5%. Final sales to domestic purchasers fell 1.8%, the largest decline in 17 years. Consumer spending dropped 3.1%, the first decline in 17 years and the biggest drop in 28 years, while business investment fell 1%. Investments in homes fell for the 11th straight quarter. Inflation-adjusted after-tax incomes fell 8.7%, the largest quarterly decline since the record-keeping began in 1947.
    American Express Co. said Thursday it will cut 10% of its global workforce, or about 7,000 jobs, in 2009 as part of a $1.8 billion cost-savings plan. The cuts will occur across business units, the company said. Also, American Express will suspend management salary increases in 2009, and institute a hiring freeze on open positions. The company expects to take a pre-tax charge of $370 million to $440 million in the fourth quarter.
     Third quarter disposable personal income -8.7%, biggest decline since quarterly records started in 1947.
Congressmen Henry Waxman sent Wall Street firms a letter requesting a list of all employees that earned over $500k for the past few years.  Waxman is incensed that Wall Street firms have paid $108 billion for employee wages and bonuses for the first nine months of 2008.  
NY Attorney General, Andrew Cuomo, sent letters to the [big] nine banks that received TARP bailout funds, which demands bonus information on executive management.
The nationalization, socialism and inquisition will intensify.  Reuters: U.S. regulators are working on a new federal program that could provide government guarantees for up to $600 billion of home mortgages to help prevent foreclosures.
         The credit crisis is causing a contraction of the little-noticed but huge business of securities lending, and financial players including pension funds, insurers and hedge funds are paying a price.
        Lenders wrote off an estimated $21 billion in bad credit card loans in the first half of 2008 as more borrowers defaulted on their payments. With companies laying off tens of thousands of workers, the industry stands to lose at least another $55 billion over the next year and a half, analysts say. Currently, the total losses amount to 5.5% of credit card debt outstanding, and could surpass the 7.9% level reached after the technology bubble burst in 2001.
The financial crisis exacerbated by credit derivatives is costing so much to fix that speculators are now using those same instruments to bet on governments as the price tag for bailing out banks approaches $3 trillion.
            The cost to hedge against losses on $10 million of Treasuries is about $40,000 annually for 10 years, up from $1,000 in the first half of 2007, based on CMA Datavision prices. The equivalent for German bunds has risen to more than $36,000 from $2,000, while it has jumped to $64,000 from $3,000 for UK gilts.
As we keep averring, it’s the derivatives that are causing the worst financial crisis since, at least, the Great Depression.  And unlike other crises, due to derivatives, no one can get a handle on the costs because the obligations are open ended and onerous to quantify.
In the third quarter of 2007, Volvo AB booked 41,970 European orders for new trucks. Guess how many prospective purchases Volvo, the world's second-biggest maker of heavy rigs, received in the third quarter of this year?  
Here's a clue. Picture a highway gridlocked by 41,815 abandoned trucks -- because Volvo's order book got destroyed to the tune of 99.63%, with customers signing up for just 155 vehicles in the three-month period, the Gothenburg, Sweden-based company said last week. It is now almost 90% cheaper to ship goods over the oceans than it was at the beginning of the year. And because the huge vessels known as capesize ships can't currently charge much more than their daily operating cost of about $6,000 per day, their captains have slowed down to economize on fuel and save money, to about 8.68 knots from 10.33 knots in July, according to data compiled by Bloomberg.  
It isn't just the oceans that are emptying. Airfreight traffic dropped 7.7% in September, according to the latest figures from the International Air Transport Association. That's the steepest decline since the trade group began compiling the data in January 2003.