EURO CRISIS ESCALATES: GERMANY PREPARES TO HAND PORTUGAL OVER TO THE BANKS TO BE SCALPED

From Case about Bird Flu 

by Jane Burgermeister

- Germany‘s Chancellor Angela Merkel manoeuvres Portugal into loss of souvereignty and economic meltdown
- Merkel’s remarks have helped push Portugal’s debt to unaffordable levels, indicates German government economic advisor Beatrice Weder di Mauro
- No debt restructuring mechanism in place though urgently needed, says Weder di Mauro
- Germans and French pressure Portugal over the weekend to accept IMF/EU control of their budget and a brutal deflationary depression
- Beneficiaries are German and French banks and insurance companies
- German Finance Ministry indicates transfer union fund will be expanded reversing earlier pledges: transfer union puts all of Europe’s tax payer’s on the hook for astronomical fractional-reserve banking debts
- Portugal’s Prime Minister resists pressure to give up souveriegnty and go under IMF/EU control
- Top figures such as Foreign Minister Luis Amado have floated idea of leaving the euro
- Spain, Belgium and Italy are next in line
- Entire eurozone faces meltdown if bank created debt burden is not dealt soon: EU plan for 2013 too late
Portugal should
*restructure debts on ist own without waiting for the EU plan for 2013
*leave eurozone and print money without creating debt to avoid having to borrow on international financial markets
Economics professor and member of the German government panel of economic advisors, Beatrice Weder di Mauro, has warned that mechanisms need to be set up urgently to manage the insolvency of euro- zone states in order to stabilize monetary union currently facing an unprecedented crisis, according to a report in the WirtschaftsWoche.
http://www.mmnews.de/index.php/politik/7079-europaeischer-waehrungsfond-soll-schuldenprobleme-loesen
Weder die Mauro said plans to “include” bondholders in debt „restructuring“ were on the right track but were too far off to deal with the  euro crisis engulfing the eurozone as debt laden countries return to the bond market.
She also accused German Chancellor Angela Merkel of making the euro debt crisis worse by laying out plans for a debt restructuring programme in 2013. This made it harder for Portugal to access the bond market ahead of a key bond sale on Wednesday.
„..Such an announcement [about making private creditors pay in 2013] makes it the problems bigger in the short-term,“ she said.
Portugal is to issue up to €1.25bn in bonds on Wednesday but it saw interest rates soar on 10-year bond record to highs of 7.19 per cent on Friday, more than a percentage point higher than at the start of December and far more than it can afford.
If Portugal cannot attract investors on Wednesday, the euro zone crisis will deepen and move on to Spain, the next country  to be pushed into the control of the IMF and EU for the profit of the banks.
Portuguese politicians have been discussing the option of leaving the eurozone and they should do so after restructuring and writing down their national debt themselves without waiting for the EU.
Merkel is a member of the Bilderberg group, a loose network that is seen as playing a key role in engineering the bank crisis and the destruction of states for the profit of the banks by sadding governments with huge national debts engineered by banks using the fractional reserve banking system.
Vienna Economics Professor Franz Hörmann explained how banks can create credit – as well as debt – out of thin air in an interview in Der Standard recently. Tax payer bailouts are, therefore, pure profit as this represents real capital with an exchange value in the real economy.
Weder die Mauro said that a framework should be set up to allow countries to enter into insolvency when a certain debt level was reached.
But there is no sign of any such default mechanism  being prepared by the EU, leaving Portugal with few options unless China or the ECB buys its bonds on Wednesday at punishing and unsustainable interest rates.
If there is no mechanism for restructuring its debt, Portugal could be pushed to accept a loan from the the €450bn European Financial Stability Fund (ESFS), the main pillar of a  €750bn IMF/EU eurozone rescue funds.
Or it will have to leave the eurozone.
Taking a loan from the fund would  put Portugal under the control of the IMF/EU , who are set to implement a brutal fiscal austerity as in Ireland and Greece, resulting  in a deflationary depression as the maximum amount of tax payer money and assets are sucked out to give to the banks and insurance companies who hold bonds in Portuguese debt..
The German insurance company Allianz is reported to hold 90% of all ist investments in the form of souvereign bonds.
Also, it was reported that Germany was pressuring Portugal over the weekend to borrow from the ESFS to pay the banks.
The Welt am Sonntag reported that eurozone finance ministers were calling Portugal’s finance minister several times a day to pressure him to accept the IMF and EU loan and their control of the country’s budget.
Bilderberg German finance minister Wolfgang Schäuble also had dinner with Bilderberg French finance minister Christine Lagarde in Strasbourg on Friday on how to deal with the eurozone crisis.
