International Forecaster Weekly

Election Predictions, Clear Channel Becoming Opaque, America The Costly

Election predictions, clear channel becoming opaque, America the costly, Bubble Mania, Let's Make A Deal, Moscow Style, Chips for Osaka kids, and the pain of Africa....

Bob Chapman | July 19, 2004

Interest rates, as we predicted months ago, will climb at least four percent perhaps five percent. A four percent increase would put the Fed funds rate at five or six percent. That would put US 10-year Treasury notes at 8-1/2 to 9-1/2%, and that would put 30-year fixed rate mortgages at 10 to 11%, up from 6% presently. We hear all these stories as to why this could not happen. We have news for the experts: the Fed in time will not be able to control interest rates as foreigners finally sell US debt. Even mainline media cannot hide the facts on statistics, particularly inflation. Business Week tells us, “The percentage of companies paying higher prices rose 88% in April.” The Kiplinger Report says, “Building supplies has also escalated with the average cost of materials adding as much as $7,000 to the price of a new home. These readings are the highest since the 1970s, when the economy was beset by surging inflation.” Forbes says, “73% of all corporate purchasing agents report that the prices of the goods they buy are rising.” Many companies are just now passing along higher commodity prices on to consumers. As you can see, inflation is far higher than the government admits. Almost 70% of Americans own homes. If they fall just 10% in value, consumers will quickly cut back on spending and that correction will feed on itself. Whoops, there goes the housing bubble. Once companies and consumers start anticipating rising prices, they will act in ways that will feed the inflationary spiral. Then we have to consider the unwinding of the carry trade as a result of higher interest rates; as that unwinds it will force rates even higher. A prime example is Fannie Mae and Freddie Mac, which control 72% of the mortgage market. How will they fare as rates rise? We believe they could well collapse. What about the highly leveraged funds? Many of them could go under. There are so many problems waiting in the wings it is overwhelming. Interest rates and a falling dollar are a gigantic problem, but inflation is now the most immediate problem, and the Fed has not been doing what it should have been doing for almost a year. From here on out inflation will be on everyone’s lips. It will stagger the economy and the financial system, and it will now be the major force that drives gold. Investors are about to find out over the next couple of years that the gold bull market is for real, and they had best join us or pay the consequences.

2005 will be a difficult year for the US and global economy as they descend economically and financially. The global policy of stimulation will have played itself out. Tremendous deficits in the US, Europe and Japan will probably cease to expand as the year progresses. The first to recede will be the production of durable goods. That will be followed by a fall in capital spending and a decline in home building, which will be followed by a decline in real estate prices. The latter two will become victims of higher interest rates. The very integration that the elitists bought about through free trade and globalization will be its undoing. The falling dollar will bring massive losses to its holders and US current account and fiscal deficits will go into default as 2006-2007 appears. Payback is finally beginning. You cannot create prosperity by printing money.

The New Yorker Magazine in the Talk of the Town section has an expose on Dick Cheney’s personal physician who was fired by Cheney for drug use. However, after reading the article, we believe the drugs were for Cheney. He is in all likelihood a manic-depressive. On drugs, in another vein, Conrad Black takes drugs supposedly for migraine headaches, but we suspect they are taken for other reasons. These two are both elitist Jekyll and Hyde characters. That would explain their irrational behavior.

As we reported before the story broke in the media, Tom DeLay, the House majority leader, is the subject of a complaint that he laundered illegal corporate contributions for use in Texas elections. A part of that laundered money came from Enron and Ken Lay. Unfortunately, people like Mr. DeLay no longer represent the people. They represent corporate America. Probably the most toxic of derivatives is the $5 trillion market in the securitization of debts and bonds. A CDO is a collateralized debt obligation and a CBO is a collateralized bond obligation. Making a directional bet and have it go wrong is not difficult. We saw that with LTCM, which was leveraged to the hilt. Once Russia defaulted, they had to liquidate everything to stay solvent and then that was not enough. Another $5 billion was needed so the failure would not take down the financial system. LTCM was run by the people who wrote the book on derivatives. Sir Alan Greenspan likes derivatives because they spread the risk. Our thought is, yes everyone goes under instead of just a few. The problem lies with those who guarantee CDOs and CBOs. Insurance companies package debt and put a guarantee on it even though it is second-tier debt. They package junk and give it an A rating because they guarantee it. The problem is the concentration of guarantees within a small group of insurance companies. This is why Warren Buffett has called derivatives “financial weapons of mass destruction.” It’s a daisy chain of risk default; one goes they could all go. For buyers they buy a liability that looks like an asset, and all of a sudden, it is not an asset anymore. Those who have guaranteed the debt of the US government, Fannie Mae and Freddie Mac are running tremendous risks. There is a long history of complicated miscalculations. The derivative bomb is sitting there just waiting to go off and some time over the next several years it will explode. Our spies in Detroit tell us the big three automakers are in serious trouble, and are canceling supply contracts left and right. They tell me that they have never seen such a bad situation in the last 40 years. Applied Digital has confirmed that the AG of Mexico and some of his staff have received a Verichip for security applications. About the size of a grain of rice, Verichip is the world’s first sub-dermal RFID microchip that can be used in a variety of security, emergency identification and other applications. Wait until the average Mexican hears about this.

