|
- I am sitting, alone, in the Impenetrable Mogambo
Bunker Of Ultimate Defensive Posture (IMBOUDP), and voices
that insist they are my "family" are begging me
to open the blast-proof door and at least give them back the
TV remote control. So I decide to ask them an easy question
to find out if they are really my family or, as I suspect,
nefarious imposters. So I shout out, "Hey! Morons!"
and someone shouts back "We don’t like being called
morons, daddy!" And so I say, "Okay, Einstein; do
you know what the Federal Reserve has done to the value of
your money since the Fed was created in 1913, only faster
and faster and faster until you can't catch your breath anymore?
Huh? Do ya, moron?" And they admit "Well, no. But
we know that's why you have locked yourself in there with
the TV remote!" Triumphantly I exclaim "Then you're
all morons!"
Please notice that I asked them an easy question,
when I could have asked them something more difficult due
to its recent-osity, such as "Do you know how much more
debt the Congress just authorized to be loaded onto our breaking
backs?" The answer is, in case you were wondering, $781
billion, bringing the total official Treasury debt limit to
just under nine trillion dollars. In case you, for some reason,
like seeing all the zeroes, it is written out as $9,000,000,000,000.00.
That's nine huge, insanely gigantic trillion dollars, which
comes to roughly about $90,000 for everybody who has a job
in the whole freaking country. At 5% interest, your government
will pay out $450 billion a year just in interest payments
alone! Which is, again roughly, about $4,500 for everybody
who has a job.
Anyway, the Senate Finance Committee Chairman
Charles Grassley, who is, they say, a Republican Senator from
Iowa, said that they are passing the huge increase in the
national debt limit because "It is necessary to preserve
the full faith and credit of the federal government."
Hahahaha! Meanwhile, this same Senator and his fellow Senate
buddies have also, according to the Associated Press, been
working on their proposed version of next year's budget, and
have "adopted a $2.8 trillion budget blueprint that anticipates
deficits greater than $350 billion for both this year and
next."
Wait a minute! The government he so proudly
represents budgets only a $350 billion deficit for the next
fiscal year, and yet the same government, at the same time,
allowed the Treasury to issue $781 billion in new bonds, which
is only enough to last them about a year? More than twice
as much? Hahaha! This is too rich! "Full faith and credit!"
And this is the Senate Finance Committee Chairman saying this!
Hahaha! "Full faith and credit!"
Wiping bitter tears of laughter from my eyes,
I next read that, as a kind of comic coda, Ben Bernanke, chairman
of the horrid Federal Reserve, has announced that the sheer
reputation of the Federal Reserve will be enough to keep interest
rates lower than they otherwise would be. Hahaha! Another
example of "full faith and credit." Hahaha!
This is the same Federal Reserve that, last
week, created another $4.7 billion in Total Fed Credit, which
itself is the subject of the popular Mogambo Scout campfire
song, "Fount of Fiat Money from Thin Freaking Air",
which ends with the famous Mogambo death chant (MDC) "We're
all freaking doomed! We're all freaking doomed!"
I laugh because this is true "theater of
the absurd" at its absolute best! It reminds me of one
of my first junior-management jobs, when I proudly proposed
that we tell the stockholders that we are going to have a
$30,000 deficit (which sounded better than "That damned
Mogambo idiot produced a loss after only three weeks on the
job"), but instead we borrow massively against the "full
faith and credit" of the company to get as much cash
as we could get our filthy hands on, more and more, until
it added up to a freaking fortune for each of us, and then
we all quit the stupid, now-bankrupt company and it's board
of directors, and retire in splendor!
Like Senator Grassley, R-Iowa, I thought it
was a great idea! Maybe my greatest Mogambo idea (GMI) ever!
Alas, my budding career as hot shot executive and "world's
youngest zillionaire" was cut tragically short by the
pandemonium in the boardroom following my presentation, what
with the chairman slumping in his chair, clutching his chest
in pain and pointing his stupid finger at me, screaming "He's
the anti-Christ! He's the anti-Christ!" But this Grassley
dork gets re-elected time after time for the same damned thing!
