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THE INTERNATIONAL FORECASTER 9,February 2002 (#2) An international financial, economic, political and social commentary. Published and Edited by: Bob Chapman Vol. 6- No. 2-2 Phone & Fax: 941 639 4756 E-mail: bif4653@home.com UP-COMING CONFERENCES On March 16, 2002 we will be speaking at the Resource Consultants, "Wealth Protection 2001," Conference in Phoenix AZ. This conference has been a very popular destination for us. This year we will be speaking with the likes of David Tice, manager of the Prudent Bear Fund. Other speakers will include Nick Russo, editor of "The Momentum Monitor," David Morgan from "Silver-Investor. Com, Kenneth Weaver, renowned tax expert and Bill Murphy of the Gold Anti-Trust Action Committee (GATA). This is your chance to register early. There are only 350 seats available. The cost of this conference is $179 complete. However if you call my friends at Resource Consultants and mention you saw this in our newsletter they will give you a $50 discount. They will also give you further details of the conference. Call them now and register at 800-494-4149 or locally in Phoenix at 480-820-5877. Don't forget to mention International Forecaster for your $50 discount. US MARKETS We have to begin with an apology. We are sure you remember that we said gold would hit $300 by the end of January in our January 1st issue. Unfortunately, we were wrong by three business days and we hope you’ll forgive us. Making predictions is not easy, but we try our best. In Portland, Maine, not exactly a major transit point for the illegal immigrant invasion, President Bush chose to speak about immigrant problems. He proposed a federal tracking system to follow the arrivals and departures of non-citizens from US ports and border crossings. He would double the number of INS Customs Agents and increase funding for the Coast Guard. Presently there are 100,000 illegal Middle Easterners living in the US. Mr. Bush is too busy wooing the Hispanic vote to talk about shipping all illegals out of the country. Mr. Bush obviously cares little about the law, but then again he’s above the law. We are awaiting the announcement of an agreement with Mexico on a guest worker program, which in reality is the beginning of a drive to legalize 11 million illegal aliens in the US. Thousands of Mexican immigrants living in the US, legally and illegally are lining up for hours every day at their closest consulate to get a Consular ID card. The cards have been available for years. They help avoid hassles on trips back to Mexico for legals and it proves authentic identity for all kinds of needs. The San Francisco City and County government accepts the ID card. Critics say the card issuance to both legal and illegal aliens masks the true intent of the Consular Card Campaign. They say it’s a round about gradual approach to a general amnesty that would give millions of illegals, legal status. Both Washington and Mexico are chipping away at the issue from every angle. “They are not supposed to lead normal lives they are breaking our laws”. The Mexican government is trying to overrule US immigration laws in order to dump their excess population on the US. Median prices for houses this year are expected to skid 15.5% in Santa Clara County, Ca., 6% in San Francisco and 3.4% in Oakland. Apartment vacancies will hit 10%. They were off 22% in Santa Clara County last year. 28,929 people in metro Atlanta in 2001 went bankrupt, up 14% from 2000; 89,000 Georgians lost jobs last year and metro Atlanta foreclosures were up 50% last year. They are number one in bankruptcies in the US followed by Portland, Oregon, Cleveland, Washington/Baltimore, Tampa/St. Petersburg, Philadelphia, Chicago, Seattle and Los Angeles. In the Minneapolis area the average office vacancy rate according to Colliers Towle is 13% and industrial is 12.5%. The office sublease rate is 17% and the industrial vacancy sublease is 15.8%. The retail vacancy rate is 6.5%. George W. Bush speaking in front of the OAS and the World Affairs Council in Washington, in spite of a severe recession that is far from ended, pushed creation of a Free Trade Area of the Americas (FTAA) by 2005. He said he wants to expand the funding of the notoriously corrupt World Bank to help bring this about. He said his next budget would include a $50 million increase in aid to World Bank programs, and follow that with annual $100 million increases, which are for essentially make-work projects. The recession continues as Equity Residential, an REIT, reports occupancy in its portfolio, fell to 93.89% from 94.56 in the fourth quarter. The worst drops were in Austin, San Francisco, Phoenix, Seattle and Atlanta. Other REITS reported similar results as new supply floods the market. New household formation and job growth continue to languish and are not expected to bounce back anytime soon. We recommended a short in Computer Associates at $36.00 a share based on unrepresentative financials. Our cover price is $18.13. It closed on 2/6/02 at $27.12 off $4.25. As the company withheld an offering of $1 billion of Senior Notes after Moody’s said it was considering downgrading the software makers’ debt. We warned of this when we recommended the short. As we reported earlier they were front loading leasing revenue, another pro-forma type result. As sales fell cash generation fell to $672 from $734 million, which is as we predicted and a significant decline. We think those who are short should stay short. Justice comes at a negotiable price. Tight budgets have forced state lawmakers to ease up on their get-tough-on crime approach toward imprisoning nonviolent felons, even as federal prisons continue to face growing numbers of inmates overall. That will increase as the recession deepens. The Bush administration, forced to squeeze domestic spending to wage his antiterrorist campaign, has cut prison budgets as felons increase. We call this misplaced priorities or it’s more important to create a Gestapo then to keep citizens safe from criminals. We do believe jailing non-violent offenders is a waste of time. Monetary penalties and public probation work is a far better way to go. In 2000 state prison populations grew 0.65% and the federal system grew 7.5%. Get this, the federal government is planning to build 18 more prisons adding space for 5,200 inmates. Finally, the House Financial Services Committee, the SEC and NASD are going to propose that research analysts explain their stock rating systems and limit stock ownership in companies they recommend. It would require analysts to prominently disclose their firms Investment banking relationship in research reports. They propose separating securities firms’ investment banking arms from research departments and assigning management the responsibility to police the new requirements. For 50 years we are aware of Wall Street has been selling recommendations. They were paid to run stocks up. We’d like to see all trading positions exposed also; they are a large profit center. The proposals ignore completely the terrible situation during the past bull market and the massive losses taken by public investors as analysts and brokerage firms lied about companies’ prospects. They want to let these white-collar criminals totally off the hook. Analysts would no longer be compensated for bringing in underwriting business and if they receive compensation from it they’d have to state they were being compensated, but not the amount. The total proposal is a step in the right direction but it looks like no one will be pursued for previously having screwed the public. It pays to be a crook on Wall Street. There is no question Americans have for many years had a superior attitude in relations with other nations. Thus, it comes as a surprise to many Americans and others that we have our own variety of crony capitalists. Enron’s denial, amid daily revelations of misdeeds and questionable accounting strikes at the very heart of elitist American Capitalism. Enron was the darling of most everyone who understood the business world, when in fact, it was a fraud. Instead of being the apex of the ingenuity of US entrepreneurship, Enron was a myth. It was devised to enrich a small group of crony capitalists, while robbing it’s employees. Their actions, at their level, management of one of the largest companies in the world, has brought into disrepute our strong market infrastructure, our accounting structure, our regulations and disclosure and corporate governance. The Enron affair questions America’s morality and moral turpitude. We are no longer to be emulated. Our benchmark was not higher then that of other countries. There has to be seismic changes on the way international elitist corporations do business. If they can’t be trusted they have to be policed. Enron has done more than collapse; it has destroyed America’s business reputation. Foreign-born residents and children of immigrants are the biggest ever at 54 million people that is 20% of our population. Only 33.8% over 25 and born in Mexico had completed high school whereas, 95% born in Africa had. The average Latin income was $29,338 while Asians made $51,363. Those with children under 18 ranged from 35% for residents born in Europe to 73.4% for Latin Americans. 