Bob Chapman – “U.S. Financial Breaking Point Soon”

http://www.theinternationalforecaster.com/

U.S. Financial Breaking Point Soon

Bob Chapman | July 20, 2008

Something is going to break, and soon. Banks are insolvent and failing by the hundreds if not thousands. Hedge funds are on the edge of oblivion. Only a tiny percentage of toxic waste losses in real estate and other asset classes of collateral, which will eventually amount to over $1.4 trillion in the US alone, has to date been recognized by the lying bankster fraudsters. Bonds are producing negative rates of return even based on ludicrously understated official rates of inflation (until this month, when we finally got some data bordering on the truth). Credit markets are frozen, and few can get financing at favorable rates. Banks won’t even lend to one another because they do not trust each other’s financial statements, which are all bogus.

Our financial system is unregulated, opaque and rife with fraud as our Treasury Secretary suggests we hand the reins over to the Fed, the very organization which is the driving force behind our myriad of woes. The fractional reserve multiplier is not working and bank’s have had to resort to the commodity markets to make profits, thus driving up food and oil prices and the cost of raw materials. Food riots are breaking out due to the ethanol scam.

Consumers are tapped out, are in debt up to their eyeballs, are being laid off by the hundreds of thousands, are being pounded by hyperinflation and crazy gas prices and are defaulting on consumer debts across the board at ever-increasing rates. Civil unrest and the potential for revolution are everywhere. A quadrillion dollar caldera of notional principal for credit default and interest rate swaps bubbles, smolders and churns, waiting to erupt into a world-economy-killing cataclysm.

Fannie and Freddie are imploding, and gargantuan government bailouts to save these owners or insurers of over half the mortgages in the US will drive us to higher rates of inflation and levels of direct taxation that are simply unheard of. These higher levels of inflation and taxation are not as far out in the future as most would think. That is because Paulson and Bernanke, who are oblivious to moral hazards because they are sociopaths, are now trying to dump what will be trillions in losses caused by endless banking scams on an ignorant and unsuspecting citizenry.

Rising interest rates due to increased risk and hyperinflation are just around the corner, and double digit interest rates will lock up the real estate markets in a cryogenic state as occurred in the early 1980s. We have gone from being the largest creditor nation in the world to the largest debtor nation in a matter of a few decades as our manufacturing industry and economy have been gutted by free trade, globalization, off-shoring, outsourcing and both legal and illegal immigration.

Bubble after asset bubble have been created and destroyed by a malevolent Fed trying to push us toward a one world government, economy and religion as powered by megalomaniacal, satanic trillionaires who have destroyed our middle class, our Constitution and our moral standards in order to drive us into their version of the ideal Platonic society where we all get to become their feudal indentured servants and slaves. Our trade and budget deficits continue to mount with profligate spending on endless wars for profit and pork-loaded legislation. Our nation is bankrupt. Our gold reserves have been stolen, swapped, leased or otherwise compromised. Our Congress, our Executive Branch, or military and our covert agencies are loaded with traitors and perverts who are driving us into a police state complete with a Gestapo and an SS. We torture, maim and kill for fun and profits. We make the Roman Empire at its most decadent look like Shangri-La.

Freddie Mac new Issue quickly approved by SEC, New offerings to absorb big losses, Gold escapes general pounding in the market, home builders sentiment index is at record low, depression is a real threat still.

After the markets closed on Friday, the announcement came that Freddie Mac plans to sell $5.5 billion dollars worth of new common and/or preferred shares to private investors, when its current market cap is only 6 billion. Of course, they had to register the new issue with the SEC and get its approval in order to do this, and on Friday, they filed with the SEC, which quickly approved the new issuance. This was no surprise of course because the SEC and Freddie are run by the same kind of people. Freddie recently got caught up on their SEC filings after years of what really amounted to total noncompliance due to what you might call some “major accounting issues” even though technically they were granted an exemption from filing because of their GSE status.

So, even before the Treasury injects equity into Freddie by purchasing new issues of its shares with monetized treasury bonds created out of thin air, and/or before Freddie borrows from the Fed on treasury collateral which consists of those same ethereally created treasuries, the elitists plan to draw in new sucker-dupes so that both the current shareholders and new shareholders alike can get blasted with a huge dilution of their stock value. We ask who the suicidal maniacs are who would venture to buy these new issues?

First, note how the timing of this announcement, which came after markets closed on Friday as just noted above, was the same time frame used for the news about the IndyMac Bank closure. This kind of timing manipulation is used by the elitists whenever they wish to prevent market panic, allow a cooling off period before markets reopen and/or keep as many people from seeing or hearing the announcement as possible as they get underway with their weekends.

You can bet your sweet bippy that if precious metals have any bad news, if that were even possible at this point, it would make front page news on Monday just before markets opened. So much for a free press. Instead we get the inane, people’s bane, fane-stream media. If Thomas Jefferson were alive today he would be absolutely disgusted at the goings on in our government and in our press right now. In fact, he would most likely call for a revolution! Ron Paul is our Thomas Jefferson, and the elitists are quaking in fear at the revolution in thinking which Dr. No has bravely engendered with his presidential campaign.