See? I TOLD you everyone is always out to get me!
Forbes magazine reports this as Treasury Secretary
John Snow warning Congress that they had better pony up $781
in new borrowing authority because it was "critical to
provide certainty to financial markets that the integrity
of the obligations of the United States will not be compromised."
Hahaha! Integrity? At the last possible minute the debtor
got his creditors to extend more emergency credit, and THIS
is your "integrity?" Hahahaha! Or maybe "integrity"
is the government lying about inflation, which tricks somebody
into loaning their money too cheaply to the lying government,
and thus the USA pays back the loans with cheaper dollars,
thus screwing the lender out of precious buying power. Hahaha!
"Integrity!"
This is also the same Treasury department that,
the day after President Bush signed the enabling legislation,
somehow sold $78 billion in government debt in ONE FREAKING
DAY, taking us from $8,270 billion in national debt to $8,348
billion! Hahaha! Ten percent of the entire increase in the
debt limit, in one lousy day! Hahaha! "Integrity!"
Afterwards, instead of having a cigarette and
telling me that he will respect me in the morning while pressing
cab fare into my hand, Mr. Snow complimented Congress for
"protecting the full faith and credit of the United States"
by allowing him to plunge the massively over-indebted nation
further into debt by another $781 billion.
Parenthetically, why $781 billion? I explain
thusly: Because $780 billion would be too little, see, and
$782 billion would be too much. Thus informed, you think to
yourself "Gosh! Ya think so?" Well, no, I don't,
and I don't think that the Washington Post does either, which
reports "Mr. Bush has managed to rack up more new debt
during his five years in office than the entire debt amassed
by the United States through 1988. And there is more to come:
The president's budget envisions the debt rising to $11.5
trillion by 2011."
Well, it looks like the President and The Mogambo
disagree as to what we "envision" the national debt
rising to by 2011, because I say it will be a HELL of a lot
higher than another $3 billion (30% higher) in 5 years! Look
at the graph! It's exploding! We're talking another $5 or
$6 trillion! At least! So much debt makes me howl like a banshee
in my fury! OwwwwWWWwwww!
Okay, I see that the police have arrived, and
are demanding that I stop screaming at the top of my lungs
"We're freaking doomed!" over and over, and to come
down off the roof. My lesson plan shows that I was going to
launch into a senseless and ceaseless Mogambo tirade (SACMT)
about how increases in debt and money lead to price inflation
and economic collapse. But all is not lost! You can learn
the same lesson if I turn things over to Doug Noland, of the
Credit Bubble Bulletin at PrudentBear.com, who calmly reports
"The February Consumer Price Index was up 3.6% y-o-y.
February Import Prices were 7.4% higher than a year ago."
I pause on my way down to pay attention to the
response of the crowd to this terrible news about inflation
in import prices. Nothing! Instantly, I return to the studio
and hit the "replay" button, and sure enough, Mr.
Noland clearly and unequivocally said "February Import
Prices were 7.4% higher than a year ago." And yet there
was no response from the crowd! Somebody coughed nervously.
Otherwise it was eerily silent, except that in the background
you could faintly hear The Mogambo screaming "Noooooo!
7.4% inflation! We're freaking doomed!" as they dragged
him into the back of a police car. And then it was quiet,
and finally everyone went home.
- If you want something ELSE to worry about
since you are already frightened by the monetary nightmare
that is happening to your money and your economy, then consider
the essay entitled "Our Worst Nightmare-The Bubble Has
Burst!" by Dudley Baker & Lorimer Wilson. Seat belts
on? Okay, abstracting slightly, let's go! "Housing Starts
Up 14.5%. Building Permits Up 6.8%. Applications for Purchase
of New Homes Down 1.2%. Index of Pending Existing Home Re-sales
Down 1.1%. New Home Sales Down 5%. Existing Home Sales Down
2.8%. Inventory of Unsold Existing Homes Up 2.4%. Inventory
of Unsold New Homes Up 1.2%. Median Home Prices Down 2%. Affordability
Down to 14 year Low. Foreclosures Up 27%. California Home
Sales Down 24.1%. Massachusetts Home Sales Down 21%. Listings
Up 41%. Florida Existing Home Sales Down 19%. Alabama Existing
Home Sales Down 21.5%. Listings Up 17%. Pennsylvania Existing
Home Sales Down 17%. Minnesota Home Sales Down 7%. Inventory
Up 35%."
