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Since
Origin;ation Of Our Federal Reserve In 1913,
Banker-Controlled Dollar Devaluation Has Been Ruinous.
When
a long list of really bad stuff piles-up over several years the ending is
beyond ugly. We suspect the crack-up-boom ending is near as this fundamental
list has grown way too long and those allegedly in charge are way beyond
stupid as to potential outcome. Geopolitics was so miss-handled it appears
deliberate.
Crooked
bankers, since the Napoleonic Wars when the Rothchild’s lent cash to
both sides, have been busy planning the final solution for a one world
government power using one currency. While this nefarious plan has worked so
far, we have to wonder how it ends in America with millions of guns, super
angry citizens and global banks holding treasury paper as valuable as potty
tissue. How lovely that their own toxic paper takes them down.
The
bond-credit-currency-confidence-games end when confidence leaves town.
We think it went away earlier this year.
Where’s
the Money? Money is the real stuff made from commodities, commodities
themselves, and hard asset manufactured goods. Play money is all the fiat
currencies and bonds produced from and backed by nothing. Even some stock
markets are play money.
As
we’ve written several times lately in Trader Tracks, the list of
naughty stuff is a mile long and growing. Some of the more critical problems
are:
Credit: In our view government
credit for nations, states, municipalities, and that of most private,
commercial, and citizens, has been severely damaged and in many cases
irreparably damaged. The QE2 continuation digs the hole deeper and we think
the end is in sight when former buyers of USA paper quit buying. In many
cases buying has already either slowed or stopped. Bond markets are damaged
and being further damaged by the printing binge of Bernanke and Geithner. We
are not alone. Other nations are doing the same thing in varying amounts.
Budgets are shattered and in most cases there is little hope of full
repayment. No bonds; no system. As we write today, Portugal is on the brink.
Food: There has been no major
improvement in food growing, crops or farm management in the past decade.
Yet, over one billion new mouths were born and must be fed. Next, Asia that
formerly existed on a modest diet, is demanding up-grades in most all food
groups because they can afford it. This imbalance appears to hit the world
food system this year as weather is not cooperating and grain supplies are
way too low. One US grain analyst said we had better have a big corn crop
this year along with wheat or, we are into major problems with prospects of
rationing. With USA corn reserves at a 37 year low, I suspect rationing is
inevitable with higher prices; either in 2011 or 2012.
Energy: Energy production and
demand has been fractured with nuclear problems in Japan, disruptions in the
Middle East and lack of a coherent energy policy in America. Crude oil is now
firmly supported at $104 per barrel and our forecast for 2011 is much higher
on forthcoming shortages and new inflation. USA refineries are shrinking in
number as it costs $6 Billion to build a new one, and operators can’t
get permits to build them, and refinery profit margins are too small to match
investments. Consequently, the US is purchasing about 35% of its refined
unleaded gasoline demand from imports, with fuel arriving on ships daily. In
our view, big global producers prefer to buyout wildcatters and not take
drilling risks. Next, they also prefer to tap foreign oil sources, first
leaving domestic reserves in the ground for later production. This creates a
higher risk for America, being dependent on others; particularly
geopolitically unstable others.
Pensions: Both public and private
pensions have been grossly under-funded due to malfeasance and bad budgeting.
Now that states and our national government are broke, congress is reviewing
a taking of private pension cash, estimated at $8 Trillion, and converting it
all to government bonds, which would destroy that money. Ms. Pelousy
mentioned she wanted this before the mid-term elections. In the states, the
over-paid workers who have been stuffed with freebies are now screaming; as
they are not going to get them any longer. Wisconsin’s problem is
only the beginning. Individuals should think about holding pensions in places
where they cannot be snatched.
Income: The most important
factor in a depression is to find enough income to keep going. This was a
proven fact in the 1930’s depression and its no different now. So many
jobs are gone and with investments providing less or no income this is of
major concern. We would recommend the former middle class, now in the top
third of the lower class, reduce obligations and debts of all kinds and plan
to live on a lot less. Many are going to have to take new jobs at low pay
just for an income. Watch for a renewal of old values throughout the world to
grow gardens, use less energy, drastically reduce monthly bills and exit
larger urban areas to live in small towns with less expense and a more, low
key stress-less atmosphere. We think this depression has broken the back of
materialism. People in the business of selling non-mandatory optional
needs-goods, are going out of business. There are simply no sales to be had
for fluff and luxury.
