Dreadful Market Perceptions

As we explained in the last issue that when GDP figures are again revised we would find 2nd quarter GDP growth was really 1.3% to 1.5%, not 2.4% revised down from 3.7%. This experience points out the really bogus nature of government statistics. Several months ago we projected that without QE the economy in the 3rd quarter would result in 1% growth and minus 1% in the 4th quarter. Insiders on wall Street knew months ago that we’d get QE, which was announced on Wednesday by the FOMC and that is why they projected GDP growth for the 2nd half of 1-1/2%. We project zero to 1%. Even with a $5 trillion injection over the next two years by the Fed, we can only project 1-1/2% growth accompanied by 14% plus inflation. If you own gold and silver you will be happy. Such stimulus eventually fails and burns out, markets fall and interest rates rise.

What most professionals can’t understand is why the dollar is bei ng dumped. It is not because it is mired in debt and bankrupt. It is not because other nations will lose 2/3’s of 60% of their foreign reserves. It is because those in power behind the scenes want world government and a global central bank based on the use of the SDR, special Drawing Right, or the bancor. This would end up with a loss of sovereignty for all nations, plus no individual monetary or fiscal policies. All decisions would be in the hands of some one-world Illuminist bureaucrat. You would be abandoning the world’s fiat currencies, excepting the euro, which is partially gold backed, for another fiat currency such as the SDR, or the bancor. How can that present an improvement? Look at the mess that bureaucrats have made of the euro zone and the EU. Look at how the European elitists had to get a constitution passed and then it wasn’t even a constitution. It was some kind of agreement to subjugate Europeans -an agreement that most of the inhabitants of Europe vot ed against.

If the SDR or the bancor becomes a world currency the decisions, not only financial, monetary and fiscal, will be made in some foreign country, perhaps in Brussels, NYC or London. Decisions that will affect everything you do. Those policies will control every facet of your life. You will become controlled and enslaved.

The attempted changes could come next yr or in 2 or 3 years, but they are coming, if you allow them to come.

You ask what will work if the dollar no longer is the world reserve currency? We see the best alternative in an index of G-50 currencies weighed by financial conditions in each country backed by somewhere between 15% and 25% in gold. Nothing less will work. Unfortunately, the people in charge behind the scenes will never allow that to happen again, because they cannot control such a gold backed currency. Fractional banking would be limited to nine times deposits or less. That means no massive speculation on inside information. They will no longer be able to screw the public and create bubbles and busts on a whim. This is what these creatures are up too. Do not underestimate them, they will do everything they can to have a world currency and you will pay for it dearly.

Now that the turmoil in European markets has stabilized, at least temporally, the infighting continues on as to whether the Federal Reserve should pour another $5 trillion into the economy, or whether the US should begin an austerity program similar to what is being executed in the UK and Europe. Even with all the bogus numbers, Europe only has unemployment of 12% to 14%, whereas the US has 21-3/8%. Without such stimulus the US economy would collapse into a state of affairs far worse than experienced in the 1930s. Although no matter what the Fed does to stimulate ultimately the US and the world are facing deflationary depression. The administration and Messrs. Summers , Greenspan and Rubin believe the deflationary depressions should begin now. Others want another broad stimulus until they see the best opportunity to plunge the system into that deflationary depression. We believe the latter want to get a worldwide war underway, so they can cover up what they have been up too for the last many years. If such a war is in progress the dislocations caused by such a conflict can be used to explain the economic and financial failure. How this dilemma behind the scenes can be solved we can’t venture a guess, but the verbal conflict is well underway. One thing is for certain we will soon know which way they are going to precede. All present outward moves lead us to believe that massive liquidity will be introduced, but then again we are not on the inside, so we have to back into our conclusions. Do not forget sovereign and other debt issues have not gone away; they have simply been temporarily painted over. Anyone who contends that the problems of Greece, Portugal, Spain, Ireland and Italy are behind them is foolish. Look at the other side of the problem. The banks that bought the bonds of these unfortunate nations from money they created out of thin air and the nations such as Germany and France that are on the hook for trillions of dollars of unpayable debt. No the problems have not disappeared with a $1 trillion commitment. Thus, the euro zone and the EU stumble on having at least for now, accepted austerity and higher taxes â€" a sure formula for deflationary depression.

Here we are three years later back to square one. Now we not only have a new subprime crisis on the way due to the actions of government via Fannie, Freddie, Ginnie and FHA, but we still have the euro zone crisis to contend with. The financial environment is still one of Ponzi finance; little has changed. Let us say emphatically that neither crisis is over and behind us.

This time around expectations are the same. The Fed will come to the rescue as the Dow slides toward 9686 again, something that cannot be tolerated. A lower market would spark a loss of confidence again, as well as a fall in value of assets.