Your challenge, to claim the fabulous prize
awaiting you behind Door Number One, is to find one thing,
one tiny little thing, one eensy-weensy thing in that whole
damned paragraph that could possibly be considered the least
bit positive to the economy. Especially to an economy where
more than half of growth in GDP is directly attributable to
people taking equity out of their still-inflating, over-valued
houses (by the brain-dead expedient of merely going farther
into debt) and spending the money, and who were engaging in
that strange and ridiculous behaviour because, as perverse
as it sounds, it made a strained kind of sense, because every
one of those things in the whole paragraph was the exact opposite
from today!
Bill Bonner of DailyReckoning.com hears me
talking about this, and offers the news that "The Mortgage
Bankers Association expects mortgage originations to drop
off by 20% this year; it says refinancing should fall by 40%."
My face goes ashen, but Mr. Bonner doesn't notice my slipping
into Mogambo Panic Mode (MPM), and casually goes on to quote
Angelo R. Mozilo, the CEO of Countrywide, the big mortgage
lender, who says "I would expect a general decline of
5% to 10% throughout the country, some areas 20%...and in
areas where you have had heavy speculation, you could have
30%."
Mr. Bonner goes on to say "Remembering
that homeowners extracted trillions of dollars worth of equity
as their homes became 'worth' more and more as prices climbed,
and they spent it, increasingly, over the last decade or so.
Now their debt is higher, and their houses will be worth less.
And I cannot imagine the horror that is going to be unleashed
if houses drop."
All the other reporters were dutifully writing
all this down, but I stood up in the back of the crowd and
loudly proclaimed "I, The Mogambo, can easily imagine
the horror, Bill! I mean, Mr. Bonner, sir!" I was going
to tell him about the horrors of the increases in horrible
poverty as standards of living horribly fall and fall, as
prices horribly rise higher than wages, as taxes horribly
rise higher than wages, too, and pretty soon there are horrible
riots in the horrible streets and horrible burglaries are
on the rise and horrible gangs of horribly desperate people
wander aimlessly, ransacking everything. But he ignores me,
and doesn't ask me for my stupid opinion, maybe because of
that accidental-familiarity "Bill" thing, or maybe
he's still peeved about the twenty bucks I borrowed and promised
to pay back, but never did, and when he called me on the phone
about it, I thought he was just another creditor, and so I
automatically said "Screw you, bloodsucker!" and
hung up, which I realize now was probably a big, BIG mistake.
So I'm thinking about this as Mr. Bonner goes
on, "For one thing, all of this consumer-spending-via-debt
is considered responsible for somewhere between 40% and 80%
of economic growth last year."
For another thing, a more terrifying thing,
local governments took in more ad valorem property taxes,
and voters allowed more people to tax my property (I now have
ten different groups taxing my house, ranging from schools
(three), City taxes, different water agencies (three), juvenile
welfare, a "planning council", and buses), and all
of them took all this new tax money from higher housing values
and they massively increased spending, year after year, which
they should not have done. And the counties and the states
and the federal government also took in huge wads of taxes,
stamps, duties, assessments, costs and fees on all of it,
and then they, too, spent every last stinking dime, which
made more and more people dependent on government spending,
further distorting and mal-investing the economy.
So I am laying there on the floor, gagging up
blood from hearing this horrible economic news, and everybody
is tripping over me and kicking at me, saying "Go home
and sober up, Mogambo, you idiot!" Out of the corner
of my eye I can see Mr. Bonner saying to the adoring crowd
"The U.S. is running a current account deficit of 7%
of GDP - and rising. If we could tell anything from reading
history’s other financial farces, we would guess that
what awaits the U.S. dollar is inflation and then hyperinflation."