As you know, we predicted months ago Bush would attempt to implement martial law if the presidential race got close or he was losing. Rather than pass legislation or allow the executive branch this opportunity, Congress should go one record now stating that any large-scale terror attack will be the occasion for the impeachment of George W. Bush and his advisors and cabinet for gross incompetence and suspected complicity in letting it happen. You should get in touch with your elected representatives and voice your opinions on talk radio and via letters to the editor. This lunatic has to be stopped or we will become a police state. Our guess is the lunatic will call a state of emergency declaration if he decides to cancel the elections. He would at once bring FEMA, Federal Emergency Management Agency, into play and execute power over personal cars, trucks or vehicles of any kind, total control of highway, seaports, airports, aircraft, the national media, all electrical power, gas, petroleum, fuels, minerals and all food resources and farms. FEMA would have absolute power over health, education, welfare, and control of production, distribution, wages, salaries, credit and the flow of money in US financial institutions. The executive orders covering FEMA removes all constitutional protections and guarantees and deprives Americans of their Bill of Rights. George and the neocons can play on the fears of the populace, lowering voter turnout before any preplanned disaster happening. What is worse is that we as Americans are responsible for these wars created for profit and power by our politicians. George and the neocons deliberately are using fear to control the populace and control elections. Again, climb all over Congress and tell them we want no states of emergency, no FEMA, no constitutional chaos and that we demand elections, no matter what.

Antiwar advocates have accused Clear Channel Communications, one of the nations’ largest media companies, from preventing them from displaying a Times Square billboard critical of the war in Iraq. We wonder if the former presence of Henry Kissinger and George H. W. Bush on their board of directors had anything to do with it. A Project Billboard spokesperson is filing a lawsuit. This is pure censorship. This is the same Clear Channel that controls the Art Bell/George Noory radio call-in show. When we were on, we received almost 8,000 responses. Previously, no one has ever received such an overwhelming response. They call this managed media and censorship. The company’s critics point out that the FCC is considering regulations that would make it easier for companies like Clear Channel to own more TV and radio stations. The station has also banned the Dixie Chicks last year after the groups lead singer, Natalie Maines, told fans during a London concert, “We’re ashamed the President of the United States is from Texas.” In 2000 and 2002 election cycles, the company and its officials donated slightly more than $300,000 in unregulated money, most of it to Republicans. Tom Hicks, the Texas Ranges owner, who has long-time ties to Mr. Bush, is a top executive at Clear Channel. The company has a long record of suppressing speech with which they do not agree. Now all you George Noory fans know why we have not reappeared on his program.

The NY Times says VP Cheney is changing doctors and the new doctor will supply a medical-heart-report that compels Cheney to not run for reelection. The media will circulate McCain and Powell as their preferred candidates.

HR 3283 will create a new annual nationwide “America the Beautiful” pass, costing $85.00 or more, as well as multiple layers of fees. Basic fees will be levied for access to all Forest Service, BLM, US Fish & Wildlife Service, Bureau of Reclamation lands and lakes, not just for the Park Service lands. Special fees will be required for campgrounds, boat launches, and special recreation permit fees will be needed for motorized recreation and for group activities. The bill eliminates the Golden Age Pass for seniors that allow them a lifetime entry into National Parks at a 50% discount. Penalties for recreation without a pass will increase to a Class B misdemeanor, punishable by 6 months in jail and or a $5,000 fine. George and the neocons are strongly behind this shameful bill authorized by Ralph Regula (R-OH) who has no public lands in his district. We own these lands and pay taxes to maintain them and now the administration wants to turn them into a revenue stream to fund their wars. Call, e-mail and write your congressmen and let them know you oppose this legislation.