Portugal has insisted that it can resolve its sovereign debt difficulties on its own but now that Merkel and the EU have helped push up borrowing costs to record highs, it is hard to see how unless it quits the eurozone.
Portugal’s Prime Minister Socrates has pointed that the country managed to to reduce the government budget deficit to 7.3% of gross domestic product in 2010 by growing – something it certainly would not continue to do under the brutal IMF and EU budget regime.
The main profiteers of such a „bailout“ are the German and French banks who would be able to use the IMF and EU as tools to strip the country of assets and tax money to keep themselves afloat. Without this stream of revenue, many European banks would face a liquidity crisis and insolvency.
Weder di Mauro’s criticism of Merkel comes as Merkel made a statement for the third time that pushed up the borrowing costs of countries in crisis — Greece, Ireland and now Portugal — without taking any steps to allow those countries to default or restructure their debt.
Plans published by the European Commission last week will reduce tax payers bill for the banks fraudulent fractional reservedebts but only in 2013. This is too late. By this time, the entire eurozone will be under the control of the IMF and EU including Germany itself which is ultimately supposed to shoulder the outstanding debt under a transfer union.
In December, 2010, Merkel and other European leaders made a theatrical show of refusing eurobonds for  the general public. Eurobonds will put all tax payers, especially Germans. on the hook for the outstanding bank debt  in the eurozone.
But Merkel remained silent when eurobonds were issued by the ESFS in January 2011 even though it is impossible to believe she was not informed by an official in her finance ministry that eurobonds were being issued through the back door to cover Ireland’s IMF/EU loan.
Also, a German government spokesman today refused to rule out increasing the the size of the ESFS.
http://www.bloomberg.com/news/2011-01-09/germany-s-refusal-to-boost-966-billion-euro-rescue-fund-may-be-weakening.html
„Germany may be softening its opposition to expanding the 750 billion-euro ($966 billion) rescue facility for indebted euro nations as investors question Portugal’s ability to avoid tapping the fund. „ reported Bloomberg.
A transfer union is not only unpopular in Germany but against the constitutional. A complaint filed at the constitutional court is due to be ruled on in Spring.
However, German banks like Deutsche Bank – run by Bilderberg Josef Ackermann – need to access tax payer’s money and nation’s assets to rollover their debts and pay out „big bonuses“ to their bosses.
Without the constant revenue from tax payers through one engineered national debt mountain, many European banks risk insolvency.
The Merkel government‘s tactic appears to be to make the eurozone debt crisis worse while pretending to try to help – but to delay the urgently needed new rules allowing for an orderly default until it is too late. This tactic allows the Merkel government to present itself to the electorate as upholding German interests as best it can while being pushed by events out of its control to forcing tax payers to pay worthless fractional reserve, bank paper debts of other countries.
Merkel may be calculating that whipping up a crisis in Portugal and Spain will be the best of way of getting Germans to accept that they have been put on the hook for the outstanding debts of all eurozone nations.
Economist Nouriel Roubini also urged Germany to accept a transfer union to pay the bank debts.
http://www.mmnews.de/index.php/politik/7085-roubini-deutsche-sollen-euro-retten
Roubini suggested that the introduction of a transfer union would not cause an economic meltdown in Germany itself, arguing that Germany’s budget was under control – but Germany’s budget will no longer be under ist control in a transfer union because it will assume responsibility for all the outstanding debts in the eurozone, debts it can never hope to repay, leading to economic meltdown there too.
Furthermore, Roubini praised Germany’s tough budget but at the same time urged the country to spend more to stimulate the economy without attempting to reconcile the contradictory approach.
And this is a professor of economics at New York University? Either he does not under economics or he is  misleading people and misrepresenting economic facts.
Faced with economic take over, Portugal should leave the euro zone, adopt its old currency and print money without creating debt as China does. Iceland’s economy is already growing one year after defaulting on its fraudulent bank debts.
The alternative is a loss of souvereignty and a brutal depression and the transfer of ist assets to German and French banks with no relief in sight.
Debt restructuring or default and adopting a national currency clearly have to be done together. There is no point in leaving the eurozone with a mountain of debts denominated in euros around a nation’s neck.
Without the engineered AIB bank debt, Ireland has a manageable public debt that it could also service outside of  the eurozone easily. The advantage of leaving the eurozone is that Ireland could take full control of ist money system cutting ist reliance on big banks., though Ireland could stay in the eurozone and still function as long as it wiped out the AIB bank debts.