I feel my heart go "Urk!" Did he say
"inflation and then hyperinflation?" I am suddenly
cold and sick, partly because of the terrible retribution
that awaits the world as a result of the insane monetary policies
of the Greenspan years at the Federal Reserve, and partly
because it appears that one of the people kicking me is my
own wife, and she's screaming, "Take that, you disgusting
pervert!" like I don't get enough of that verbal-abuse
crap at home or something. Maybe it was a hallucination, but
it seemed so real!
- Sometimes I able (with my eerie Mogambo powers
of ESP (EMPOESP)) to predict when I will have a flat tire,
such as when I drive up to my house and one of my stupid neighbors
has clearly had enough of my waking them up at 4:00 a.m. and
screaming "Your money is being killed! Prepare to die!"
crap, and now the whole family is out on the front lawn shooting
at me with rifles as I drive by. When that happens, I can
somehow sense that one of the tires will go flat, and sure
enough, it usually does! Pow! Weird!
Well, from Reuters we get one of those EMPOESP
moments, as Reuters writes "The dollar slipped to session
lows on Wednesday after a Treasury Department report showed
that net capital inflows into the United States in January
failed to cover that month's record trade deficit." Not
only that, but it was "the second month in a row that
net inflows into U.S. assets failed to cover the country's
trade gap." Now we really ARE screwed!
- An Associated Press article by Gina Holland
says that Ruth Bader Ginsberg and Sandra Day O'Connor, present
and former Justices of the Supreme Court, have "been
the targets of death threats." I say, "Welcome to
the club!"
The article goes on to report how "Over
the past few months O'Connor has complained that criticism,
mainly by Republicans, has threatened judicial independence
to deal with difficult issues like gay marriage." Hahaha!
She thinks that she and her Supreme Court brethren are to
be exempt from criticism? Hahaha! No wonder they have been
getting death threats! She sits on the Supreme Court, making
all these wacky decisions and staunchly upholding erroneous
Supreme Court decisions of the past. The kid with the freckles
in the front row raises his hand and asks "Like what,
Mister Mogambo?" I glare at him, gruffly ask, "Mister
Mogambo, what?" and he damned near craps in his pants,
but finally he blurts out "Mister Mogambo, sir!"
So I look a the class, and say "The worst
decision the Supreme Court has ever made was when they ruled
that it was, perversely, Constitutional for our money to NOT
be made of silver and gold, even though the Constitution clearly
requires that it SHALL be. With that one traitorous action
by the Supreme Court, all of today's economic troubles were
born."
Noticing the blank look on their faces, I cleverly
switch to the patented Mogambo Educational Tirade (MET), meaning
"To get louder and louder while degenerating into a personal
attack of the listener and how stupid their parents must have
been to have produced a child so abysmally stupid." So,
accordingly, I start out nice and sweet, and explain "If
the government tried to run budget deficits with an economy
using gold as money, see, then somebody had to buy the bonds
by selling something else. And this took money out of savings
and out of the economy, and the economy suffered, and the
money re-entered the economy via government spending, which
distorts the economy, and then things start falling apart
and the dollar falls in value, and Congress learned the hard
way that you can't do that kind of silly crap and expect to
be re-elected."
I paused to let that sink in. I continue, the
audience sitting spellbound, hanging on my every Mogambo word
(EMW), "But the Supreme Court, in their most wretched
hour of infamy, gave the FDR and the government carte blanche
to create as much money as they want, any time they want,
in direct violation of the Constitution! And every Supreme
Court, and every Congress, and every President since the 30's
has been criminally complicit in, in that they did nothing
to rectify this despicable perfidy!" I leap to my feet,
fists thrust defiantly into the air! "The ultimate economic
outrage!", I thunder. "And the price of such economic
treachery and stupidity is inflation! Grinding, terrifying
inflation that will destroy your economy and eat your stupid
guts out, you stupid little kids! Didn't your stupid parents
tell you about this, or are you so stupid you just forgot?"