Next, note how much US government and Freddie officials obviously believe Freddie to be undercapitalized after claiming outright only days ago that both Freddie and Fannie were and are adequately capitalized. Among those claiming adequate capitalization before this announcement was none other than our beloved Treasury Secretary, Hanky Panky Paulson, on loan from Goldman Sachs, and Senator Chris Dodd from Connecticut, elitist bootlicker and Chairman of the Senate Banking Committee. From their mouths to God’s ears. These reprobates give serpents a bad name. If they had been with Adam and Eve in the Garden of Eden, who knows what perverse lies they might have sold to our progenitors? You think we have problems now? We would probably have the Adam and Eve First National Bank. Can you just imagine? These two pieces of work are truly unbelievable. Buck-Busting Ben and Cheney the Wienie round out the new Rat Pack of liars and scalawags.

Then look at what will happen to the price of Freddie’s shares. The Freddie share price closed way down at $5.26 on Tuesday based on all the scary bailout news, but ended the week with a price of $9.18 when new sucker-dupes jumped in based on government and fane-stream media hype about a potential bottom in the real estate markets and the patently false and misleading earnings reports of Wells Fargo and Citigroup which left investors with the impression that Freddie and Fannie might not be in as much trouble as everyone thought. Short-covering was another major factor which accounted for the higher share price.

The potential for the new proposed Freddie issue was enhanced by the increased stock price because the higher price allowed more capital to be raised using fewer shares, but the new shareholders and old shareholders alike could find themselves owning stock worth substantially less because of the resulting dilution and mounting overall losses from a tanking real estate market, which Freddie admits! Can you believe it? All those new shareholders could end up with an instant haircut! And that does not even take into account the potential for the purchase of new Freddie shares by the Treasury in a bailout situation, which is inevitable! Sometimes we wonder if we are still conscious or whether we have been hooked up to the Goldilocks Matrix pod where everything turns out juuust riiight. As the Mogambo Guru might say: “Hahaha! Morons! Hahaha!”

Somehow, with over a trillion dollars of mystery off-balance-sheet toxic waste assets, Citigroup coughs up only $2.5 billion in losses for the second quarter. Can we suggest that we are more than a little skeptical of this figure? Enough said. The same pathological lies will also be spewed forth for all the other banking fraudsters this quarter. After all, we have incumbents that have to be reelected to keep the Illuminist scam wagon rolling down the road. We recoil in disgust at such unmitigated arrogance in financial reporting. Can you imagine the potential liability of the CPA’s involved in this mess? How do these people sleep at night? They probably sleep just fine, because they are all sociopaths, or they wouldn’t be working for these elitist institutions.

Gold has been implacable this week. The cartel’s best efforts have yielded little more than a brief tamping down of gold below 1,000. Despite the best efforts of the Illuminati, gold is still trading over $950 and silver is still over $18. Despite an $18 dollar per barrel takedown of oil from peak to trough this week, the largest such decline ever, and phony dollar rallies galore, gold is still more than $100 per ounce over its recent lows. The resource stocks have been pounded mercilessly with naked shorting, yet are still maintaining the same levels as two weeks ago on July 3. Lease rates are negative or near zero for both gold and silver, but no one wants to lease gold or silver for subsequent sale due to the potential to get vaporized if any untoward event occurs, such as more bank failures or the outbreak of a war or conflict. The naked shorts of the SLV shares and illegal rationing of Silver Eagles by the US Mint are barely keeping silver from exploding to new highs.

This resiliency in the precious metals has many facets and reasons for support. The CPI and PPI are at 26 and 27-year highs. The Fed pumps $500 billion monthly into the banking system just to keep it from freezing up. M3 rages at 17% to 18%, thus locking in years of hyperinflation no matter what the Fed does. The Fed has no credible way of cutting rates or even threatening to cut them as the ECB hikes to levels that are more than double the Fed funds rate.

The dollar is quickly reaching new all-time lows against the euro and has recently scraped up against its all-time lows this past week on the USDX. It is headed for 67 to 68. This presents the potential for establishing a dollar carry trade, which would take the dollar quickly to new lows. All major stock market exchanges around the globe are in Bear Market Territory, having plunged to 20% or more from their most recent highs. Various Arab nations are threatening to break dollar pegs. Wars and threats of wars abound everywhere in Georgia, Kosovo, Iraq, Iran, Syria, Lebanon and North Korea. Inflation is raging worldwide, which means that populations across the globe are quite literally being taxed to death by their governments. This just simply cannot continue.

Something is going to break, and soon. Banks are insolvent and failing by the hundreds if not thousands. Hedge funds are on the edge of oblivion. Only a tiny percentage of toxic waste losses in real estate and other asset classes of collateral, which will eventually amount to over $1.4 trillion in the US alone, has to date been recognized by the lying bankster fraudsters. Bonds are producing negative rates of return even based on ludicrously understated official rates of inflation (until this month, when we finally got some data bordering on the truth).