Oh, It Was The John P. Wheeler III Who Was Involved In The Barksdale-Minot Incident Who Was Found In A Landfill!

From Femalefaust:

So Wayne Madsen  hips me to this tip on John Wheeler III, whose name I didn't recognize:

John Wheeler III, special assistant to Air Force Secretary during the 2007 B-52 nuke incident at Minot, found dead in Delaware landfill. Homicide concluded. Last seen on Amtrak from DC on Dec. 28. Dealing with neocons can be hazardous to one's health. Not the first suspicious Air Force death as reported by WMR.

A bit more digging, so you have somewhere to start, brings me to Sodahead's rather levelheaded opinion :

What the "news" is not telling you is -

Wheeler was the assistant to the Secretary of the Air Force in the George W. Bush Administration. It was the Secretary of the Air Force who discovered that Richard Cheney had set up an alternative chain of command to the nuclear weapons wing of the AF. In the process, six minutemen missiles armed with nuclear warheads were secretly transported from Minot AFB to Barksdale AFB. The later is the chief staging base for the Middle East war. The alarm system for the weapons was deactivated for the transport, something that not even the base commander could authorize. The orders had to have come from above. Many point to Cheney. Before the warheads could be flown via B-52 to the Iraq/Iran theater, the Secretary of the Air Force ordered the stand-down of all B-52 flights. When he discovered the alternative chain of command to Cheney, he fired all military personnel who were involved. Cheney was said to have been livid. The Secretary ordered an investigation of what the AF press release called an oversight, and 70 enlisted men and 5 officers were removed from the Minot nuclear system. 

At the same time, people involved began to die mysteriously. Wheeler is only the latest casualty.

Read more, including background info, here .


For a detailed history of the Barksdale-Minot incident, go here (of course).

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GORDON DUFF: THE WHEELER MURDER, JUST ANOTHER DEAD VETERAN?

Method, Means, Motive, and Opportunity – The Mechanism of Chinese Silver Accumulation

