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What happens when
suddenly most everyone stops buying stuff? The cream is gone off the top.
There is no more discretionary income. Now comes the hard part. We only buy
what we must have and the rest is simply forgotten. What can you do
without? Credit card addicted USA consumers are desperately using plastic for
groceries, utilities and emergencies. When those cards are tapped out, then
what? Already, many of them are, and they’re card-defaulting while
running for food stamps. Big banks reported today card collections are not
good at all.
The fool’s
paradise known as Washington, D.C. continues in a horrid vacuum of zero
leadership. Various mammoth departments continue to operate as individual
fiefdoms bouncing off the walls and careening toward the ultimate tragedy as
our kid president whistles past the graveyard. Meanwhile, two wars are
running full blast, the nation has no budget, the oil spill grows worse and
USA borders are wide open for every terrorist in the world-all in the name of
power and votes.
Someone wrote
many years ago that the entire life of most countries-societies is 250 years.
If this is true, the USA has about 16 years remaining before the big breakup.
I seriously wonder if we can even make it through the next 16 years. The way
things are going, will our nation resemble anything like just a few years
ago? We are all broke and this is when things go violent. Hot summer ahead
and it started right on time per our old forecast yesterday in Los Angeles,
California.
Obama-Economics
spends like our government money pit is bottomless. It is not. Our Northern
Advisor has watched this stuff for years, much of it first hand. His key
point: “Many times the stupid reaction of government to emergencies is
not necessarily due to ignorance and disorganization. Often the budgets are
not available in advance of major trouble to instantly react and they
simply don’t have the money or authority to quickly spend. We saw this
in Katrina and now with the Gulf of Mexico oil spill.
I never thought
of this idea considering the way government tosses cash into the wind. Most
would say go spend it now, solve the problem and sort it out later.
Government budgeting is laid out in neat little boxes; quite compartmented to
say the least. They can easily waste $2 Billion in a flash if the needs
are budget covered. However, if a national catastrophe like Katrina or,
the BP oil spill hits, pre-planning does not cover nor cope.
Further, all the
marvelously stupid bureaurat red tape rules residing in 150 agencies have
roadblocks in place to avoid emergency management like the Coast Guard
recalling Louisiana spill control ships back to port for not having
life jackets. We respect the rule but how about someone letting them continue
to work and provide the jackets on an emergency basis keeping the spill
contained. Nope. It won’t work that way. Our advisor says they simply
are not prepared for these emergencies and never will be. Surprised?
We suggest the
worst Achilles Heel is storms, and extended power outages from our
creaky half-century old electric grid system. When your power is off, you are
finished. I think about recent winter storms in Kentucky when thousands had
no power for several weeks in very cold weather. This means no lights,
communications, i-net, television, refrigeration and the inability to get
fresh food. Most when hit with this dilemma just give-up and run for
government help. Thankfully, the Red Cross does good work to help ease the
pain, but they are not really the government but a charity designed to help
those in need. They cannot, however, begin to do it all.
Thinking on this,
I can see more reasons why the Sheeple had better get busy and learn to take
care of themselves. Uncle Sam will not do it as he is simply not set-up to
help. Further, your emergency is probably not funded anyway and even if it
were, ten miles of red tape sit between you and your critical demand
assistance.
Actually, those
folks that are quite poor and living hand-to-mouth are going to better
weather this economic storm than most. This is because they are used to be on
the scramble 24/7 to find another meal, stay warm from the cold and find a
way to enjoy utilities. When every day is an emergency you learn to deal with
it having low expectations in the process. The middle and upper-middle class
spoiled brats will be helpless and have no idea where to begin to help
themselves. Their lives are going to get nasty.
