Bob Chapman
We are not going to go into the lurid details regarding residential and commercial real estate, but we are going to give you some highlights. We began telling subscribers to sell real estate in June of 2005, long before anyone else. We picked the top just as we did in September 1988 at the top.
Residential real estate won’t hit bottom until 2013 and who knows how long it will bump along the bottom. At the end of the year we have a whole new generation of sub prime and ALT-A mortgages coming due for reset. In addition there are the pick and pay loans that are in trouble, and 52% of problems lie, if you can believe it, in prime loans. Residential real estate countrywide is off 32% with a number of areas off 50% or more. In the next two years that national figure will show losses of 45% to 50%, and the former 30 hot city markets will be off 50% to 70%. We predicted this in November of 2004. All the savings of America for three generations of Americans will be lost, and these same Americans will be saddled with horrendous amounts of debt spawned by our Wall Street controlled Treasury and the Federal Reserve. These are the bankers who have robbed you and will continue to rob you until you are destitute and enslaved.
Over the next four years $1.5 trillion or more in commercial real estate loans will come due. About 50% are in deep trouble. From the top in 2007 their values are off 35% to 40%, so they only have 30% to 35% to go. Losses could be as high as $700 billion. The fallout will affect all banks big and small. The reality of losses will be devastating.
Lenders, mostly banks, already broke, are going to get hit very hard and many will go under. All debt in real estate is in serious trouble. That is why we believe more than 2,000 banks will go out of business over the next 1-1/2% to 2 years. That is why you should have no CDs and only three months expenses in the bank for operating and 6 months for businesses. That money should be in gold and silver related assets.
The only word to describe what has been and is continuing to happen in real estate is catastrophic. By way of comparison the losses in the Lehman collapse were piddling. If you include the derivatives it was about $775 billion. In real estate we are talking trillions. The result was that stock markets lost between 10% and 50% of their value after Lehman collapsed. Irrespective of stimulus, government and Fed loans and bogus earnings, once the effect of losses are realized, the Dow will again test 6,500 to 6,600 and in all likelihood break that level and fall to 4,000 to 4,500, with probably some way to go on the downside. The Lehman and Bear Stearns affairs forced the Treasury and the Fed to feed $12.7 trillion directly into the system with a total commitment of $23.7 trillion says our US inspector general. Not only did the US provide a rescue but so did members of the G-20, all of which are presently trying to withdraw the stimulus that kept deflationary depression at bay. The financial elites, particularly of London and NYC, have been temporarily saved, but that game is not over yet.
The withdrawal of trillions of dollars from the world economy will collapse it and the Illuminists are well aware of that. The goal has always been the pauperization of the multitudes worldwide in order to implement world government and the new world order. The enslavement of mankind. That is what this is all about and you had best come to grips with what they intend to do. These people have bankrupted almost every country in the world in this deliberate process. That is why sovereign debt is the next area they have zeroed in on as one of the last main cogs of stability to be destroyed along with the devaluation of most currencies.
Greece in Crisis
That brings us to the deliberate destruction of Greece. Greece has been the leader in the global shipping industry and so has suffered as global trade has fallen. It has killed their balance of payments. The drop in tourism has also badly hit their economy. This is their part of the price to be paid for the phony war on terrorism. The elitists found Greece to be easy prey along with hedge funds and the likes of Goldman, Morgan and Citi. Their moves set up the initial stages for what will be the deflationary takedown of the world economy financially and economically.
Greece’s debt to GDP is estimated to be 120%, far worse than Russia’s debt when they defaulted 12 years ago – some $430 billion. German banks hold a great deal of the debt for not only Greece, but for Spain, Ireland and Portugal, some $700 billion worth. As you know all of these countries are in trouble financially, as well as England, which will sell more than $300 billion in bonds this year, all of which will be monetized. This will create more British inflation to be added to the current 3.5% official inflation now in place. Real inflation is double that and it is going to get much worse. It is no wonder British interest rates are 1% higher than German rates. Last year the Bank of England monetized almost all the liquidity they injected into the British market. As the year wears on liquidity will get tighter as borrowed liquidity is to be returned to lenders. For all eurozone banks that number is about $600 billion, which came from the Fed, although they won’t admit it. This is one of the main reasons Ron Paul wants to audit the Fed. That is to expose the Fed’s illegal role in US foreign policy. The weakness in the pound, as we pointed out in previous issues, along with the dollar and other currencies, has lost 2/3’s of its purchasing power, as we pointed out again and again for 6-1/2 years. That measurement is versus gold. How much longer do you believe others will hold pound, euro and US dollar paper, not long? Dollar Forex holdings have dropped from 64.5% to 60 ¾% in just the last year. Global monetary and fiscal problems worsen every day and there is no end in sight. We know there is something very big underway when Warren Buffett, who’s firm recently paid a $100 million fine for accounting fraud is dragged out frequently to tell the people things are going to get lots worse. Charlie Munger said the same thing last week as further warnings are fed to the public.
