THE INTERNATIONAL FORECASTER (Excerpts from the IF)
We find the capture of Saddam Hussein to be a setup. First the announcement Friday that the UK and US occupation troops would be out of Iraq by July 1. A new panel would be in place plus elections. That of course is just before the Republican Convention in August. Then the supposed capture of Saddam Hussein. How convenient. A person with a gray beard with no gray hair. It is another Saddam double. The whole package stinks.
The result will be in the short term a higher stock market and bonds and a test of $400 an ounce on gold. Those buyers had best be prepared to stand in there because the government and the bullion banks will attack with ferocity. We'll find out just how strong the physical buyers are. Either way it is temporary. Another rigging of world markets.
George W. Bush has signed a bill that increases funding to develop new kinds of nuclear weapons.
Speculation in the stock and bond markets is at the same level as in 1994-2000. Margin debt is setting new records. NASDAQ just reached 2,000 again up from a low of 1,108 a year ago. The dummies who lost 62% of their money over 2-1/2 years think we’ll have another bull market. We call it madness, similar to the madness we see in the White House. Nasdaq is selling at 97 times earnings, which is hallucinatory. The stocks under a dollar are getting the biggest play. Markets historically have ended their run when the penny stocks and oil and gas stocks get their final play and that’s what’s been happening. We may not be at a top but we will be over the next nine months. Don’t forget this is a bear market rally. Convertible bonds and junk bonds are priced to perfection. Real junk is borrowing money at 8% down from 12 to 16% not so long ago. Stocks and bonds are well overvalued and it doesn’t get much riskier.
The FDA has shut down the importation of drugs from Canada in order to allow the drug companies to continue to financially rape Americans, particularly the elderly. 44 million Americans have no health insurance or 15% of the population. States are really up against it with Medicaid. 49% plan to freeze payments to physicians, hospitals and other providers for fiscal 2004 and 44% will restrict the drugs Medicaid patients can buy. Twenty will cut dental care and 18 will tighten eligibility standards. The states received $10 billion for 2004, but in 2005 they won’t get any extra funding. They had best start cutting now or raise taxes.
The two family income of today in terms of purchasing power is equal to that of one income in 1972. That certainly isn’t financial progress and the negative social ramifications are enormous. Worse yet, the average American is so deep in debt that there is no way out and the FED, the Administration and Wall Street encourage more debt. Almost every month consumers’ debt increases just as every month federal state and corporate debt increases and the FED and Fannie and Freddie increase aggregates wantonly. That means the long-term prognosis for America’s standard of living is terrible. Hyperinflation followed by deflation and depression. America and Europe are being deliberately forced to face China, now the workshop of the world. China now accounts for 15% of the world’s total growth. It also produces 60% of the world’s export growth. China still has an unscrupulous communist/socialist government and will stop at nothing to achieve preeminence. Volkswagen and GM have just recently set up in China and already they both allege that China has stolen their technology. What is taking place and allowed and encouraged to take place by the Bush Administration and Congress is going to bring the destruction of the American economy and the jobs of American workers. It is absolutely impossible for us to compete with slave labor. How can our worker-citizens pay their bills? Outsourcing is killing us. Engineers in India work for 10 to 25% of what our engineers get. Asia is a persistent exporter of deflation to America. The end of free trade and the imposition of tariffs will stop part of the deflationary pull. That means the FED will be able to slow down the printing presses. Imposition of tariffs does not mean there has to be a trade war. Arrangements and agreements can be negotiated. Better we pay higher prices and have inflation rather than a deep dark depression. WTO has been brought to a standstill and for good reason. The Senate has a bill to introduce tariffs and both the US and Europe want the Asian economies to allow their currencies to appreciate, yet they refuse to listen. No matter what there will not be a US-led world economic recovery that will last for any length of time. US debt problems will continue to drive the dollar lower and interest rates and gold and silver higher. Due to