Thread: A Destroyed Economy And Mistaken Legislations

A Destroyed Economy And Mistaken Legislations

Posted: July 15 2009

money rates and numbers, G8 propping up dollar, the results of globalization, off shoring and outsourcing, Goldman Sachs allegedly front running their own client orders, vacancies for offices rise, more people than ever on food stamps, nobody supports the bailouts, so why do they happen? Your internet privacy is under threat

Last week the Dow fell 1.6%; S&P fell 1.9%; the Russell 2000 fell 3.3% and the Nasdaq slipped 1.8%; cyclicals fell 3.6%; transports 1.5%; consumers 1.6%; utilities 1.4%; banks 2.3% and broker/dealers 2.8%. High tech fell 1.8%; semis 1.8%; Internets 2.1% and biotechs 2.7%. Gold bullion fell $19.50 and the HUI gold index fell 8.4%.

Two-year T-bill rates fell 10 bps to 0.82% and the 10’s fell 21 bps to 3.30%. Ten-year German bunds fell 8 bps to 3.26%.

Freddie Mac pegged the 30-year fixed rate mortgage off 12 bps at 5.20%. The 15’s fell 8 bps to 4.6% and the 1-year ARMs fell 12 bps to 4.82%.

Fed credit declined $9.5 billion to $1.977 trillion, off $269 billion ytd and up 123% yoy. Fed foreign holdings of Treasury and Agency debt jumped $20.5 billion to a record $2.787 trillion. Custody holdings for foreign central banks rose 20.7% ytd, and were up 18.6% yoy.

M2 narrow money supply fell $36 billion having expanded 9.1% yoy. Total money market fund assets rose $4.4 billion to $3.668 trillion.

This past week the dollar index, the USDX, was unchanged at 80.26.

During the week of the G-8 meeting the US pushed the dollar up. They attempted the same with the stock market unsuccessfully and successfully drove bond yields down and bond values up. They also smashed commodities, especially oil and pressured gold and silver lower. The problem is they cannot continue. They do not have the power to do so. Those suppressed markets will reverse and rise.

The dollar was on the verge of breaking below 79 on the USDX, so the ECB announced they would pour $613 billion into 1-year deposits. This was to encourage bank lending in the eurozone, which gained by only 1.8% in the first half of the year. The US banks had a similar experience.

One thing is for certain and that is that low interest rates encourage carrying long gold and silver positions. That is true for commodities as well, which in the second quarter rose. Oil gained 45%; copper 28% and wheat 20%. Gold and silver were not allowed those gains by our government. While holding interest rates at 1% the ECB now has M3 increasing at a paltry 3.7%. In our mind there is no question that the eurozone is about to slip into severe depression. The 16 economies are being strangled to death.

The Democrats playing politics have made a huge mistake with the stimulus package and we noted that in January. We predicted 90% of the personal stimulus would be used to reduce debt. As it turns out 92% will probably be the number. The consumer did not perform up to the desires of Washington’s elitists. We said in January because of that another $2 trillion package would be needed and discussion began last week. Most of the current package will be spent next year in the election year. Greed has foiled any kind of a recovery this year. If the politicians had not politicized the $787 billion package, GDP would not have been a minus 5.5% in the first quarter. We expected minus 5% for the second quarter and minus 4 for the rest of the year. They missed the boat. U6 unemployment is 20.5%. Had these politicians not been so stupid unemployment, U6, could have been held at 14.8%.

We have a situation socially similar to that of the early 1990s, only this time it is twice as bad. Blue-collar workers know they won’t get their high paying jobs back, because our transnational elitist conglomerates have stolen them. They not only took our jobs, they took our dignity as well, and are hiding their profits offshore depriving our Treasury of badly needed revenue. Unemployment will continue to deteriorate thru to the end of the year and next year will only hold its own. That is going to see the rebirth of the militia movement in America. Such a movement gained momentum in the early nineties, but it faded as the economy improved. This time, improvement is not on the way – only more unemployment and inflation are.

If you surgically remove the birth/death ratio U6 was 20.5% last month as we lost not 467,000 jobs, but in reality 652,000 jobs, and the workweek fell to 33 hours. In little over two years we have lost more than 9 million jobs. We have almost 15 million unemployed, which in great part is the result of free trade, globalization, offshoring and outsourcing over the last 8-1/2 years. Those jobs will never return unless we erect tariffs and start taxing corporate profits that are held offshore. We are doomed to be a third world nation enveloped in a fascist police state and we can assure you that you won’t like it one bit. During the second quarter to make things more binding wages fell 1.6% due to slave labor goods being imported into our country. As we quoted before, even the Centre for Labor Market Studies in Boston says unemployment is 18.2%.

The reason militias will gain major traction is that the workers now know their jobs are gone forever, which leaves them in desperation. The feeling already out there is worse than it was in the 1930s. Like in the 1930s savings are being depleted and real estate is still falling and people are becoming destitute. This social condition is one of destitution. The cushion people once had is gone.

You saw the riots in Europe earlier this year. Unemployment is almost 19% in Spain and 37% among the young, many of whom have university degrees. Latvia is close to 16% and Germany is looking at a 35% increase in unemployment between now and the end of 2010.

Social justice is absent in our country and in other countries. The rich are getting richer and the poor, poorer caused mainly by globalization. If workers do not get justice there will be violence worldwide. You can take that to the bank, if it is still there.

Goldman Sachs is in big trouble, but the media refuses to dig and get the same story the alternative media has dug up. As usual the SEC is looking in a different direction, as far away from the real action as possible.

The latest allegation is front-running their own client orders, never mind everyone else’s. As we reported earlier they are using a government created program. A good question is are they front-running for both themselves and the government, which might make it semi-legal? Of course nothing ca be semi legal. It is either legal or it isn’t. Goldman has been confronted on the issue and refuses to answer detailed questions, just saying, “your suggestion that we monitor our website to facilitate front-running is untrue and offensive.â€

This is the most depressing thing I have read today. Although the Dow was up over 250 today, this article just proves that these profits are no more than smoke and mirrors, and the rest of the world realizes exactly what we are doing.