Phat profits for hyenas in Iraq

From Oilprice 

There is a Gold Rush Underway in Iraq, with major implications for the rest of us. The success of the recent oil auctions in Iraq is creating a windfall for American oil services companies.
Schlumberger (SLB), Baker Hughes (BHI), Weatherford (WFT), and Halliburton (HAL) have committed to drilling 2,500-3,000 new wells per year and building new pipeline and shipping terminal infrastructure that could make Iraq the world’s largest oil exporter. The value of these contracts may reach a massive $60 billion over the next six years, and could generate $1 billion in new revenues for each company per year.
Two offshore terminals are already under construction, and another two are on the drawing board. If successful, the project will boost the country’s oil production from the current 2.5 million barrels a day to 12 million b/d by 2016.
Iraq’s oil production peaked at 3 million b/d in 1979, and then went to nearly zero after it invaded Iran. I remember those days well, as I was issued a visa to accompany Saddam’s troops to Tehran, only to see it cancelled when the Iranians were able to mount a counter offensive. I still have the dessert camos and telephoto lenses need to cover the desert war, although the pants, regrettably, no longer fit.
Iraq’s oil industry never recovered. UN sanctions limited the regime to minimal “official” exports that covered humanitarian imports like baby food and drugs. Tanker trucks smuggled out through Jordan what they could, with the proceeds going directly to Saddam’s family. When the US invaded, bails of hundred dollar bills were found stashed in private homes, the proceeds of these black market deals.
American oil engineers were shocked by the poor state of Iraq’s energy infrastructure after 40 years of neglect. It all has to be rebuilt from scratch. If the new Iraqi government can provide the necessary infrastructure, and stabilize the political and security environment, it will become one of the largest changes to the landscape for international trade in decades.
Those are all very big “ifs”. It will dump another Saudi Arabia’s worth of crude on the market. It will also go a long ways towards meeting China’s insatiable demand for oil, as well as that of other emerging economies, and put a long term cap on prices. 
Of course, this is the scenario that antiwar activists and conspiracy theorists feared eight years ago, but no one thought it would take so long to play out. With an oil man as president, a vice president from Halliburton, and a secretary of the army from Enron, who can blame them.
Early in the planning of the war there was an expectation the US could defray some cost of the war with newly freed oil exports. I know, because I was there, my eight years in the Persian Gulf earning me an appointment as an outside consultant. I bailed when I saw the whole project was hopeless. Ever notice that Iraq’s oil industry was never targeted during either gulf war? These are usually prime targets in modern warfare.
This is so important that I can’t believe no one else is talking about it.  Yes, I know you’ll feel guilty making money off of a pariah stock like Halliburton, but you can always donate your profits to the Sierra Club.


Courtesy: Mad Hedge Fund Trader
___________-


 Related:

Fallujah’s leukemia rate 38 times higher than Hiroshima

   

A Gold Standard, of Sorts, In the Making?

From Fiat Collapse:

It is no secret that France, soon to have the upcoming chief role of chair/presidency of the G20, wants to facilitate tremendous change within the current global monetary system.

It is also no secret that France, Germany, and Russia, will meet in French town of Deauville tomorrow.  The US, was noticeably not invited, as I discussed in my post  Pre - G20 Meeting between France, Germany, and Russia - What's Cooking?   And also, the US response to this meeting from a New York Times article was not receptive to this new clique of countries:

“Since when, I wonder, is European security no longer an issue of American concern, but something for Europe and Russia to resolve?” asked a senior American official, who spoke on condition of anonymity. “After being at the center of European security for 70 years, it’s strange to hear that it is no longer a matter of U.S. concern.”   (link)

That said, there was a recent article from Ambrose Evans-Pritchard in the Telegraph.  The article dealt with currency wars, and the US's position as well as the East-West conflict in global trade.  But what really caught my eye, was something Evans-Pritchard wrote about Christine Lagarde, France's Finance Minister.  Here is the relevant portion, emphasis mine:

And while the French deny that they are in talks with China over the creation of a new currency regime, I heard French finance minister Christine Lagarde say in person at a meeting in Italy that France would use its G20 presidency to push for an alternative to the dollar. She specifically cited the “Bancor”, the idea floated by Keynes in the 1940s for a commodity currency priced off a basket of metals. The US risks gambling away the “exorbitant privilege” it has enjoyed for two thirds of a century as currency hegemon.

