The Market Oracle: Fed Uses Self Created Credit Crisis to Grab Power

By: Peter Schiff.

Throughout history, governments have always used crises to justify blatant power grabs. Often the crisis subsides, but the expanded government powers remain. In America this week, the tendency came into sharp focus. Congress signaled that it is preparing to perpetuate the Bush Administration’s domestic wiretapping program, and has even abandoned the pretense that warrantless surveillance be confined to terrorism. Similarly, even though our financial crisis has yet to reach full flower, Treasury Secretary Paulson announced plans to give the Federal Reserve new and explicit powers to oversee and regulate the financial services industry. However, a sober look at his plan reveals that it is tantamount to giving the fox complete autonomy to guard the henhouse.

What few economic leaders have acknowledged is that the Federal Reserve itself is responsible for the real estate and credit bubbles, which are the source of our current troubles. By keeping interest rates too low for too long, the Fed ignited a speculative fever and engendered a disregard for risk management that pushed asset prices above rational levels. Should we blame the private sector for taking advantage of all the cheap credit, or the Federal Reserve for supplying it? If a kindergarten teacher passes out handfuls of Pixie Sticks, and then leaves her classroom unattended for several hours, should we blame the five year olds for the hysteria that ensues?

The reality is that we should be restricting, rather than expanding, the powers given to the Federal Reserve. Since Greenspan, Bernanke and company have already inflicted so much damage with the weapons already in their arsenal, why provide them with heavier artillery? Only in Washington do those who screw up get rewarded for doing so.

Since the Fed has demonstrated complete incompetence at setting interest rates, why not return that function to the market? Instead of allowing the Fed to inflict unbridled havoc on our economy, why not re-impose some discipline? Instead of looking for new ways to regulate Wall Street, why not find an old way to regulate the Fed? Actually there is a simple answer to all of these questions; it’s called the gold standard.

In his speech outlining these proposals, Paulson stated that during the past fifty years the performance of the U.S. economy has been second to none. I do not know what planet Paulson has been living on these past fifty years, but it is certainly not Earth. If Paulson were referring to the prior fifty year period, from 1908-1958, his statement would have been correct. But from 1958 to 2008, the U.S. economy has blown a lead even greater than the one the Lakers enjoyed over the Celtics in game four of the just concluded NBA Finals. In fact, it may well qualify as the biggest economic choke in history.

In 1958 the U.S. enjoyed a standard of living so unmatched that the rest of the world still lived in the Stone Age by comparison. Our per capita income was so far ahead of our nearest rival that it seemed impossible that any other nation would ever catch up. Today not only is per capita income in the U.S. barely in the top ten, but we are being rapidly overtaken by countries that up until a few years ago were barely discernable in our rear-view mirrors. When it comes to economic performance during the past 150 years, the U.S. is the Big Brown of economies. 1858-1908 was the Kentucky Derby, 1908-1958 was the Preakness, and 1958-2008 was the Belmont Stakes.

Not only did the U.S. surrender a substantial lead, but in many respects our current standard of living is lower than the one our grandparents enjoyed. Sure we have a few more gadgets, larger televisions and more prevalent air conditioning, but the quality of life has actually declined. In the 1950’s, the average man earned enough money to fully support a wife and four kids, all while saving for retirement and paying off his mortgage. Today the average man can barely support himself. It takes two bread winners in most families to make ends meet, and that is assuming only two children. Even with both parents working, the typical mortgage on the family home will never be paid off and retirement is now a pipe dream. Flush with high pay, low debt, and a strong currency, the Ugly American in the 1950’s could vacation in Europe like a king. Now we can now barely afford the gas for a day trip to a Six Flags theme park.

If Paulson can be so completely clueless regarding the Fed’s role in the current debacle and in America’s economic stumbles over the past two generations, why would anyone place any faith in his proposed remedies? In fact, an unaccountable and unelected Federal Reserve, which nonetheless has lately proven to be as politically craven as any two-bit politician, does not hold the keys to our economic revival. However, with its increased willingness to rescue the big financial firms from their own excesses, perhaps Paulson sees an expanded Fed as the best way to ensure the continued prosperity of his former pals on Wall Street.

By Peter Schiff
Euro Pacific Capital
http://www.europac.net/

A tale of two tomatoes: How and why, in a centralized food system, a little bacteria can go a long way.

Source: Melinda Hemmelgarn, Rodale Institute.

It’s hard to beat the taste of warm, juicy, sun-kissed tomatoes plucked ripe from heavy, home-grown vines. Tomato-cravers who lack access to a plot of soil or who simply can’t wait for their local harvest have to rely on restaurant and supermarket supplies.

In the winter and early spring, commercially grown “fresh-market” tomatoes typically travel hundreds of miles from their roots in Florida and Mexico. Picked green, they ripen en route with an expected shelf life of two to four weeks.