Education: Education has been on a
slippery-slide to lower achievement and higher costs for many years. Teacher
unions took too much from the taxpayers and now budgets will not work. The
Wisconsin events signal what spreads throughout the United States. If the
unions will not provide relief, schools go broke and kids go to private
schools, home-schooling and religious schools. Colleges have hit the wall
with high prices for four year degrees beyond reality. We know of kids
who went straight to work after high school or entered the military for a
fully paid, educated existence. However, those choices are limited.
Even the military is cutting back on certain budgets.
College
loans are way too expensive and education quality has fallen as college kids
are taught by very young grad students while fully tenured professors collect
big bucks to do research and pontificate. Further, many formerly middle class
parents do not like the left-wing teachings of lunatic socialists or,
communists messing-up their children’s heads for a so-called higher
education. The reality is, in this environment, a kid has other avenues to
learn, including a full, four year internet degree obtained from a top-notch
university for $7,500 not $40,000 to $50,000 or, even more. This is a game
changer for education in the USA. The ivy-covered walls of higher learning
institutions are turning into poison ivy and it’s not going be pretty.
Utilities: Provision for residential
and commercial utilities has undergone numerous changes in this depression.
Commercial demand is off due to empty factories and office towers.
Residential customers must have utilities and providers can charge anything
they wish in a constant stream of price increases. Several of them have
controlled profits set by the state utility commissions, but they are
basically on a cost-plus basis. A solid ten percent return being guaranteed
is quite nice; especially if the provider can keep jamming new and higher
costs into base prices with impunity.
Collectively,
all utilities used to be a small portion of expenses when compared to house
payments. Now, in many cases, these run-away costs, when added together, exceed
a home-owners’ house payment. Worse yet, with new inflation, those
costs will keep growing and squeezing users.
Watch
for lower income or, no income consumers begin to give-up some of these
services including the internet, cell phones, land line telephones, fax
machines, printers, computers, and anything else they can dump to reduce
costs. The internet is free at libraries and eating places have cable
television.
Housing: Most folks up on the news
know that housing is in such disarray it cannot return to normalcy for many
years. We say with USA new-build starts running at 300,000 instead of
1,700,000, builders will be mostly destroyed. Remodelers can stay in business
for smaller jobs and low profits scratching out a tiny living. But, for the
most part buying a new house is not a good long range investment. Renting is
on the rise as people have to live somewhere. For the first time in decades,
renting is cheaper than owning a home.
In
our view, the entire USA national average of home prices will drop another
-35% to the point where values resemble the 1960’s and in some extreme
cases the 1950’s. Incomes do not anywhere near match the
“standard obligations” of operating a home for a family and
paying all the “normal recurring expenses.” The new normal
won’t cover and to do so, incomes would have to rise roughly +50% on
average. This is not going to happen with current economic conditions and so
our standard of living goes down over time and much further than most expect.
Urban areas will
decline with McMansions, and the smaller towns and villages should see some
new folks seeking less stress and smaller bills.
Transportation: A single person or family needs one or
two cars or trucks for errands, commuting to work, and for pleasure. Some
urban folks can get by with no car using cabs, public transportation or,
airplanes. However for the majority of Americans used to freedom and wheels,
the cost-screws are tightening, pushing them into older, unreliable cars or,
in fact car pooling. The auto companies claim former annual sales of new cars
and trucks were 17 million annual units, and are now at 12,000,000.
Maybe, but we
say those numbers should be lower and furthermore, sales are pumped through
handout freebies and subsidy leases. The auto business has too many
competitors in the USA and way too many dealers are fighting over the scraps
of a declining marketplace. New car sales will drop drastically and repair
garages should flourish as older cars are nursed along and repaired. Nissan
reported that 40 Japan parts suppliers are shut-down or, running too slowly.
Ya gotta have parts to make new cars.