The "exorbitant privilege" Evans-Pritchard writes of is regarding the US's unique position of hosting the world's reserve currency.  By having the reserve currency, the US must constantly print dollars as the global economy grows.  But there are by-products to this printing.  One is that the US gets to export its inflation, due to the global demand for US dollars.  The other involves what economists call the "Triffin Dilemma"  that is, the US must constantly run a trade deficit, i.e. the US gets to consume a disproportionate amount of the world's resources and economic output as a result of having the world reserve currency.  Yes, the US gets to print, at will, the currency that is used to buy oil and other commodities.  That truly is an "exorbitant privilege."

But as the world get smaller from global trade, and economic power becomes more dispersed, this "exorbitant privilege" is coming under increased scrutiny.  The Triffin Dilemma I wrote about above also describes the dilemma the US faces.  As I mentioned, because it has the world reserve currency, it must constantly run trade deficits.  If it does not, and dollars (along with inflation) were not "exported" fast enough, global trade would contract.  That's the dilemma - no nation can keep running trade deficits forever.  It's not sustainable.

The world needs a common currency for global trade.  Yet it also demands a system that is sustainable and equitable.

Will it be the SDR, which so far, has been described as a basket of currencies?  Will it be this bancor tied to metals, including, I would assume, gold?  Or will the dollar continue until it, along with the global financial system, crashes?  Will a new system emerge through cooperation and before a new crisis erupts?  Or will a new system be born out of conflict and crisis - a defacto, and by default system?

That's the real dilemma the world faces today.
______-


Related:

Max Keiser’s investigation into Deutsche Bundesbank’s Gold farce goes global. The Germans are about to have 66% of their Gold reserves commandeered by the U.S.

Fears about the value of any currency have seen a resurgent interest in gold. Traders are now reading their John Milton: “Time will run back and fetch the age of gold.”

Desperate ECB: No Really, We're Going To Keep Printing Euros Like Crazy, Too!

From Clusterstock:

 
Euro leaders continue to fret that they're losing the currency war -- with the euro trading still at around $1.40 -- and are desperate to convince the world that they're happy to devalue their currency like everyone else.
Hence ECB chief Jean-Claude Trichet is out with new comments rebuking Bundesbank leader Axel Weber, overWeber's call to end bond buying.
Trichet says the program shall continue, and has brought support throughout the ECB Council, contra Weber.
We're guessing though it will take more aggressive language than this to jabber down the euro right now.


Join the conversation about this story »
See Also:

• Did An Uber-Hawk Speech Just Cost Axel Weber His Shot At Being The Next ECB Chief?

___________--

Related: 

Niall Ferguson says Sovereign Defaults coming to Europe, Japan and U.S.

Global Macro Notes: Fed Simply Driving Markets Toward a Brick Wall

On the Value of Gold as Policy Insurance

Fallujah’s leukemia rate 38 times higher than Hiroshima

By : Bob Nichols, Project Censored Award
October Saturday 16 2010

(San Francisco) - Dr. Christopher Busby, a world famous UK based physicist, was at the UN last week with the results of his health survey of the city of Fallujah, Iraq. The results were truly astonishing, even to the jaded eyes of UN representatives, old retired war fighters and politically connected bureaucrats. No armed force had accomplished this level of death and disease in a civilian population before.

What Weapons Can Do That?

There it was in black and white, on paper, from an internationally respected physicist - the utterly unbelievable, but certified results: Fallujah’s leukemia rate was 38 times higher than Hiroshima after the US Atomic Bombing in 1945. The questions were fast and furious.

Questions include:

1) How did the US do that? and, 2) What weapons did the US deploy on the civilian population to cause so much cancer? and, 3) Did the US nuke weapons labs develop a Cancer Bomb?

Many diplomatic representatives were probably wondering how their government could get some of those weapons, though they had no idea what the weapons were. Neither do I.

This is a whole ‘nother level of warfare, to paraphrase Maj Doug Rokke, USArmy, Ret., former Director of the Pentagon’s Depleted Uranium Project. The US Army and Marines visited upon the isolated, small Iraqi city of Fallujah, somehow, 38 times the killing and cancer causing power of the Atomic Bomb that devastated Hiroshima 65 years ago. That is a big improvement in war fighting lethality. What on Earth did you guys use?

The Livermore Nuclear Weapons Lab in California and the Lethality Center at Picatinney Aresenal in New Jersey were most certainly involved, among others, in this monumental breakthrough in war fighting capability. This is a really big deal! War fighting is all about delivering death and disease to the enemy population and enemy war fighters.

Was Fallujah a “Field Test” for Nuclear Weapons?

A reliable “Cancer Bomb” that nations can deploy while the whole world is watching is a long sought after Holy Grail of the US Weapons Program. A “Cancer Bomb” that politicians and Generals can deploy with arguable deniability, as if it was just another conventional weapon, would be absolutely Priceless to War Makers, War Planners and War Targeters at the Pentagon. They have long dreamed of just such a weapon.