Increasing year-round consumer demand places tomatoes fourth (and climbing) on the most popular fresh-market vegetable list. So it was with heavy hearts that we learned the food-safety fiasco du jour involves tomatoes and Salmonella.

Not exactly what you’d expect from tomatoes, right? Salmonella typically conjures up thoughts of undercooked chicken and raw eggs, with good reason. Most of the 40,000 or so under-reported cases of Salmonellosis in the United States each year are associated with foods of animal origin.

That’s because Salmonella are a group of bacteria that live in the intestinal tracts of humans and other animals, including birds and reptiles. According to the U.S. Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC), the bacteria usually spread by eating foods contaminated with human or animal feces. Keep that in mind.

A mystery unfolds

Tomatoes have been implicated in Salmonella outbreaks since 1990. But during the past decade, fresh and fresh-cut tomatoes have been linked to more than a dozen different outbreaks and near 2,000 confirmed cases of food-borne illness in the United States.

The current ongoing nationwide outbreak—277 cases reported in 23 states and counting—implicates three types of fresh (raw) tomatoes contaminated with the uncommon strain, Salmonella Saintpaul: red plum, red Roma, and round red.

Because of their early harvest dates and widespread distribution, growing areas and processing plants in South Florida and Mexico have been under closest scrutiny. However, the first and by far the largest number of reported cases occurred in New Mexico and Texas from tomatoes harvested in April from as yet an unknown source.

Meanwhile, the FDA is clearing tomatoes as safe if they come from growing regions and states where tomatoes have not yet ripened, or were not ripe at the time the cases were first reported.

At present, FDA is withholding information about the location of a cluster of nine cases, since such information is considered part of the “ongoing investigation,” and “commercial confidential.”

Even though the FDA and CDC have not been able to “trace back” the source of the contamination, Dr. David Acheson, FDA’s associate commissioner for foods, says the probability of the same genetic type of Salmonella coming from more than one geographic location is “highly unlikely.”

How does contamination occur?

In its 40-page “Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and Vegetables,” the FDA outlines contamination hazards and methods to reduce risk. For example, contamination with human or animal feces may occur as the result of physical contact with runoff water near feedlots, overflowing manure lagoons, contaminated irrigation water containing raw sewage, improperly treated effluents from sewage treatment plants or inadequate farm worker toilet and sanitation facilities.

Of particular interest are recent studies showing that produce can take up pathogenic bacteria via their root systems, as well as through flesh or stem scars.

For example, during processing in order to help keep the fruit “fresh,” hot tomatoes may be placed in large vats of cool water, called hydrocoolers. According to FDA’s Acheson, the temperature gradient can cause the cool water to “get sucked inside the tomato.” If that water is contaminated with Salmonella, many tomatoes can become contaminated, and routine washing at home will not effectively remove the internalized bacteria.

Safe in my backyard

Even though we’ve known about Salmonella bacteria for over 100 years, widespread outbreaks are a modern day dilemma of centralized food systems.

Jennifer Wilkins, a Cornell nutritionist who examined the recent food-borne illnesses associated with spinach and lettuce, says it’s unwise to “take all of our salad from the same bowl.” In other words, food production that occurs on a single or handful of farms and facilities, and then serves the entire nation creates potential widespread public health risk.

“Smaller, more localized production and processing systems are not immune to contamination,” Wilkins says. But if problems do arise, “they’re less costly, far easier to trace and have less widespread consequences.”

Local, organic, tasty and less likely to carry Salmonella.

Ka-ching

Speaking of costs, ever wonder about the price tag on a nationwide outbreak? No Federal agency is keeping tabs on the total costs of this and other food-related outbreaks. But outside of retail losses, calculating the true costs would have to include: loss of income to farmers; health-care costs and lost employment of those sickened by Salmonella; lab fees, salaries and travel of FDA and CDC staff; and, lost energy and fossil fuel costs associated with growing, harvesting, processing, packaging, shipping, and now disposing of the fruit.

Unfortunately, the FDA’s guide, which addresses “Good Agricultural Practices” (GAP) to ensure produce safety and protect public health, offers voluntary guidance, not regulation. The FDA has requested greater regulatory authority around preventive controls for high-risk foods. However, Florida couldn’t wait for stricter national mandatory rules. In response to the economic devastation brought on by prior Salmonella-tomato outbreaks, the Sunshine state is adopting the GAP as a state regulation beginning July 1, 2008.

Keep it simple…

To help protect public health, the FDA advises simple consumer messages:

• Grape and cherry tomatoes, as well as tomatoes sold with vines attached are safe to eat, since they have not been implicated in any of the outbreak cases.
• All tomatoes are considered safe to eat if they come from one of the states or regions cleared by FDA: www.fda.gov/oc/opacom/hottopics/tomatoes.html
• Avoid eating tomatoes with broken or split skins, or signs of decay.
• Wash tomatoes under running water, not in a sink or tub; detergent or special rinses not necessary.
• Refrigerate tomatoes after you’ve cut or sliced into them.
• Wash hands after handling pets, changing diapers, using the bathroom and before preparing food.
• Wash cutting boards, dishes, utensils and countertops with hot water and soap.
• Know the source of your food. The FDA says: “If consumers are unable to determine the source of their tomatoes, they should not be eaten.”
• Backyard tomatoes are safe! Handle them carefully, and enjoy.