Taxes: While the federal tax rate in the USA
has been reported as smaller than most other comparable western nations,
overspending on entitlements and defense by our congress has permanently
ruined the national budget. These extremes will eventually force a national
bankruptcy of sorts although the outcome will not be something resembling any
kind of commercial or, citizenry bankruptcy. Rather, we can expect a
shrinking dollar and perhaps a change-over to using SDRS as an international
currency or, in fact see a dissolution of the dollar and its premium
usefulness as the reserve currency for the world.
If the dollar
remains intact albeit at much lower values, it will need something behind it
like a tiny unit of gold or perhaps a unit of energy being oil and gas or
both. Taxes should be a flat tax of 10% for all individuals and companies.
Numerous, favored big corporations pay little or, no tax and this should be
rectified. Tax codes are in drastic need of revision. We think somewhere
soon, most taxes go unpaid as there is no income to tax or, the citizenry and
some companies refuse to pay as they cannot or, will not. Here comes major
mayhem on this one. Governments’ grasping scramble for dollars will get
wicked.
Banker
Theft: We
all know what favored insider-bankers and corporations did to the American
taxpayers. They were literally TARP-robbed and it continues today in this
wild-west post-Lehman anything goes environment. The American public is very
forgiving and will provide wide latitude for huge errors. However, the
bankers and companies have pushed too far and too hard and their day of
rejection and come-uppance is near. This will be beyond ugly. This is
especially true since these scammers are still at it more than ever.
One analyst
said that to bring their downfall from unbridled power, the Sheeple will have
to reject the system the best they can. We think they will as they have no
other choices and cannot pay. In my view, we suggest the implosion of global
bond markets on a failure of confidence and trust will smash the bankers and
their government enablers.
Rejection
of participation in their criminal games and elimination of most all debts
must arrive before we can start all over again from a new page one for a new
life. These international
controllers are fighting hard to keep old paradigms alive but they’re
losing and the end is nigh. Expect the first of several major repercussions
this fall with a war in 2012-2013. Meanwhile, a stampede to precious metals,
shares, and related trades could be heroic. We’ve seen some of our
traders busy fortune building and are amazed.
Confidence: When confidence is lost all
is lost. Knowledgeable observers know governments are broke and federal
paper currencies are toilet paper sitting on a mountain of bonds issued each
day. Confidence is waning and when bond-buying ceases to exist, there will be
little time left to escape a crashing implosion of not only USA paper, but
that of other nations throughout the world. Here comes personal trade goods,
, regional gang problems, and the use of hard currency in commerce.
When one big
player goes down; they all go down as confidence is lost in all governments,
paper and corporations. That is indeed the end of this game. Please
understand these users can kick-the-can down the road until that day of lost
confidence and rejection. It could be weeks, months or, years. We are
continually surprised at their new tricks and games used to keep the scam in
motion, delaying the inevitable.
Trading on
this day of March 23, 2011, signals a calm before the storm.
Traders and
investors have been mostly watching and inactive for the past three days
waiting to see what happens next. We got hit with several negative news
events this morning and this day could yet turn into a trading adventure. If
not today, we certainly expect the storm very soon. Key signals are showing
hard rallies in gold, silver, and crude oil; all with some real power and new
recent highs.
Silver is
especially sensitive as it represents commercial demand as well as a higher
demand on the hard money “Fear and Security” markets for precious
metals traders. For now, Gold is hot but Silver is even hotter. Highs
today were April gold futures at $1,441.20 and May silver futures at $36.98.
Next resistance points for gold are $1,448.50 and $38.48 for silver.
Time is
growing short when traders and investors can purchase gold and silver coins
at lower, today’s prices. We think by this fall, many will wish they
had jumped in now and bought even more metal at the March 23, 2011 prices.
More than
ever, it is important to take 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 eleven years in gold
rising +15% per year or more, so this remains a good trade. In the last
twelve months, gold rallied over 34% and is going ever faster. As outstanding
as those numbers are, silver is doing even better. Inflation adjusted gold
should be about $2,350. Charts are telling us the top is no where near for
now.
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 commodity cycles.
Roger Wiegand
www.webeatthestreet.com
Contact Claudio Bassi, at Trader
Track’s New York City publishing offices for a trial subscription. Call 718-457-1426 Monday
through Friday,
9:30am to 5pm or, e-mail cbassi@miningstocks.com
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made in “Trader Tracks” are exclusively those of Roger Wiegand
and the publication is also exclusively the editorial content provided by
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