By Golden Economizer

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January 7, 2011 - I was gratified to see how well my recent article (Is China Behind The Big Silver Short Dec 25th, 2010) was received, when over 50 websites worldwide picked it up in the first 24 hours. But I am afraid that a fair bit of confusion was created by that article, which I want to clarify here.
First, I am not presenting this as fact. I am presenting this as a theory that explains the observable facts.
With no transparency in the banking industry, we will never get a chance to see the swap books of JP Morgan or HSBC to find out which of their clients are shorting silver, or how much of the money behind silver shorts comes from JPM’s own proprietary trading desk, and this is how it SHOULD be.
But the presumption IS that the CFTC is monitoring these books, and would perform their duty to investigate any clearly manipulative and excessively large short positions not being held by legitimate hedgers of mine production. Sadly, we cannot depend on the CFTC to put fair, realistic position limits in place, or even to enforce the unrealistic position limits already in place, which are far too high compared to annual silver production and compared to above ground silver inventories to actually succeed in limiting anything.
Since the CFTC is just another captured “regulatory agency” like the SEC and there will never be any transparency in the shady operations of the mega banks, let’s look at the circumstantial evidence available to us and build a case against them, just as any criminal investigator would: using method, means, motive, and opportunity.
METHOD: 
Last week’s article never intended to state that China had a NET SHORT POSITION IN SILVER. The title of the article was in question form, and the body of the article explained my theorythat the Chinese have both long and offsetting short positions in silver, which may result in combined net position of zero. I stated that the Chinese were using these opposing positions, in which China may hold the same exact same number of long COMEX future contracts and short COMEX future contracts resulting in no net long or short position, AS A MECHANISM WHO’S PURPOSE IS TO ACCUMULATE SILVER METAL AND DISPOSE OF EXCESS US DOLLAR RESERVES, which are constantly accumulating in the Chinese Central Bank month after month as a result of the persistent trade deficit. The brilliance of this mechanism is that it could allow the Chinese to secretly drain physical silver metal inventory away from the COMEX without spiking the market price of silver, which would hurt their producers and exporters. They merely need to hold their long contracts to maturity and take delivery of the physical silver, while selling their short contracts before maturity for cash, and using the proceeds to buy more short contracts with maturities further into the future (roll their shorts forward for longer dated shorts). The money they lose on the shorts (paper) as the silver price gradually climbs can just be considered additional acquisition cost on the longs (silver bars).
MEANS:
We Americans have been accumulating Chinese produced goods for many years now, about four times the amount of American goods being consumed by the Chinese. We settle the difference in US dollars, a good deal for the US: we trade freshly printed paper for scarce resources and labor. The Chinese already pay for all the American goods they require by exchanging a greater quantity of their own goods, so they are constantly accumulating US dollar reserves in the Chinese Central Bank, and want to find a way to use or invest these dollars so they don’t sit idle. As these dollars continue to build up in China, the Chinese have accumulated nearly a trillion dollars worth of US Treasury bonds, and another trillion dollars worth of US Agency bonds (bonds of Fannie Mae, Freddie Mac and Ginnie Mae). All these bonds pay a below market rate of interest because they are implicitly or explicitly guaranteed by the US government, but it still amounts to more than allowing the reserve dollars to remain idle in the Chinese Central bank. 


MOTIVE:

But now the Chinese realize that:

1. The principal returned on their maturing bonds is worth less and less every time because of the incessant quantitative easing (money printing) by the federal reserve, which is a form of gradual default
2. Fannie Mae, Freddie Mac, and even the US Treasury may default outright on their bonds at some point in time
3. Hard assets and commodities represent a safer store of value than fiat currency

One measure that the Chinese have taken is to reduce their purchases of US Treasury Bonds, even though the trade deficit with the US continues at high levels. In January 2008, China was the single largest buyer of US Treasury Bonds, with purchases totaling $153 billion. In September 2008, the Chinese became the largest holder of US Treasury bonds, surpassing the Japanese for the first time. 
By June 2009, China became a net seller of US Treasury bonds, and their purchases have continually moved to the shorter maturities. According the US Treasury Website, Chinese holdings of US Treasury bonds have declined by about 4% year over year from October 2009 to October 2010, even though they have been steadily accumulating treasuries since July 2010.

According to a recent Bloomberg article , China imported 209 metric tons of gold during the first ten months of 2010, compared to 49 tons imported in all of 2009. Even though they are the world’s biggest gold producer, they exported zero tons in 2009. Only India consumes more. Although India’s gold consumption is mainly in the form of jewelry, this is deceptive. The Indians may wear it around their necks and wrists, but they use it as more of a savings account, especially in rural India. The savings of Chinese citizens amount to about 40% of their personal income, so what more perfect vehicle than gold bullion to protect their savings from inflation and government instability?

In April 2009, China’s Central Bank announced that they had covertly accumulated 454 tons of gold since 2003, raising the official figure on Chinese gold reserves from 600 tons to 1054 tons in one day, after remaining unchanged for six years.
Since the Chinese are wisely accumulating gold, why not silver? We have no public announcement by the Chinese Central Bank to go by, or any official figures of their silver holdings (if any), so we need to see if we can base a theory on the available facts. 