Bubble mania - bubbles everywhere. Asset prices are now driving markets. Wages fall far behind inflation and job creation has been an abysmal failure. Real Estate internationally, which makes up 96% of the housing stock in the developed world, makes up housing bubbles in 25% of the global economy. Another 40% is on the verge of becoming bubbles. The world will soon have to come to grips with a post-bubble shakeout just like they did with the stock market in 2000. The biggest factor in housing is interest rates and they are headed higher from near zero rates the lowest in 50 years. The liquidity injection that allowed the housing bubble to happen has not vanished into thin air and it has begun to manifest itself in inflation. The current bubble countries are Australia, New Zealand, UK, US, Spain, Thailand, Russia and Argentina. Mortgage debt rose above 50% of GDP in 2002 in Australia, New Zealand, the Netherlands, the UK and the US. The withdrawal of those high values does not trigger economic growth but does indirectly create growth. That liquidity withdrawal will stop once interest rates move higher; if they do not move higher, massive inflation will ensue. Two-thirds of world housing is in a bubble that will soon burst and when it does there will be much unhappiness.

It is let’s make a deal in Moscow. Russian oil firm Lukos, backed by the Rothschilds, has offered $7.5 billion to settle its tax arrears bill on condition it be given three years to pay. Mikhail Khodorkowsky took on Putin and the KGB and lost. Yukos is history and its properties will be nationalized just as Pan American Silvers’ properties recently were seized. Westerners will just never learn. You cannot make deals with the Russians and the Chinese because there are no rules.

Venezuela, Argentina and Brazil have made it quite clear that they will not sign the FTAA agreement due to come into force in 2005. Plans are in the works to establish the International Humanitarian Fund to compete with the IMF. It will be a form of South American independence from control by the US and Europe. A South American satellite TV station is planned as an alternative to the dominance of CNN. Needless to say, the Bush Administration will be trying to block progress in these areas whenever possible. Thus, we predict FTAA will not become reality in 2005. This will be a severe blow to the elitists and will set back their program for a new world order.

School authorities in Osaka have decided the benefits of RFID chips outweigh the disadvantages and will now be chipping children in one primary school. The tags will be read by readers in school gates and other key locations to track the children’s every movement. The chips will go into school bags and nametags on clothing.

New Zealand’s PM, Helen Clark, made a scathing attack on Israel and imposed tough diplomatic sanctions after two Mossad spies were jailed for passport fraud. The act carried out by the Israeli intelligence agents was not only unacceptable, but also a breach of NZ sovereignty and international law. All Israelis coming to NZ on government business must now obtain visas. Foreign Ministry consultations with Israel have been suspended and the government has declined an approach by Israel’s head of state.

After 60 years of independent rule, half of Africa cannot feed itself. This is the result of an ongoing, relentless ethnic-cleansing campaign. Democracy as the western elitists call it has led to poor land management and the over-population policies of a long-line of power-hungry, self-serving African dictators, which has brought the continent to the edge of disaster. All you have to do is throw HIV/AIDS into this evil potion and you surely have disaster. These countries with democratic dictators have driven out all of the efficient food-producing ethno-Euro farmers, and the western nations had done nothing to retard this process. That tells us they want Africa depopulated. Just look at the situation in Zimbabwe. It says it all. Educated Africans are fleeing this chaos because they know what is going to happen. They are streaming into Europe, where they are demanding to be housed, fed educated and given equal legal treatment, while European nations tolerate and financially support Africa’s ethnic-cleansing campaign. Zimbabwe and Namibia are being depopulated of whites and Mbeki of South Africa has passed laws called “black economic empowerment,” which blocks whites from accessing the job market and has affectively removed their private-land ownership. He is changing all Afrikaner names on the South African map, closing cultural and educational institutions and Afrikaans- language radio stations. After being in the country for as longs as blacks, some 350 years, they have no place to flee too. The world cannot continue to give Africa four million tons of wheat a year, especially if we have a depression. There are only 45,000 Afrikaner farmers left in South Africa; over a thousand have already been murdered. They are battling heavily armed groups of youth militias targeting their homesteads. Just 10 years ago there were 85,000 white farmers employing over one million people. That is history. There are less than 100 Zimbabwe farmers left. No matter how you cut it, it's game over.

AIDS is now pandemic in Africa where infants born in the nations with the seven highest rates of disease are expected to live less than 40 years. In South Africa, life expectancy fell from 57 in 1995 to 55 in 2000 and the future looks catastrophic. It looks like about 500,000 whites and three million Zimbabweans have left the country and now the last 30,000 whites are about to leave as well with just the shirts on their backs. When we left Zimbabwe in 1973, we warned all our many friends that this is the way it would end, but they were not listening. They said that it could never happen. Well it did happen. People may not sometimes like what they read in the IF, but we have been very right for a long time.