Most of you have probably heard of Robert Kiyosaki, who is best known for the famous book “Rich Dad, Poor Dad”. This book has helped millions improve their personal finances, and is a must read.

The following comes from Kiyosaki’s main website www.richdad.com and depicts exactly how big of an impact this book as had in the marketplace:

“Rich Dad Poor Dad ranks as the longest-running bestseller on all four of the lists that report to Publisher’s Weekly – The New York Times, Business Week, The Wall Street Journal and USA Today – and was named ‘USA Today’s #1 Money Book’ two years in a row. It is the third longest-running ‘how-to’ best seller of all time.

Translated into 51 languages and available in 109 countries, the Rich Dad series has sold over 27 million copies worldwide and has dominated best sellers lists across Asia, Australia, South America, Mexico and Europe. In 2005, Robert was inducted into Amazon.com Hall of Fame as one of that bookseller’s Top 25 Authors. There are currently 26 books in the Rich Dad series.”

Kiyosaki more than likely played a significant role in the Real Estate market boom constantly preaching investment in positive cash flow real estate. Through the mid 90s up to the recent housing bubble, this was at the core of Kiyosaki’s financial advice. Suffice to say, had you followed his advice 10 or 15 years ago, you would have benefited immensely.

Kiyosaki writes a monthly column for Yahoo and his latest article, titled “Preparing for the Worst”, is fairly shocking. This is due to the fact that the content of the article does not match his mainstream following – individuals typically just beginning to seek financial guidance.

Kiyosaki begins the article by bluntly discussing his outlook for the economy:

“‘Is the crisis over?’ is a question I am often asked. ‘Is the economy coming back?’
My reply is, ‘I don’t think so. I would prepare for the worst.’

The stock market has been going up since March 9, 2009. Talk of “green shoots” fill the air. Yet, in spite of the more positive news, I continue to recommend that people prepare for the worst. The following are some of my reasons:”

Kiyosaki then proceeds to provide some pretty sound rationales for his opinion. However, the most surprising portion of the article to me was his open statement about market manipulation:

“1. I believe the stock market is being manipulated. I suspect the government, banks, and Wall Street are doing everything they can to keep the market from crashing. Our leaders know that nothing makes the world feel better than a raging bull market.

Do I have any proof that the market is being manipulated? No. I just smell a rat, or a pack of rats. I believe greed, self-interest, arrogance, and fear control the financial markets. I suspect those in charge will do anything to keep us all from panicking… and I don’t blame them. A global panic would be ugly and dangerous.”

Most alternative newsletters and financial information assume there are varying degrees of *non-reported* manipulation, but nearly every source *assumes* it exists. In the media, this is difficult to pick up on, but it *can* be found. The following are video links I provided in previous email newsletters where government manipulation of the markets was discussed specifically on well known outlets:

Joe Saluzzi of Themis Trading on Bloomberg TV Discussing Market Manipulation (6/30/09)
http://www.youtube.com/watch?v=g0U1vMUa2sc#t=3m40s

Larry Levin, of Secretsoftraders.com talks about market manipulation by the government (6/29/09)
http://www.youtube.com/watch?v=tFWIe7qqaZU#t=2m00s

5/14/2009: Dan Shaffer on Fox News: Someone is manipulating the stock markets to benefit the banks
http://www.youtube.com/watch?v=hxBqAw75Bpo

Given that Kiyosaki was very successful with respect to timing the market in regards to Real Estate over that last 10 to 15 years, it is interesting to note what he is now saying about future investments. As you can see from the title of the following video, Kiyosaki has been encouraging investment in gold and silver:

Mike Maloney – Gold needs to go to $15,000 – Rich Dad Advisor (7/7/09)
http://www.youtube.com/watch?v=ckFfzoplC-I

While no one knows where gold is headed, as well as silver (gold’s little brother), the information provided in the previous video is factual and has historical precedent. There is little doubt that this precedent, which is a common theme throughout all fiat currencies in economic history, will repeat to some degree – the only real questions are “to what degree?” and, of course, “when?”.