what the FED and the Bushites are doing in retarding this correction they are making it worse. It will last longer, go deeper and be far more damaging than it would have been. Individual investors and professionals all over the world are selling dollars and eventually governments, namely China, will do the same thing. All this is important because it affects American jobs and income. GM, Ford, Chrysler and two suppliers are going to cut 50,000 US jobs and for those left there won’t be any raises. This has to be stopped. We have only read several other publications that address the problem. The rest of them are oblivious. They just don’t understand. They still blame the depression of higher tariffs, when the culprit was 10 years of wild spending, debt and the fact that the FED deliberately caused the depression by cutting off aggregate creation. Our economy is being ripped apart by different forces than in 1929. Yes there is the excessive debt, but to deliberately ship our jobs and businesses out of the country has to be suicide. The inner fabric, the lining of our great nation is being ripped to shreds and the public doesn’t rise up and challenge what is being done to them by their own Senators and Representatives in Washington, not to mention that lunatic in the White House. Why do Americans want to live on their knees? We can’t understand it. Not when five million jobs just went out the window; unemployment is 13%; 91% of recent college graduates cannot find jobs in their field of study and inflation is 7-1/2%. We live in incredible times. Perhaps Americans deserve their fate. Our guess is when the dollar has finally fallen 70% of the oil producing countries will cap the US dollar as the world reserve currency and denominate oil sales in euros or other currencies. This will be the last straw that breaks the dollar’s back and we can assure you it is going to happen. That’s why eventually you’ll want all your assets in silver and gold. Few will want depreciating dollars. The implication for America is huge. If the euro becomes the world currency it will be the end of America as we’ve known it.
Stocks of several mortgage-lending banks have fallen after industry heavyweight Washington Mutual said a slowing home-lending business would hurt earnings and force it to cut 5,400 jobs. They said mortgage volume is expected to decrease by 50% in the fourth quarter versus the third quarter. We guess our prediction of higher interest rates is about to become reality. The golden era of affordability is ending. The burden of owning a home has started to become heavier and will only get worse in the next few years. Mortgage bills and property taxes are on the way up. Mortgage rates have climbed 70 points in the last six months to 5.9%. Next year we see them at 7 to 7.5%. Homes in hot markets such as New York and Washington worth $800,000 carry mortgages of $600,000 at 6% plus $22,500 in property taxes. Carrying costs are $58,500. A 7.5% mortgage moves carrying costs up to $92,000 when accompanied by a 20% increase in property taxes. That increase translates to a 33% correction in the value of the home. We believe 2005 will see mortgage rates of 9% and that’s when that $800,000 home will have dropped 50-60% in value. This is what happened from 1989 to 1992. People with fixed rate 6%, 30-year mortgages will sit in their homes as long as they can. Millions holding sub-par mortgages will simply walk away filling all those apartments that presently have cheap rates. The long awaited correction in real estate is finally on its way. The Orwellian freak show begins. Wait until you see the devastation.
The Sunday Global and Mail treated us to a list of people who have influence with Paul Martin who has been anointed as the next elitist Prime Minister of Canada. Prominent in Mr. Martin’s life is Maurice Strong a protégée of the Rockefeller clan who are at the very top of Lucifer’s food chain. Then we have James Wolfensohn who is a Maurice Strong pupil. They all play ring around the rosy with none other than Mr. Desmarais who keeps a special room for Prince Philip at his hacienda in Quebec. There they are all chummy together with Europe’s black nobility. Some government, it’s more like a coven. Then there is that very strange politician Mr. Chrétien, who incidentally takes his orders from the same crowd that is now running a “shadow” foreign policy. We mention that man who talks strangely because we’ve seen Paul Martin’s hate list. They take orders from the same source. Housing starts were off 10% in November.
Dictator Robert Mugabe of Zimbabwe has announced that he and his country are leaving the Commonwealth countries. They had been suspended from membership for murdering the opposition.
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