Truth wills Out

Amid all the Red Herrings splashed across the entire Media, the one really big and significant event, which was completely ignored by the Media, happened on Saturday 9/12: We had the first huge demonstration against being taxed to death. There were about 75,000 people in Washington protesting and millions more across the entire country. The media, except for Fox News, did not cover it.

DANGER AHEAD: The coming Commercial Real Estate failures, bankruptcies and foreclosures will DWARF the sub prime debacle. The economy is NOT going to TURN AROUND because of the TARP money-which is just basically a financial "papering over" of $13 trillion dollars bail out of whom? Certainly not the people. The stock market is now a totally RIGGED GAME. The movement of all the bank stocks is totally rigged because all the banks are BANKRUPT. The FDIC is bankrupt, Freddie and Fannie are bankrupt and the Federal Government is bankrupt. That is why they are not lending even though their balance sheets look like they are strengthening. They all know that there are a lot more right-offs yet to come.

A while back, I mentioned that most of the homebuilders would go bankrupt. It has not happened yet; I refer you to the Deutche Bank projection that by 2011, fully 1/2 of all the homes in the U.S. will be worth less than their mortgages. By then, the homebuilders will be having their burials. Soon, 26 million households will be getting their increases in their Alt A mortgages.

The more the U.S. government talks about stimulus, the cheaper the dollar is going to get and the higher Gold is going to go. I may be repeating myself for emphasis, but JOBS are not going to be coming back. Many jobs will be permanently gone, never to return and this is going to make this the greatest recession/depression of all.

There has been a great BANK ROBBERY, but the banks have done the robbing.

The present culture is to LIE, from Wall Street to Main Street, to the Government pronouncements and finally our media... The Bernanke pronouncement made big headlines; that this recession is almost over. Mr. Bernanke has NEVER been right in any of his pronouncements. That is quite a record. The lying to the public is structural, endemic, and indigenous.

The next item to fall will be the colleges and universities. Their tuitions have been going up for years and that too must end. The endowments are down an average of 25%, the Alumni no longer have the money they once had. When they do graduate with liberal arts degrees and saddled by huge debts--there will be no jobs for these people, and little future.

Just to stay even with the employment issue and have jobs for the new people coming out of schools and colleges, we have to CREATE 150,000 jobs per month. Instead, we are losing on average 500,000 jobs every month for six months now. Who is kidding whom that the recession is almost over.

WAKE UP: Look at the math when it comes to spending. We must borrow three billion per day from foreigners just to stay alive. The interest on our present debt is now 800 million per day. How much longer will foreigners keep financing this debt as they are all now afraid of the dollar? The US must let the "too big to fail", FAIL. No more bailouts. That is what "cleansing" is all about. Right now it is all about bailing out the wealthy. This has to stop, but it may already be too late.

MONETIZATION: Is now being RECOGNITION BY CREDITORS. THE U.S. DOLLAR IS GOING TO BE SLOWLY ABANDONED. Desperation is now engrained in our monetary policy. It is also no longer hidden. The United States credit markets are losing their legitimate liquidity and increasingly are turning to the desperate reckless alternative, namely the dreaded monetization - the WEIMAR pathway has been taken. In fact, U.S. $ based bonds of all types might soon rely on direct monetization also. It means that the Fed will be buying all types of bonds for their portfolio to hold up the financial system. If it were not for the Fed buying most of the U.S. Treasuries issued (though hidden), the long term interest rates would be rising quickly and with alarm, with major fallout damage to the U.S. dollar, through failed auctions.

Dilution of the U.S. dollar from the printing press is certain to result in a much lower U.S. dollar exchange rate. Bubbles always break. There is not one bubble in the U.S. landscape that has been properly identified by the bankers who created them. There really is no way of knowing how many tens of billions of dollars of Treasuries have been secretly bought .by the Federal Reserve in previous "fraudulent" auctions. With the current bubble, as with all bubbles, there is going to be a bursting, then a drop in price and it will be both painful and rapid when the awareness spreads of this monetization. I am looking for a 30% to 50% loss in the value of the dollar. It may take six months or it may take two years.

Many people talk about DEFLATION, but only because they don't fully understand what Deflation and Inflation really are. It really looks to me like stagflation (inflation with bad unemployment) and a hyperinflation Tsunami is already in sight. All Central Bank and U.S. government responses have been and will continue to be the same, which is money printing, debt issuance, and running federal deficits.