UPDATE: Audit the Federal Reserve

http://www.auditthefed.com

• H.R. 1207: Federal Reserve Transparency Act of 2009 now has 282 co-sponsors, flat from 282 last week.
• S. 604: Federal Reserve Sunshine Act of 2009 now has 23 co-sponsors, flat from 23 last week.

Ron Paul : Time to Audit the Fed! 8/31

http://www.youtube.com/watch?v=IfoY6zmAnr0

Fed Asks Judge For Delay In FOIA Case – Bloomberg (8/27/09)

http://www.youtube.com/watch?v=wzrt7WY9nuY

“It Could Get Ugly Very Fast”: Banking Crisis Grows, FDIC’s Funds Shrink (9/2/09)

http://finance.yahoo.com/tech-ticker/article/315700/%22It-Could-Get-Ugly-Very-Fast%22-Banking-Crisis-Grows-FDIC%E2%80%99s-Funds-Shrink

• The failure of some of the nation’s largest banks in 2008, including Washington Mutual, Wachovia and IndyMac, and scores of smaller banks this year came at a price. The Federal Deposit Insurance Corporation’s fund that insures the country’s deposits now stands at $10.4 billion, down from $45.2 billion the prior year.
• 84 banks have failed this year, and the problem list of banks continues to grow, 416 as of the end of June. “They’ve got a bunch of huge open ended liabilities should the banking system continue to deteriorate and it could get ugly very, very fast for them,” Bianco worries. As we learned during this banking crisis, these things can pick up steam in a hurry.

The Coming Deposit Insurance Bailout (9/1/09)

http://online.wsj.com/article/SB10001424052970204731804574385072164619640.html?mod=loomia&loomia_si=t0:a16:g2:r1:c0.324866:b27452892

• Americans are about to re-learn that bank deposit insurance isn’t free, even as Washington is doing its best to delay the coming bailout. The banking system and the federal fisc would both be better off in the long run if the political class owned up to the reality.
• We’re referring to the federal deposit insurance fund, which has been shrinking faster than reservoirs in the California drought. The Federal Deposit Insurance Corp. reported late last week that the fund that insures some $4.5 trillion in U.S. bank deposits fell to $10.4 billion at the end of June, as the list of failing banks continues to grow. The fund was $45.2 billion a year ago, when regulators told us all was well and there was no need to take precautions to shore up the fund.
• But this subterfuge can’t last. Eighty-four banks have already failed this year, and many more are headed in that direction. The FDIC said it had 416 banks on its problem list at the end of June, up from 305 only three months earlier. The total assets of banks on the problem list was nearly $300 billion, and more of these assets are turning bad faster than banks can put aside reserves to account for them. The commercial real-estate debacle is still playing out at thousands of banks, even as the overall economy bottoms out and begins to recover.
• FDIC Chairman Sheila Bair continues to say that deposits will be covered up to the $250,000 per account insurance limit, and of course she’s right. But we wish she’d force Congress – and the American public – to face up to the reality of what deposit insurance costs. Amid the panic last year, Congress raised the deposit limit from $100,000. While this may have calmed a few nerves – though the worst runs were on money-market funds, not on banks – it also put taxpayers further on the hook.
• The $250,000 limit was supposed to expire at the end of 2009, but in May Congress extended it through 2013, and no one who understands politics thinks it will return to $100,000. The rising bank losses mean that the FDIC’s ratio of funds to deposits is down to 0.22%, far below its obligation under the insurance statute to keep it between 1.15% and 1.50%.
• Rather than further soak capital from already weak banks, the FDIC ought to draw down at least $25 billion from its Treasury line of credit. Ms. Bair is going to have to ask for the cash sooner or latter, and she might as well do it before the fund hits zero and we get another round of even mild depositor anxiety. We suppose Congress could raise a faux fuss, but these are the same folks who ordered the FDIC to broaden the insurance limit. They need to face the political consequences of their promises.