70.4% live in California, New York, Florida and Texas and 55% live in metropolitan areas. California had 29.6% and New York 19.6%. America is changing again. Paul A. Volcker was North American Chairman of the Trilateral Commission from 1991-2001. Mr. Volcker is former Chairman of Wolfensohn & Co., Inc. (1988-96) and Frederick H. Schultz Professor Emeritus of International Economic Policy, Princeton University (1988-96). Mr. Volcker served as Chairman of the Board of Governors of the U.S. Federal Reserve System from 1979-87. Educated at Princeton and Harvard and the London School of Economics, Mr. Volcker divided the earlier stages of his career between the Federal Reserve Bank of New York, Chase Manhattan Bank, and the Treasury Department. He is a director, trustee, or member of several corporations and nonprofit organizations. Paul A. Volcker, Key Insider, Globalist, fiat monetarist, CFR stooge, and member of gold cabal institutions has been hauled out to save the Andersen accounting firm, and politicians under its employ. Justice will not be done, and America and its markets will be the losers. Americans continue to elect crooks and internationalists who have taken us down a dangerous road with our Constitution now but a fond memory of what used to be. America's markets will remain rigged and its institutions headed by corrupt leaderships. Such is the hard road to a new world order. http://trilateral.org:9999/membship/bios/pv.htm Any investigation of former Enron employee VP John Baxter will be covered up. We’ll never know if he was murdered to keep him from telling the truth. Our president, Skull and Bones member George W. Bush, wants to limit the scope of any investigation in the 9/11/01 incidents. That’s because the elitists had prior knowledge because they planned it for their agent Osama Ben Laden and sent FEMA into NYC just prior to the attacks. Then there is the Ben Laden contact with CIA agents in Dubai exposed by the French press, but never allowed on the media in the US. One Worlder George wants to limit the Enron investigation especially the secret discussions of VP Cheney. Everything government does should be an open book, but not under George W. Bush. Secrecy must be maintained to conceal the participation of Bush, the cabinet and thousands of other elitists. They don’t want the people to know what went on. Incidents such as Energy Commission Chairman Curtis Herbert, Jr. being interviewed by Ken Lay before he was accepted and then was removed when he refused Lay’s demands. The new Freedom Corps is an extension of the Peace Corp, Americorps and the Brown Shirts. We expect recruits will have a hard time learning the Horst Wessel song. This is cover. This is false patriotism. This is an extension of Fatherland Security. What other country do you know of where there are classes in Islam, but such classes in other religions are forbidden? Mr. Bush’s stated antipathy toward other nations is simply a propaganda tool to keep Americans perpetually on a war footing. This way they won’t notice the economy collapsing. Remember politicians will sell their souls for power, or in Bush’s case, world domination. If J.P. Morgan breaks $29.05 the next stop is $23.00. Bookstore owners must now divulge to the authorities (upon request) what books their clients are buying. All in the name of the war against terrorism. We will soon be wearing brown shirts. Our predictions for the year will be based on fundamentals and the psycho-political aspects of economic, political and financial events. The DOW will end the year between 4,500 and 6,450. Gold will reach $500 an ounce. Silver will be $10 to $15 an ounce. The dollar will drop to 100 to 105. Bonds will decline and the yield on 30-year treasuries should be 6 1/2% or higher. Commodities may hold at all their recent levels, but chances are great that the support levels will be broken. We are probably in the biggest bear market of all time. You are about to witness the almost total destruction of the financial system accompanied by multiple foreign conflicts all over the world and revolution with in the US. The stock market went into distribution in late 1999 and we made our decision to exit in early April 2000. Very simply the insiders, the elitists have been getting out for two years. That leaves the public with their mutual funds, pension funds and real estate holding the bag. The Drudge report tells us that Ken Lay arranged for a $1 million donation to the Prince of Wales’ charity. The US DOT is arranging for a national transportation worker identify card intended as a first step toward trusted-traveler cards for airline passengers. This is part of the Aviation and Transportation Security Act signed by President Bush to authorize and establish requirements to implement trusted passenger programs. This allows you to bypass extensive security screening at airport checkpoints. The card is intended to shorten lines at airports, but FBI background checks would disseminate information about the owners to many law enforcement agencies. Needless to say, this is a backdoor method of establishing a national ID. The stock market has experienced two years in a row of negative returns. That has only happened twice in the last 60 years, 1940 and 1973-4. The only time it suffered three down years was in 1929-32, when it lasted four years in a row. CNBC, house economists, strategists, brokerage houses, banks and government, all of whom have been wrong for three years, tell us recovery will be here the second half of this year. We don’t believe them. We see one crisis after another, waves of bankruptcies and exploding gold prices. Trillions are yet to be lost. Due to heightened security the number of illegal aliens apprehended at the US-Mexican border has dropped 40%. That can, in part, be attributed to the recession in the US. Our question is why did it take a terrorist attack for the government to do it’s job and why isn’t government extraditing the 11 million illegal aliens already here? The slime that oozes out of the UN, Wall Street and government, demands as we reported earlier, $50 billion a year for the UN. The Conference on Financing for Development is set for March 18th-22nd in Monterey, Mexico at which world elitists, socialists and marxists will demand 0.7% of GDP of donor countries. Get ready for your UN funding tax. The new world order marches on and one of its leaders is George W. Bush. The auditing firms are finished as we’ve known them. That is Arthur Andersen, Price Waterhouse, KPMG, Ernst and Young and Deloitte and Touche. They all get other fees from clients, which are a conflict of interest and far exceed actual auditing fees. We are talking hundreds of millions of dollars. We have just chartered a crying club for George W. Bush’s mother-in-law. That $8,000 loss was just horrific. We also filed a charter for Linda Lay’s Sociopath’ Society. Linda believes she’s the reincarnation of Scarlett O’Hara. Linda says there is nothing left. Linda is a pathological liar, and of course, the Lays are victims. Yeah, so wasn’t Genghis Kahn? The Lays have retained Hill and Knowlton who represent such pillars of society such as the Tobacco Institute, the Teamsters and the Church of Scientology. A new persona is being developed. We wouldn’t be surprised if the Lays didn’t become evangelists. The Lays posses that kind of arrogance, wouldn’t you if you were part of the world elites? This is pure culture distortion and that is what the Lays and the elitists are all about. You can see how far America has fallen led by these kinds of people. Insiders play by one set of rules and we play by another. They have their fellow Illuminists to help them; poor us have no one, not even a mini-cabal. Nothing is or will be done about the shredding even though it was felonious intent. As we told you at the beginning this scandal will last for years and rival BCCI and the Teapot Dome scandal. Almost everyone in Washington was paid off or had their hand out. George W. Bush in the meantime has perpetual war for perpetual peace as his cover. That’s based on every American is a terrorist if he brings a nail clipper to the airport. Treasury Secretary Paul O’Neill says it’s all just natural phenomenons. Paul, tell that to the poor souls we lost, billions - all those Americans who were bilked and robbed. He and the entire cabinet and the president openly and arrogantly, defy Congress’ investigative authority. There are no rules, except the rules they make and Congress will do nothing because they are almost all as dirty. There is a massive cover-up going on and grand juries may be the only avenue open to citizens to bring the crooks to justice and that includes the Bush family. Believe us this will go on and on. It will eventually take the stock market down and send gold flying. This is one scandal the conspiracy never planned on. The FED has signaled all is well in America by ending interest rate reductions. If you believe that you are naive. If that were true why are yields on Treasuries climbing again? There is no massive exodus out of 10-year notes yielding 5.00% and 30-year paper at 5.40%. There is no stampede from the bond market to the stock market. Washington is just full of fairy tales such as 5.6% unemployment. Yields will continue to trend higher as the stock market retraces it’s bear market rally and heads lower. Any of you who were curious about the new USA Freedom Corp you might go to their site, but before you do you should be warned that the website is a FEMA website. The Corp, we’ll call them the new brown shirts; will have a council and office within the Executive Office of the President. This is not a