Well, as you can imagine, the place immediately
erupted with screaming, hollering and general panic, until
the teacher finally jumped into the fray, all huffy and puffy,
saying "Mr. Mogambo! Please stop! They are only children!
Little five-year old children, you horrible man!" and
I coldly replied "I KNOW they are only five years old,
you stupid little twit, as I am looking right at them. But
they are the future of America (FOA), and I have to make sure
they learn this important Mogambo stuff (IMS) before you and
your stupid, public-school education establishment Leftist
yahoos start brainwashing them! Now, make them shut the hell
up and start taking some notes!" Instead of answering
my stinging charges, she abruptly claps her hands and announces
it was "nap time" and sends the little tattletale
Billie Fisher to fetch the school Principal..
But this is not about how it was a crying shame
that I was too late to save some kindergarteners from public-school
indoctrination, but about how the people on the Supreme Court
are getting death threats. Let me make one thing perfectly
clear: I certainly do NOT want to see anybody killed or even
harmed, but I proudly admit that I'd like to drag the black-robed
Supreme Court weenies and weenie-ettes out into the street
by their hair and force them look at how much prices have
gone up, year after year, thanks to them! Now the government
is forced to provide (because prices have gone up so high
that people can't pay them) welfare, Medicare, Medicaid, Earned
Income Tax Credits, Social Security payments that FAR exceed
what the recipients paid into the system, etc. Hell, the federal
government is now forced to increase in the latest budget,
by $3 billion dollars a year, money to pay the damned heating
bills of the poor! And in Britain, things are no better, as
an estimated 10% of the population can't afford to heat their
houses now!
And how many more people are now, thanks to
rising prices, relying on government handouts, or going without
health insurance, or going without property insurance, or
going without automobile insurance, or going without more
and more things all the time? Lots! And why? Because the dollar
has continually lost purchasing power, thanks to the horrible
Federal Reserve constantly creating more and more money and
credit! Which is so unnecessarily stupid that it is only allowed
because the damned Supreme Court betrayed America and the
Constitution!
I would thrust the faces of the Supreme Court
at all this, and scream at them "THIS is the result of
your actions, you horrid, gutless traitors! You have allowed
the government to produce the horror of inflation, by letting
them print up and spend more money, and all because you are
your fellow scumbags at the Supreme Court betrayed your sworn
duty to uphold the Constitution, which requires that money
shall only be of silver and gold!"
And don't come running to me, whining and complaining
about how this is torturing Supreme Court Justices because,
fortunately, these kinds of torture techniques are now allowed
by the Bush Administration if someone is your enemy. And worse,
too. Much worse.
- I see that stock markets plunged in Kuwait,
Saudi Arabia, the United Arab Emirates, Bahrain and Qatar.
The total value of the stock bourses is estimated to be less
than one trillion dollars, but it is down $150 billion (from
their 2005 values) and $250 from the peak they had reached.
On the other hand, these same Gulf markets increased almost
700% since 2001, as of all that glorious money poured in from
around the world by selling oil at $60 a barrel versus selling
it at $25 a barrel.
There were "angry protests" that the
stock markets went down, and the Kuwait Investment Authority,
which is the state investment arm, came out and promised to
inject cash into the market! Hahaha! You don't get market-rigging
any more blatant than that! Hahaha!
Mark Lundeen looks at this and says "When
a rich Arab pulls his money out of the stock market, don't
expect him to do what the Americans did in 2001 and use real
estate to leverage his portfolio. Gold and silver will be
much higher a year from now."
Now, before I can say anything (like "Can
I borrow some money to buy gold and silver?"), Roger
Wiegand of TraderTracks.com hears this talk about gold and
says that with or without Arabs' stock market problems, "Extreme
demand pressures on gold are building, supplies are diminishing
precisely as demand is going parabolic. In 2004, four mines
producing 400,000 ounces of gold or more, either closed or
expected to shut down. Africa's current gold production is
no more than it was 80 years ago. It has slipped badly. New
gold mines and expansions of older ones are expected to add
3 million ounces for 2006."