Commercial Mortgage Defaults Jump for U.S. Banks (8/31/09)

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9FRZ6ipJB8Y

• The default rate on commercial mortgages held by U.S. banks more than doubled in the second quarter from a year earlier amid falling rents and occupancies for malls, office buildings and warehouses.
• Banks are beginning to recognize that more past due commercial property loans are unlikely to be paid in full. Commercial mortgages labeled as “non-accrual” more than doubled in the second quarter from a year earlier, to $27.76 billion, according to Real Estate Econometrics. The figure reflected a 31 percent increase from the previous three months.
• Commercial defaults will rise to 4.1 percent by year’s end, a rate last seen in 1993, according to Chandan’s forecast. Overdue commercial property loans reached 4.6 percent in 1992 during the savings and loan crisis, when the U.S. created the Resolution Trust Corp. to sell off real estate and non- performing mortgages held by insolvent lenders.

ECB Highlights ‘Systemic Risk’ of Credit Swaps Market (8/31/09)

http://www.bloomberg.com/apps/news?pid=20601085&sid=aAGQ3SmA.0JI

• The credit-default-swaps market is concentrated in the hands of a small group of dealers, which is stoking concern about “systemic risk to financial-market stability,” according to the European Central Bank.
• The 10 most active counterparties in Europe account for 62 percent to 72 percent of the credit-swap exposure of lenders surveyed by the ECB, the Frankfurt-based central bank said in a report on its Web site after the market closed Aug. 28.
• The credit default-swaps market has become more concentrated because of the failure of dealers and counterparties such as Lehman Brothers Holdings Inc. and Bear Stearns Cos. LLC, the ECB said in the report, titled “Credit Default Swaps and Counterparty Risk.”
• The “interconnected nature” of the credit-swaps market and its “structural opacity” may also increase risk, the ECB said.
• “In practice, the transfer of risk through CDS trades has proven to be limited, as the major players in the CDS market trade among themselves and increasingly guarantee risks for financial reference entities,” according to the report.

Inflation Will Accelerate Next Decade, Economists Say (8/31/09)

http://www.bloomberg.com/apps/news?pid=20601103&sid=a6BvsAteUyRc

• The Federal Reserve will be unable to prevent the trillions of dollars in government stimulus pumped into the U.S. economy from stoking inflation over the next decade, a survey of business economists showed.
• The main reasons cited for concern over the inflation outlook included “lagged effects of policies now in effect,” “monetization of the debt” and an “ineffective exit strategy” by the central bank, the report said. Only a “small percentage” thought a loss of Fed independence will cause prices to accelerate.

Rep. Frank eyes Fed audit, emergency lending curbs (8/29/09)

http://finance.yahoo.com/news/Rep-Frank-eyes-Fed-audit-rb-3402785272.html?x=0

• Rep. Barney Frank, the chairman of the U.S. House of Representatives Financial Services Committee, said he plans legislation to restrict the Federal Reserve’s emergency lending powers and subject the central bank to a “complete audit.”
• At a recent town hall meeting, Frank said the House would pass a bill to use an audit to crack open the central bank’s books more widely, but in a way that will not encroach on the central bank’s monetary policy independence.
• In addition, he said the House would move to rein in the authority that allows the Fed to lend to a wide range of non-bank firms in “unusual and exigent circumstances.”
• A bill sponsored by Texas Republican Rep. Ron Paul that would allow the Government Accountability Office, a federal watchdog agency, to audit Fed interest-rate decisions has won the co-sponsorship of more than half of the House.