This time we do not have the luxury of cutting interest rates, which are currently near zero. That leaves the Fed with only one weapon; flooding the economy with money and credit, known as quantitative easing. The alternative is deflationary depression, as advocated by Obama, Summers, Greenspan and Rubin, etc. the Trilaterals, Council on Foreign Relations and Bilderbergers are arguing as to which road to take. If they take the low road they had best get there next war going post-haste.

We also see former Fed Chairman Sir Alan Greenspan has jumped aboard the low road bandwagon stating that the Bush tax cuts should be eliminated. This strikes another blow for the deflationists. If he and the others, who agree with him, hold forth the y had best plan for a much lower stock market and a continued flight to gold and silver, as the only real safe havens in all this terrible tumult.

Worse yet, everything the administration has done has been disastrous. They do not even want to talk about their successes because the public lowers their ratings almost every day. A financial regulations bill that makes the privately owned Federal Reserve a financial monopoly and dictatorial power. This is all bad, but do not forget he doesn’t make the decisions. They are made by the CFR-types behind the scenes that are running scared. Half want stimulus and the other half want depression. This is a mess, but it was predicable. Talk radio, the Internet and a handful of newspapers, magazines and newsletters have been raising havoc with elitist plans. The public is learning the truth and it is killing the insiders. That is why you are seeing vicious attacks on anyone that is effective, such as many attacks on radio programs that we appear on. Desperate people do desperate things and that is the vise that the shadow government is in presently. If you had any doubts why are gold and silver and commodities rising and the dollar falling? It is because the stimulus program was a failure and the geniuses behind the scenes do not know what to do. It’s inflate or die. If these one-worlders lose they lose everything just as they did when the Lombard system collapsed in 1348. This is where this is all headed and they are terrified and they should be.

Perceptions of the market are dreadful. 72% of the volume is front running, which happens to be illegal, known as black box trades. The public has been a major share seller for the last year and one-half. Why is the market rising again? It is called, “The President’s Working Group on Financial Markets,” which works 24/7 manipulating markets worldwide to serve the goals of those who want world government, a world c urrency and a world bank.

These people learned nothing from the first three years of the credit crisis except how to bail out the financial system, which is still broke. They still do not get it. It is the economy and jobs and the federal government’s desire to peer into everyone’s lives and control them. The vote in the November elections will be devastating for the criminals behind the scenes. They will have to find a way to buy all those new politicians and many won’t be for sale, because they want to be reelected.

Very few have faith in our federal government and less in global government. The politicians and their handlers have few options. The majority of people worldwide are unhappy with their governments and if they do not shape up they’ll be shipped out one way or another. They have found stimulus does not equal stability and they want answers and there are none to be had. These facts will all lead to destabilization a nd the public realizes it. The bankers and the Illuminists are being found out and their policies are not working. The public only has so much patience as we learned from the French in 1789.

The world is on the edge of revolution; passive or violent. We won’t have to wait long, because the world public is seething and in that climate anything can happen.

The community Recovery and Enhancement Act has been introduced by Congresswomen Shelly Berkley to subsidize equity investment in commercial real estate assets. You get to pay for the banks losses.

Senators Pat Leahy, John Cornyn, Ted Kaufman and Charles Grassley and Rep. Darrell Issa in the House have introduced legislation that would delete from the Dodd-Frank Act, which gives the SEC power to not have to listen to FOIA requests.

A basket of 31 items was compared at a Wal-Mart Super Center, Kroger, Safeway, Harris Teeter and Whole Foods. T he basket showed a 5.8% increase in average prices at Wal-Mart, the most significant jump in 1-1/2 years. Wal-Mart still holds a 10.4% lead vs. traditional supermarkets relative to 16% in June.

Congress approved a final spurt of spending Tuesday to bolster the sluggish recovery, sending on to the White House a $26 billion plan to save the jobs of thousands of teachers and other government workers. The measure, likely the last significant effort at economic stimulus until after the November elections, brings total federal spending on the economy to just over $1 trillion since the Great Recession began in late 2007. It passed the House 247 to 161, with most Republicans voting no.

A judge ordered Wells Fargo & Co. to stop manipulating debit-card transactions without consumers’ knowledge to increase revenue from overdraft fees while ruling the bank should pay ab out $203 million to customers because of the practice.

U.S. District Judge William Alsup in San Francisco sided with three customers who sued in 2007 on behalf of thousands of Californians charged overdraft fees. In a ruling yesterday, he agreed that the practice was unfair, deceptive and fraudulent.

In 2001, Wells Fargo, the largest U.S. home lender, changed the way it treated daily debit transactions and cash withdrawals so that transactions with the highest dollar amount posted first, rather than in the order they occurred, according to the complaint. The practice, allegedly intended to boost revenue from overdraft fees, led to customers o verdrawing accounts by small amounts multiple times a day, according to the complaint.