Two tomatoes

The latest food safety fiasco boils down to two choices. One tomato is available year-round, harvested by unfamiliar hands (or machines) and passed through multiple potential contamination points before reaching unwitting consumers. The second, a tantalizing, local, organic tomato, drips with fresh flavor and carries a bounty of nutrients that only develop on the vine. It requires patience. But some things are simply worth waiting for.

Melinda Hemmelgarn, M.S., R.D., is a registered dietitian, advocate for sustainable food systems, and Food and Society Policy Fellow. She’s based in Columbia, MO.

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References:

Salmonella outbreak: Centers for Disease Control and Prevention: www.cdc.gov/salmonella/saintpaul/

Food and Drug Administration: www.fda.gov

Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and Vegetables: www.cfsan.fda.gov/~dms/prodguid.html

Plant root uptake of pathogens: http://barfblog.foodsafety.ksu.edu

FDA Press calls: 6/11/08; 6/12/08; 6/13/08; 6/16/08; 6/17/08

USDA Economic Research Service: www.ers.usda.gov/Briefing/Vegetables/tomatoes.htm

Nurse Olivia: Some Brain Surgeons Don’t Hold Cell Phones To Their Brains

Source: Red Pill Reich.

Three prominent neurosurgeons declared on Larry King Live that they don’t hold cell phones to their ears because they believe they’re dangerous. So of course the New York Times came to the rescue of cell phone makers with an article containing mixed information, entirely watering down the message.

Photographer Documents 189 Secret Satellites

Source: Bryan Gardiner, Wired.

BERKELEY, California — For most people, photographing something that isn’t there might be tough. Not so for Trevor Paglen.

His shots of 189 secret spy satellites are the subject of a new exhibit — despite the fact that, officially speaking, the satellites don’t exist. The Other Night Sky, on display at the University of California at Berkeley Art Museum through September 14, is only a small selection from the 1,500 astrophotographs Paglen has taken thus far.

In taking these photos, Paglen is trying to draw a metaphorical connection between modern government secrecy and the doctrine of the Catholic Church in Galileo’s time.

“What would it mean to find these secret moons in orbit around the earth in the same way that Galileo found these moons that shouldn’t exist in orbit around Jupiter?” Paglen says.

Satellites are just the latest in Paglen’s photography of supposedly nonexistent subjects. To date, he’s snapped haunting images of various military sites in the Nevada deserts, “torture taxis” (private planes that whisk people off to secret prisons without judicial oversight) and uniform patches from various top-secret military programs.

The nearly vertical streak in this image shows a satellite called Keyhole 12-3 crossing the sky near the constellation of Scorpio.

While all of Paglen’s projects are the result of meticulous research, he’s also the first to admit that his photos aren’t necessarily revelatory. That’s by design. Like the blurry abstractions of his super-telephoto images showing secret military installations in Nevada, the tiny blips of satellites streaking across the night sky in his new series of photos are meant more as reminders rather than as documentation.

“I think that some of the earliest ideas in the modern period were actually from astronomy,” Paglen explains. “You look at Galileo: He goes up and points his telescope up at Jupiter and finds out, hey, Jupiter has these moons.”

More significant than the discovery itself, Paglen says, was the idea that anyone with a telescope could verify it and see the same exact thing that Galileo saw — an idea Paglen is trying to re-create in his own photographs.

“It really was analogous to a certain kind of promise of democracy,” says Paglen, who sees a similar anti-authoritarian premise running through his own work.

Paglen says his most recent project is the culmination of close to two years of trial-and-error experimentation with astrophotography, untold hours of fieldwork and analysis, an ongoing collaboration with amateur astronomers, and many nights in his Berkeley backyard and at California’s Mono Lake.

“Lacrosse/Onyx II Passing Through Draco (USA 69)” shows the transit of another surveillance satellite.

Photo: Trevor Paglen

To capture his images, the researcher and “experimental geographer” employs a motorized mount with various combinations of telescopes and digital and large-format film cameras. Paglen uses spy-satellite data compiled by Ted Molczan — a renowned amateur astronomer profiled by Wired magazine in 2006 — to predict where a given “black satellite” will be in the sky. Then he decides how he wants to compose the image.

“I’ll find where a star will be in the compositional plane,” he says. “Then I’ll use one telescope, which is attached to a webcam, to focus on that star.”

With the help of a computer program that controls the mount of the telescope and keeps it focused on the heavenly body, Paglen says he can get the telescope to swivel with the Earth’s rotation.

