Dec 1 2011 2:18PM

Why Markets Go Down Irrespective Of Economists, Politicians And Central Bankers' Manipulations

Global debts among the USA, Europe, and Asia have grown too large to manage and/or pay-off. The only choice remaining is to delay and repudiate debts, and print more currencies and bonds moving toward massive defaults.

In the USA, trillions in older, toxic derivative paper has not been dealt with in the aftermath of TARP I. Global banks that were buried under this mess are running two sets of books and banking authorities know it.

Those banks were not stopped after the first credit implosion and have gone back for more of the same, making new derivatives problems even worse.  The stealing continues at levels twice what we saw in pre- 2007.

The elitists, primary large central bank operators, deliberately fomented these failures to crush their enemies and the USA society at large to install a one-world government and a one world currency.  It won’t work for two reasons: (1) the internet is too free and open for the exchange of information  (2) the soon-to-be-wrecked bond markets will destroy any remaining credit and value held by the perpetrator banks. (3) if force is used against consumers, and maybe even if its not, milions of armed Americans with about 500MM guns are ready to revolt.

We suspect the violent road, if indeed it ever happens, would be brief as the world and America turn to new paradigms in economics.  It’s like a big war; but what happens if no one shows up to fight?  In economics, what if the formerly, participating Sheeple refuse to participate rejecting and dropping-out of the system as we know it? The herd can be forced in some respects, but that force will only create violent backlash and further ruin the elitists’ plans.

The Super Committee was a child-like fantasy idealized by dumb politicians to fool the herd. We knew nothing would come of it and we know the mandatory cuts they’ve talked of never happen either. Do not expect any good decisions, or relief from any politician. They are determined to ruin America and plunder what they can personally, and corporately for backers-bankers before they’re voted out of office. That goes for both parties. Their objective is one currency and one government for all.

Inflation in 2012 will rise ever faster. Taxes will go up on the expiration of the Bush tax cuts. Over-taxed citizens will go to private trading and off-the-books black markets. Tax collections will fall dramatically since incomes do, too.

The USA Defense Department will be forced to undergo severe cuts and current Middle Eastern wars will cease, or slow temporarily until a newer, much larger World War III, begins in the aftermath of crashing economies.

We expect the current administration to be re-elected with later-on efforts to impeach the president that will fail. People will stop voting in droves.  For the most part, voters have lost all faith in their so-called leaders.

The US Post Office is under severe pressure but will continue delivering mail, eliminating Saturday delivery and certain office services.  Many rural post offices close for good and rural people must turn to private delivery and other arrangements. Delivery timing will slow considerably, on smaller budgets and fewer employees. Mail service and delivery goes on, albeit more restricted to higher population areas. Private delivery will increase.

Watch for public parks and facilities going into disrepair on falling budgets. Some parks may be closed for good and some might even be sold to private owners and developers. Interstate highways are sold to private toll-taking companies to monetize state-held assets for payments on ruined budgets.

The “Back To The Land” ideas are in full force. There are still enough oldsters around who remember the Dirty 30’s and extreme hardships many felt with a decade of no income. They will teach their kids and friends how to cope.

 Most anything consumers, individuals and families enjoy such as optional little pleasures like cable TV, internet, cell phones, package delivery and cleaning services will all diminish. One major dish TV provider just reported major service cancellations; I would guess mostly in rural locations where there’s no directly connected cable, or internet. Those in a lower income spectrum are just canceling services and making due by using their friends’ equipment, or by using cheap cell phones or snail mail.

USA Unemployment is now 23% and could be 25% within 90 days.  Over the next 18-24 months, it should rise above 30%.

The USDA now has nearly 50mm Americans on food stamps costing $75 Billion per year. It gets worse, but we cannot forecast how much worse as this is new and never travelled territory. We hope the USDA can cover and hang-on; especially for innocent children who need the help. One $375mm brand new jet fighter cancellation could feed a whole bunch of little defenseless kids.

The American military is very tired-out from a decade of useless wars. Watch for many USA foreign facilities and outposts being canceled and closed on hard budget decisions.  We expect a brief 1-3 year pullback with troops returning home. However, when WWIII is started-instigated, probably again in the Middle East, new and costly war-budget demands appear again, draining more blood and treasure from America.

Many are wondering what happens regarding consumers and citizens as Greater Depression II begins to bite harder and deeper. Americans mostly, do not have the social control and manners found in some other nations, yet they are reasonably tolerant.

However, as you can see with the phony, instigated OWS demonstrations, things can go awry very easily and quickly.  Local police in some cities have finally had enough and cleared them out.  It is our contention this goes a lot worse in the heat of next summer with no jobs, money, future, or resources for millions of citizens, not only in America but over the world.