The Chinese have a long established cultural affinity for silver. Silver began to be used as a currency in Guangdong, China in 1423 when it became legal tender for payment of taxes. Provincial taxes had to be remitted to the capital in silver after 1465. In 1914, the National Currency Ordinance established the Silver Dollar as the national currency of the Republic of China. In 1949 the incoming Communist regime took China off the silver standard, but there are still many Chinese alive today who can remember a time when silver was used as money in China. In 2004, China legalized private ownership of gold and silver bullion for its private citizens, and in 2008 they began actively encouraging their people to invest their retirement savings in gold and silver. The Chinese word for “bank” uses the same symbol as silver.

So the primary MOTIVE of the Chinese Central Bank in accumulating silver is to wisely transfer dollar reserves to tangible assets, as they have already admitted they are doing with gold, to protect themselves against the out of control money printing by the Fed. 
Another MOTIVE is to start an asset backed currency at some time in the future. As the US dollar is continually overprinted by the Fed, its days as the world’s reserve currency are numbered. The Chinese are just biding their time, trying to cash in as much of their US debt holdings (while they still maintain SOME purchasing power), before the day when the Yuan ultimately becomes the world’s reserve currency by default. The first steps have already been put into place, such as the currency swaps and bilateral trade agreements with Brazil, Australia, Indonesia, Turkey and Russia.
These countries all have natural resources that China needs, and are markets for exports of Chinese finished products. When the dollar, pound and euro implode from overprinting, the world will need a new reserve currency, and will not trust another one consisting of nothing but unbacked fiat paper. By accumulating a huge cache of gold and silver, the traditional, historical monetary metals, the Chinese will be ready to back the Yuan when the world’s oil exporters will be demanding payment in hard assets. The level of gold/silver redeemability chosen for the Yuan will determine the value of all other world currencies from that day forward, by their free market exchange rate with the Yuan.
A third MOTIVE for the Chinese to be accumulating silver now is the increasing necessity of silver as a raw material for high tech goods produced in China. There is no substitute for silver in many applications, and the demand is the most inelastic of any commodity. China would like to dominate future production of solar panels, switches, flat panel TV’s, computers, cell phones, GPS units, batteries of all kinds, especially hybrid car batteries, silver bearings, silver solder, and the list goes on. A ready stockpile of silver will protect the productive capacity Chinese industry in the face of expected future silver shortages.

OPPORTUNITY:

I now consider it much more likely that the Chinese Central Bank has it’s short COMEX silver position with HSBC bank, the largest international bank in China and known to have a huge silver short position, (which is unlikely to be a legitimate producer hedge), and probably have their corresponding long COMEX silver position with JP Morgan, although this might also be with HSBC.
I am just speculating that keeping the positions at two different banks, under two different names, would help to camouflage their strategy of accumulating precious metals and dumping US dollars. With all the global banking secrecy, there is never any shortage of opportunity to unload a bunch of US dollars. But their window of opportunity is closing because of the historically low inventory levels of silver at the COMEX.

This opportunity appears to be coming to an end with looming delivery defaults at the COMEX. In September 2010, there were 3002 silver contracts standing for delivery at the COMEX on first notice day, August 30, 2010. Of those, 84% of the holders (2519 contracts totaling 12.595 million oz) actually took physical delivery, In the next delivery month, December 2010, there were were 17,208 contracts standing for delivery on first notice day, November 26, 2010. Using the same 84% ratio of contracts that actually took delivery in September (presumably 16%, probably more, were talked into settling in cash, likely at a hefty premium to the contract’s value based on spot), that leaves 72.3 million ounces of silver actually delivered to long contract holders by the COMEX in December 2010, more than six times as many silver bars as delivered three months earlier in September. As of January 6, 2011 the COMEX released inventory figures of only 44.9 million remaining ounces of silver registered for delivery.

There is an internet rumor going around that billionaire hedge funds (on the advice of former JP Morgan traders and in competition with the Chinese) settled their December long contracts at expiration for large cash premiums by posting the necessary cash and demanding (threatening) to take physical delivery on their long contracts. This would help explain the 9% gain in the price of silver during November, on top of a 14% gain in September and a 9% gain in October, never once having fallen below the 20 day, 50 day, or 200 day Moving Average during those three months.