volunteer group but another government bureaucracy. One of the gems in their regulations is the administration will submit legislation to amend the Higher Education Act to require very college and university to denote 50% of it’s Federal Work Study funds to community services, commonly known as serve-study. In any given year, at least 5% of the students will be expected to work in the homeland security fields of public safety, public health and emergency preparedness. Of course they’ be issued brown shirts. They will also establish Citizens Corps Councils representing citizens in local communities, provide appropriate community designations and encourage recruitment of Citizens Corps volunteers. The Councils would include leaders from law enforcement, fire and emergency medical services, business, community-based institutions, schools, places of worship, health care institutions, public works and other key sectors. FEMA will coordinate the states and local communities to support the establishment of the Councils. Of course, everyone will be issued a brown shirt. Perhaps we, the public, who understand what the elitists are up to, should form Citizen Militias as an antithesis. It would certainly catch their attention. We could compete and call ourselves the Minutemen after those who defended our freedom at Lexington and Concord and brought us our freedom. This is not to be confused with the Minutemen of 40 years ago formed by Robert DePugh. The sister and son of Kenneth Lay, former CEO of Enron benefited from sweetheart deals with Enron. Mr. Lay and his son Mark, 33, invested about $1 million in two privately-held technology companies. Months after the deals, Enron signed contracts with both companies. Enron acquired a company owned by Mark Lay, which was under criminal investigation for suspected bankruptcy, fraud and embezzlement. Mark Lay was given a three-year, $1 million contract and options on 20,000 shares of Enron. Houston Travel Agency owned by Ken Lay’s sister booked over $10 million in revenue from Enron on behalf of the firm’s business. Self-dealing permeated the board of Enron. Ken and Mark Lay invested $500,000 in EC Outlook. Enron then invested with VenRock Associates, a venture capital fund created by the Rockefeller family. Now isn’t that cozy? They should have named it Elitists United. It looks as though all of Ken Lay’s business was incestuous. Mark Lay has escaped the turmoil. He embraced the Lord and is studying to be a preacher. The Pentagon is proposing the creation of a four-star command to oversee federal troops engaged in “homeland defense” activity on American soil. The 1878 Posse Comitatus Act curbs the ability of the executive to yield domestic standing armies, by stipulation that appropriations for the military cannot extend at anyone time beyond a two-year period. Fatherland Defense has turned America into a garrison state in spite of existing law. It is simply unconstitutional. In addition a bill re-instituting the draft, which we predicted two years ago, has made its way to Congress, HR3598IH, the Universal Military Training and Service Act of 2001. The elitists want to use your boys and girls and grandsons and granddaughters as cannon fodder again. The manipulation of markets, the economy and the financial system by central bankers and the US government over the next few years will come to an end if the $150 trillion market in derivatives is regulated. It is through derivatives that the elitists control all the segments of our lives. The game will soon be over. Venture capital spending for the fourth quarter was flat with the third quarter. The fourth quarter saw $7.1 billion versus $20.9 billion in the 4th quarter of 2000. Few expect a pickup anytime soon. The household debt burden may have peaked at 7.69% in the 3rd quarter of 2001, down from 7.94% in the prior two quarters, the highest since 1987. As credit is paid off or not expanded, the consumer, which makes up 2/3rd of the economic spending, will buy less causing a contraction in the economy. Economists are more concerned about corporate borrowing and credit quality then consumer debt levels, but one affects the other and that is why we are having high profile bankruptcies. Worldwide defaults by issuers climbed to a record $31.3 billion in January. Experts expect flat corporate profits this year, we expect much lower profits, which will effect corporations’ ability to service debt. 54% of Americans are using the web up 26% from 2000. 174 million Americans or 66% of the population use computers, but those numbers are substantially higher among children. Now that Global Crossing is bankrupt the SEC is investigating them and Arthur Andersen their auditor. Where was the SEC while all this was going on? We’ll tell you, they were busy putting small companies and small brokerage firms out of business. At the recent shooting at Appalachian Law School the attack was stopped by two students who had handguns in their cars. So much for gun control. What is remarkable is that out of 280 separate news stories only four mentioned that the students who stopped the attack had done so with guns. In similar type incidents rarely do more then 1% of the news stories mention that citizens with guns stopped the attacks. Research shows there are two million defensive gun users each year. This misreporting endangers people’s lives. Research consistently shows that having a gun is the safest way to respond to any type of criminal attack. Clifford Baxter, the former VP of Enron, who knew where all the bodies were buried, was not a suicide. He had blown Enron’s cover. Baxter was liquidated. The fact that the suicide gun was found in Baxter’s hand is enough to rule out a genuine suicide, as the recoil of a fired .38 will remove it from a hand deprived of any nerve control from the brain. It seems the Pima County, Arizona Board of Supervisors has passed a new ordinance requiring all new residential construction to have all front entrances to new residences handicap and elderly accessible. That in effect means all new homes will have to be built with wide exterior doors and no steps according to the news pundit. This being a first step she nattered on... So we would presume the next step will be handicap accessible bathrooms and interior doors Unbelievable, Pima County covers some 9000+ sq miles including Tucson and most of Southern Arizona and has about 20% of the state population. They only have 15 counties in Arizona and state square miles more than double Florida so you can see this will have a wide impact. The American Bar Association has not contested President Bush’s ability to use military tribunals, but they will be used in only limited circumstances and under established legal and constitutional rules, and also that a death sentence should require a unanimous verdict. We disagree with both the lawyers and the president in regard to Talaban prisoners no matter where they come from. They should be treated as prisoners of war and be afforded the protection of the Geneva Convention. Remember our military when captured will be treated likewise by our enemies. UN Secretary Kofi Annan has recommended the rich nations double foreign aid, at the World Economic Forum. He only wants $100 billion annually. Marxists like to think big. If you can believe this, the White House has warned Fannie Mae and Freddie Mac, that they may be taking on too much risk in sub prime loans. Debt for both enterprises rose from $518 billion in September 1997 to $1.26 trillion at the end of September 2001, an annualized growth of 25% a year. The mortgage asset portfolios have increased 150% in dollar volume and their guarantees of mortgage-backed securities increased 40%. The Bush budget said increased guarantee volume and retained portfolios imply increased credit and interest rate exposure. Furthermore, the budget added, the hedging transactions transform credit or interest-rate risk into counter party risk (the risk that the counter party of a hedging transaction fails to honor the contract). Thus, the GSE’s management of counter party risk is of increasing importance. This is of extraordinary significance. This means the Treasury sees real counter party failures coming on the heals of Enron. It is an edict to Fannie and Freddie, from which 38% of new loans have been sub prime, to stop writing and insuring them. That means housing starts and sales will fall as well as prices. There will no longer be a push from the bottom to buy the low cost house to propel its current owners upward. Then the failures begin, and the losses for these GSE’s, then the major fall in housing prices. It’s all right here. If you ever wanted to sell do it now, the game is over. That also means all that liquidity supplied to the housing market, that ended up reducing debt and supplying liquidity is at an end. This is a momentous financial event. Take advantage of it, sell real estate. This, of course, will adversely affect the stock market and expedite deflation leading to deeper recession because not only will the real estate bubble break but also the debt bomb will explode and in turn, the derivative debacle will follow. Over the past three months banks continued to tighten up on loans by using tighter standards. Significant fractions of customers seeking to refinance existing mortgages over the past six months extracted equity from their homes, typically increasing their outstanding balances 5 to 15%, which is significant. They are