In response, "North American gold exploration
investment has shot up from $193mm in 2001 to $521mm through
2004 and undoubtedly is much higher for 2005. Those are USA
dollars invested in the gold mining industry exploration budgets
for Canada and America. With lead time for new mine development
being roughly eight years, explorers must be in for the long
pull." And what will this price of gold be, lo those
many years hence that are referred to, in the aggregate, as
"the long pull"? Well, he is too wise to tread into
that tricky swamp, but he does give you the starting place
to begin your analysis. "Inflation adjusted gold should
be $1700-$1800 today."
I can almost feel Ken Gerbino, of Kenneth J.
Gerbino & Company, sneering that my vision is too narrow
when I look at gold and silver.when writes that it is ALL
commodities that are going higher and higher, especially copper,
nickel, platinum, zinc and lead. "We are in an era where
India and China need 5-6 times more raw materials than Europe
and the U.S. did during the 30 years of booming economic expansion
after WWII. However, the inventories of metals in the world's
major warehouses (Comex, London Metal Exchange and Shanghai)
are down by more than 80% in the last three years and all
the easy mineral deposits found near surface over the last
century have been mostly consumed. Minerals and metals are
becoming more scarce."
He thus lights a roaring fire under the boiler
of the steam-powered Mogambo profit-seeking machine (SPMPSM)
when he says that "Three phenomena are converging right
now that offer you a unique opportunity. 1) Prices are going
up for gold, silver, copper, nickel, zinc, lead, uranium,
and the platinum group. 2) Supply will be constrained for
5-7 years. 3) Warehouses are almost empty."
Rising demand against inadequate supply for
years and years and years? Wow! Count me in! This is true
"ground floor" stuff!
Mr. Wiegand offers one another clue as to the
price of gold, and writes "Last year oil was dominant.
From 2006 through 2009 gold will over-power oil prices on
a two to one basis. Both gold and oil are in short supply."
And if you want another source of demand for gold, he also
says "The Russian central bank gold reserves are now
up $2.3 billion (US) for just last week alone."
I wasn't even thinking about hedge funds, but
he says that maybe I should, because (and I paraphrase), that
the rise in gold prices will attract speculators, and then
more speculators, and then investors, and then the sharks,
and hedge funds are no different than the rest of us when
it comes to sniffing out profit-potential, and he says "We
think those funds are going to buy in 2006 with a vengeance."
- Ron Paul, our heroic Congressional Representative
from Texas, has introduced a bill to require the Federal Reserve
to continue publishing M3, the broadest measure of the money
supply, and one that they plan to start hiding from us. It
is called "Sunshine in Monetary Policy Act (Introduced
in House) HR 4892 IH." I am sure that your elected representative
would be interested to hear how you feel about that.
On the other hand, with those idiotic new electronic
voting machines that leave no trail, are un-auditable and
thus make election fraud easy to do and impossible to prove,
maybe your elected officials don't have to care anymore what
in the hell you think or don't think. Ugh.
****Mogambo sez: - I notice that the gold
lease rates posted at Kitco.com are again converging to a
rough singularity. In fact, short rates are actually higher
than longer rates! If this resolves like it usually does,
then soon the price of gold will shoot up and the lease rate
spread will widen. It works to the advantage of the market
manipulators in the same way that the yen-carry trade works,
except that the rate spreads in gold are easier to manipulate,
move a lot more, and move a lot faster.
And a late Tuesday breaking news item
at GoldSeek.com reported that the SEC has approved the Barclays'
proposed silver Exchange Traded Fund! Let the fun(d) begin!
Hahaha!
But these are just mere trading observations,
when the obvious truth is that any time is the right time
a) to be in love and b) to buy silver, gold, oil and damned
near any commodity you can name. And for a long time, too!
Richard Daughty, the angriest guy in economics
9241 54th Street North
Pinellas Park, FL 33782
727 546 5568
e-mail: scgcjs@gte.net
|