We are on the verge of an inflation spill over. There is nothing laid out by the teachings from the Ludwig Von Mises Austrian School of Economics that has failed to occur. This discusses the approaching phase 2 which states that monetary inflation must accelerate to sustain growing bubbles. It also must accelerate to sustain these bubbles that break anyway and the inflation must continue to accelerate in an attempt to prevent the whole system from collapsing.

We have a government that is not equipped to fix an actual crisis. All they do is give the appearance of action, while leaving the actual reform behind as they never look for, let alone address, the actual causes. The people who have created the financial schemes that have robbed people of their entire future are still free while keeping their tremendous bonuses. You are witnessing an Empire collapsing from within (as they all do). Our real unemployment is now past 21%. More than 260,000 jobs per month disappear. (Not unemployment, but job positions folding, never to come back again.)

Governments and the financial systems they control have been rejecting economic law for some time now. There are always consequences for doing this.

Leveraged buyouts with nothing down: Will probably be the next bubble to implode with no bottom in sight.

Without a proper warning, the U.S. public is aligned to lose their life savings. Home equity, pension funds, and savings accounts are now vulnerable to deception, ruses, and false messages (propaganda). They need to heed the warnings, to depart from paper based investments. They need to shed U.S. dollar based securities and assets of all kinds and to fully embrace gold and silver. You will and are witnessing the largest transfer of wealth from paper assets to HARD precious assets. Few will do this or recognize this as they will rush to US Treasuries, the Biggest and last bubble that must eventually implode.

The bureaucratic state has continued expanding its reach across the U.S. economy at an astounding pace. At the very same time, the collateral foundation has "fallen" out from under the U.S. banking and financial system exposing it to U.S. $4.1 trillion in loan write-offs while having a capital of a mere $U.S. 1.4 trillion. If this does not say insolvency in large letters, the insolvency of the U.S. Treasury does. The Government's collateral foundation means income taxes. People out of work pay no taxes at all. They ask for refunds and go on the dole.

The G-20, which will be meeting soon, has slashed interest rates, thrown trillions in newly created "money" at the financial system, put blanket guarantees on the bank deposits of their citizens and prevented bank "assets" from being priced in ANY kind of market. And they have done this in unison. Now, as I see it, they are formulating plans to circumvent the consequences of their actions, it will not work.

To repeat myself, you now have the greatest "heist" or takeover of government by Wall Street, in U.S. history. They are taking over Washington and sucking it dry, especially by Goldman Sachs. The Fed is now giving all the money printed to mostly the large banks. Virtually nothing goes to Main Street.

We are entering the EARLY part of the greatest depression in our history.

Avoiding Economic Lessons

In fundamental terms, production must come before consumption. Today, we are told that at least for the past 10 years, consumer spending has accounted for between 67-70% of the U.S. economy. That is gross domestic product. In reality, this is impossible, but we have changed the rules. All that is required is an ever increasing trade deficit with the difference made up by Treasury IOU's. Does this sound familiar? Do this for 10 years and China builds up a trillion dollars of $US Treasuries.

In fundamental terms, real savings (unconsumed goods) are needed. This is a necessary prerequisite for investment and economic growth. But our country and its people have no savings to speak of. We have been spending our savings and what's worse, consuming our capital.

In fundamental terms, interest is a payment made to an owner of capital in return for giving up control or use of that capital for a specific period of time. But the U.S. government has chosen to alter this situation by mandating that this currency is "elastic" and can be stretched at will to meet the needs of government and business. A free market is where people come together to voluntarily exchange the fruits of their labor. When you begin to regulate, free markets end. Governments cannot abolish economic law, no matter how many times Mr. Obama says, "Yes we can." Most people see the government and its control of the economy as a necessary prerequisite to their own well being. In reality--the OPPOSITE is the case.

Again talking reality, the U.S. Government is bankrupt, just like Citigroup, AIG, Fannie Mae, Freddie Mac and others. They are being kept afloat by the auspices of the U.S. Government. The Government has no assets. All they have is borrowing and taxing power, the former being based on the latter. But the taxing powers of government become useless during a severe economic contraction. Furthermore, instead of reporting capital gains, people will be reporting capital losses, and asking for tax refunds. The Government's huge spending spree is coinciding with a tremendous fall in tax revenue. Rather than adopt austerity measures as common sense would dictate, the government is doing the exact opposite--spending beyond their means and increasing the indebtedness of their citizenry even more. The massive bailouts and deficits incurred to "save" the financial system will be a HUGE anchor on economic growth for years to come, even if the depression I call for were to end tomorrow. If there is no real savings (capital), then the depression will continue.