He then uses another telescope attached to a high-end digital camera for his deep-sky shots, similar to the rig he used for his desert shots.

“I’ll see the satellite in the sky, kind of know where it’s going to be in the frame, then I’ll open the shutter and take a long exposure of the satellite passing through.”

Paglen’s initial interest in the government’s so-called “black projects” took shape while combing through U.S. Geological Survey archives of satellite prison photos in 2002. He noticed that many of the photo frames of prison sites were missing or, in some cases, heavily edited.

“I thought: What the hell is this? We still have blank spots on maps? We’ve mapped the whole structure of the cosmos and the human genome, so what’s this all about?” Paglen said.

Eventually, those blank spots led Paglen to other covert subjects and turned a hobby into a full-time job — one with a decidedly political stance.

“For a time, people were getting arrested for photographing the Brooklyn Bridge,” Paglen notes. “So to me, what it meant to do photography also changed. There was a new kind of politics to it — something that was very aggressive and dangerous — and a presumption that it would reveal some kind of truth or evidence.”

Ultimately, the satellite photos are an attempt to critique that attitude. While the budget for black military operations has more than doubled in the last 10 years and the government continues to espouse the virtues of secrecy, it can’t prevent interested amateur astronomers from calculating the orbital paths of spy satellites.

“The National Reconnaissance Office cannot classify Kepler’s laws of planetary motion,” Paglen says. “They just work … and they’re unbelievably accurate.”

Political Cortex blog: It’s the Iraq War that’s Killing the Economy, Stupid!

By Bob Kendall.

As billions are going down the drain in Iraq, this wild misadventure is destroying the once strong U.S. dollar.Economic vultures all over the world delight in seeing what was once the world’s economic super power’s financial stability being demolished.

Foreigners are buying out major assets as the dollar dramatically declines. Belgium may buy the biggest brewery in the U.S. In 2007 foreign investors spent $414 billion buying some of the biggest assets of the U.S.A.

There is even talk now of the New York City landmark Chrysler Building being sold.

Perhaps now the U.S. won’t outsource jobs to China, India or Bangladesh.Foreigners who buy out U.S. corporations will have cheap U.S. labor, a labor force anxious to accept jobs they may desperately need to cope with inflation as their currency declines. And they will have to work hard to pay off the $10 trillion debt the Bush Administration generated.

Saudi Arabia and China’s bond buying is keeping us afloat. If the U.S. dollar declines much further, they may decline to buy our bonds, and then what?

We are borrowing from China to pay the Saudis for the oil we are using for our gas guzzling SUV’s.

All this is going on while George Bush enjoyed a week long European whirlwind farewell tour. In every major city, Bush smiles and waves for TV cameras as if he was on a triumphant farewell tour. With Europeans having a lower popularity rating for Bush than even U.S. low ratings, this is strange.

Glancing back at the Vietnam War, which cost the lives of over 59,000 U.S. service personnel, and over 2.5 million Vietnamese and Cambodians, historians have asked in countless Vietnam books -What was the Vietnam War fought for and precisely what was accomplished?

Is Iraq a re-run?

The fear factor drove the Vietnam War fear. It was perpetrated by a media propaganda campaign. Could it be this was the concerted activity of the military-industrial complex that the Republican President Dwight D. Eisenhower warned us about?

The domino effect was the idea that if the U.S. did not stop the Communists in Vietnam, all of Asia might fall like a row of dominoes into Communist rule.

When the U.S. fled Vietnam and the Communist North Vietnamese took over South Vietnam, all of Asia did not become Communist. The domino effect fear hysteria had been proven false. Even Robert McNamara finally admitted that it was a hopeless war.

How time changes everything! In 2008 China is the biggest trading partner of the U.S.A., with our trade balance to China being in the billions.

The money made possible by the Saudis and China buying U.S. bonds keeps the U.S. functioning economically in 2008.

Don’t talk about Democrats being the big spenders. Not when Bush’s national debt is bigger than all the previous national debts combined – approaching $10 trillion.

Traders today are considering, due to the drastic dollar decline, ceasing to use the battered U.S. dollar as the world’s bench mark currency.

Don’t blame the international currency traders for contemplating this possibility. Blame Bush!

With the British pound now worth twice the value of the U.S. dollar and the Euro over 50 percent higher than the dollar’s value, the U.S. economic plight is quite apparent.

Gas prices go up, up and away, higher than ever. Food prices, college costs, hospital expenses, building materials, autos, everything is going up. The cost of living is skyrocketing, demolishing the American dream as salaries for American workers slump.

What about those Americans who save their money, putting it in banks for safe keeping?

The last Federal Reserve chief Alan Greenspan lowered interest rates to the lowest level in over 40 years. This triggered the home building bubble, with people investing in residential property as if was the stock market.

Now that the bubble has burst and home prices in many areas have drastically descended, the new Fed chief Ben Bernanke cuts the interest rate repeatedly, just like Greenspan did.