paying down credit card and revolving debt. Household credit has worsened over the period. Loan equity is better but that is transitory. If house prices go down 50% borrowers could end up with negative equity and Fannie and Freddie, the government, could end up with the homes. This is also a signal to short Fannie Mae at $79.50 (FNM-NYSE) and Freddie Mac at $65.68 (FRE-NYSE), cover Fannie at $48.13 and Freddie at $33.00. The elitists have tipped their hand again. The Bush administration’s projections for 2002 are starting to look like ours. The budget assumes that even with a $2.13 trillion budget re-launching deficit spending, the economy will grow just 0.7% this year. This means no recovery and deflation. We believe the budget won’t be passed in its current form and GDP will be minus 0.5% for the year. The Bush message is distinct, further recession is on the way. They project growth of 3.7% from 2003-2005, which is a pipe dream. Politicians and government can’t get anything right for next week never mind next year. They are still pushing on a string and the purge must play itself out. Why would President Bush personally ask Senate Majority leader Tom Daschle to limit congressional investigation into the events of 9/11/01? Because it’s a cover up. If you got within three miles of the WTC in the air you are supposed to be shot down. How about the CIA station chief meeting with Osama Ben Laden in Dubai? What about the large scale CIA operation that brought hundreds of people from the Middle East to the US, issued them passports and trained them to be terrorists. Osama Ben Laden is a US-CIA asset and has been since the early 1980’s. How about the $2.5 million in market winnings that goes unclaimed. The litany goes on and on. We are being bamboozled by government propaganda in order for the elitists to cover up their catalystic adventure to bring about the collapse of the US economy and not get blamed for it. That is their trick. They can’t be seen to be at fault; otherwise the entire game will be discovered. President Bush has allocated $37.7 billion to Fatherland Security. It is reminiscent of 1933-34 in Germany. Spending that amount of money to secure the US is insanity unless the elitists have something else in mind, which they do. The suppression of freedom. They haven’t even presented a plan to congress. They intend to throw the money against a wall to see how much of it sticks. With that said the department is supposed to be the most important building block for the Bush elitist national strategy. The Office of Domestic Preparedness is to be shifted from the Department of Justice to FEMA. Lined up are all the mercenary outfits that surround Washington in Virginia to get piles of business. They are all ex-military, CIA, DEA and secret service types. For anyone who hasn't yet heard, starting July 1, 2002, the 4 major credit reporting agencies in the US (Equifax, Experian, Innovis and TransUnion) will be allowed to release your credit info, mailing address, phone numbers et cetera to anyone who requests it for any reason. If you don't want your info released, call 1-888-567-8688, the "Opt Out" phone number. It only takes a couple of minutes to do using an automated voice program. You can take care of one other individual during the same call if you have their social security number. Be sure to listen carefully to the recording, the first "opt out" selection is only good for two years, wait until the prompt to press 3 on your keypad and this will "opt out" your info forever! Mr. Bush’s budget proposal of $2.13 trillion is a 3.7% increase from 2001-02 and if you add in mandated programs it’s 19% higher or $124 billion. The big increases go to the FBI, Justice, DEA and Fatherland Security. The amounts allocated to spy upon American citizens is staggering. Money market mutual fund assets rose $6.7 billion to 2.346 trillion about evenly split between retail and institutional investors. The average seven-day compounded yield was 1.45% down from 1.47% and the 30-day compounded yield declined to 1.48% from 1.50%. The Bush budget will take $500 billion from Social Security funds for other purposes from 2008-2012 mainly for guns and planes for war. Treasury Secretary O’Neill plans to scold Hans Eichel his German counterpart for not being more aggressively against terrorist financers. Britain and other European countries will resist a Bush proposal to turn more World Bank loans into grants. There go our taxes again. This is so the third world borrowers can concentrate on paying banks back the money they are owed. The normally elusive VP Dick Cheney next week hosts a Council on Foreign Relations (CFR) luncheon for American International Group (AIG) run by CEO Hank Greenberg (CFR) a CIA operative. At another CFR meeting Al Gore will give a foreign policy speech. As you can see political parties mean nothing, but are controlled from behind the scenes by the CRF and the Pilgrims. In some areas of the country housing prices are still moving higher in spite of the recession. The buyers that are pushing prices up from the bottom are mainly immigrants who for the most part have sub-prime loans, the very loans the Bush budget has warned Fannie and Freddie about continuing to make. The housing market is about to unravel undermining consumer finances at the worst possible time. Homes historically are very expensive versus income. The high prices are being supported by lower interest rates, which allow consumers to lower their debt burden and afford more expensive homes then they’d otherwise be able to buy. The next upward move in interest rates will begin the slide in prices. The cities to be effected first should be San Francisco and then Southern California, Seattle, Boston, Dallas, Atlanta and Houston. The same experts who told us the stock market was going up forever are the same group that now tells us that higher and higher house prices are eternal. Consumer credit fell $8.1 in December, the largest one-month drop ever. It could be the $600 rebate check was used to pay for Christmas gifts allowing consumers to bypass their credit cards and revolving credit accounts. Overall borrowing shrank $5.l billion in December to $1.645 trillion. This followed a $20.1 billion gain in November. Consumer credit contracted 3.7% in December, the fastest pace since 1991. Revolving credit fell 14.2% the biggest decline since 1978. Non-revolving credit grew at a 3.9% rate as people bought houses and refinanced. The strong dollar policy of the past and the present administrations and the FED is about to destroy the textile and other industries. That and trade cheating and slave labor are shortly about to put another 400,000 people out of work. The strong dollar policy has devastated American industry along with NAFTA and WTO. Since June 1997 the dollar has risen 27.8% against currencies of the industrialized and emerging-market trading partners. In textiles alone 100 American mills have closed and 67,000 have lost their jobs. This is the worst crisis since the great depression of the 1930’s. The elitists want textiles and other US manufacturing businesses out of business. If we don’t stop free trade as it’s called, we will be left totally without industry. It must be reversed now before total depression sets in. ------------------------------------------------------------------------------------------ Watching our US Senate leaders, Hollings, Dorgan, Boxer, and a plethora of other grandstanders on C-SPAN this afternoon, we wondered if anyone besides ourselcwa was thoroughly disgusted. Their words and behavior brought into focus for me everything that is wrong with out country. Cloaking themselves in dignified concern for investors and Enron retirees welfare, these demagogues feigning righteous indignation with Enron's behavior was truly an embarrassing spectacle. These are bought prostitutes, my friends. They are elected by you, and are responsible to you. It is clear that the so-called Senate investigating committees will have heads roll - but not theirs. We began asking ourselves if these "statesmen" are so upset over the Enron debacle why are they stopping there? It's now widely known that many other bankruptcies are waiting in the wings to drop the other feet. Widescale derivatives fraud and off balance sheet accounting is rampant, disguising a company's real worth and earnings. Why don't these Senate do-gooders haul in other CEO's of major corporations? We’d like to hear what William Harrison of JP Morgan has to say about his lending and derivatives practices. Let's hear from Sandy Weill of Citigroup. The list could go on, but you get the idea. We argue that our elected representatives are using delay and stall tactics to permit their cronies and other scoundrels to run damage control on their own balance sheets. We don't expect an answer to this question, as our elected serve other masters, but thought we'd ask anyway. Only Americans, once informed, can make meaningful change in this coming election. ---------------------------------------- Last week it was announced that Sheila Horan, acting head of the FBI's national security division, has suddenly been transferred to an administrative support position. She is expected to leave the bureau. The article goes on to say that Herr Mueller was displeased with her independent freewheeling style, and specifically unhappy with her handling of an investigation related to potential Chinese espionage. It appears that Mueller thinks