We have built up awesome leverage in the credit default swaps, CDO's and other strange vehicles. This leverage works ONLY with growth in the economy. If you have no growth-as now-then leverage works in REVERSE. The DEBT is exacerbated and then starts to implode. That is what is taking place now. It really is all a SHELL GAME. How can anyone call for a recovery? There is no recovery in a corrupt economy with criminal activity: There will be no recovery. Stop "mouthing" what the controlled media tells you. Take away DEBT and the DEBT (heroin) addict will go crazy. More and more debt must be created and that also is what is going on now. Try to understand where you are now, where this country is now. There are really three worlds out there: There is the media world, there is the political world, and there is the real world. The media world and the political world are totally out of touch when it comes to what is going on in the real world--and this is just the beginning. People are being squeezed and they are going to react in an ugly way. The Town Hall Meetings were just a prelude of more nasty things to come. It has been my opinion that the average person does not know what is going on. When this average person finally catches on, it is going to be very serious.

There are $2.4 TRILLION (VALUE) in Alternate A Mortgages that are due for re-setting directly ahead of us. The resets will be much higher and we are going to have more abandoned properties and foreclosures. In addition, banks are holding foreclosures off the market to avoid an all out glut. Commercial mortgages will start to default in greater numbers. According to Shadow Statistics, there are 21 million now unemployed. Nothing is over. When are people going to stop believing the media and do the math???

THE DEATH OF SMALL BUSINESS

The small business wreckage is staggering. It is the lifeblood of American Enterprise. It is the biggest reason for growth of the middle class and is now becoming a national tragedy. Gross neglect is part of the equation. Small business is vital to any recovery, but many are going bankrupt. Businesses are born, people are hired, equipment is purchased, sales are then generated, deliveries are made, services are rendered and then taxes are paid. If you did not know it, 50% of the GDP and fully 90% of job creation comes from Small Business. Of the famous TARP funds, less than 1% has gone to small business. All the Federal Programs support the lumbering, inefficient big business, fully bent on failure. Commercial bankruptcies are surging. Fewer small businesses are forming: Since January, 350 businesses filed for bankruptcy on a daily basis, which is an increase of 240% from 2006. Thus to claim an economic recovery is a total LIE. Small Business is the backbone of the US Economy and it is crumbling. For the most part, there are no jobs for College Graduates.

The American People Are Tapped Out: They are losing their jobs and they have no savings. Then, they are losing their homes which are being foreclosed on. They also have no collateral left against which to borrow. And the various banks will not lend to them because so many are losing their jobs and because the banks want to rebuild their collateral base. The banks prefer to lend to the government because the loan is guaranteed by the government and these loans require no excess reserves.

Since our government knows that the American people cannot spend, they see themselves as having to do the spending for them, while the collection of taxes has dropped by 40%. All G-7 governments and especially ours have reached the point of facing cutting spending or going broke.--and this choice stares directly at the seats of power. The lower levels of government--the state, local, and municipal governments are already laying off staff, reducing employment, having forced furloughs and thus cutting both spending and services. It is only the Federal Governments- which still insist on conducting their affairs as usual. What this really means is that FEDERAL COST is no object when political power is at stake. What is at stake is how long these governments can get away with spending endless money. Because of this, I am in direct opposition to the present buying of any tax free bonds of any kind, as we are no where near the elimination of multiple crises.

This situation is not the same as the Great Depression, where most municipalities paid their interest. Perhaps 5% defaulted. It is much worse. California just borrowed $10 billion from J.P. Morgan (which is really the US Treasury) and must pay 8% interest after a period of time. They also are paying out 80 million a day for unemployment insurance. They owe 26 billion in all and growing. I do not see an end here. Owning bonds of a state not in trouble?? Maybe, but not me.

I am well aware that most people need income, especially retired people. I have recommended KMP and ENB which are MLP's paying decent income, tax deferred. Their income is kind of assured for years to come. They are pipelines that transport and store oil and natural gas.

Do you feel something tightening around your neck?

Either this present system is going to recover or the people will reject the attempt to recover because THEY WAKE UP TO THE FACT that Socialism has never worked. That really is the choice that everyone is facing, whether you realize this or not. The more you choose for government to take over everything, the less freedom you are going to have. Every sign of increased lending backed by the POWER to tax future generations is presented to you as a false sign of "recovery". Every government injection of "capital "which allows the financial corpse to continue to trade on the paper stock markets is presented to the reader as a sign of "recovery." I am talking about Citigroup, AIG, Fannie Mae, Freddie Mac and so many more. They are really all corpses kept alive by a feeding tube from the US Treasury (the Public). And every government statistic (doctored) which is not quite as bad as the previous one is presented to you as a sign of "recovery." Every step that your government takes that literally tightens the noose around your neck and those still striving for self-sufficiency is presented to you as a sign of recovery. Do you feel the noose tightening? Is it hard for you to breathe?