Senior citizens on fixed incomes and the U.S. bond buyers, who keep the nation’s economy going, are automatically cheated out of a fair return on their money.

Senior citizens who rely on a fair return on money they have accumulated through a lifetime of hard work, now get a return often less than the inflation rate. This means that banks are using savers and U.S. bond buyers’ money for free.

The 2.5 million mortgage foreclosures, by a strange twist of fate, is the same number of mortgage foreclosures that occurred during the Great Depression.

79 million senior citizens (referred to as baby boomers) are looking forward to retirement with social security and Medicare assistance.

All this is occurring while the U.S. dollar crashes and the cost of living increases, with job layoffs in the auto and airline industries.

Homeless people roam the streets, begging for sustenance. A recent CNN report disclosed that the U.S.A., representing only 5 percent of the world’s population, uses two-thirds of the world’s drug market.

Dante J. Driver of Seattle wrote in the Seattle Post-Intelligencer in the Letters to the Editor on June 18:

“The Federal Reserve has actually been pursing inflationary fiscal and monetary policy since the eighties. Profligate government spending by both parties and historically low tax and interest rates have pumped cash into the economy that fueled the technology, real estate (and arguably the current commodity bubbles).”

More than one hundred years ago, in speaking of American, British historian Lord Macaulay warned, “Your republic will be as fearfully plundered and laid waste by barbarians in the twentieth century as the Roman Empire was in the fifth, with this difference, that the empire came from without and your Huns and vandals will have been engendered within your own country, by your own institutions.”

Bob Chapman: Dollar Diving

Source: The International Forecaster.

Dollar to fall to metals in upcoming rallies, rate hikes soon wont be able to fix economic problems, real inflation understated for years, USDX contracts plummet,why arent people fleeing from the stock market… Exchange Traded Funds are a disaster, losses from global write downs, Fed still invited to intervene in spite of failures

The dollar has once again collapsed. Get ready for the next dollar debacle and the coming rally in gold and silver which have just broken out. The elitists have lost all credibility. The would-be lords of the universe have told so many pathological lies that no one “in the know” believes anything emanating from the forked tongues of Buck-Busting, Bear-Bashing, Big-Ben Bernanke and Hanky Panky Paulson. If our Fed Head and Treasury Secretary had been characters in the Walt Disney movie entitled “Pinocchio,” their noses would have quickly grown to lengths that could have been wrapped around the earth’s equator several times. God would have had to reverse the earth’s rotation to extricate them.

Wall Street tells us the odds favor two quarter percent rate hikes to the Fed funds rate by the end of the year. We ask whether that would be before or after the economy collapses? If before, the Fed’s rate hikes will destroy what is left of our economy, and the dollar will collapse, thereby erasing any benefits from the rate hikes. If after, you will see rate cuts instead of rate hikes as the Fed attempts to save the fraudsters on Wall Street who are not even remotely close to recovering from the credit-crunch despite what the elitists might tell you to the contrary. We ask who the morons are that make up these odds, and what planet they come from. They give aliens a bad name. These index predictions are just another form of jaw-boning and disinformation.

As soon as the economy starts its final descent into Davy Jones’ Locker, which is likely to occur in the very near future, the Fed and the US Treasury will unceremoniously toss the so-called “strong dollar” policy into the nearest financial dumpster in order to save the economy and the fraudsters. Accompanying the “strong dollar” policy on its way to the dumpster will be the next round of derivative toxic waste that is on its way courtesy of the upcoming surge in fallout from tanking real estate markets in a process that will see the Fed blow what remains of its general collateral in exchange for such waste. Once the Fed’s general collateral is exhausted, we will be ushered into a new hyperinflationary era characterized by direct monetization of US treasuries to fund our deficits and to absorb more toxic waste as it continues to pour down on elitist financial institutions like Niagara Falls.

A few measly quarter percent cuts will do absolutely nothing to slow the acceleration of inflation, especially if the Fed keeps the M3 at current levels. Only a double-digit Fed funds rate and greatly reduced M3 could have any eventual and meaningful impact on the inflation that is built into the system for at minimum the next year and one half at levels in the area of 15% to 18%, and even then the impact will not be felt until the current baked-in inflation has run its course. Direct monetization of treasuries to replenish Fed collateral and to absorb our growing deficits will put inflation beyond the point of no return, as will the breaking of OPEC dollar pegs.

As you can see, there is no way that any of the proposed diminutive rate hikes will have a positive impact on the economy, on the dollar or on the balance sheets of the fraudsters. Therefore, there will not be any rate hikes. Any increase in the Fed funds rate would be accompanied by an economic catastrophe of epic proportions that would occur as a direct result of the raising of that rate. Any rate hike would take a year to a year and a half to have an impact on inflation. By the time the anticipated Fed rate hikes could have any kind of impact whatsoever, the economy will already be in a state of rampant hyperinflation, and would be well on its way to depression, far too late to save the dollar or the economy. Ergo, the new elitist motto will soon become: “Damn the inflation, full greed ahead!”

