Monday, December 1, 2008
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America's Coming Financial Vortex; 6 predictions for 2009-2012
It has been an incredible year loaded with surprises but I think that the next few years will surprise even more. Whenever I feel certain about something coming, I'm glad to put it in print. In 2004, I had successfully forecast many economic events such as the housing bubble popping and the credit crisis among other events. Current economic conditions and political outcomes have laid the groundwork for more events that we should be prepared for. All of these events combine to create a "Financial Vortex" that will hit us in the coming years.
Failed CB Franchise & Gold Explosion
The OMEN for a powerful shift in the gold market in my playful mind was the very real earthquake on November 18 here in Costa Rica, a clear signal from the financial gods, no minor tremor, measured at 6.0 on the Richter scale. The tremor confirmed the tectonic shifts to come to the gold market without question. This was the biggest earthquake in my life, no damage at all though, roof and toys intact. Numerous stories testify in aggregate to a severe tightening of the physical market, certain to put pressure on the corrupt paper market managed by the COMEX and its parent NYMEX.
Gold Poised for Biggest Monthly Gain Since 1999 as Dollar Drops
Nov. 28 (Bloomberg) -- Gold headed for its biggest monthly advance since 1999 in London as a weaker dollar increased the appeal of the metal as a hedge against further declines in the U.S. currency. The dollar is poised for a third monthly decline against the yen and its first monthly loss versus the euro since June. Gold prices have also been buoyed by demand for physical metal and exchange-traded funds. Gold demand rose 18 percent in the third quarter, the World Gold Council said this month.
The Great 2008 "Gold Rush"
There's a new "Gold Rush" but the big problem is: you might not be able to get your hands on any! The U.S. Mint tells CBS-6 News that certain gold and silver coins with a 2008 date have been depleted. Their spokesman calls the interest "extraordinary". A combination of people looking for something tangible to invest in during an uncertain economy, and a slowdown in some production at the US Mint, means there has been a "global run" on coins in those precious metals.
A Lethal Cocktail of Financial Trouble
Let's step back for a moment, and look at the big picture, to determine what the Illuminist miscreants have been up to over the past year. Their plans to pawn off all the toxic waste derivatives on others backfired when Meredith Whitney exposed Citibank's subprime derivatives as being toxic waste, worth a mere fraction of par. This untoward event was a watershed event for our nation, and for Illuminist plans to destroy us. Ever since she exposed the toxic waste derivative subterfuge, which the Illuminists planned to use to infect and sabotage economies around the world, thereby causing the collapse of the world financial system to pave the way for world government, the Illuminists have been in damage control mode. They were caught holding far more of the toxic waste than they had planned because they were unable to unload what had already been created, or that which was in the process of being created, due to Ms. Whitney's timely critique.
The Real Truth behind the Citigroup Bank Nationalization
On Friday November 21 the world came within a hair's breadth of the most colossal financial collapse in world history according to bankers on the inside of events with whom we have contact. The trigger was the bank which only two years ago was America's largest, Citigroup. The size of the US Government de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major US and perhaps European banks thought to be 'too big to fail.'
The clumsy way in which US Treasury Secretary Henry Paulson, himself not a banker but a Wall Street 'investment banker', whose experience has been in the quite different world of buying and selling stocks or bonds or underwriting and selling same, has handled the unfolding crisis has been worse than incompetent. It has made a grave situation into a globally alarming one.
For Retailers, 'Tis the Season to Be Nervous
Be careful whose gift cards you buy this season. As retailers struggle with recession, debt-laden consumers, unfriendly bankers and declining property values, fewer of them will be around next year. "By the end of 2009, the number of retail players will be down by at least 25% and could be down by as much as 40%," says Britt Beemer, chairman of America's Research Group, a consumer-research and marketing firm based in Charleston, S.C. "I expect the number of bankruptcies next year to be more than we've seen in the last five years combined."
The Perfect Storm
The indiscriminate printing of paper money coupled with the crippling of the World’s financial system is the “perfect storm” setting for gold and silver investors. Current conditions in the financial markets should be more than enough proof to convince even the most stubborn of financial pundits of the necessity to own precious metals. The vast majority of people who visit the websites where articles like mine are posted recognized this a long time ago. The time has now come where the rest of the world is about to wake up as well.
The demand for physical gold and silver has reached all time record levels where delivery for fully bought and paid for bullion is weeks away. If my thinking is correct the demand and price for physical metal will set new record highs each year until the physical supply is exhausted. Your guess is as good as mine as to the price of gold and silver when there is none to be delivered.
Depression in 2009?
After suffering through the biggest stock market correction since the 1930s, many are wondering if the market - that great discounting mechanism - foresees depression in 2009.
The thinking behind this interpretation of the 45% correction is that the stock market envisions a collapse in GDP and the biggest downturn in consumer spending of the current generation. Could the bear market of 2008 in fact be warning us of economic gloom next year? Is the U.S. destined to start the path, in the words of one widely followed observer, to becoming a Third World country in 2009?
New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster 30 'leading edge' indicators of the coming Great Depression 2 Every day there is more breaking news, proof Wall Street's greed is already back to "business as usual" and in denial, grabbing more and more from the new "Bailouts-R-Us" bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas - anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble. Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time's running out. We're already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:
1. America's credit rating may soon be downgraded below AAA
2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3. Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this yea
6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13. Fed also plans to provide billions to $3.6 trillion money-market fund industry
14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion
16. Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
17. Commodities down, resource exporters and currencies dropping, triggering a global meltdown
18. Big three automakers near bankruptcy; unions, workers, retirees will suffer
19. Corporate bond market, both junk and top-rated, slumps more than 25%
20. Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21. Unemployment heading toward 8% plus; more 1930's photos of soup lines
22. Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23. China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
24. Despite global recession, U.S. trade deficit continues, now at $650 billion
25. The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
26. Now 46 million uninsured as medical, drug costs explode
27. New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
28. Outgoing leaders handicapping new administration with huge liabilities
29. The "antitaxes" message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises
30. At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan's Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America's problems will take years and will burn trillions. He sees "nothing but large increases in the deficit ... I think it would be worse than the depression. ... Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds." It'll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government." Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. 'I just want to get people thinking about this, and to realize this is a road to disaster,' said Whitehead. 'I've always been a positive person and optimistic, but I don't see a solution here.'" We see the Great Depression 2. Why? Wall Street's self-interested greed. They are their own worst enemy ... and America's too.
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