Horan was too timid in the conduct of investigations. She was careful not to step on toes (especially Congressional toes) and not quick enough to feed the Constitution into the shredder. Thanks to the expanded powers of the bureau it is no longer necessary to be delicate. She will be replaced with someone who will use all possible investigative technique routinely. We are talking about a very large footprint, even on flimsy evidence. The Chinese connection is highly sensitive. Now, Chinese entities are regarded differently depending upon various criteria. Chinese Christians are considered friendly to US interests. The Falun Gong is viewed as anti-government and therefore suspect. Corporate entities doing business with the US government or major defense contractors are considered exempt from suspicion. The Chinese investigation apparently concerned a suspicious contact by an employee of a protected entity. Mueller wants the corporation excluded from the investigation. Horan wasn't told exactly why she was replaced, but our sources indicate this was the reason. She had been marked to be purged in any case, though. Some of these Chinese corporate entities have very high connections. Shielding them from investigation serves the political interests of the bureau. It prevents backlash from above. Whether it really serves American security interests is an open question (or should be), given that these entities are parts of the Chinese war machine. But anybody in the bureau who says that out loud will quickly be shown the door. Wednesday February 6, 8:36 am Eastern Time Press Release SOURCE: KleenAir Systems Inc. Today's News On The Net - Business Wire's full file on the Internet KleenAir Announces Significant Private Equity Placement by Prudent Bear Fund FULLERTON, Calif.--(BUSINESS WIRE)--Feb. 6, 2002--KleenAir Systems Inc. (OTCBB:KAIR - news), announced a significant equity purchase of KAIR stock by the Prudent Bear Fund in a recently concluded private placement of close to $1 million. KleenAir is nearing the end of its R & D stage as its NOxMaster® NOx Reduction System is now being tested and evaluated in a variety of field trials here and abroad. Since product performance has consistently exceeded expectations, it is anticipated that sales contracts will emerge from these trials. The principal use of funds will be to secure EPA and California Air Resource Board (CARB) Retrofit Verification. David Tice, a Dallas money manager, who heads the $200 million Prudent Bear mutual fund largely dedicated to short-selling, said: ``While my main goal is the acquisition and short-selling of overvalued stock, I do have an interest in a number of undervalued longs in products and industriesthat are bound to grow dramatically. ``I believe KAIR is positioned in the environment industry to take full advantage of ever tightening government regulations on NOx and particulate reduction.'' Tice's fund was up 7.4% last year even as the broad market plunged. KleenAir has a patented unique computer controlled ammonia system, the NOxMaster®, which, when injected into the exhaust stream, interacts with NOx produced during combustion. The result converts environmentally hazardous NOx into harmless nitrogen and water. In addition, the company's catalytic converters and Oxidizing Particulate Traps (OPT) significantly reduce particulates, as well as hydrocarbons (HC) and carbon monoxide (CO). ``We are excited by the confidence shown in the company by such a shrewd and successful investor as David Tice,'' said Lionel Simons, president of KleenAir. ``These funds will enable us to meet the significant expense associated with applying for EPA and CARB certifications necessary to bring the product to market in California and elsewhere.'' CARB retrofit device verification will certify a specific level of NOx and particulate reduction which can then be used by local Air Quality Management Districts to award NOx emission trading credits. These credits contribute toward the cost of equipment and vehicle operation. Safe Harbor Act Disclaimer The statements contained in this release and statements that the company may make orally in connection with this release are not historical fact and are forward-looking statements within the meaning of the private securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements, as such statements involve risks and uncertainties that could significantly impact the company's business and the actual outcome and results may differ materially. ------------------------------------------------------------------------ Contact: KleenAir Systems Inc., Fullerton Lionel Simons, 714/774-3652 STATISTICS January’s auto sales fell 5.2%. There are 67,062 people working in the lobbying business in Washington. There are 125 people working to influence government policy for every member of congress, up from 31 lobbyists per congressman in 1964. For the first eleven months of the year Asia was a net buyer of $104 billion in US Treasury and government agency securities. Lear, auto components supplier will cut 6,500 jobs and 21 facilities. The US Treasury sold $14 billion worth of bills, of which $8 billion was from cash. As you can see a pattern is developing. The Treasury now needs to raise fresh cash every week. Freddie Mac will sell $200 million in two-year notes on 2/14/02. The Treasury sold $16 billion in five-year notes and $13 billion in ten-year notes on 2/5/02. Factory orders rose 1.2% in December after falling 4.3% in November. Officially last year, factories shed 1.3 million jobs or 7% of their workforce. This does not include small companies. Mead Westvaco plans to cut it’s corporate workforce by 20% to 1600. Of 331 metro regions tracked by the Bureau of Labor Statistics 305 had higher unemployment in December. The State of Arizona is starting layoffs due to lack of funds. The Labor Department says worker productivity rose 3.5% in the fourth quarter versus 1.1% in the third quarter, that’s an average of 2.2% of normal productivity growth. Sprint’s unsecured debt was downgraded to BBB from BBB plus by Fitch due to concerns about its long-distance business. R.J. Reynolds will spend $1 billion to buy back its stock. Fleet Boston has eliminated salary increases this year for workers earning over $50,000 a year and will limit raises under that level to 3%. The SEC is investigating Calpine. The Bank of Tokyo-Mitsubishi sales index rose 5.1% in January versus 3% in January 2000 due to massive sales. The Treasury will raise $196 million in new cash in a $30 billion offering of short-term bills on 2/11/02. Fannie Mae will offer $1 billion, 5% callable notes on 2/11/02. Tyco will lay off 44% of its workers at its telecom unit or 1,000 employees. December inventories were off 0.6%. Wholesale sales were up 0.4%. COMMODITIES India’s rapeseed production will be up 50% in 2001-2002. Since this will follow a good harvest of 5.3M tons of groundnut and 4.8M tons of soybean crops, India’s import of oils and fats in the current year should fall to 5.4M tons from 5.75M tons last year. Growers will do well and probably will be larger gold and silver buyers than they normally would have been. World oil production will peak within the next five years, never to be exceeded again. This, at a time when world population is rapidly increasing and demand, especially in China, the Far East and the developing worlds, is soaring. This is the reason for the wars that will not end in our lifetimes. This explains why the CIA is acting as an agent of globalization, to control the oil of Central Asia and the world drug business. As oil production declines in the near future it will cause depression due to even higher oil prices and massive unemployment. The AGA natural gas inventory showed a draw of 82 billion cubic feet of natural gas taken from storage, the low end of expectations. There is a trillion cubic feet of natural gas overhanging the market, so we don’t expect any major upside moves soon. “More Ways to Profit From the Coming Collapse” We have begged the reader to buy silver futures on double margin. Silver as we write is still only about $4.30 per ounce. You can buy a single COMEX contract of 5,000 ounces of silver for $2,500 but put down $5,000 for safety. Silver would have to go way under $4.00 before you would need to add margin money- and it just isn’t going to do that in our opinion. If you buy four COMEX contracts and put down double margin of $20,000 you would control 20,000 ounces of silver. When- not if- silver goes to $50 you would literally be a millionaire. This is your chance to be a millionaire if you’re not one. This is your chance to be a multimillionaire if you’re already a millionaire. Please remember that when silver skyrocketed to $50 about 20 years ago there was plenty of silver available. Please also remember that $50 then is $l00 now so silver would have to go to $100 an ounce just to match the run-up of the early 1980s. Also please remember that palladium did, in fact, recently go up ten times in price in only four years. We feel not only is silver the very best investment you can make in 2002, but also the best investment you will see for the rest of your life. This is a rare opportunity to make money while the great-unwashed hordes keep investing in the stock markets. For more information go to www.silver-investor.com (there is a hyphen between “silver” and “investor”) or to www.butlerresearch.com. There are other great ways to make money as the U.S. economy