IMF Pumps $250 Billion Into Global Foreign-Currency Reserves (8/28/09)

http://www.bloomberg.com/apps/news?pid=20601083&sid=a_7xC2NrTkkU

• The International Monetary Fund said it today pumped about $250 billion into foreign-exchange reserves worldwide, acting on an April call from leaders of the Group of 20 nations to boost global liquidity.
• Countries will be able to convert the money, to come from so-called Special Drawing Rights, into hard currencies through “voluntary trading arrangements” with other members, the IMF said on its Web site today. The SDRs are the institution’s unit of account based on a basket of currencies.
• About $110 billion of the total allocation will go to emerging-market and developing countries and $20 billion to low- income nations.
• “A number of members with sufficiently strong external positions” have already said they are ready to set up or expand existing arrangements enabling the sale or purchase of SDRs, the IMF said. The lender typically acts as a broker and arranges transactions between parties at no cost.

Judge Sets Sept. 30 Deadline for Fed to Appeal Disclosure Order (8/28/09)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQSMj84TPttg

• The Federal Reserve has until Sept. 30 to appeal a federal judge’s order requiring the central bank to identify financial institutions that benefited from its emergency loans.
• The Fed’s Board of Governors asked Manhattan Chief U.S. District Judge Loretta Preska to delay enforcement of her Aug. 24 decision that the identities of borrowers in 11 lending programs be made public by Aug. 31. The central bank wanted Preska to stay her order until the U.S. Court of Appeals in New York can hear the case.
• The Fed’s “ability to effectively manage the current, and any future, financial crisis” would be impaired, according to the Fed’s motion for a stay. It said “significant harms” could befall the U.S. economy as well.
• Preska told the Fed they must file for an emergency appeal within three days of receiving permission with an ultimate deadline of Sept 30. The judge left it up to the Court of Appeals to decide whether to continue staying her order to disclose once the appeal is under way.

Fed urges secrecy on banks in bailout programs (8/27/09)

http://www.reuters.com/article/marketsNews/idINN2732083820090827?rpc=44

• The U.S. Federal Reserve asked a federal judge not to enforce her order that it reveal the names of the banks that have participated in its emergency lending programs and the sums they received, saying such disclosure would threaten the companies and the economy.
• The central bank filed its request on Wednesday, two days after Chief Judge Loretta Preska of the U.S. District Court in Manhattan ruled in favor of Bloomberg News, which had sought information under the federal Freedom of Information Act.
• Preska said the Fed failed to show that revealing the names would stigmatize the banks and result in “imminent competitive harm.” The Fed asked the judge not to require disclosure while it readies an appeal.
• “Immediate release of these documents will cause irreparable harm to these institutions and to the board’s ability to effectively manage the current, and any future, financial crisis,” the central bank argued.
• The Clearing House Association LLC, which represents banks, in a separate filing supported the Fed’s call for a delay. It said speculation that banks’ liquidity is drying up could cause runs on deposits, and trading partners to demand collateral.
• “Survival can depend on the ephemeral nature of public confidence,” Clearing House general counsel Norman Nelson wrote. “Experience in the banking industry has shown that when customers and market participants hear negative rumors about a bank, negative consequences inevitably flow.”
• The Clearing House said its members include ABN Amro Holding NV, Bank of America Corp (BAC.N), Bank of New York Mellon Corp (BK.N), Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE), HSBC Holdings Plc (HSBA.L), JPMorgan Chase & Co (JPM.N), UBS AG (UBSN.VX), U.S. Bancorp (USB.N) and Wells Fargo & Co (WFC.N).
• The case arose when two Bloomberg reporters submitted FOIA requests about actions the Fed took to shore up the financial system in 2007 and early 2008, including an expansion of lending programs and the sale of Bear Stearns Cos to JPMorgan.

1,000 Banks to Fail In Next Two Years: Bank CEO (8/27/09)

http://www.cnbc.com/id/32581463

• The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.
• “We’ve already lost 81 this year,” Kanas told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They’re smaller companies.”
• “Government money has propped up the very large institutions as a result of the stimulus package,” he said. “There’s really very little lifeline available for the small institutions that are suffering.”
• “The market is expecting about the way we were expecting,” he said. “Unfortunately, we’re not seeing any evidence of a recovery in the real estate market in the southern Florida market,” he said.