So where is this recovery going? It is aimed at the retention of political power over the lives and property of those who are expected to finance that power. And they cannot run the economy without controlling the individuals who do not run the economy, but who merely participate in it by cooperating with their fellows. Ultimate political power cannot rely on cooperation, it never has. It relies on force and nothing else.

There are two opposing forces here which is the fundamental issue. Namely, the recovery of political governance or having the people reclaim political freedom. The next two to three years will tell. What is taking place now in the economy will not be over for at least three years and maybe more. We are going into a period of very high spending; most investments are based upon greed of one kind or another. Investing in GOLD is primarily based on FEAR and there will be much to fear in the coming three years. Greed comes later: And as I explained to you many times before: There is nothing more powerful than a Bull Market fueled by both GREED and FEAR. The kind of Bull Market that only GOLD can command.

Lies and deception are increasingly clear, regarding price inflation, the benefits of inflation as a policy, the attack on savings for which there is no yield, even implicit encouragement of gambling with life savings and pension funds. The ruling Elite control the banks, which control the creation of money. They are aided by intellectuals like Greenspan and Bernanke, Paulson and Geithner, Jamie Dimon and Lawrence Summers, Martin Feldstein Bill Gross and Warren Buffett and Robert Rubin who preach the ideological dogma that has ultimately destroyed the system along with our industry and our investments" unquote.

THE U.S. DOLLAR IS EXTREMELY VULNERABLE

The U.S. dollar breakdown is now in progress: The $78.50 level has been broken as of this writing and now is at $76.30 on the U.S. dollar index of currencies. Although the Technical signals now point to a powerful and important near term breakdown, they will try to manufacture at least one more rally attempt (probably coinciding with the G & summit). It is in progress and will push the dollar ultimately down to 70. That is for starters. The analysts will then cry global currency crisis. It is something that I have been looking for, for a long time. What follows will not be a recovery for the U.S. dollar at all, but a slow death process, destroyed by monetary debauchery, failed U.S. economic recovery policies, bankrupt U.S. banks, and lost global confidence.

THREE STAGES (A fast approaching dollar crisis)

The competing currency wars are soon to reach a fever pitch. The U.S. dollar weakness will force other countries to wreck their own currencies in response, so as to avoid further damage to their foreign trade. I am looking for this currency destruction to happen in three stages, the first of which is already apparent. In stage 1, the US dollar will falter and the Euro will rise. In stage 2, the Euro is going to falter, but the dollar will not benefit or recover. Other currencies such as the Canadian, New Zealand, Australian and Norway dollars will go up instead. Gold and silver will be big beneficiaries. In stage 3, perhaps two years from now, all the commodity currencies will falter and all hard assets will suffer except gold and silver. All the funds world wide will chase real money, namely Gold and Silver, since I believe the currency system will be shattered.

The Chinese government has announced many times that it wants to unload US Treasuries and U.S. Agency Mortgage Bonds. They also want to increase their gold holdings from 2% to 5%. In order to do that, they would have to buy up all the world's gold production for one year or 2500 tons of gold. That is unlikely. So they buy up any sizable gold that comes on the market, effectively putting a floor on the gold price. I should put after every paragraph--add to your gold holdings. But few will do this. I was recently asked," Now that gold has passed $1000, should I sell and take profits?" It has been my feeling that gold will rise to about $1500 by the end of the year and $2500 sometime in 2010. After that, let's see.

Will the coming IMF Gold sales lower the price of Gold. Maybe, but just to accommodate China and not for very long as China will be buying it all.

Is there a CRISIS Coming?

I am looking for one within three months or sooner. Our debt situation will force another crisis. The U.S. itself is on the horns of a dilemma. If it tries to balance its fiscal budget with spending cuts, it sends the U.S. economy into a depression. If it does not, then the U.S. Treasury has to keep borrowing to FUND (pay for) the budget deficits to the point where all lenders simply give up. When this happens, the US Treasury will have to go over to the Fed's printer. And I think the Chinese know all of this. That is why they say they will offer the U.S. the option of Yuan bonds. That is printing Treasuries denominated in the Yuan, which would at least eliminate the currency risk of the dollar falling for the Chinese. The dollar can fall without affecting China, since it would be paid in Yuan.