tanks. Anyone who has been reading this newsletter for more than a week certainly feels all the U.S. stock markets are extremely overvalued and falsely propped up. It is only a matter of time until reality comes in and lowers them to levels more reflective of their worth. The DOW, NASDAQ and S&P will all suffer in 2002 and beyond and their P/E ratios will drop from the stratosphere. Most analysts feel the S&P 500 is the most overvalued of the three. The traditional P/E ratio for the S&P is only 14.5, but the current P/E is about 37. It seems most of the 500 companies on the S&P have resorted to pro forma profits to make themselves look good. “Pro forma” is better translated as “lying, stealing and cheating”. The S&P 500 simply cannot sustain a ridiculous P/E of 37. Let’s take the stock of the office supply company Staples. Staples claims they have a P/E of only 27. Even if this was true this is almost double what the traditional value should be. But it isn’t true; the real P/E of Staples is about 132. Yes, 132. Now, isn’t that a great candidate for a short? It is almost impossible to lose by shorting a stock like Staples. They use pro forma profits to tell their stockholders how they’re doing- and the fools fall for it! So, how are we going to profit as the U.S. economy crumbles this year? Buy long term LEAP puts on the S&P 500. For goodness sake do not buy the usual short term options as you will surely go broke before the markets correct. These only last a few months while a long term LEAP can be good for almost two years. Do not use futures options either for a variety of reasons. If you will look in the Wall St. Journal on the options page you will see a small column titled, “LEAPS- LONG TERM” for the DJI, S&P 100 and S&P 500. You can actually go all the way out to December of 2003, which is 21 months away. While you don’t want an “in the money” put due to its high price, you also do not want a risky far out of the money put regardless of its very low price. Choose one that is just out of the money or the next available one that is the next step out of the money. If the S&P is, for example 1150 you can buy a 110 (reflecting a value of 1100) or go down to a 100 (reflecting a value of 1000) if available. Remember that if you lose your options expire worth less and you lose everything you put in them. This is not as easy as buying commodity futures unfortunately. You do buy your options from a regular stockbroker where you have to buy futures from a special commodity broker. But in the case of options you have to fill out a financial statement according to federal law and be approved by the brokerage. You have to be approved in other words. Only use money you can afford to lose here and not your retirement money. Do you believe we will have another major terrorist attack in 2002? It has been about five months now since the first attack. Our own president not only said that we are going to have another major attack but that it will be much worse in scope. The next attack will be worse and probably a biological one like a smallpox plague. The anthrax -hype was a media show meant to distract you since anthrax is not contagious it hardly poses any real threat. A biological contagious plague will make planes running into buildings look mild by comparison. And, what will happen when the attack takes place? Obviously the markets will crash much harder than they did the first time - and you will get wealthy in the process. Remember that anyone can go buy put options, LEAP puts or futures options puts on the Dow, the NASDAQ or the S&P and profit off the markets collapsing. But they aren’t for whatever reasons and you can and should. Take a look at the situation in Israel getting worse by the day. Bush has already called Iran, Iraq and North Korea “the evil axis”. We are still killing innocent civilians in Afghanistan for no good reason at all. We are frothing at the mouth ready to attack Iraq, which is none of our business. We have alienated over a billion Muslims in the world and make them angrier every day with our actions. The Muslims of the world become more inflamed against the Great Satan America every day and every day we commit even more atrocious acts to further inflame them. Don’t you think it might be a good bet that payback day is long overdue? Your broker will send you a free booklet on options trading. The only part you need to read is buying puts and you can ignore all the rest about calls, covered calls, naked puts and the rest of it. Be aware that the built in premiums are a little hard to overcome and normally we would never use any kind of options to bet on anything. In this case LEAP puts are ideal for the situation. The house edge is high here but will look pretty good as the markets start to implode. You will have a good 20 months to prove you are right, the great unwashed masses are wrong and then you can step up to the table and collect your money. This is not something we feel you can sit around and wait on. With the S&P right now around the 1100 area you are right where you want to be. Use the December 2002 expiration date. 100’s (reflecting an S&P 500 of 1000) would be a good bet. It is going to take at least a week to get approval from your broker to trade. We hope the markets don’t start collapsing before you can execute your trade. We are already in and feel great about it. December 2003 is a long way off and a lot of very bad things are going to happen before that time unfortunately. Well, you get what your hand calls for as the old saying goes. If you want professional assistance, call broker Rich Radez at 800-285-1700. GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS Gold DEMAND is going UP. Gold SUPPLY is going DOWN: SANTIAGO, Chile, Feb 1 (Reuters) - Canadian miner Placer Dome Inc. (PDG) said on Friday it does not plan to begin construction of its Cerro Casale gold project in northern Chile, even after obtaining approval from local environmental authorities, because of low gold prices. Chile's state environmental agency authorized on Thursday the $1.43 billion project, which would produce 975,000 ounces of gold annually. "We are not going to develop the mine until gold prices improve," Felipe Ruiz, Placer Dome's regional director of public affairs, told Reuters. "Three-hundred-fifty dollars per ounce is the gold price we are waiting for. There has to be a trend indicating that prices are heading toward that level and that is not happening," Ruiz said. Who is a dwarf? Enron is a dwarf. That is compared to what’s coming at JP Morgan Chase. They only seem to have lost $2.6 billion with Enron. We ask what is there derivative exposure? Morgan does have $30 trillion in derivatives. Morgan is the leader of the gold manipulation cartel. They have many gold loans outstanding and they are mega short. It now comes out, as we guessed, that Morgan as reported by the Comptroller of the Currency, as of 9/10/01, held 80% of the gold derivatives the COC reported. It looks like Morgan could have been dumping short gold derivative positions on Enron to lower its exposure and this explains the mega loans Morgan made to Enron as it was going under. This also means Morgan and probably Citigroup are left to defend the gold manipulation position. They don’t have that kind of strength left, which means anything can happen. The big question is will the central banks throw their remaining gold reserves at the market? If we had to guess we’d say yes, but that would only be temporary. The game is on, be long. This is only the beginning of a wild ride. Incidentally, if Morgan unloaded a large portion of their derivatives on Enron and Enron is defunct, that means all their counter-parties either lose their money of their gold, which has already been sold into the market. This is explosive, be a buyer. If Enron did anything it made it unfashionable to hedge or be a heavy derivative player. This means current buying in the $280’s could be hedgers covering their positions and even if it isn’t, there has to be pressure on Barrick, Placer Dome, Anglogold and the Australian managements to at least cutback, if not wipe out hedge positions. We still believe Enron was leasing gold and silver; they were too close to JP Morgan to not have done so. We’ll find out sooner or later. Gold, silver and their shares charts look super. Be long, long, long. The shorts and hedgers have to be shivering in their boots as major gold and silver buying persists and the annual shortfall of production to demand maintains at 1700 tons annually. The key of course is JP Morgan. Their exposure on gold is colossal, but as congress digs into Enron, Morgan will get deeper and deeper into the financial quagmire. Morgan could go bankrupt and that means these gold shorts and derivatives could implode. That would give very serious upside velocity to gold, which would pull silver and platinum with it. We had predicted $300 gold by the end of January and that prediction was neutralized by the gold cartel at $290 an ounce. It still could be we are only a few weeks off. Reports say the Japanese normally buy 1kg to 5kg gold bars. They are now buying huge amounts and they are taking it home not putting it in safe deposit boxes. How’s that for confidence in your government, the yen and the financial system. Customers say that even if the price of gold falls, it will never fall to zero. They are very concerned for the safety of their savings. If hedgers cut back on hedging there will be