The Cancer Bomb Results in Fallajuh do look like the answer to many a War Planners’ Prayer. This is a good report from Dr. Busby. I highly recommend it to all you guys at the Pentagon, gals too. This is the answer to your Prayers.

It is not so good for ordinary grunts slogging through house-to-house urban warfare. The distinction between targeted civilian and US grunt is non-existent. This stuff does not discriminate. It just kills and sickens with death and the exit path.

Why, even the Roman Catholic Church and the Pope endorse whole heartily the concept of slaughtering people and leaving the legacy infrastructure and buildings standing. “In 1979, Pope John Paul II conferred on ... Sam Cohen a peace medal for his invention, the neutron bomb.” (1)

What weapons did you use, guys? It would seem that the logical choices are dialed down B61-11 nuclear weapons set to less than 5 kt to cover up their use. Fourth Generation nuclear weapons for heavy neutron doses to the civilian population and other rumored neutron weapons. Doctors have told us that heavy neutron warfare would produce these disease and cancer characteristics and Male/Female sex ratio changes. What else did you use? [End]

Abstract Cancer, Infant Mortality and Birth Sex-Ratio in Fallujah, Iraq 2005–2009 Dr. Chris Busby

Abstract: There have been anecdotal reports of increases in birth defects and cancer in Fallujah, Iraq blamed on the use of novel weapons (possibly including depleted uranium) in heavy fighting which occurred in that town between US led forces and local elements in 2004. In Jan/Feb 2010 the authors organised a team of researchers who visited 711 houses in Fallujah, Iraq and obtained responses to a questionnaire in Arabic on cancer, birth defects and infant mortality. The total population in the resulting sample was 4,843 persons with and overall response rate was better than 60%. Relative Risks for cancer were age-standardised and compared to rates in the Middle East Cancer Registry (MECC, Garbiah Egypt) for 1999 and rates in Jordan 1996–2001. Between Jan 2005 and the survey end date there were 62 cases of cancer malignancy reported (RR = 4.22; CI: 2.8, 6.6; p < 0.00000001) including 16 cases of childhood cancer 0-14 (RR = 12.6; CI: 4.9, 32; p < 0.00000001). Highest risks were found in all-leukaemia in the age groups 0-34 (20 cases RR = 38.5; CI: 19.2, 77; p < 0.00000001), all lymphoma 0–34 (8 cases, RR = 9.24;CI: 4.12, 20.8; p < 0.00000001), female breast cancer 0–44 (12 cases RR = 9.7;CI: 3.6, 25.6; p < 0.00000001) and brain tumours all ages (4 cases, RR = 7.4;CI: 2.4, 23.1; P < 0.004). Infant mortality was based on the mean birth rate over the 4 year period 2006–2009 with 1/6th added for cases reported in January and February 2010. There were 34 deaths in the age group 0–1 in this period giving a rate of 80 deaths per 1,000 births. This may be compared with a rate of 19.8 in Egypt (RR = 4.2 p < 0.00001) 17 in Jordan in 2008 and 9.7 in Kuwait in 2008. The mean birth sex-ratio in the recent 5-year cohort was anomalous. Normally the sex ratio in human populations is a constant with 1,050 boys born to 1,000 girls. This is disturbed if there is a genetic damage stress. The ratio of boys to 1,000 girls in the 0–4, 5–9, 10–14 and 15–19 age cohorts in the Fallujah sample were 860, 1,182, 1,108 and 1,010 respectively suggesting genetic damage to the 0–4 group (p < 0.01). Whilst the results seem to qualitatively support the existence of serious mutation-related health effects in Fallujah, owing to the structural problems associated with surveys of this kind, care should be exercised in interpreting the findings quantitatively.

Keywords: Fallujah; Iraq; cancer; leukemia; depleted uranium; gulf war

[End

The Notes are an integral part of the article. Include when distributing. CopyRight by Bob Nichols 2010. Feel free to distribute with attribution and Notes.