However, any move in that direction would prompt MANY other nations that their loans to the US be made in their own national currencies. This would then destroy the U.S. dollar as a reserve currency. Thus I say to the reader that the prolific printing of US money puts the Dollar at grave risk on many fronts. There is going to be a fast approaching U.S. dollar crisis. Your BEST defense is mainly gold, as other currencies will be devalued also. Right now the U.S. Treasury demand is aided by HIDDEN monetization of a very large scale, both on the domestic front with primary bond dealers and the foreign front with collusion among central banks.

Your owning gold offers the individual protection at the institutional level, the corporate level, and the personal level in a unique, stable, and subtle way. It is the only real money and I sleep well at night, no matter what the world of finance does. Frankly, it is still cheap given the insane multiples in increased money supply both inside the U.S. and globally in the last 3-5 years. If one factors in the derivatives, the multiples of money growth are even higher. I thus say that the price of gold should be at least $2500 per ounce right now and even approach $3000, but it is held down with brute force in a clear criminal fashion by the GOLD BANKS, which will not be possible to continue much longer.

Ben Bernanke and his Crowd does not realize that he and the rest of his cronies have painted themselves into a dire corner. And just by way of comment, the U.S. Fed Chairman did not foresee any bank crisis or mortgage bond problem before it occurred, not even a housing bubble. He also did not recognize the bank credit crisis until long after incorrectly labeling it a "Sub prime" Crisis when he then estimated the total bank losses to be only $200 billion. Then Mr. Bernanke expected the banking system would not extend to the tangible economy, as if there was no recession. He was wrong. He forecasted a U.S. economic recovery in the second half of 2009. He was wrong. He has never been correct yet, but the president praises him and then re-appoints him. In my opinion, either he is in deep denial or utterly incompetent. He then admits that the banking system has not returned to normal as many still cannot get loans. He acknowledges no errors, no missteps, no late awareness, no favored treatment to Wall Street firms, no irresponsible lack of transparency for TARP funds, no erroneous estimates on nationalization costs of many entities, no recognition of the ongoing " Black Hole credit derivatives are", yet resists Independent Audit of the FED and practices an avoidance of reality.

Bernanke has called for tighter controls in the governance of insurance conglomerate AIG, which is an impossibility. He also urges the winding down of globally interconnected U.S. companies-- impossibility. In actuality, Bernanke is stuck in the mud. The U.S. Fed has no exit strategy, since none is even remotely possible given the incredibly disastrous corner that the U.S. Fed has painted itself into. He does not have the brains to change course, since he cannot figure one out.

Buying Gold

My conclusion is that if you hold stocks denominated in a fading currency you are going to lose out when you compare your results against true intrinsic money such as gold. That is what you buy. You also buy silver because that is cheaper, has more leverage and at this stage is used as both an industrial and monetary metal. I am looking for 20-23 by the end of the year, $35 by next year. The one ounce silver eagle now has a $2 premium, but I would buy some anyway. I would sell ABX; they are part of the Bullion Bank's conspiracy and have destroyed their balance sheet with their Hedge Books.

Some Last Words: A new Paradigm is upon us. That word means CHANGE, a major change. And the majority voted for Change but they had no Idea what Change really meant. But still you have to see it and protect yourself. It is like moving through a veil to a place never seen before. And this place will soon become very dangerous with very bad forces unleashed. The U.S. social fabric has been torn asunder, and this situation is going to worsen. The system that we have been used to will break; platforms are going to collapse, causing massive global ripples that cause much destruction. Breakdowns are occurring now, but are going to become much more visible. Gold is the most important item to watch now and the Bullion cartels are losing control of its price. While there are many shorts in gold, China buys on all dips. The syndicate cartel and elite are now losing control in visible fashion.

I really do not care what most analysts and economists are saying about an end to this recession. The numbers put forward by CNBC and other government agencies have not added up for literally years. We are now moving into the next leg down into the abyss of what will be the greatest depression in history.

The people in Congress are the parasites who feed on the private sector and will eventually kill it. The parasite will destroy its host. The G-7 countries and the United States, which have all become welfare states, are headed towards an immense collapse because the debts being accumulated are un-payable and cannot be extinguished. In my opinion, there is no escape from the final debacle.

 

 

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UNCOMMON COMMON SENSE
Aubie Baltin CFA, CTA, CFP, PhD.
2078 Bonisle Circle
Palm Beach Gardens FL. 33418
[email protected]
561-840-9767