Now that
Greenspan is out of his old job where he destroyed half the immediate credit
world within five years with his give-away cash, he tells us “The USA
may soon reach its borrowing limits.” Wow! What a refreshing and honest
statement. Especially when you are outside, retired and looking-in and can
blame your instigated messes on others like Chopper Ben and Timmy “The
Kid Junior” Geitner, our
Pseudo-Treasury-Secretary-Goldman-Gangster-Alumni. For those not aware, Timmy
was the PPT’s Chief-Computer-Button-Pusher-Market-Support-Guy in New
York City where he was the local Federal Reserve Honcho. Welcome to the
United States of Goldman Sachs.
Why We Pay The
Price
Greater
Depression II Enters Phase II With Harder Repercussions.
Housing sets new
extremes in low sales with the lack of credit, end of the tax credit, millions
on negative equity and the new jingle mail; walk-aways. Millions have learned
they can stop making payments and continue to live in their homes without
immediate banker backlash. There are so many, the banks are overwhelmed with
paperwork and not near enough staff. Meanwhile, hundreds of thousands of home
repossessions remain on the books as they’re being held back so as not
to flood markets with merchandise driving down prices even further.
America just like
Europe is so far behind in state and federal tax collection payments, expect
installation of the new VAT or Value Added Tax to be congressionally
approved. This is a stealth tax difficult to pinpoint directly by the
Sheeple. After all since the bureaurats cannot begin to balance the budget
they just take more.
European bank
stress tests are supposed to be published. They cannot be or credit markets
will implode. Look for delays in printing the results. If and when they are
visible, they will be watered down and made palatable for the Sheeple to swallow.
One of the important new developments is a European movement toward austerity
while the USA administration prefers throwing cash and credit at this
disaster. Since Europe is suffering from lack of credit and debt overload,
they have chosen to “take their medicine now” and de-leverage the
debts. America must de-leverage too, but is kicking the can down the road not
being able to, or having the will to do the right thing. This heightens
credit tensions between Europe and America as both head for a larger,
exaggerated major crash in this dispute. Watch what happens at the end of
this month between July 25-August 6.
Insolvency of the
PIGS; Portugal, Italy, Greece and Spain has terrified bankers of all stripes
world-wide. We say they better be afraid as the rolling crash and insolvency
of these nations is well on its way to reality. Banker media stars are
working feverishly to cover and the stories are no longer believed. Greece
goes down first but they are quite small. The bigger story in July is Italy and
it is indeed scary. We suggest when a significant portion of this regional
group and their neighbors economically crack-up, it could be the catalyst
ruining the happy-phony credit delays in North America with the exception of
Canada. It will indeed spread quickly.
Two others most
at risk in Europe other than the Eastern European bloc would be Ireland and
the U.K. They have more staying power than the others along with Germany and
France for the moment, but we can see a domino cascade taking them all down in
a huge rolling crash. The USA cannot help as they are structurally worse-off
than most imagine and the US Senate has voted no on IMF credit help for
Europe. The US is too broke to help.
There is no
single central bank in Europe for fat origins of credit to backstop these
nations as in America. The IMF is about out of gas as they’re mostly
funded by American credit. This nears the end of the line and the ECB is not
legally authorized to help any member by charter. Germany very reluctantly
offered slightly over $1.1 Billion to help Greece but it’s not yet been
approved by the German politicians nor paid.
The two USA wars are going badly primarily due to lack of cooperation from
the Iraqi’s and Afghan’s. These two sinkholes remind me of the
Vietnam conflict. This is a terrible drain on human resources and the US
Treasury. And, with the leadership or lack thereof in Washington we can count
on those resident idiots to do exactly the wrong thing.
While deflation
worsens for now, the last gasp attempts by international treasuries and
central bankers tossing credit and cash will incite inflation. This comes not
right away, but we are building toward that eventual event.
China, long the
recent engine of growth, is peaking and slipping economically. The Chinese
stock market is down the worst in 15 months and a new offering for
agriculture shares for over $21 Billion is going badly and has sunk -5% from
the initial offering price before it had been all sold. Car sales have been
hot but they are slowing. Real estate prices have peaked and credit is being
tightened to avoid inflation already rudely underway. The recent Yuan reforms
are mostly public relations and lack any real teeth or effects. However,
these markets are peaking as the Yuan currency sneaks up in value.