Here is a link to a financial message board where an apparent market insider posted Wednesday that the participants were so happy with their easy COMEX silver profits in December, that they plan to make much larger purchases of COMEX silver long contracts in the last few weeks of February, 2011, and stand for delivery in March, the next delivery month for COMEX silver. I will be looking at the March COMEX silver delivery figures with great interest, and will not be at all surprised to see major gains in the February and March price of silver. The post also warns of a planned takedown of gold (and indirectly, silver) during the month of January in order to cover some of their silver shorts (scare investors into selling their silver) in time to minimize the banksters’ pain in March. This is portrayed as a desperate, last resort tactic since there are enough existing gold inventories available for the banksters to work with, but no silver and buying silver on the open market would only spike the price.

Golden Economizer 1 - 7 – 2011
Golden Economizer Blog 
goldeneconomizer@gmail.com

__________

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International Forecaster January 2011 (#3) - Gold, Silver, Economy + More

By Bob Chapman, The International Forecaster, Sunday, 9 January 2011

US MARKETS

If you look back into the mid-1960s you will see the beginnings of today’s financial and economic problems. Inflation was beginning to raise its ugly head as clad coins came into being. We were collecting all the pre-1964 90% dimes, quarters and halves we could find. As we moved into 1968 few were to be found in circulation. War in Vietnam was draining the country and the buffoon Lyndon Johnson, another socialist, was leading America into the Great Society. What he was really doing was taking the US into socialism and debt. It got so bad that countries were demanding gold for dollars, particularly, aggressive was President Charles DeGaulle of France. Then the beginning of the end came. On August 15, 1971 the dollar was moved off the gold standard and the dollar became just another fiat currency. Here we are almost 40 years later and the dollar has lost 95% of its purchasing power and two breadwinners are needed in every family, as apposed to one in 1971. That is when social engineering began, as we know it today. We’ve seen many losers walk across the stage over the years – all with either their hands in the till or exuding incompetence. Most of the bright still excelled but 55% of Americans slipped into stupidity. What is sadder is they think they know it all, but they do not. From 1976 to 1981 gold and silver warned us of what was coming. We have had cycles of inflation, buildup of debt and a general degeneration of society.

We had a purging of the system in the early 1980s but it certainly did not last long. Real estate collapsed starting in 1988 and the affects carried over into the early 1990s. During that period those in control had a great opportunity to again purge the system, but they refused to use that option and went right back to doing what they had done in the past. Gold and silver fell out of favor and we were subjected to the dotcom boom, which ended in tears for so many. Inflation was about but worse a great deal of wealth had been lost. We were fortunate enough to call the top of the market in the first week of April 2000, just two weeks after the actual top. Only 2% of economists, analysts and newsletter writers called the top. Being mostly outnumbered by the losers has its benefits. Presently 95% believe gold and silver are headed lower. Considering their track records we’ll stay long as we have been since the second quarter of 2000 when gold was $262.00 and silver was $3.50.

Many professionals are looking for answers as to why the US economy and finances are in the state they are in. We have been pointing out for ten years that the Fed is the problem, but those who realize this are afraid to speak the truth. They won’t have their jobs long if they do speak out. Low or zero interest rates may have helped government and big business, but it has not helped small business and the unemployed. Are we to believe that the Fed had nothing to do with the real estate collapse? Of course they did – they planned and executed it. The zero interest rate policy still in place has created more grievous damage than any other aspect of economic causes.

Framing failed policy in the context of the system and calling it mistakes and incompetence doesn’t cut it. The problems we have seen since 2000 were planned that way. Investors and professionals do not want to hear that. They do not want to look behind the facts because it’s not popular and they may have to tell the truth and that is very inconvenient for an employee’s financial health. Why do you suppose the Fed didn’t want anyone to know to whom the $13.8 trillion was lent to and why and what collateral was presented? A great part of the loan packages went to banks and others, which had been buyers of MBS from US syndicators. We would say the next logical step in this charade would be to clean up the rest of the toxic waste in the US and Europe and then come up with the $8 trillion to bail out Fannie, Freddie, Ginnie and FHA. We believe that either legislation or fiat order has to be set in motion at 5-1/4% to bring home the $1.9 trillion America’s transnational corporations have stashed in the Cayman Islands and in other tax havens. You notice you cannot do that, but these anointed corporations can. They can use the funds to again prop up the stock market, perhaps make the market go higher, make their company’s stocks go higher, so they can again cash out their options making billions and to help fund the Treasury, Agency and perhaps buy MBS-CDOs at $0.15 on the dollar. Don’t forget elitists control all these corporations or those who manage these firms are under elitist thumbs. We see this move as inevitable with the Fed already offside some $1.2 trillion. Eventual assistance to the housing agencies would fit perfectly with our prediction seven years ago that these agencies were broke, they would be nationalized, which they were, and funding by the Fed would lead to eventual 55% control of the US housing market. Over the next two generations almost all real estate half will belong to the Fed and government. This way they will be able to tell people where they will live and work and a myriad of other controls will be in place.