Germany is playing a key role in all of this, particularly in Europe. Germany never saw a bubble in its stock market nor in its housing market. Germans have been frugal doing what any sane society should have done. They never had cheap credit, soaring salaries or big government goodies like those countries on the edge; Greece, Spain, Ireland, Portugal and Italy. It must be said though that part of German success was exporting to theses bubble countries. The cry now from purchased economists is Germany must buy in order for the rest of Europe to economically survive. Others are envious of Germany’s trade surplus, which is the second largest in the world after Saudi Arabia. That surplus is what is used by the rest of the eurozone nations to stay solvent. Definitely a 2-edged sword. Is it any wonder 67% of Germans have for 11 years wanted to dump the euro. Germany was forced to take on Greece and Italy knowing they did not qualify and Ireland was subsidized into the zone and should have never been allowed to join. Germany is being penalized holding down salaries to the point of stagnation and cost cutting, whereas the other players simply ran economically and fiscally wild. Germany will not join the culture of debt and cannot be expected to pay for others profligacy.
In a recent poll German banks said they will not buy more Greek sovereign debt. Greeks are demonstrating in the streets because the party is over and they want it to continue forever. Greece’s problems are somewhat similar to those of the states in the US. An economic depression, large budget deficits and giant falls in revenues. Costs have to be cut and people have to be laid off. Like in Greece, California, New York, Pennsylvania, New Jersey and other states are running out of money. Greece wants Germany to help and now 67 years after the war wants its gold returned, some $70 billion. Germany couldn’t deliver the gold if it wanted too, because the US refuses to return their gold, probably because they secretly sold it to suppress gold prices. At the same time the states in the US are selling municipal bonds like mad to stay afloat with yields of only 3%. The problem is we have an unsound credit system. Last year the Fed bought 80% of Treasury debt and monetized it. In addition, they bought $1.2 trillion in MBS and Agencies at least half of which was monetized. The system in the eurozone and in the US is impaired and nothing is being done to fix it. It’s one band-aid after another. All these nations can think of is reflation. The wrong path and example still exists. Trillions in deficits as far as the eye can see to underpin the stock and bond markets and make it appear that there is economic recovery, when in fact the world is going deeper into the hole. The stability of asset prices, incomes and corporate cash flow and revenues for government are a mirage. It is a classic Ponzi scheme. Markets are trying to lead us to believe that Treasury, the Fed and Wall Street will use credit effectively to lead us out of our current depression. In Europe the weak countries within the eurozone continue to suffer the inability to create money and credit to try to extricate themselves. They are in a far different kettle of fish. Now that M3 in the US and Europe and M4 in England have been brought to almost zero levels any possibility of recovery is remote. Some academics believe inflation should be acceptable at higher levels, in particular the IMF. Of course that idea is akin to giving matches to arsonists. Grossly negligent doesn’t even begin to cover this kind of insanity. Governments want higher inflation to cover their debt and let the public pay for it through reduced purchasing power. This does not bring prosperity and growth, only a temporary fix. Much akin to what a drug addict goes through. The elitist bankers and Wall Street want monetization because it keeps the game going. Neither the players or the media think the European sovereign debt crisis is a disjointing event. The lack of foreign participation in sovereign debt offerings doesn’t seem to phase them as well. Just another trouble to be dealt with. If trouble ensues they will just call in the Fed to monetize the problem. Contagion never enters their minds. This is why gold continues to rise in value in every currency. Foreign governments are well aware that the Fed is monetizing debt. We can see that in the drop off of indirect participation. Can you imagine the stupidity of use of the household category to state purchases? Since when do housewives buy millions of dollars worth of treasuries? There are 17 nations that are on the verge of bankruptcy. We do not know when the Brotherhood of Darkness will decide to bring this charade to an end, but it should be before the end of next year and perhaps lots sooner. The dollar may be stronger against the euro, but that status will soon show up in a drop in exports and a worsening of the balance of payments deficit. For every action there is a reaction. That will kill any possible economic recovery. Europe may export more, but they will face higher inflation. The only solution for the US and Europe is tariffs on goods and services and until that happens neither will be able to compete. Needless to say, many problems and challenges lie ahead. We cannot expect any help from the current Congress. The answer is vote out of office as many incumbents as possible in November. If you do not there will never be a recovery and you will end up enslaved by Wall Street and banking.
Nessun commento:
Posta un commento