The BP mess has
made bitter new enemies everywhere. In the U.K., parliament and the
shareholders are angry over the USA nasty Tony Hayward interrogation. In the
USA everyone is mad at the Obama administration for being so inept and
slow to respond. Just on this one topic many previous hard-core Democratic
supporters no longer support Obama-Land. Meanwhile, large parts of the USA
energy industry have been drilling-handcuffed and cannot proceed with
budgeted, approved, and planned gas and oil development.
In the Middle
East, oil producers have seen the price of crude oil skid from near $80 to
$70 and back to $76. They prefer and are happy with $70 but are fearful of
more selling. Our latest forecast for the SHORTER TERM had been $70-$65.
Natural gas has been rising on proposed summer air conditioning power plant
demand but this has softened in the wake of several American negative,
economic reports. Oil and natural gas prices are firming for now on reserve
draw-downs and drilling moratoriums.
Where Does This
All Go Next?
Russia’s
income is primarily from oil and gas. With this sector in a mess they have
serious problems. Putin has voiced the idea of a new currency backed by gold
for trading oil. Our view is this goes nowhere. German Euros may soon be
traded as Marks along with the US Dollar, Yuan, Yen and Won. We think this
latter group could hold-up as they are the least worrisome fiat currencies
for the time being. Canada is also among the fortunate along with Australia.
Eventually, however, these ‘better’ currencies could revalue,
too. For now the resource currencies are strongest along with the blue chip
Swiss Franc.
The first half of
2010 is over. The second half could be much more trying and ugly. When the
little nations have run out of credit resources they collapse, and the
stronger ones will have witnessed first hand as to what could be their fate.
How they all react is going to be quite interesting to say the least. Some
could panic and make ill-timed moves. Others could reverse strategies making
things worse. Time will tell but events are getting closer.
July Will Be A
Time Of Testing On Several Fronts.
However, we think
this month must endure more than one severe test. Among these could be
inflammation of new violence in the Middle East fomented by Iran in
particular. Israel is about ready to attack for several reasons and her
current and former allies will just look the other way and act surprised. The
U.S. Navy fleet is watching near Iran. Iran’s commercial airliners are
being refused foreign airport refueling per new sanctions. Wonder how this
works out? All parties are playing chicken and the ending is nigh.
If something goes
wrong in August relative to BP’s well capping efforts all kinds of bad
things can happen. We think they can cap it and drain-off the balance with a
new relief well. However, rumors of seeps coming through a fractured ocean
floor at depth are beginning to surface creating new worries. Our sources say
the best of the best are on this problem having saved 42 out of 42 wells. These
are private contractors skilled in relief well technology. On a previous
disaster this contractor punched five relief wells to stop leaks on one
single well. We think they will be successful but the mess goes on for years.
American politics
has grown increasingly caustic, loud and accusatory. The Democrats have no
budget and are moving forward continuing to spend without one. The
Administration despite having accelerated the bankruptcy of America continues
to spend and pretend forcing spendy new programs on a super mad populace that
is totally fed-up. Much of this stuff is coming to ahead. Confrontational and
accusatory politics are tiresome to the max.
Another major
test just ahead is the forthcoming involuntary austerity of national and
state governments. This began with our citizens and it has spilled over into
states’ budgets. The final straw will be extreme austerity at the
national level. Since federal government can tax and spend at will, they have
a longer extension of time to continue the game. However, this ends when
credit and bonding abilities cease. We are there right now. The international
bond and equities markets are collapsing. The stocks go down first and this
is well underway. Within another 90 days, later this fall, the bonds could
smash in an epic event. That then is the beginning of the end.
If a rolling
crash originates out of Europe or Asia and affects the USA stock markets,
this one could be the final blow to these politicians everyone loves to hate.
No one can forecast where the outcome goes after that event.