Transnational conglomerates contend they need the ability to avoid taxation of the US, which runs from 35% to 40%. In Europe the range is 24% to 30%. Individual US taxes, after state and local taxes, run about 35%, but in Europe if you add in VAT the average is 70%. Therein lies the difference. The only way to deal with the problem is to set up tariffs to protect US jobs and industry from predators such as transnational conglomerates. The tariffs would fund government and debt and there would no longer be any reason to move jobs and industries offshore. That means the majority of jobs and industry would return to the US. Under current law there is no reason for US corporations to invest in the US because it is uncompetitive. We wrote about this in 1967, but no one was listening.

If all this wasn’t damaging enough, most American municipalities are facing bankruptcy. Police, fire and social workers are already being eliminated, some with 15 to 25 years on the job. This dislocation is going to be devastating in communities. This is the result of pure incompetence and we predicted this result three years ago and recommended the sale of municipals. We must say that salaries and benefits at these government levels got totally out of hand. After 30 years on the job some retirements are $150,000 to $200,000 a year, which is totally absurd. This new wave of ongoing layoffs will add to core unemployment. Those lucky enough to find jobs will do so at a rate of 1/3 to 1/2 of previous salaries. This is why America desperately needs tariffs on goods and services. Unfortunately tariffs are a long shot as the elitists behind the scenes have purchased 95% of the members of our House and Senate and no such legislation could be passed. Then there still is the revolving door between Wall Street and the Fed and the Treasury. The latest in your face appointment to fill the shoes of Rahm Emanuel, as White House Chief of Staff, is Mr. Daley from JPMorgan Chase’s Midwest branch. Doesn’t the public see what is going on? Or do they care at all? We see 55% of know it all Americans not caring or being too dumb to understand.

As the destruction continues in an insolvent banking system banks continue to speculate in world markets again increasing leverage at the cost to the economy of not lending to most small and medium sized businesses. The Treasury carry trade is far more profitable. All this in an environment of flash trading, which is front running and is illegal, as is naked shorting, which the SEC refuses to do anything about. In addition, of course, is a rigged manipulated stock market whose license to steal was granted under Executive Order. These mechanisms are used to take markets in whatever direction government and the people who control government want them to go. Is it any wonder the public investor is leaving the markets in droves?

The US economy is still reaping the world wind of malinvestment that is yet to be unwound, which continues to destroy capital. The intercession by the Fed and the agencies delayed the residential housing collapse, but didn’t stop it, and it has not been a solution. Very low interest rates have been in place, but most buyers cannot even afford 3-1/2% cash down. In addition, the available housing inventory for sale monthly grows. Slow growth and lower rates have not been a solution. In fact, without the Fed and its loan programs and returning to the subprime-ALT-A loans, all the major lenders would have gone under and their financial situation is no better now than it was four years ago. The pyramid scheme that was housing was a giant financing device, as homeowners pulled out equity once a year and used that cash to buy second and third homes. The lenders knew they shouldn’t have been doing what they were doing, but they did it anyway. The result is today some 25% of homes have negative equity, which we believe will become 25% worse over the next two years. That means more walk-a-ways and more over-hanging inventory. This is nothing less than systemic failure. In the housing collapse most Americans had a major loss of wealth occur. Half of Americans were using their homes as a hedge for retirement. In most cases their only real saving’s vehicle, only to have that vehicle smashed by the Fed, government and imprudent banks. This was the destruction of the dreams of millions of Americans.