The Fed’s and the government’s lies about inflation and other economic statistics have trapped them in an impossible situation. For instance, because they have tremendously understated official inflation for so long, they cannot impose a plausible solution to fight actual inflation. Any meaningful action they might take to give people relief by lowering the level of actual inflation must be scaled down to match what they are saying about official inflation and would therefore be totally ineffective and pointless. The same scenario holds true for other economic issues as well.

As if to accentuate the collapse of the dollar, open interest on the USDX plummeted on Wednesday by a gargantuan 20,461 contracts, from 46,665 to 26,204. This also means that since last week Tuesday, when open interest was boosted by the PPT by a huge 14,393 contracts to a total of 52,520 contracts to boost the dollar and to make it look as though Big Ben really meant business about the buck, the open interest has been cut by half, with a total of 26,316 contracts having been liquidated over the course of the past week.

The last time this kind of a breakdown in USDX open interest occurred was on December 19, 2007, when open interest dropped a whopping 22,966 contracts, from 57,389 to 34,423, when the spot USDX stood at 77.587. The spot USDX then plummeted to a double bottom of 71.459 on March 17 and 71.329 on April 22, before rebounding to a recent closing high of 74.146 on June 13. This week Friday, June 20, the spot USDX has already dropped to 73.030 from its recent closing high of only a week ago as the collapse of the dollar got underway once again. Between December 19 and June 13, the closing high for the spot USDX was 77.794 set on December 20, while the all-time low was set at 70.698 on March 17. If that pattern is followed again, we could be looking at a dollar breakdown to the low to mid-67 area. Then again, we could be looking at a total collapse as hyperinflation and severe recession continue to eat away at what is left of our hapless economy. Gold and silver are headed for outer space.

We further note that as of Friday, there were 25,382 USDX futures contracts for September, 2,362 for December and only a handful for later months. There certainly does not appear to be much interest in the “strong dollar” after September, which is when the supposed rate hikes are “expected” to occur.

Gee, we wonder if it could be that traders don’t believe Ben-the-Bear-Killer and Hanky Panky about the “strong dollar” policy and have a sneaking suspicion that post-election America will mark the start of the final bloodbath that will destroy the real estate, stock, bond and derivatives markets along with the US and world economies? Royal Bank of Scotland has warned of the potential for a full-fledged crash in global stock and credit markets over the next three months as inflation voraciously consumes and destroys everything in its path worldwide. Morgan Stanley has predicted a “catastrophic event” in world currency markets during the coming months as occurred in 1992 due to opposing views between the Fed and the ECB about what to do about monetary policy and inflation and due to imbalances in the ECB itself. Both RBS and MS are elitist insiders high in the food chain of Illuminist companies. They know what is coming.

The ECB is history no matter what Trichet does. If he hikes to fight inflation, the weaker members will be destroyed. If he cuts to save the weaker members, Germany, the strongest member that is carrying virtually the whole Euro Zone economy, will bolt, and the EU will be shattered by hyperinflation. Germany is the holder of most of the Euro Zone’s surplus dollar forex reserves which are being destroyed by inflation. Then on top of losing purchasing power with respect to its dollar forex, Germany’s citizens are fed up with inflation from a euro they view as being too weak and the vast majority of them want the Deutsche Mark back. Germans are savers and they resent having their savings destroyed by a weak euro as their wages stagnate. Germany may soon join Ireland in their political rejection of the EU and its Lisbon Treaty. Adding to Trichet’s woes is the fact that if he hikes rates, and the Fed does not follow through with its jaw-boning about rate increases, which they won’t, the damage to the weaker EU members will be accelerated as their exports become more expensive in the US on account of the resulting much stronger euro versus the dollar. That would make them less competitive in the US and in nation’s with currencies pegged to the dollar, forcing them into tighter competition with domestic companies and with other foreign exporters of goods to the US and to other dollar-pegged economies, thereby increasing their growing trade deficits to intolerable levels. Nothing could be more positive for the US than the break-up of the EU, which will delay the evil Illuminati’s plans for a one-world government for over half a century.

In reviewing the movement of the yen versus the Dow, we are astounded that every human being drawing breath on the face of our planet and that every business entity with offices located anywhere on the globe are not fleeing in terror from the general stock and bond markets along with their related derivatives. The last time the Dow closed below 12,000 (11,972.85), on March 17, the yen stood at 96.88 yen per dollar and 152.731 yen per euro. On Friday, the Dow closed below 12,000 (11,842.69) with the yen at 107.42 yen per dollar and 167.855 yen per euro. So despite yen weakness in the range of 10 yen per dollar and 15 yen per euro, the stock markets have gone nowhere. If that doesn’t freaking scare you, nothing will. The carry trade can no longer carry the markets. The de-leveraging from the credit-crunch, the destruction of corporate profits, stagnant consumer spending despite the stimulus, outrageous energy and food prices, the ongoing real estate debacle, the monetary profligacy of the Fed, wars for profit and eternal deficits in our budget, our trade balance and our current account are simply too much for the markets to absorb, even with the help of the PPT. We are headed much lower. We are 100 to 200 Dow points from a total catastrophe. If gold and silver start to rally and the PPT crashes the markets with yen-hits to drain liquidity, it will be all over but the crying for stock markets worldwide.