“THE NUCLEAR THREAT THAT DOESN’T EXIST - OR DOES IT?”, by Sam Cohen and Joe Douglass, March 11, 2003, Financial Sense, http://tinyurl.com/2f5e2el

Cancer, Infant Mortality and Birth Sex-Ratio in Fallujah, Iraq 2005–2009 Chris Busby, Malak Hamdan, and Entesar Ariabi, 1 Department of Molecular Biosciences, University of Ulster, Cromore Rd, Coleraine, BT52 1SA, UK 2 100 Tanfield Avenue, Neasden, London, NW2 7RT, UK; E-Mail: malakhamdan@hotmail.com 3 82 Goldsmith Road, London, N11 3JN, UK; E-Mail: intisar_alobady@yahoo.com * Author to whom correspondence should be addressed; E-Mail: christo@greenaudit.org; Tel.: +44-1970-630215; Fax: +44-1970-630215. Received: 7 June 2010; in revised form: 23 June 2010 / Accepted: 30 June 2010 / Published: 6 July 2010, Int. J. Environ. Res. Public Health 2010, 7, 2828-2837; doi:10.3390/ijerph7072828

Google: <5 kt nuclear weapon There were about 113,000 Google results. Many are good hits for further research. Oct 15, 2010, Bob Nichols.

 

Machines of War: Blackwater, Monsanto, and Bill Gates

From DProgram:
(PoorRichard) – A report by Jeremy Scahill in The Nation (Blackwater’s Black Ops, 9/15/2010) revealed that the largest mercenary army in the world, Blackwater (now called Xe Services) clandestine intelligence services was sold to the multinational Monsanto. Blackwater was renamed in 2009 after becoming famous in the world with numerous reports of abuses in Iraq, including massacres of civilians. It remains the largest private contractor of the U.S. Department of State “security services,” that practices state terrorism by giving the government the opportunity to deny it.
Many military and former CIA officers work for Blackwater or related companies created to divert attention from their bad reputation and make more profit selling their nefarious services-ranging from information and intelligence to infiltration, political lobbying and paramilitary training – for other governments, banks and multinational corporations. According to Scahill, business with multinationals, like Monsanto, Chevron, and financial giants such as Barclays and Deutsche Bank, are channeled through two companies owned by Erik Prince, owner of Blackwater: Total Intelligence Solutions and Terrorism Research Center. These officers and directors share Blackwater.
One of them, Cofer Black, known for his brutality as one of the directors of the CIA, was the one who made contact with Monsanto in 2008 as director of Total Intelligence, entering into the contract with the company to spy on and infiltrate organizations of animal rights activists, anti-GM and other dirty activities of the biotech giant.
Contacted by Scahill, the Monsanto executive Kevin Wilson declined to comment, but later confirmed to The Nation that they had hired Total Intelligence in 2008 and 2009, according to Monsanto only to
keep track of “public disclosure” of its opponents. He also said that Total Intelligence was a “totally separate entity from Blackwater.”
However, Scahill has copies of emails from Cofer Black after the meeting with Wilson for Monsanto, where he explains to other former CIA agents, using their Blackwater e-mails, that the discussion with Wilson was that Total Intelligence had become “Monsanto’s intelligence arm,” spying on activists and other actions, including “our people to legally integrate these groups.” Total Intelligence Monsanto paid $ 127,000 in 2008 and $ 105,000 in 2009.
No wonder that a company engaged in the “science of death” as Monsanto, which has been dedicated from the outset to produce toxic poisons spilling from Agent Orange to PCBs (polychlorinated biphenyls), pesticides, hormones and genetically modified seeds, is associated with another company of thugs.
Almost simultaneously with the publication of this article in The Nation, the Via Campesina reported the purchase of 500,000 shares of Monsanto, for more than $23 million by the Bill and Melinda Gates Foundation, which with this action completed the outing of the mask of “philanthropy.” Another association that is not surprising.
It is a marriage between the two most brutal monopolies in the history of industrialism: Bill Gates controls more than 90 percent of the market share of proprietary computing and Monsanto about 90 percent of the global transgenic seed market and most global commercial seed. There does not exist in any other industrial sector monopolies so vast, whose very existence is a negation of the vaunted principle of “market competition” of capitalism. Both Gates and Monsanto are very aggressive in defending their ill-gotten monopolies.
Although Bill Gates might try to say that the Foundation is not linked to his business, all it proves is the opposite: most of their donations end up favoring the commercial investments of the tycoon, not really “donating” anything, but instead of paying taxes to the state coffers, he invests his profits in where it is favorable to him economically, including propaganda from their supposed good intentions. On the contrary, their “donations” finance projects as destructive as geoengineering or replacement of natural community medicines for high-tech patented medicines in the poorest areas of the world. What a coincidence, former Secretary of Health Julio Frenk and Ernesto Zedillo are advisers of the Foundation.
Like Monsanto, Gates is also engaged in trying to destroy rural farming worldwide, mainly through the “Alliance for a Green Revolution in Africa” (AGRA). It works as a Trojan horse to deprive poor African farmers of their traditional seeds, replacing them with the seeds of their companies first, finally by genetically modified (GM). To this end, the Foundation hired Robert Horsch in 2006, the director of Monsanto. Now Gates, airing major profits, went straight to the source.
Blackwater, Monsanto and Gates are three sides of the same figure: the war machine on the planet and most people who inhabit it, are peasants, indigenous communities, people who want to share information and knowledge or any other who does not want to be in the aegis of profit and the destructiveness of capitalism.
Source: Poor Richards Blog
Related posts:

1. Video: The Nation – Docs Reveals Blackwater-Linked Companies Provided Intel & Security to Multinationals Like Monsanto, Chevron
2. Monsanto, Blackwater and GM crop saboteurs – Rady Ananda
3. Bill Gates now pushing genetically modified seeds in Africa

The Real IP Pirates

From Mises Economics Blog: 
 It’s bad enough that IP advocates dishonestly use the word “theft” to describe use of your own property in contravention of a monopoly issued by the state. (After all, as Nina Paley reminds us, copying is not theft; when you use information to guide your action or configure your own property, the originator of the idea still has it.) But use of the word “piracy” to describe pattern-copying is going too far. Real pirates storm boats, rape, loot, murder; they break things; they leave the victims dead, injured, enslaved or at the least missing many former possessions. Modern IP “pirates,” of course, do none of these things.
So it is indeed ironic that in there is a connection between IP and real piracy: namely, they go hand in hand.
Patent and copyright originated in the machinations of sovereigns (monarchs, etc.) to win the loyalty and services of entrepreneurs and artists. “Letters Patent” and later copyrights were exclusive monopolies protecting various goods and services and their authors or purveyors for a period of time. As Historian Patricia Seed notes:

The word “patent” comes from the Latin patente, signifying “open.” Letters patent are open letters, as distinguished from letters close, private letters closed up or sealed. Letters patent came from a sovereign … and were used to … confer a right, title, or property, or authorize or command something to be done.

In fact, Letters Patent were used by the British Crown to entice pirates to become “privateers” (a fancy name for legitimized piracy), by giving them a monopoly over some of the spoils of their piracy for a given time. A notorious example is Francis Drake (I won’t call this slaver and pirate “sir”) who was given a Letter Patent March 15, 1587 to authorize his piracy, such as attacking Spanish ships sailing back from South America laden with silver, handing it over to the Queen after taking his share. (See David Koepsell, Let’s Get Small: An Introduction to Transitional Issues in Nanotech and Intellectual Property.) According to Wikipedia, Maritime History of England, Drake

made the first English slaving voyages, taking Africans to the New World. Drake attacked Spanish ships sailing back from South America laden with silver. He took their treasure for himself and his queen. He also raided Spanish and Portuguese ports. He undertook a circumnavigation of the world in 1572 and 1573. He discovered that Tierra del Fuego was not part of the Southern Continent and explored the west coast of South America. He plundered ports in Chile and Peruand captured treasure ships. He sailed up to California and then across the Pacific Ocean to the East Indies. He returned to England with his ship full of spices and treasure, so gaining great acclaim.

In other words, patents were originally used to authorize actual piracy. So it is ironic that modern defenders of IP claim to be opposed to IP “pirates”—even though real pirates (like Francis Drake) kill people, break things, and take things from people (and delivered slaves into bondage), while “information pirates” do none of these things.
Of course, Letters Patent evolved into modern patents. At first employed sporadically by monarchs, later they became “democratized” as part of entrenched and more predictable state institutions. (One of the first patent statutes was England’s Statute of Monopolies of 1624.)


Join the discussion and post a comment

John Williams Warns Of "Severe And Violent Sell-Off In Stocks"

From ZeroHedge 10/15/2010:

John Williams utters his most ruthless words of condemnation not only toward the Fed, but to everyone who is stupid enough to be chasing returns in the face of what is a hyperinflationary collapse.

Euphoric Inflation Insanity. Buying U.S. stocks because the Fed says it will proactively debase the U.S. dollar is like sitting on the beach in order to get a great view of an incoming tsunami. Any pleasure so derived should be short-lived, when the terror of underlying reality quickly takes hold.

If one were to view movement in the price of gold as a surrogate for anticipated inflation, for example, the issues begin to come into focus. Consider that last night's (October 14th) respective S&P 500, Dow Jones Industrial Average and NASDAQ Composite closing levels were up by 7.5%, 10.8%, 12.1% from a year ago, but the price of gold was up by 29.6% in the same period. Relative to gold, which tends to hold its purchasing power over time -- albeit sometimes in an anticipatory manner -- the S&P 500, Dow Jones Industrial Average and NASDAQ Composite have declined respectively by 22.1%, 18.8% and 17.5% year-to-year. This is against the prospective inflation environment being discounted by the gold market.