In our view, we
expect Obama to be a one term president and there is an excellent chance he
may not finish his current four year term. We say chances of this are now one
in three and moving rapidly toward 50-50. Could there possibly be an
insurrection and revolt of some kind? We say the chances are moving toward
that event as several matters worsen.
When the Obama
administration has outlived its usefulness to the crooked bankers and
international cabal of corporations backing its power, it will be cast aside
for the next package of useful idiots. This is the day when things could
change dramatically.
More than one of
our highly respected colleagues has said, “You will not even know the
USA by the end of 2010, it shall have changed so much.”
America in general is now fully aware the USA’s southwestern borders
are wide-open to gangsters and terrorists. Formerly peaceful sections of
Arizona (a national park) cannot be used by American citizens as the dangers
are too high. Phoenix is the car theft capital of the USA with over 50,000
vehicles stolen last year and probably most of them taken into Mexico. The
Mexican government is now more at risk than ever as a major political figure
was killed and Hugo Chavez and other outsiders are supplying revolutionary
aid and encouragement.
No surprise to us
but Venezuela has now been moved to the top of the sovereign failure list
with a 58% chance of national bankruptcy and total collapse. Greece is number
two and Argentina third. Argentina last had such a massive bond failure in
2002.
This is the first
time in my memory when USA borders are open and at risk of attack and nothing
is being done by the administration to stop it. They want the borders open
for new welfare recipients who will vote Democratic. The voting thing is
dirty enough, but what about the crime and danger to USA citizens? Arizona
and New Mexico along with most of Texas might take things into their own
hands. They are getting no relief from elsewhere. This could be the old Wild
West revisited. There are millions of guns and hot tempers in this region; a
volatile combination to say the least. Watch the United States southwest for
the beginnings of open rebellion if the bureaurats don’t get busy and
help. Arizona could use a whole National Guard army division just to
catch-up. Obama promised only 500 soldiers when they need 15,000 to 20,000
right now.
Collapse of the
American middle class is obvious and apparent. The Tea Party Movement
is part of the outcome. This story is one played out in history during the
American Revolution in 1776 and again somewhat for some similar reasons
during the US Civil War. Where are we going this time? The second half of
2010 could tell the tale.
What ever happens
to foreign economies, credit and banking along with the American vote in
November could be a major turning point in world affairs affecting all
citizens world-wide. This is a generational changing series of events. It
might be prolonged but we think not. Prepare for several smashes and crashes from
later in this month of July through nasty springs and falls all the way to
2012 when I predict World War III begins over energy, economics and
settlement of several old grudges; some of them being 5,000 years old.
Wilshire 5000
Composite Shares Index Tells The Big Story.
It’s
Selling to 7,500 Support After 10,500, 9500, 9000.
The US Dollar and
American standard of living shall be cut in half over the next few years.
Now, more than
ever, it is important to take the immediate necessary precautions to protect
yourself and your families and friends. Traders and investors should be
buying precious metals and select shares right now. In our newsletter
we have a great list of trading and investing ideas for you. Meanwhile, you
can never go wrong buying physical precious metals and holding them for
security. We’ve had a constant run of nearly ten years in gold rising
15% per year so this remains a good trade. In the last twelve months, gold rallied
over 34% and is going ever faster.
It’s not
going to stop any time soon. In fact, we predict those annual percentages
will rise even more and this offers a chance, arriving only once in 25 years
on the historical cycles. Good trading! -Traderrog
Roger Wiegand
www.webeatthestreet.com
Roger
Wiegand is Editor of Trader
Tracks Newsletter and of
the Rog Blog at www.webeatthestreet.com.
Roger provides recommendations for short and longer term trading using
stocks, futures and commodities with specifics.
Contact Claudio Bassi, at Trader
Track’s New York City publishing offices for a trial subscription. Call 718-457-1426 Monday
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9:30am to 5pm or, e-mail cbassi@miningstocks.com
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