The real catastrophe comes when elevated levels of risk push rates up despite what the Fed does with its funds rate. LIBOR is up 1% despite the Fed’s lower rates and this affects mortgages, credit cards, student loans and a host of other variable rate loans that are tied to LIBOR. Higher real rates of interest will destroy principal values for corporate bonds and treasuries that are already way underwater on account of rampant inflation, and that inflation will administer the coup de grace to bonds and treasuries as everyone flees to the only real money – gold and silver. When the towel is finally thrown in on the bond and treasury markets and all that money migrates into commodities, and especially into gold and silver, you will see gold and silver move in ways you never thought possible that will delight you with shock and awe as all the money in the world pours into the tiny precious metals markets and their related shares. Already, some mainstream analysts are calling for gold prices to rise to $5,000 an ounce and beyond as investors decimated by miniscule returns in the face of hyperinflation seek to protect themselves. This latest prediction came from Schroder Investment Management Ltd., which oversees $277 billion of assets globally.

This week, the PPT tried to blow out the specs’ protective derivatives by driving stocks up at the beginning of expiration week for stock index and other options. The specs struck back once again like clockwork and pounded stocks into the ground, racking up huge gains to fund the coming precious metals rally. The PPT continues to press specs who are short oil to protect metals positions, and this is partly why oil keeps dropping and popping on short squeezes that are explained away with all kinds of jaw-boning pretexts in the fane-stream media. The elitists have driven oil up while metals were suppressed to use it as a suppressive counterbalance against precious metals. This will backfire as everyone exits oil and takes their proceeds into the gold and silver pits. Stark, raving fear and the need for a safe haven from tanking markets and rampaging inflation will take over where oil left off. Resource stocks will greatly benefit from lower energy costs as oil gets tanked to hit the next metals rally, so its time to LOAD UP!!! The bottoms are in and its up, up and away!

Don’t worry, be happy. The fact that the ETF’s are a disaster due to the piles of gold and silver they have put into elitists hands for naked-shorting, leasing and swapping against the owners of those piles, and due to the diversion of funds away from producers’ shares, is nothing to worry about. Just convert your worthless paper (ETF shares, mint certificates and leveraged futures) into physical gold and silver bullion and then take possession of it. The elitists have unwittingly drawn many into knowledge about the gold and silver markets who otherwise might have stayed clear with their ETF machinations. We can turn their ETF gambit against them! Although you have been incorrectly instructed as to how to invest in gold and silver, that is what we are here for, to tell you how to do it right. The elitists have built their position on a house of cards. Their weakness is their lack of physical gold and silver in deliverable form. If you push them, their house of cards will collapse. Only a little push is necessary. Just empty out the COMEX cupboards and the dealers vaults by taking possession, avoid the casino leverage and we can take over the markets. Then you can gamble with impunity. Fabulous fortunes will be made. If you are not sure who you can trust, call us, we’ll tell you. We’ve been in this for 50 years. You should also consider joining Jim Sinclair’s battle against naked shorting. He has some great ideas about exposing these reprobates who are stealing from us. When people find out who they are, they will be ruined and their reputations will be destroyed. You must get proactive. Do not be lazy and keep your gold and silver in paper form, unless you are buying resource stocks, which are now dirt cheap. Holders of resource stocks will be the big winners when all is said and done. The whole reason we are now in the predicament we are in is because our citizens swill beer, view meaningless sports games and watch inane television programs while their country, their economy and their freedoms fall down around their ears! Do not be like them! Go after that gold and silver like your life depends on it, because it does!!!

Regional banks are now getting hit with defaults. Huntington Bankshares, National City and Sun Trust have as much as 20% of their loans in home equity loans. The FDIC says total outstanding home equity loans total about $625 billion.

The ABC/Washington Post consumer confidence index rose 1-point last week.

The rumor is that Lehman may have to cut 20% of its workforce.

Commercial real estate investment fell 69.5% in the first four months of 2008 yoy. That is $48.2 billion versus $157.8 billion.

The quarterly CEO Economic Outlook Index fell 5-points to 74.5 in the 2nd quarter, its lowest since 10/03. They see 2008 GDP up 1.3% not 1.5%.

We stated some time ago that the losses from global write-downs and losses from the credit crisis would reach $2 trillion. John Paulson says they will reach $1.3 trillion. Finally there is someone in our league in the securities business who is willing to tell it like it is. He sees no sign of stabilization. He manages $33 billion, returned 12% ytd May and last year his fund was up 6-fold. The GAO, the Government Accounting Office, has backed Boeing’s protest against the US Air Force, and its award of a $35 billion contract to Northrop Grumman-Airbus to begin replacing Stratotankers.