While stock prices do tend to rise in an inflationary environment -- where revenues and profits are inflated -- rising stock prices do not always stay ahead of inflation. On a constant-dollar or real, inflation-adjusted basis, stocks go through bull and bear markets, just as they do otherwise. If prices do not stay ahead of inflation, investors lose value in terms of the purchasing power of their assets. The equity markets may rally in the upcoming inflation, but the systemic implications and current gold behavior suggest that the circumstance will not give investors a positive real return, as discussed in the Hyperinflation Special Report.
Given the current systemic distortions and extreme irrationality in the equity markets, a severe and violent sell-off in stocks would not be a shock, and it could come with minimal, if any, warning. It also might be coincident with a U.S. dollar-selling panic.

There is particular risk of recent dollar selling -- which has been closing in on historic lows -- turning into an outright dollar-dumping panic, which not only would roil the domestic U.S. markets, but also would set the stage for a rapid acceleration of domestic consumer inflation. Irrespective of any near-term market volatility, gold and silver, as well as the stronger currencies, remain the best long-term liquid hedges against loss in purchasing power of the U.S. dollar.

For more, click here

We sympathize with John's sentiment, but who cares about risk? The Fed will never let anything drop in price ever again. It is now far too late to prevent the biggest bubble in the history of the world, and its subsequent collapse.
______________-


Related:

Markets now just a function of the dollar, Art Cashin tells King World News

Federal Agents Urged to 'Friend' People on Social Networks, Memo Reveals

From Connecting the Dots in the New World Order:

A privacy watchdog has uncovered a government memo that encourages federal agents to befriend people on a variety of social networks, to take advantage of their readiness to share -- and to spy on them. In response to a Freedom of Information request, the government released a handful of documents, including a May 2008 memo detailing how social-networking sites are exploited by the Office of Fraud Detection and National Security (FDNS).

As of Thursday morning, Facebook, Twitter, MySpace, and Digg had not commented on the report, which details the official government program to spy via social networking. Other websites the government is spying on include Twitter, MySpace, Craigslist and Wikipedia, according to the Electronic Frontier Foundation (EFF), which filed the FOIA request.'
Read more...
________


Related: 
read the full report at the Electronic Frontier Foundation.

Government Spying via Facebook

US eyes Australian Government web plan

Scummy banksters troll Yves's comment section, try to bring her site down with denial of service attacks

International Forecaster October 2010 (#5) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster
Sunday, 17 October 2010


The following are some snippets from the most recent issue of the International Forecaster.  For the full 32 page issue, please see subscription information below. 


US MARKETS


Today’s great debate basically between the US and Europe is – should the Fed go full bore by implementing a second quantitative easing? In part it is a moot point, because they have been doing just that in the repo market for four months without letting anyone know what they were up too. Their mandate is to reduce inflation and create full employment. Real inflation is 7% and unemployment is 22-3/4%. The Fed for three years has concentrated on bailing out Wall Street, banking, insurance and transnational conglomerates. Little has been done to fulfill their mandated mission. The main recipients of their largess, of course, are the firms that actually own the privately owned Fed. 


There are two options left to the Fed. Create a full QE2 by injecting another $2.5 trillion into the economy, as they just did with QE1 with $868 billion in assistance from the Senate and the House, or they can purge the system and have a deflationary depression. That result will be the fate of the Fed eventually if they create QE2 or perhaps QE3. No matter what the Fed does a deflationary collapse, one way or another, is inevitable.


Few pay attention to the fact that the US has been in deflation for 8 years and has been kept afloat by injections of massive amounts of money and credit. Not to be singled out most all nations have been doing the same thing and that is why all currencies have fallen versus gold for the past 9 years. This is how the game has been continued, otherwise we would have all fallen into deflationary depression or a death spiral. This has given us less consumption, zero interest rates and higher unemployment. 


Officially inflation is 1.6%, but real inflation is 7% as most of the liquidity injections have been used to beat back the undertow of deflationary depression. That has resulted in a Fed expansion of from $1 trillion to $3 trillion and who knows how much more is being hidden on the books of other foreign central banks. As the Fed has told us it is all a state secret. To their credit the Fed has held off financial collapse, but we ask you how do they believe that they can keep this up indefinitely? The obvious sacrifice is the dollar and that is in progress.