Capital was drained into the real estate cauldron and today we have millions of empty homes, malls and stores. This capital should have been used to build plant and equipment and in research and development. That was difficult under the circumstances, because of the lack of need of such job creating facilities. This was caused by free trade, globalization and outsourcing. Over the last 11 years America lost 8.5 million jobs and 42,400 businesses to foreign countries. Without tariffs to level the playing field there was no need for investment, so the outlet to keep the economy from collapsing was real estate construction. That was and still is consumption, that is keeping the economy afloat, along with endless amounts of funds for the financial sector and little or nothing for the average American. This consumption, which is 70% of GDP, is still in force in the US debt borne economy. Still no solutions, but can there be a solution as we lose millions of jobs a year to transnational conglomerates, which ship these good paying jobs overseas in a relentless effort to totally destroy the American economy? This is the same group of elitists who want to bring $1.9 trillion in profits again back into the US at 5-1/4% taxation, which will cost the taxpayer $650 billion in lost taxation - money that instead flows to corporate shareholders and into the pockets of the managements of these corporations, as the funds are used to jack up the market and buy Treasury and Agency bonds. This is all at your expense. All these elements have been employed to take down the US economy and pauperize the American people in an attempt to make them accept world government. You now are experiencing the legacy of Keynesian corporatist fascism and the destructive forces unleashed by Sir Alan Greenspan. All we see from the trillions of dollars pumped into the economy by the Fed is the bailout of the financial sector and over the top speculation and unbelievable fraud from the criminal cabal running NYC, Washington and the nation. Only in America can a Defense Department announce it cannot find trillions of dollars or where in the administration of Iraq $50 billion disappears, as American citizens starve on the streets. Everywhere you look there is fraud and criminal acts, yet mysteriously no one ever goes to jail.

The residential home mortgage market has been destroyed and probably won’t recover for many years to come. The Fed will probably have to create money and credit for years to come to stave off the failure of the financial system and the persistent undertow of deflation. As you have been taught the giant banks, brokerage houses and insurance companies are too big-to-fail. That means they will continue to have a license to steal. Front running and naked shorting will rise to even greater heights with the complicity of the criminal SEC and CFTC. The corruption that is overwhelming will worsen each and every day. Then again for the past 15 years Goldman Sachs has controlled the revolving door at the Treasury Department and JPMorgan has controlled the Fed since its inception. These are the gang leaders who control America. These are the same people who control the American media, so that you won’t know what is really going on. The brainwashing and psychological warfare, against the American people, is relentless.

The supposed current recovery is being underpinned by zero interest rates with real inflation hovering around 6-3/4%. We are told by Bloomberg that current high gold and silver prices, a result in part of these zero rates, is a craze and CNBC calls it a bubble. They don’t call the bond market a bubble, which it is. Evidentially they attach no significance to the fact that the 10-year Treasury note just catapulted from a yield of 2.40% to 3.50%. In the world of CNBC, CNN and Bloomberg up is down and down is up. It is also evident that governmental deficits will never be liquidated, unless, of course, Washington steals Americans’ $6 trillion in 401Ks and IRAs, which they have every intention of doing. The bill has been prepared and our politicians and Wall Street are waiting for the right moment to jam it through. Just think of it, a lifetime of work wiped out in the blink of an eye. If you have these plans you had better think about liquidating them before it is too late.

Gold has become again the world reserve currency. It is just that few realize the transition has already taken place. For the past 11 years every major currency has fallen in value versus gold from 13 to 20 percent annually. Versus silver, the figures range from 17 to 25 percent. This is a clear-cut ominous trend of a flight away from all currencies to gold and silver and quite a flight to safety. This movement by worldwide investors cannot be ignored. There obviously are many people that see what we see and in that process are dumping currencies for gold and silver related assets. Unfortunately, Americans are far behind in these changes with only 2% of the population participating. Ladies and gentlemen the second stage of the gold and silver bull market has just begun. Prices have fallen from their highs, what a great time to buy.

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THE INTERNATIONAL FORECASTER

SATURDAY, JANUARY 8, 2011

01/08/11 (3) IF

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