FDIC: Number of troubled banks rises to 416 (8/27/09)

http://www.marketwatch.com/story/fdics-problem-list-of-troubled-banks-tops-400-2009-08-27

• The Federal Deposit Insurance Corp. reported Thursday that the number of distressed banks rose to the highest level in 15 years as its insurance fund continued to shrink.
• The FDIC said that the number of troubled banks rose to 416 at the end of June from 305 at the end of March. This is the largest number of banks on its “problem list” since June 30, 1994, when 434 banks were on the list, which isn’t disclosed by the FDIC.
• Total reserves of the Deposit Insurance Fund stood at $42 billion, with the contingent loss reserve falling to $10.4 billion from $13 billion over the second quarter. Some analysts have been warning that growing bank failures could put pressure on the FDIC fund.
• The FDIC’s insurance fund balance has dropped from over $50 billion to around $10.4 billion over the past year, according to Mark Calabria, director of financial regulation studies at the Cato Institute. “With further losses in the construction lending and commercial loan sector, it is almost certain that the remaining insurance fund balance will be depleted,” he said.

Highlights from “The International Forecaster” newsletter (9/2/09)

Published and Edited by: Bob Chapman

Check out or Subscribe to The International Forecaster

• Thus far there has been little recovery even with an official $23.7 trillion committed by the Treasury and the Fed. This number alone shows you how serious this situation is. The banking sector is still broke and is using TARP funds to buy out failing smaller banks. The residential TARP funds returned will go toward helping bail out the collapsing commercial real estate industry. Quantitative easing has not worked, nor has TARP and the endless stream of money from TALF. We are anxious to see if the FASB sticks to its guns and demands mark-to-market accounting. That will pull the cover off of the fraud known as mark-to-model, which really is mark to whatever you want it to be. As you can now see this is a much deeper problem than a subprime problem. That just triggered events. As we pointed out before we are still facing a new wave of subprime loans written over the past year by FHA, Ginnie Mae, Fannie Mae and Freddie Mac, plus ALT-A, Option ARMS Pick-and-Pay Loans and the failure of prime loans that will stretch to 2013. On top of that we have commercial real estate loans now to deal with and credit card failure. This is what the Illuminati crime syndicate has brought you in their lust for more power and riches. We must not forget as well, standing in the wings, are America’s creditors, especially the Chinese who are dumping $25 billion to $100 billion in dollar denominated assets monthly. Their goal is to be out of dollar paper in another 1-1/2 years. Then there are the other sellers. There are few buyers, so the Fed will have to monetize trillions of dollars in dollar denominated bonds, which they are doing secretly presently. It is no wonder they are terrified of an audit, which would not only uncover their illegal activities, but also expose their leadership and participation in the outrageous suppression of gold and silver prices. The status of foreign creditors could turn on a dime. We predict they will abandon ship one at a time, as the dollar slips lower and lower. The Fed and the Treasury have tried over and over to keep the USDX, dollar index, over 80 for weeks and they have been totally unsuccessful. It settled this past Friday at 78.31, just ready to break to new lows. We wonder how long these countries will tolerate such arrogance and the dream of world government? One must remember these countries are suffering the fallout of the actions that have been deliberately executed by these Illuminists and they are not happy about that. They are all suffering recession and many depression. It is only a matter of time before they too dump dollar denominated assets.
• We would like to say for individuals caught up in this mess worldwide, other currencies are not the answer. Only gold and silver related assets are the answer. Remember that, for in the final analysis all currencies will fall in value versus gold and silver and there are no exceptions. We have been there before and seen that, so do not be deluded into going into other currencies, or shares in foreign markets denominated in other currencies, they are not the answer, only gold and silver are.