As this increase in money and credit continues at a $2 to $2.5 trillion pace over the next year the vision of hyperinflation looms in the background. The only way to avoid hyperinflation is to allow deflationary depression to proceed. It is going to happen anyway no matter what the Fed does. The chaos of hyperinflation should be avoided at all costs. The owners of the privately owned Fed won’t allow that because they want to hold on to power and control as long as possible. Thus, in all likelihood we will have inflation, then hyperinflation and then deflationary depression. Having been at this for 50 years we nkow nothing is written in stone. It may not seem sensible to you but it is reality. Our track record for the last 21 years speaks for itself. Correct calls in all sectors 98% of the time.


Wages and salaries and asset prices have been falling with inflation rising, as we have endured a credit crisis for the past three years. The dollar is close to its lowest levels and gold is flirting with $1,360 an ounce. That is a disastrous situation for Americans, except the 2% to 3%, who have had sense enough to invest in gold and silver bullion, coins and shares. That excludes the ETFs, GLD and SLV, which we believe are a disaster waiting to happen.


Thus, there is to be another monetary expansion, which will take inflation up to 14% or more and that will in part cause a flight to quality, which will continue to be boasted by gold, which has replaced the US dollar as the world’s reserve currency. Many question that, but in time people will realize that is what in fact has happened. Monetarily that means that the one-worlder’s dream of a world currency will never be fulfilled. Hyperinflation in the US dollar will spread in varying degrees to all fiat currencies and these elitists will be deprived of issuing any currency that is not backed by gold. The game they have played for so long, the suppression of gold prices, will be lost. That means those who are in control already realize that their war against gold for financial domination has been lost and they will have to concentrate on the survival of what they term, their system.


Inflation is on the way in much higher numbers to be followed by hyperinflation and ultimately deflationary depression.


Presently the US government debt to GDP is about 93% of GDP with an annual debt to GDP of about 10%. QE2 means more of the same along with government debt. Government continues to create debt and the Fed continues to monetize debt. Both are trying to bury the economy, increase demand and to keep deflation at bay. The result they hope is recovery, which in reality is out of their reach. Even with $5 trillion over the next two years the best they can do is to barely stay on the plus side. Over the last two years they have accomplished very little.


Those who have been paying attention have seen the Fed’s targeting of the Treasury market. Not only do they have interest rates at zero, but also they have caused yields on the 2-year bills to fall to 0.36%, but also the 10-year notes are yielding 2.47% and they look like they are headed lower. This makes borrowing very cheap for large corporations and for mortgage rates to be very attractive. This has made treasuries the focal point of Fed policy. The strength or weakness of their program. Most small business and medium sized businesses still cannot get loans and they are the ones that create 70% of the jobs. Thus, it is still Wall Street; banking, insurance and transnational conglomerates that get virtually free money. The intention is that all the elitists survive and the heck with the rest of the country. These same firms are the ones that are still laying off. 


The result is that treasuries, in spite of their bogus AAA rating, are the new addition to junk bonds and toxic waste. They are overvalued and the yields ridiculous. We believe in time the Fed will end up with total treasury issuance. That means the US dollar will sink to new unheard of depths, which it is in the process of doing.


Much of the Treasury sales by money managers are sending money into the commodities market and in limited cases in gold and silver and shares. Such switches will put pressure on Treasuries, which will make the Fed’s job more difficult. They will have to create ever more money to control that market. As we move forward the Fed will be forced to create more liquidity by buying more Treasuries than they might have to otherwise. Eventually this will appear to be a bubble, which it in fact it’s becoming as we write, and that is how the Fed will end up with the entire issuance.


The big money center legacy, too big to fail banks, is essentially broke. In fact they have been nationalized via infusions of capital by the Fed plus are being allowed to keep two sets of books. Regulations have been bypassed and they have become a law unto themselves with the help of the federal government, the BIS, The Bank for International Settlements, and the FASB. They borrow funds from the Fed at zero interest rates and then lend it back to the Fed at 2-1/2%, which taxpayers get to pay. This is for a subsidy to try to keep these banks on the edge of solvency. These actions also allow their officers multi-million paychecks that under the circumstances border on the obscene. They hoard funds and have cut lending to small- and medium-sized businesses by 25%, which keeps those funds sterilized. When they monetize these funds it is in the form of loans to the elite corporations and in the purchase of treasuries. This as the Fed buys $1.7 trillion in toxic waste at prices it won’t divulge from these same and other banks. Now they are in the beginning process of selling this toxic waste back to the banks at low prices to allow the losses to be transferred to the taxpayers. This is exactly what is going on. The fed is totally subsidizing these banks, which just happen to own the Fed. We call this an incestuous relationship. We all know what will happen when these banks and the foreign holders all try to exit Treasuries at once – the bubble will break. This time no one will be there to play catcher and yields will climb quickly and furiously.