less gold for the bullion banks to sell into the market and that’s happening. Worse yet, gold production is down and few projects are coming on stream. The evidence for gold is mounting and will become insurmountable. All we can say is buy with both hands, we are. The investment world may finally be catching on that gold is the investment of our time. Low interest rates have been helpful and Japanese buying, up over 50% recently, has propelled the metal forward. The deposit insurance situation has been compounded by new lows on the Nikkei Dow, which we re-shorted at 10,800. We covered our 21,000 short at 9500. Of course, the yen is a lock to move lower to 142, a perfect environment for gold and silver. Who will be the next Enron or Argentina? The current account deficit is horrendous and will be over 4% this year. The stock market will soon penetrate its interday low of 8160. The dollar is being artificially manipulated and its days at lofty heights will soon be over, as are the days of a hyper-inflated money supply, which will now reverse into a full-blown depression. The elitists have killed America’s physical economy. The real estate, debt and derivative bubbles are about to collapse. Gold is money, gold is real, gold is wealth and gold is no one’s liability. It is difficult to bring such bad news of our future, but these are or will be the facts. Prepare yourself financially, spiritually, and economically because the next several years are going to be nightmare. We view markets on fundamentals and the distortions caused by psychological warfare. We try to figure out what our adversaries are going to do before they do it. That doesn’t preclude us from looking at many other indicators. That is why we bring to your attention the average NAV premium for senior and intermediate tier gold shares. Their valuation premiums, in spite of hitting new highs, are still a long way from levels seen before 9/99, when valuation premiums dropped steeply, following the announcement of the Washington Agreement. NAV premiums have been increasing at the same time as the gold price, which is contrary to the normal pattern. Current valuation levels have not even reached the bottom of the range that had existed prior to the Agreement. This means money has been flowing into gold shares since late 2000. The sector is still only discounting a gold price that is at the bottom of the range that existed prior to its downward revaluation. That means gold shares are about to assume much higher multiples even though they perceive gold at about $350.00 an ounce. We remember in 1969 and 1979 when gold shares sold at 150 times earnings and silver shares up to 300 times earnings. Better yet, today they have far smaller capitalization. There are only $35 billion worth of gold shares traded. The upside possibilities are enormous. Any material inflow of funds in just a week could rocket these issues. We haven’t even begun to finish phase one of four upside phases. Based on NAV and P/E ratios both *Agnico-Eagle (AEM-NYSE) and *Goldcorp (GG-NYSE) could double from present prices without gold moving over $300 an ounce. Based on estimated 2003 earnings’ projections at $300 an ounce gold could double during this year just from alternative investment flows that will be fleeing the general stock market trying to find a profitable home. We have seen this happen four times in the last 40 years. This analysis does not take into consideration higher or much higher gold prices, nor major negative financial events. These two issues and others will replicate what Homestake did from 1930 to 1936, and that is appreciate from $48.00 to $458.00 a share. Once the criminal activities of the gold cartel are exposed, the entire financial system will be shaken to its core. When Americans, Germans, the Swiss and others find out that their gold, the only thing of monetary value has been sold, they will be outraged. If not lynched, officers of J. P. Morgan Chase, Citigroup, Goldman Sachs, Deutsche Bank and others, including officials of government and the FED, will be charged with criminal acts. We are getting close as rumors persist that J. P. Morgan Chase has derivative or gold bullion problems. There is also word that Morgan was hiding short gold positions offshore in secret accounts in order to keep them off the balance sheet. If the central bankers want to stop the present upward move in gold they will have to sell the remainder of their physical gold in the market. They may stop the rally temporally, but when the public discovers what they’ve done all hell will break loose and we could have a collapsed financial system. Golds fundamentals and the enormous structural supply demand deficit is overwhelming. Owning gold shares, coins and bars are the way to participate in this chance of a lifetime, not only to protect your wealth but also to profit. Date: 2/8/2002 7:04:17 AM Central Standard Time Gold surged over $306 early this morning as the Japanese public bought hugely on Toccom. Volume exceeded 1mm ozs again (eg 100,000 comex contracts) and open interest jumped 1.15 Mm ozs. The normally laconic Mitsui-Tokyo said: "What a day! Japanese public investor's buying supports gold market strongly today. Friday, February 8, 2002 Gold Prices Hit 3-Year High As Japanese Seek Out Havens TOKYO (Nikkei)--Gold is becoming more popular among individual investors looking for a safe investment, with the price of the precious metal going above 300 dollars per troy ounce on Wednesday on international markets for the first time in two years. Gold prices also rose to a three-year high on the domestic market on Thursday, with high prices in Japan helping to push up the price abroad. A downtown Tokyo retail shop run by Mitsubishi Materials Corp. (5711) offering gold for sale was so crowded during business hours on Thursday that sales staff could barely get away for lunch. "Gold sales since the start of this month have been 100% higher than those seen in January," one shop employee said. Tokuriki Honten Co., a large gold bullion trader, said that total Thursday gold sales at its domestic retail outlets, including some 80 affiliated retail stores, were the highest since the beginning of January last year. "The number of first-time buyers who purchase 1-3kg is rising, in addition to a widening range of buyers in terms of age," an official at Mitsubishi Materials said. At the same time, say some retailers, there have been a number of cases where large-lot buyers purchase more than 30kg (retailing for about 42 million yen) of gold at retail stores. Trading volume on the Tokyo Commodity Exchange reached a 28-month high of 340,647 contracts for 1kg of gold on Thursday. Individual investors bought, while large traders sold contracts for arbitrage trading on overseas markets. Many traders are selling gold in Japan and buying it abroad. "Small-lot gold purchases in Japan are one of the major factors boosting international gold prices," says one official at Mitsui & Co. (8031). (The Nihon Keizai Shimbun Friday morning edition) The Reality of Buying COMEX Silver Anyone reading this newsletter knows that silver is the most explosively potential investment you can make in February 2002. It is NOT a good idea to store your silver no matter how secure the storage facility or what country it is in. The best way to own silver is to physically own it. You can buy 1000-ounce bars but they weigh about 70 pounds apiece and must be assayed before resale. UPS cannot ship these and the usual way to ship them for individuals is by first class, registered insured mail for about $100 a bar. An armored car service wanted $4,000 to ship 20 bars from Texas to Tennessee and the customer still had to drive to the armored car facility with a truck, as they do not deliver to homes. Another way is to buy bags of junk coins with $1,000 face value containing about 720 ounces of actual silver. These are about the size of a bowling ball and weigh about 50 pounds. They sell at a premium. Another way is to buy 100-ounce bars that are stamped and trade freely without assay. It was suggested to us that I get my silver directly from the COMEX and take delivery. Here is the reality of that experience. We paid in full for four COMEX contracts of 5,000 ounces each for a total of 20,000 ounces. At $4.50 this came to $90,000 plus commissions. I then had the four certificates sent to me. The broker had never before had a client request delivery and take the certificates. The silver was at the HSBC Bank in New York City. I called them and asked that the silver be sent. The armored car service wanted about $4,000 for the 20 bars. And I would have had to drive 200 miles to their secure facility to pick them up myself. Most armored car services will NOT do this but Brinks Inc. will. HSBC said UPS will not carry silver and I called to verify that. They refused to mail them first class by USPS because there is a 70-pound weight limit and with packaging the bars would have gone over that limit. So we literally had to fly to New York City, rent a one-way cargo van and drive ten hours back home without stopping at a motel. Find a discount coin and metals dealer that will give you a good price. Compare prices and call several. You must pay with a cashiers check or send a personal check a week ahead of time so it will clear. For God’s sake don’t pay cash or you may end up in prison (minus your money) for being a criminal. It doesn’t matter if you filed a tax return on your cash as