Customers don’t “reasonably expect that they will have to pay up to 10 overdraft fees when only one would ordinarily be incurred,” Alsup wrote, deciding the case without a jury. The multiple fees are “so pernicious,” he said, that they should be allowed only if customers expected them and in this case “the proof is the opposite.”

Wells Fargo “went to great lengths to bury the words deep in a lengthy fine-print document and the words selected were too vague to warn depositors, as even the bank’s own expert conceded,” Alsup wrote. [This is premediated criminal fraud. No charges were brought and interestingly the bank was not fined on a civil basis for deliberately defrauding its customers.]

The Federal Reserve reversed plans to exit from aggr essive monetary stimulus and decided to keep its bond holdings level to support an economic recovery it described as weaker than anticipated.

Central bankers meeting yesterday adopted a $2.05 trillion floor for their securities portfolio, pivoting toward a quantitative target for monetary policy. Treasuries surged and stocks pared losses as some investors judged the decision opened the door to a resumption of large-scale asset purchases. [We had predicted $2.5 trillion for each of the next two years in QE, and we will probably get something close to that. The big question is when will WWIII start.]

President Obama approved a final spurt of spending Tuesday to shore up the sluggish recovery, signing into law a $26 billion plan to save the jobs of thousands of teachers and other government workers. The measure brings to tal direct federal spending on the economy to nearly $1.2 trillion since the nation descended into recession in late 2007.

With economic growth faltering and unemployment stuck at 9.5 percent, some economists are urging additional action. But senior Democrats and administration officials said the package of state aid is likely to be the last major effort at economic stimulus -- at least until after November congressional elections, for which the soaring national debt has become a major issue.

House Speaker Nancy Pelosi (D-Calif.), determined to demonstrate a commitment to fighting job losses, summoned lawmakers back from their August vacation for an unusual one-day session to vote on the package. Democrats argued that it would preserve the jobs of more than 300,000 workers by helping state governors plug their own budget holes.

The trade deficit widened a surprising 18.8 percent in June on a surge of consumer goods from China and other suppliers, suggesting second-quarter economic growth was much weaker than previously thought.

The monthly trade gap totaled $49.9 billion, the highest since October 2008, the Commerce Department reported on Wednesday, as U.S. exports stumbled a bit.

The deficit was wider than any of the 67 Wall Street forecasts collected before the report, and is likely to prompt analysts to ratchet down estimates of second-quarter gross domestic product growth.

"The strength in imports, though hinting at some pickup in consumer spending, continues to undermine GDP growth. Moreover, the slowing in exports will only fan fears of a faltering U.S. recovery," said Sal Guatieri, senior economist at BMO Capital Marke ts.

Many economists have already trimmed their estimates on signs business inventories had risen more slowly than the government first thought. In its first estimate of GDP growth late last month, the Commerce Department had said the economy grew at a 2.4 percent annual rate in the April to June period.

U.S. imports of goods and services grew 3 percent in June to $200.3 billion, the highest since October 2008, in a show of strengthening domestic demand. Imports of consumer goods hit a record $43.1 billion and imports of non-petroleum goods were the highest since August 2008. Imports from China soared to $32.9 billion, the highest since October 2008.

The closely watched U.S. trade deficit with the East Asian manufacturer widened to $26.2 billion, also the highest since October 2008, while U.S. exports to China fell slightly.

The big jump in the U.S. trade deficit follows Chinese government dat a on Tuesday that showed China's trade surplus surged to $28.7 billion in July, an 18-month high.

The trade data had little impact on U.S. financial markets. U.S. stock index futures were lower on Wednesday as weak Chinese manufacturing data and a gloomier U.S. economic outlook from the Federal Reserve led to mounting concerns about the health of the global economy.

The dollar hit a 15-year low against the yen.

The trade data is likely to intensify calls in the U.S. Congress for China to move more aggressively to raise the value of its currency against the dollar.

China loosened the yuan from a nearly two-year peg to the dollar in June, but it has barely risen since then. Many lawmakers believe it is undervalued by at least 25 percent.

U.S. imports from Germany and the 27-nation European Union also had their best showing since October 2008.

Overall U. S. exports fell 1.3 percent in June to $150.5 billion, the biggest month-to-month drop since April 2009.

U.S. automotive exports were the highest since October 2008, but other important categories like capital goods, industrial supplies and materials and food, feeds and beverages posted declines.

A second report showed U.S. home loan demand climbed last week but record low mortgage rates failed to light a fire in a market constrained by unemployment and tight lending practices.

Mortgage purchase and refinancing applications rose less than 1 percent in the first week of August, even as 30-year loan rates fell to 4.57 percent, the lowest in 20 years of record keeping by the Mortgage Bankers Association.

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