• Then we hear the fairy tales of recovery in the US, Europe and Asia. If you spend enough money you can create a recovery albeit of short duration. No one is out of the woods. Europe, particularly the eurozone, has cut issuance of money and credit to 3.7% but they are maintaining interest rates at 1%, which is in reality ½%. The European recovery will be a parallel movement for a year and without more cheap money or an increase in money and credit it will die and wither away. Then there are the ongoing real estate collapses in the US, Ireland, Spain and in the Persian Gulf. There could be a bank panic or holiday in any of these regions. If a panic occurs the first liquid asset sold will be US Treasuries and Agencies and the US dollar. This would spread terror in Frankfurt, Paris, London and NYC. All these stock exchanges could collapse as well. The NYSE, FTSE, CAC and the DAX as countries in trouble sell everything not nailed down to simply survive. The world is about to find out that free trade and globalization has been a disaster. The millions of jobs lost in the US and Europe, so that transnational conglomerates could prosper is in the final stages of death. The redistribution of wealth from the rich to the poor countries is about to end in a shattering smash-up. The myth of worldwide prosperity is about to end. Contrary to prevailing thought the biggest losers will be world exporters, such as China, which has already seen a 40% fall in exports. All the money and credit creation we have seen in China over the past seven months, some $1.9 trillion, isn’t going to work. They still face 30 million unemployed. Those jobs are not going to return for a long time if ever. Out of desperation there eventually will be tariffs, legislated in the US, Europe and in other countries and inflation will rise as a result.
• In America the safety net of the FDIC doesn’t exist. It is virtually broke and that is why a few months ago unofficially the FDIC asked government for $500 billion. Putting this into perspective, about $700 billion would insure about 1% of all the qualifying deposits in the US.
• Not only will the Federal Reserve Transparency Act, HR-1207, pass the House, but also it will pass the Senate, because you are going to write every Senator demanding that they pass it.
• If passed, we will see our gold inventories. We’ll find out what toxic garbage the Fed has been buying from banks and what they have paid for it. We will find out every company that received funds and how they were spent. We will subpoena every piece of correspondence, fax, e-mail and phone calls the Fed has ever made. We will get a real balance sheet; not some version the GAO approved. Wait until the public sees how the Fed and its owners have looted the people for almost 100 years.
• Three more U.S. banks failed on Friday, bringing the total to 84 so far this year, as the industry continues to grapple with deteriorating loans on their books. Regulators shuttered Affinity Bank of Ventura, California, Bradford Bank in Baltimore, and Mainstreet Bank of Forest Lake, Minnesota, which in total are expected to cost the government’s deposit insurance fund about $446 million. ??The Federal Deposit Insurance Corp on Thursday reported that the insurance fund’s balance stood at $10.4 billion at the end of the second quarter. But the agency also noted that the figure was adjusted to account for $32 billion set aside for expected failures over the next year. ??FDIC Chairman Sheila Bair said this week that bank failures will remain elevated as banks go through the painful process of recognizing loan losses and cleaning up balance sheets. ??The total of 84 failures this year marks a sharp rise over the 25 last year, and the three failures in all of 2007.
• We stated long ago the somewhere between 3,400 and 4,200 banks would go under and the FDIC would spend trillions of dollars to cover the loses. A loss of 3,400 banks would lead to losses of over $33 trillion.
• The FDIC now has foreign banks and private equity groups about to engorge themselves on failing US banks. Worse yet, rather than cash the FDIC is allowing these financial firms to use equity which is unprecedented. The use of non-cash collateral assets is being used because the purchasing banks are broke and without TARP not only could they not buy anything, but they’d probably be out of business. What Ms. Bair has done has been to expedite the takeover of banks by bigger banks and involved the use of foreign banks as well as private equity partnerships.
• As far as we are concerned, as a foreigner, you have to be deranged to buy dollar denominated assets with the massive monetization of agency securities, collateralized debt obligations and treasuries going on, never mind the underhanded secret deals the Fed is involved in to fund their markets. If we can understand what the fed is up too, so can these foreigners. That is what a more than $600 billion swap facility is all about, including suppression of foreign currencies in order to bolster the strength of the dollar.