This scenario brings us to where will all the money go? The first haven has been commodities. That will push prices up and add to price inflation. Those who choose to use ETFs will be jumping from the frying pan into the fire. We all can see that this is in process, especially in gold and silver prices. What is going to surprise you is that this sector change will be relentless in the flight to quality into real things. Yes, there will be wild volatility and corrections, but the upward trajectory will be maintained long beyond what people could have believed. Those owners will have nowhere else to turn. Bonds and the market will be falling along with the dollar and real estate is dead. They will continue to stay long commodities, gold and silver because there is no place else safe to go too. Unfortunately the populace will at this stage be treated to hyperinflation - the process in which people will have lost faith in the dollar and will dump it for goods and services as soon as it is received. 


This is why a world meeting is necessary, such as the Smithsonian of the early 1980s, the Plaza Accord of 1985 and the Louvre Accord of 1987. Without such a meeting to realign currencies and to multilaterally default on debt there will be international financial and economic chaos. It would also lead to worldwide hyperinflation, emanating from the US. This would in all likelihood be accompanied by not only a flight to gold, silver and commodities, but also a collapse in treasury markets, particularly in the US Treasury market, which by that time could be totally owned by the Fed. That would push yields up and cause the stock market to fall.


Such events would force the public to use their currencies that they have lost faith in first by buying food and household goods before prices rose higher. Asset prices will collapse. The price of things, such as homes, buildings, cars, trucks, factories, etc. will collapse to 20% to 40% of what they were worth just a month ago. The functioning of the US and world economy would collapse. That is where bartering begins. Using gold and silver coins to complete transactions. You may not think what you are seeing could lead to all this, but it could, unless there is soon an international meeting to settle differences and patch up the existing system. No matter what happens there will be great dislocation and chaos.


Government cannot save us, only international cooperation can. One of the most important events would be a collapse in the Treasury market, accompanied with a stock market collapse. The flip side of that would be skyrocketing prices of commodities, gold and silver. There would be no other options left. Most people were too preoccupied with their lives to notice the advance of such events. America will wake up one morning to Martial law. That will be the only thing left for government to do to try to control the situation. It is not a solution, but it at least for a time will keep order. America is Humpty Dumpty. Such events have an excellent chance of occurring in 2011 and 2012, if a meeting is not held over the next six months. The key to such an accord is to revert to a gold standard for currencies worldwide at a price in excess of $6,000 an ounce; otherwise the scenario will just begin again.


It is obvious we cannot continue to do what we are doing. It is not working. We are all headed toward global deflationary depression, even the most solvent nations, because most have very little or no gold left. You had best prepare. First for higher inflation, then hyperinflation and than deflationary depression. If you do not prepare you will be very unhappy.


Since 2007 mortgage servicing departments of financial institutions hired Wal-Mart employees, assembly line workers and hair stylists as foreclosure experts, almost none of whom were ever trained for such a responsible position. They almost all were involved in fraud. Worst yet, they said they knew they will lying when they signed foreclosure affidavits. People shut out of their foreclosed homes are moving back in even though there are new owners.


The Senate is poised to follow the House in passing China currency regulations. This will lead to trade war.


Voices reach us and are telling us that Washington is planning a resolution trust type of affair. The chances for a bank bailout are small, so this would be the preferred avenue. 


The latest mortgage problems could very well lead to homeowners refusing to pay monthly payments, because they will demand that they be shown who the real owner is and are they paying the payments to the owner or to its legal agent. They could live in the house indefinitely rent or mortgage payment free. This scam by the bankers and Wall Street could end up making the credit crisis look like small potatoes.


No matter which way you cut it banks now have more serious problems. That is what is being said at the Fed. They are talking about a $6 billion bank problem, just based on the delay caused by the moratorium of three months.  That is on $750 billion in mortgages. Banks keep homes in foreclosure from 14 months to two years. When all is said and done it could involve $1 trillion in mortgages. You might call this - the peoples’ revenge - for getting screwed by the banks and the fed. These unfolding events should send bank stocks tumbling.
...


THE INTERNATIONAL FORECASTER


SATURDAY, OCTOBER 16, 2010


101610(5) IF


E-MAIL ADDRESSES


For correspondence to Bob:


bob@intforecaster.com


For subscription and renewal; technical support, log in problems, etc.:


info@intforecaster.com


CHECK OUT OUR NEW WEBSITE


www.intforecaster.com


RADIO APPEARANCES:


To check out all of our radio appearances click on this link below:


http://www.intforecaster.com/radio