“There is no money left, the politicians have spent it all.”…(Goin’ Long on “Rope” Futures!)

Sunday, February 26, 2012
By Paul Martin

International Forecaster February 2012 (#8) – Gold, Silver, Economy + More

By: Bob Chapman
Sunday, 26 February 2012

The seven-week sanctions against Iran oil sales and the use of the banking system and the Swift Code facilities by US, UK and European governments has as yet not been effective.

Negotiations are in process with six EU nations to adopt oil contracts for up to five years. Future oil must be paid for immediately. Four of those members can barely pay for oil now. The embargo as you can see is ridiculous. Even if alternative services are found how will they pay for all of it? This has to be one of the most ill thought out schemes ever.

The financial end won’t stop payment countries can use barter, multiple currencies and gold. Talk about shooting one in the foot. This has been a case of the Illuminist’s shooting themselves in both feet. Talk about financial vehicles of mass destruction. No we have three of them if we include derivatives. We have had limited sanctions against Iran for some 30 years, yet their economy has improved. In the years to come more growth will be there. Iran is breaking the hold on the petrodollar so it must be destroyed under any ruse. It must revisit the Stone Age. This is the elitist idea of freedom and liberty.

After discussions as far as we can discern, the Iran oil deal with India is for 45% of payment in Rupee and the balance in barter. That eliminates the dollar in $12 billion in annual oil imports from Iran to India.

Debt and trade imbalance has been and still is killing the value of the dollar and many other currencies. The dollar has been totally abused since the US left the gold standard on 8/15/71. Its end as the world reserve currency will come over the next several years. Other countries are similarly positioned and we expect eventually a return to the gold standard.

Keeping Iran out of Swift Code for bank transfers is dumb. We can assure you they will find an alterative way to transfer funds via China, Russia or India. That will weaken the dollar control even further. Whoever came up with these operations had to have no common sense. If Iran is successful, which we believe they will be, the only other way they can stop Iran is by attacking it and possibly starting World War III.

At the same time here is the US with zero interest rates forever, QE 3, $1.6 trillion in funding to bail out Europe for 1-1/2 years. Plenty of money and credit to bail out the financial community, but little or nothing for jobs and the general economy. Eventually interest rates will rise, and more problems will manifest themselves. The main problem being how long with bondholders hold on, as inflation moves higher along with rising unemployment. We something read commentary by other analysts and are profoundly disappointed when they tell us there is little inflation and that unemployment is 8.5%. They know government is cooking the books, but still won’t tell the truth.

No one in politics or on Wall Street is going to stop the deficits; that is part of how the economy is kept afloat. The only exception being Ron Paul. Perhaps the Fed, Wall Street, the City of London and all central banks think they can extend survival forever via money and credit, but they cannot. Inflation will devour them. Living has been difficult for the past five years. What you have seen is nothing. The next five years will be like living in Hades. There are no solutions for the debt of the US, UK and Europe. All will eventually collapse. There is only one solution to the end of the financial system as we know it. There are those who know and understand, who have owned gold and silver from June 2000 until now. Gold is up 530% and gold and silver shares even more. By comparison the Dow is up 6%. If you haven’t done so now you know where to go with your money.

Who is going to pay people when the government goes broke? No disability, Social Security, Medicare, Medicaid, unemployment, food stamps and everything else that government pays for.

There is no money left, the politicians have spent it all. As government reduces spending and increases taxes austerity sets in and revenue falls and deficits continue to rise as the economy moves lower.

The position of German President may be symbolic, but when he has to step down and prosecutors begin the process of lifting his immunity something bad has to be happening. Mr. Wulff is to be accused of accepting favors during his stay as Governor of the State of Lower Saxony. His judgment may have been bad and was this just one of the many indiscretions? We guess time will tell. Wulff was a personal choice of Chancellor Merkel. This happened previously when Mrs. Merkel saw her Presidential appointee Horst Kohler have to step down a couple of years ago. This is very serious business particularly at this juncture of Greek negotiations. This event weakens the hand of Germany to a slight extent and also the position of the CDU, the Christian Democratic Union.

What has been rumored last week has finally happened. Iran has become the aggressor in the oil embargo sanctions structured by the US, UK and Europe. The coming ban was to begin July 1, 2012.

Iran has halted sales of crude oil to French and British buyers. Iran will sell its crude to new customers. This action will tend to put upward pressure on oil prices. That means higher gas and diesel prices that the world consumer gets to pay for as a result of foolish US foreign policy. This is the result of Iran selling oil in currencies other than the dollar, which undermines the value and predominance of the US petrodollar. In addition, Iran has threatened to halt shipments to Greece, Italy, Spain, Portugal and the Netherlands. The EU constitutes 18% of Iran’s exports of crude oil. In the event European deliveries are shut down by Iran the EU countries have a 4-month supply as a backup. China currently purchases 22% of Iran’s oil exports. We believe the US has shot itself in the foot using these so-called sanctions, which as you can see have already been neutralized.

This data shows up in this section because of its importance and to alert you again to reporting fraud not only by government, but also by corporate America and their mouthpieces.

The National Association of Realtors reported that sales of existing homes jumped more than 3% in January, a 2-year high. In December, the existing homes sales number was reported to be 4.61 million, up 5% from November. The sales for January 2012 were reported at 4.57 million. That was a drop not a gain. The NAR fraud allows them to deliberately control perception of the housing market for the masses that are generally not exposed to proof of such fraud.

In addition, the NAR recently revised lower all existing housing sales from 2007 through October 2011 by 14%. That means seven of every 100 home sales reported over five years was fraudulent. This allowed the real estate industry to make higher sales than they might have made otherwise, thereby defrauding the public.

The NAR is a fraud and most of governmental and corporate reporting today is as well. We have banking and some businesses being allowed to carry two sets of books.

You can compare NAR numbers with mortgage purchasing applications week to week last week. The 4-week moving average fell 3.2% and that index has fallen 12% year-on-year. Some buyers over the past three months should sue these crooks.

Over the next 2-1/2 to 3 years the US real estate market will be hit hard – end foreclosures to add to the already over abundance of such real estate foreclosed inventory. Now that most of the lower end homes have been dealt with it is time to take on the expensive homes. Many of those lower priced homes will become rentals and that should continue to put pressure on prices.

Banks have let high-end owners in default live in homes free for up to three years for technical reasons and to hide inventory. These figures are available to everyone, but we hear just the opposite on financial channels. Like everyone else in business there is little validity in his or her statements. Once these homes are unleashed banks and government will find very few buyers. The banks paid a paltry fine of $26 billion or $0.02 on the dollar versus what they defrauded the American public out of. The foreclosure party is over. The former owners will be removed and the homes put up for sale. The high end of the market is finally about to be hit. They are about to complete their 50% to 60% drop.

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