There are thousands of US college educated kids who’ve returned home to live in mom and dad’s basement as they have degrees but no jobs. Many are returning to school to get master’s degrees; again probably not too useful in the next 5-10 years for most of them.

The military is cutting back on budgets and American bases as corporations send more jobs and investments overseas for cheap labor. Corporations will undergo severe public relations pressures for doing this, while having suffered increased taxes and experiencing a larger loss of USA customers who cannot buy nor pay.

Thousands of students have discovered they can earn a four year college degree on-line for about $7,500. Further, they can do this while living with parents and hold part-time minimum wage jobs to help with bills.  Many will get by with no car and they’ll avoid $50,000 in student loan-paybacks down the road. I am seeing more qualified kids (good grades) elect not to attend college but rather work for minimum wage and begin a small business for themselves on the internet, or through other local means.

The national job market is toast. There are hundreds of people looking for a tiny number of job openings. Yet, we read of unfilled jobs as the proper skills cannot be found by recruiters for special work.  Mechanics, electricians and others are badly needed.

Families are having fewer children in this depression as they cannot afford them. It is estimated to cost $250,000 per kid to raise that child from birth to age 18. This economic reality is delaying marriages indefinitely, and delaying married couples from having kids now, or maybe forever. You have to wonder what this means for an entire lost generation from say 2007 to 2027.

USA’s Federal Reserve and US Treasury is reluctant to discuss implementation of QE-3. The reality is; this has been in play in a stealth manner since QE-2 expired June 31, 2011. The last few bond auctions have been absymal both in America and in Europe.

Economist Mark Zandi, whom we consider to be one of the better ones, thinks the QE-3 program begins in February, 2012. We say if true, it would be a formal announcement of an already implemented policy. QE-3 has been running smoothly since July 1, 2011, as a stealth program.  Today on Bloomberg, is was reported the federal reserve provided $13 billion under the radar for USA global banks to keep them solvent.

Germany is being publicly maligned and mistreated as they have not laid-down and rolled-over to hand-out billions from their taxpayer funds to their lazy, nation-neigbors.  We think they have a strategy to pretend to go along with welfare payouts using some specious-suspect credit vehicle like the ESFS emergency credit facilty, or some other nonsense promulgated by the broken nations of Europe begging for help. 

In Germany, after this public relations ploy is in place (with no contingent liability by Germany); they’ll defeat it to avoid being ruined.  In others words they can escape and, or weasel-word out of it. We say they’re on the right track to save Germany from a major economic crash, which is where their broken neighbors are headed next.  

Germany’s plan might be to resume trading in the old D-Marks currency and implement necessary decisions to make a major shift, leaving the Euro and a failed Euro-land experiment for good.

Germany’s damage will be massive loan losses they can afford to cover. Next, they will lose several, larger export customers for German goods. Why? Because those customers will then be unable to afford to buy on (1) bad or no credit and, (2) the German D-Mark currrency will trend toward the higher values of Switzerland’s Swiss Franc making German stuff too expensive.

Our traders and investors are encouraged to take care of personal family needs first. Then own 10% of accounts up to $100,000 in physical gold and silver. Some are going to 33% physical on the first $100,000. We prefer silver as its cheaper to buy and might rise faster. Get out of all debts and obligations to the extent possible. Review family budgets and cut ruthlessly to save. Hold cash in the house and keep investments to shares in the best gold and silver mining stocks.

Watch for a new report in Trader Tracks covering key points as to what a good mining stock should offer for both growth and security. Daily trading volatility is going higher with wider trading ranges and faster trading.  We will see market days that scare people into making bad decisions. When markets go nuts, sit back and watch…doing nothing. Trading decisions should be made when you have a clear head and are not under severe pressure. The best junior mining stocks will mint new millionaires before this is over.

Now, more than ever, it is important to take immediate, necessary precautions to protect yourself and your families and friends. Traders and investors should be buying precious metals and select shares right now. In our newsletter, we have a great list of trading and investing ideas for you.

Meanwhile, you can never go wrong buying physical precious metals and holding them for security. We’ve had a constant run of nearly plus-ten years with gold rising +15% per year or more, so this remains a good trade. In the last twelve months, gold rallied over 34% and is going ever faster. As outstanding as those numbers are, silver is doing even better.

It’s not going to stop any time soon. In fact, we predict those annual percentages will rise even more and this offers a chance, arriving only once in 25 years on the historical commodity cycles.

Roger Wiegand
Editor Trader Tracks Newsletter


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc.  Neither Kitco Metals Inc. nor the author can guarantee accuracy of all information provided. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.


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