• This month, September, a great confusion will begin. The occupation of Iraq will continue; more troops will be sent to Afghanistan and Pakistan will become another major battleground. Terrorism will be used to continue to propagandize the American public, along with Cap & Trade and medical reform and the Swine Flu fiasco. These are all distractions to keep the publics’ eye off the continued failure of our financial system.
• Deflation continues to eat away at assets, except for gold and silver, and the Fed creates money and credit to offset deflation’s savages.
• The torrent of money and credit has pulled some nations at least temporarily out of the negative decline on GDP. Japan, France and Germany are examples. The question is when will their economies run out of stream? Probably when they attempt to raise interest rates. In the case of the eurozone the expansion of money and credit has already fallen 3.7%.
• The global economic crisis, now more than two years old has allowed governments to run banking and financial systems in a usurpation of power over the individual and private property. What we are facing is perpetual crisis and intended government control. There will not be a return to normality. Next will come food shortages and rationing and one epidemic or pandemic after another. We wonder what will happen when the public finds out that all these problems were preplanned by the Illuminati. Then comes the control of all labor. Government is now spending 185% of tax receipts. The budget deficit will be between $1.6 and $2.00 trillion for fiscal 2009, ended on 9/30/09.
• For those who hadn’t noticed, yoy commercial real estate values fell 27% and are off 36% from their 10/07 peak. We see a total drop of 70% to 75% from the highs, when all is said and done. Refinancing has to be found for $165 billion in properties by the end of the year, which is impossible, even with left over TARP funds.
• The only thing that keeps a veneer of equilibrium is the massive creation of money and credit pumped out by central banks worldwide. We said we had entered depression this past February and as when we called the beginning of recession two years before, no one shared our opinion. If we are not in depression than what is the significance of 20.8% unemployment, a factory utilization level of 65% and continued massive foreclosures? As we have said over and over again the Fed, Treasury, Wall Street and banking are in a box and they cannot get out. They deliberately created this horrible situation and there is no going back. It is impossible to reverse the process. We are in an economic and financial depression. The palliative supposedly is bigger budget deficits and credit expansion into infinity. We are going to see a replay of the 1970s. Inflation will catch up and overtake deflation one more time, but in the end deflation will prevail.
• Fiscal spending is running wild and our president predicts a budget deficit of $9 trillion dollars over the next ten years. The Congressional Budget Office (CBO) says spending has to be cut 8% permanently over the next several years. In July alone federal spending rose 26%, as revenues fell 6%. Corporate tax receipts fell 58%, as individual revenues fell 21%. The official economic contraction is the worst since the great depression. Can you imagine what it really is? 9.4% unemployment is front-page news, but you didn’t hear about the 4.7% loss in salaries and wages of 4.7% for the 12 months ended in June. There are more government employees now than all those employed in manufacturing and construction. How is it that state employees now make 40% more than the average income in non-governmental jobs? What a perversion of government. It is no wonder that the US poverty rate is higher than in Mexico and Turkey.
• Our grassroots Revolution has set its sights on restoring a sound monetary policy to our nation, and every day we are awakening more of our countrymen to the dangers of Federal Reserve secrecy and its stranglehold on our economy.
• A year ago, no one in the political establishment would have believed that a bill to thoroughly audit the Fed would have almost two-thirds of the House (including every Republican representative and nearly one hundred Democrats) and a quarter of the Senate on board.
• Certainly, no one would have bet that three-fourths of the American people would support such an audit.
• We have three weeks left of monetization and we know if the Fed doesn’t continue to monetize then the bottom will fall out of the world economy.
• State owned Chinese firms have defaulted on derivatives as Goldman Sachs, Morgan Stanley, JP Morgan Chase and UBS refuse to discuss the matter. The Chinese figure the US is printing money madly to bailout bankrupt institutions, which is essentially defaulting on dollar obligations. The Chinese figure why should we honor derivative losses with the crooks. Let them go to the Fed or the Treasury and let the American taxpayer foot the bill. After this episode the dollar should go into the tank.