Credit markets are frozen, and few can get financing at favorable rates. Banks won’t even lend to one another because they do not trust each other’s financial statements, which are all bogus. Our financial system is unregulated, opaque and rife with fraud as our Treasury Secretary suggests we hand the reins over to the Fed, the very organization which is the driving force behind our myriad of woes. The fractional reserve multiplier is not working and bank’s have had to resort to the commodity markets to make profits, thus driving up food and oil prices and the cost of raw materials. Food riots are breaking out due to the ethanol scam. Consumers are tapped out, are in debt up to their eyeballs, are being laid off by the hundreds of thousands, are being pounded by hyperinflation and crazy gas prices and are defaulting on consumer debts across the board at ever-increasing rates. Civil unrest and the potential for revolution are everywhere. A quadrillion dollar caldera of notional principal for credit default and interest rate swaps bubbles, smolders and churns, waiting to erupt into a world-economy-killing cataclysm.

Fannie and Freddie are imploding, and gargantuan government bailouts to save these owners or insurers of over half the mortgages in the US will drive us to higher rates of inflation and levels of direct taxation that are simply unheard of. These higher levels of inflation and taxation are not as far out in the future as most would think. That is because Paulson and Bernanke, who are oblivious to moral hazards because they are sociopaths, are now trying to dump what will be trillions in losses caused by endless banking scams on an ignorant and unsuspecting citizenry.

Rising interest rates due to increased risk and hyperinflation are just around the corner, and double digit interest rates will lock up the real estate markets in a cryogenic state as occurred in the early 1980s. We have gone from being the largest creditor nation in the world to the largest debtor nation in a matter of a few decades as our manufacturing industry and economy have been gutted by free trade, globalization, off-shoring, outsourcing and both legal and illegal immigration. Bubble after asset bubble have been created and destroyed by a malevolent Fed trying to push us toward a one world government, economy and religion as powered by megalomaniacal, satanic trillionaires who have destroyed our middle class, our Constitution and our moral standards in order to drive us into their version of the ideal Platonic society where we all get to become their feudal indentured servants and slaves.

Our trade and budget deficits continue to mount with profligate spending on endless wars for profit and pork-loaded legislation.

Our nation is bankrupt. Our gold reserves have been stolen, swapped, leased or otherwise compromised. Our Congress, our Executive Branch, or military and our covert agencies are loaded with traitors and perverts who are driving us into a police state complete with a Gestapo and an SS. We torture, maim and kill for fun and profits. We make the Roman Empire at its most decadent look like Shangri-La.

The greatest depression of all time looms at our doorsteps. The barbarians are at the gates, but no one notices or cares. It is nothing short of surreal. Those without gold or silver will make great sport for the barbarians, who also happen to like the “barbaric relic” known as gold, because they are more intelligent than the average US citizen.

Large specs have become wise to the manipulations of the PPT in suppression of precious metals and maintain protective derivatives against such manipulations. The next wedding and jewelry seasons in India, the Orient and the Middle East are upon us. Open interest for August gold on the COMEX has gone up over 100,000 contracts in the past month, and there are already 112,500 contracts of open interest for December futures as everyone tools up for a big fall rally. The number of contracts of open interest on Goldman’s COMEX gold shorts are at record lows. We still have two weeks before August contracts get rolled over at the end of July, and then all hell will break loose. So take your positions now in gold and silver, or turn green with envy as the rest of us make magnificent profits. It may be now or never. After the elections, there will be a no-holds-barred unraveling of the system, assuming we even have elections, and there is no telling how fast and how high gold and silver could rocket. If you stay on the sidelines, you could miss the whole thing.

If you were wondering about the stock rallies, don’t. The yen went wimpy right on cue to support stock markets just as oil was taken down in record fashion to further support stock markets and to suppress precious metals. Since Wednesday, the carry traders have gotten back into it with a reduction of the value of the yen by two yen per dollar and by three and one half yen per euro. Add in the Fed’s out-of-control repo pool for funding, the PPT’s usual manipulative efforts and the pathological lies shown in banks’ financial statements, the drop in oil to support the dollar, and the rally mystery is solved. Elementary, my dear Watson.

Note that this was options expiration week, so most of the rally was powered by a short-covering rally ignited by the PPT to drain value from protective derivatives carried by large specs to protect themselves from the PPT. Fortunately for us, most of the specs probably got out when the Dow hit 10,800. Specs should short oil over 140 and a Dow over 12,000. Note that dollars chased from bonds, treasuries and money markets back into foreign stocks usually causes the dollar to weaken. Since this did not happen, it is a clear sign of intervention by the PPT, which will soon subside since they simply cannot keep this pace up for very long in such a gargantuan forex market. Gold and silver are headed much higher, and will now regroup for the final assault on $1,000 for gold and $21 for silver that will take us to new heights and more unexplored territory.

The home builders’ sentiment index fell two points in July to record-low 16, with all three components of the survey also dropping to historic lows, the National Association of Home Builders reported Wednesday. At 16, the NAHB/Wells Fargo housing market index shows that only one-in-six home builders has a positive view of the market. New subdivisions have become ghost towns, with current sales dropping off and with the traffic of prospective buyers drying up in recent months. Few builders anticipate any improvement in sales in the next six months.

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Published in: on July 20, 2008 at 4:49 PM  Leave a Comment  

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