The MBA, Mortgage Bankers Association, purchase index for homes fell 4.3% and their market index fell 8.7%.

Another startling revelation is that the Fed doesn’t follow normal accounting rules, rather it creates and writes its own as it goes along. Picture an accounting system where a bank never had to recognize losses on any security it holds, as long as it continues holding them. That, too, is the Fed’s policy.

Now that the Fed has taken on Bear Stearns’ toxic garbage and may have to take on more garbage in its auction exchanges of Treasuries for junk, the Fed could become a bottomless pit for garbage. In addition, the Fed’s Board of Governors can change the rules anytime it wants.

The Fed has taken on $30 billion of Bear’s bonds probably worth on average $0.40 on the dollar. To put that in perspective, the Fed’s total capital was $40.4 billion as of 6/11/08. JP Morgan Chase will lend the Fed $1 billion to absorb any losses, which is laughable. Morgan is the Fed’s biggest shareholder, so they have a sweetheart deal. If there are losses they will never be taken. They can be held on the books indefinitely at cost, never being marked to market. If they followed FASB’s rules they would have to recognize a charge against net income whenever the securities declined in value.

This is a joke and this is how the Illuminists control our banking system and our lives and reap enormous profits. This is pure accounting trickery to avoid losses.

We want to see this manual, which is held in secret. We want exposure to what the Fed is doing. A reporter asked for one under the Freedom of Information Act, received it 18-days later, so redacted it was near useless.

How can anyone have any confidence in the privately owned Fed when such things go on?

What we do know now is that the Fed is lying about almost everything it does. That considered, Congress should disband the Fed and turn operations over to the US Treasury.

The risks associated with the vast, unregulated market for credit default swaps played a crucial role in the bailout – assassination of Bear Stearns, or at least that is the excuse to further enrich JP Morgan Chase, largest shareholder in the Fed.

The question now is will MBIA, the big bond insurance company, renege on a promise to shore up a crucial unit with $900 million in capital. We do not think so. They have written $137 billion in swaps, privately traded insurance contracts. In addition, MBIA insures $670 billion in municipal bonds and mortgage-related securities. We do not see how they can survive and if we are right, many bondholders will lose billions. Losses look to be $14 billion presently. The company no longer has an AAA rating.

House prices fell again in San Diego County in May, with the median reaching its lowest level, $380,000, since 9/03. That is down 23% yoy. The peak was in 11/05 at $517,500. That puts prices down 26.5%. We predict San Diego, dependent on the area, will fall 40% to 60%. As we forecasted April’s slightly higher prices were misleading. New homes and condos have gotten hit the worst. May sales fell 51% in those two categories. Resale homes fell 3% by comparison. Builders dumbly refuse to stop building.

Sales of bank-owned homes made up 36% of all resale purchases. Re-sales of single-family homes fell 3% yoy, but prices of re-sales fell hard from $557,000 to $420,000 yoy.

In the first half of 2008, 36% of buyers got jumbo loans in May – only 17% did.

The correction for San Diego, which led the charge upward several years ago, is 40% to 50% from the bottom. That will take place over the next two years.

Fifth Third Bancorp, Ohio’s second biggest bank, cut its dividend from $0.44 to $0.15 and must raise $2 billion.

National City Bank, Key and Fifth Third have more than $65 billion in additional losses. We forecast this would spread to banks all over the country. Do not have more than $100,000 in any bank account.

Office Max will eliminate 2,700 management positions.

The CFTC said the oil market was ripe for illegal manipulative activity, and imposed limits of the speculative positions on some trades made on overseas exchanges, particularly in London. All large trades would be reported to the CFTC.

The Confidence Board’s Leading Index rose 0.1% in May, matching April’s gain.

Phoenix based real estate lender Mortgages, Ltd. will lay off 17 of their 43 employees. They have halted making new loans in commercial real estate.

Weekly jobless claims fell 5,000 to 381,000. The 4-week average of initial claims rose 3,250 to 375,250.

If you can believe this, Treasury Secretary Henry Paulson wants the Fed, which caused all of our monetary, financial and economic problems, to intervene in the workings of Wall Street firms to protect the financial system that they destroyed. They would step in to avert events that pose unacceptable systemic risk. What this really means is that the Fed will further nationalize the financial industry via consolidation in a true fascist manner. The Fed has neither the statutory authority nor the mandate to anticipate and deal with risks across our entire financial system. This is a power grab, plain and simple. This takeover has been in the works for well over a year. The Fed wants to extend its open discount window and auctions beyond September when they expire, so they can stop a bankrupt system from collapsing. The loans will be extended and Wall Street and the banks can gamble and speculate to their hearts content.