• Japan’s opposition party says it would refuse to buy American government bonds denominated in US dollars, if elected. But, he added, it would continue to buy bonds only if they were denominated in yen the so called samurai bonds.
• The chief finance spokesman of the Democratic Party of Japan, Masaharu Nakagawa, told the BBC he was worried about the future value of the dollar [He was elected]
• Average credit card debt among low and middle income Americans 65 and older carrying a balance for more than three months reached $10,235, up 26 percent from 2005, according to a recently released study by the public policy group Demos. It was the fastest increase of any age group. Soon to be retirees are also struggling with debt.
• Aging and retired baby boomers will be a demographic drag on the stock market for years because they will no longer be spending lavishing and investing. Instead they will be liquidating assets to live. This is the opposite dynamic that generated the great stock market boom of the eighties and nineties.
• For decades, the Federal Deposit Insurance Corp. disclosed all bids on failed banks to the public. That was then. This is now: no disclosure on losing bids, no explanation to date, and the change might become permanent.
• Industry insiders are crying foul. The records are used in formulating future bids and, with the pace of failures accelerating, the about face could not come at a worse time, they said. Some observers also questioned whether the FDIC can legally withhold such records and accused the agency of flouting the Freedom of Information Act, which details what can be kept confidential and requires public disclosure in all other cases.
• Rasmussen: Overall, 46% of voters say they at least somewhat approve of the President’s performance.
• That’s the lowest level of total approval yet measured for Obama. Fifty three percent (53%) now disapprove. Eighty one percent (81%) of Democrats approve while 83% of Republicans disapprove. As for those not affiliated with either major party, 66% disapprove.
• Charles Biderman on Bloomberg TV: Insider selling is 30 times insider buying, while corporate stock buybacks are non existent. Companies are saying they don’t want to touch their own stocks. I don’t know where the money is coming from to keep the markets from not plunging.
• If indeed China is prodding its companies to default of derivative contracts, the next crisis phase will unfold. And US solons are to blame because they have not enacted the necessary reforms or restructuring, especially concerning the quadrillion derivatives market.
• Now China will show the world how to handle the intractable derivative problem. Will the default ploy extend to non-commodity contracts? How many other nations will now tell Wall Street toxic waste peddlers to take a hike? How will Wall Street mark those worthless derivatives? We wonder how JP Morgan’s estimated $60 trillion to $80 trillion derivative book will be impacted.
• We’ve been warning for months that foreigners are avoiding agency paper. The Fed has been monetizing agencies like crazy as a result. Yesterday the NY Fed announced a change in its monetization policy.
• Prior to August 31, 2009, purchases were focused on off-the-run securities in that category. Going forward, purchases will include on-the-run securities in that category. This change represents a technical adjustment designed to mitigate market dislocations and to promote overall market functioning. Over the course of the program, the Federal Reserve may change the scope of purchasable securities.
• In other words, the US is having difficulty placing agency paper, so the Fed must monetize new issuance.
• In Ron Paul’s new book, to be published on 9/16/09, “End the Fed” he says, “In recent years central banks have been selling gold constantly, and I am strongly suspicious that the ‘President’s Working Group on Financial Markets’, the ‘Plunge Protection Team’, participates in the gold market as well as to keep the price suppressed.”
• “As recently as November 2008, Mr. Bernanke has admitted to me in a Financial Services Committee hearing that the only time gold is discussed with other central bankers is for the purpose of selling, never to consider its merit in serving as a reserve for a new currency agreement.”
• Breaking a half-century hammerlock of one-party rule in Japan, the opposition Democratic Party won a crushing election victory Sunday with pledges to revive the country’s stalled economy and to steer a foreign-policy course less dependent on the United States.
• In a record landslide on a rainy day, voters awarded 308 seats in the powerful 480-seat lower house of parliament to a slightly left-of-center opposition party formed by disaffected LDP veterans. It is led by Yukio Hatoyama, 62, a Stanford-trained engineer who will probably be chosen prime minister in mid-September.