paying for anything in cash now seems to be vaguely illegal. Buy an airplane ticket for cash in the airport and the DEA will have you in custody before you can get to your terminal. How you store your silver is your business and not anyone else’s. Use your imagination. If you live in an apartment building you have a problem obviously. When- not if- silver goes to $50 an ounce or more you’ll be glad you did this whether you buy 1000 ounces or ten metric tons of it. And please remember that when silver went to the moon about 20 years ago there was plenty of silver and $50 back then is now $100. Don’t be surprised to see $100 an ounce silver in the next four years. Go to www.butlerresearch.com if you would like to see factual reasons for this. Giving another boost to gold was AngloGold’s disavowal of forward hedging as they announced they wouldn’t renew hedge positions until it has reduced its book by another 6 million ounces. Old Mutual Sells AngloGold, Buys Gold Fields, Harmony Gold By Jonathan Rosenthal Johannesburg, Jan. 31 (Bloomberg) -- Old Mutual Asset Managers, South Africa's biggest investor, said it is selling shares in AngloGold Ltd. and buying its rivals, betting they'll gain more from an expected rally in the gold price. AngloGold, the No. 2 producer, has commitments to deliver 14.6 million ounces of gold at preset prices, limiting its benefit if gold gains, Old Mutual said. Gold Fields Ltd. and Harmony Gold Mining Co., South Africa's second and third-biggest producers, sell at current prices. ``Harmony and Gold Fields are more geared to the gold price,'' Alwyn van der Merwe, senior portfolio manager at Old Mutual, said at a press conference. ``For Harmony the gearing is phenomenal because they are not hedged at all.'' Old Mutual manages assets worth 215.2 billion rand ($18.8 billion) in South Africa. Gold producers and other miners were among South Africa's best performing stocks last year, benefiting from the rand's 37 percent decline against the dollar. Miners pay most of their costs in rand, but sell their products for dollars, boosting profits. AngloGold gained 6 rand, or 1 percent, to 474 rand, while Gold Fields rose 5.2 rand, or 8 percent, to 72.7 rand and Harmony increased 4.2 rand, or 5 percent, to 89.2 rand. Last year Gold Fields was South Africa's second-best performing company, gaining 124 percent. Harmony ranked third with a 123 percent gain and AngloGold seventh at 91 percent. Gold, which has halved in price since 1980, is set for a rebound, said Michael Schroder, who manages Mutual's resources funds. The gold price will likely gain as producers have bought back gold they had sold at pre-set prices, reducing the supply. ``In the medium term we think there is still some upside potential for the gold price,'' Van der Merwe said.Old Mutual also cut its holdings in Cie. Financiere Richemont, Anglo American Plc, Sasol Ltd. and its own parent Old Mutual Plc, van der Merwe said. It is buying stocks including South African Breweries Plc Standard Bank Investment Corp. and South African Breweries. *STARFIELD RESOURCES INC - SRU.CDNX PRESS RELEASE - February 6, 2002 Corporate Office: Suite 420-625 Howe Street Vancouver, BC CANADA V6C 2T6 SRFDF – OTC BB Tel: (604) 608-0400 Fax: (604) 608-0344 Toll Free: (877) 233-2244 email: investorrelations@starfieldres.com website: http://www.starfieldres.com Ferguson Lake Nickel-Copper-Cobalt-Platinum-Palladium Project, Nunavut, Canada STARFIELD RETAINS CORPORATE FINANCE ADVISOR Starfield is pleased to announce that the Company has retained Warrior, a division of Standard Bank of London as corporate finance advisor. Warrior provides corporate finance and strategic advice exclusively to the mining, metals and minerals industries and will provide these services to Starfield for the Ferguson Lake project. Starfield’s exploration work to date has identified a resource exceeding 60 million tonnes at the 100% owned Ferguson Lake property as summarized below: Cutoff Grade Tonnes Copper (%) Nickel (%) Pd (g/t) Pt (g/t) (millions) 1.0% Cu+Ni 60.1 0.93 0.59 1.32 0.19 1.5% Cu+Ni 20.6 1.17 0.77 1.69 0.25 2.0%Cu+Ni 12.7 1.39 0.85 1.92 0.28 Additionally, on December 28, 2001 the Company announced discovery of a discreet new horizon assaying 103 g/t (3.29 oz/t) Palladium, 26.7 g/t (0.85 oz/t) Platinum and 2.74 g/t (0.09 oz/t) Rhodium. Starfield is currently awaiting startup of the 2002 drill program. On behalf of the Board of Directors “Glen Macdonald” Glen Macdonald, P.Geol., Director The CDNX neither approves nor disapproves of the information contained herein. ______________________________________________________________________ The New Shoshoni we recommended two weeks ago is up 20%. For those of you who would like another diamond spculation we offer the following. Some interesting things are going on in this company and we believe they have an excellent chance of success. Coronation Diamond Property, Nunavut – (UNO-CDNX)-C$0.35 - News Release Vancouver, B.C., February 5, 2002 First Narrows Resource Corp. (“First Narrows”) is pleased to announce the signing of a Letter of Intent with Shear Minerals Ltd. (“Shear”) for on going diamond exploration at Shear’s Coronation Diamond Property in the North Slave District of the Nunavut Territory. The Coronation Diamond Property, comprised of thirty-one claims in several blocks, is located approximately 175 km northeast of the Ekati Diamond Mine. Under the terms of the agreement, First Narrows has the option to earn up to an 80% interest in the Coronation Diamond Property for staged expenditures totaling $1,000,000 prior to June 30, 2003 and the issuance of 700,000 common shares of the Company to Shear prior to December 31, 2004. The initial stage of the option calls for the issuance of 200,000 First Narrows shares to Shear and an exploration expenditure of $400,000 before June 30, 2002. On all additional ground acquired by First Narrows in the North Slave, Shear will retain a 10% carried interest through acquisition, and thereafter, a 10% participating interest. On both the Coronation Diamond Property, and all new ground acquired, a one time kimberlite bonus of $25,000 cash, or share equivalent in First Narrows, is payable to Shear. The potential kimberlite targets identified by Shear on the lands optioned by First Narrows are the culmination of over 10 years of geological, geophysical, prospecting and sampling programs by various operators, including over 6000 line-km of airborne geophysical surveys and 200 till samples. The property currently consists of 79,489 acres distributed over three non-contiguous blocks covering airborne geophysical targets suggestive of kimberlite pipes as identified by Shear and Apex Geoscience Ltd. Several of these targets are rated as HIGH priority by Intrepid Geophysics Ltd. First Narrows has scheduled immediate detailed ground geophysical surveying over a number of the targets in preparation for a spring drilling program. All necessary drill permits are in order. Bathurst Inlet, located 30 km north of the Coronation Diamond Property, is currently the focus of studies by various agencies as a potential deep-sea port site with an all-weather road to support northern mining projects and communities, thus greatly enhancing the future economics of the Coronation Diamond Property. First Narrows is also reviewing option and joint venture diamond exploration proposals from third parties in three other regions in Canada. The staking of mineral claims in one of these areas is currently in progress. The terms of the Shear-First Narrows transaction are subject to regulatory approval. On behalf of the Board of Directors FIRST NARROWS RESOURCES CORP. “signed” John Campbell Director “We have mentioned the Prudent Bear Fund numerous times over the last two years as an excellent way to play the market in these unusual and confusing times. Unusual inasmuch as deep recession/depression have not been as frequent in this past century as they were in previous centuries. Confusing because of the mammoth propaganda machine operated by GE, CNBC, Wall Street and government. You seldom get the truth and that is confusing. We believe this is the perfect time to purchase the Prudent Bear Fund and the Safe Harbor Fund. The market has just experienced a strong 30% bear market rally and precious metals stocks seem poised to go higher. The Prudent Bear Fund shorts the market and goes long precious metal stocks. As the market falls and gold and silver move higher those shares will also move higher. It is a perfect and simple way to invest during these troubling times for those who don’t have the experience and fortitude to pick individual stocks. The Prudent Safe Harbor Fund (PSHFX), which invests in high quality debt instruments, denominated in currencies other than the dollar, gives you an exceptional alternative to a falling dollar. You may purchase these funds though Rich Radez at 800-285-1700.” WORLD MARKETS The growth in world trade in goods and services was 12.4% in 2000 dropped to 1% in 2001. The IMF has predicted an increase in 2003 of 2.1%, which we believe is wishful thinking. A free lunch isn’t enough anymore. Foreign aid agencies increasingly are taking on a new responsibility: supplementing the salaries of government workers. If they don’t get paid off they won’t cooperate. In Cambodia foreign donors pay 53% of all government wages. The UN pays 700 Cambodians an average of $85 a month. This relieves government of the responsibility of raising salaries and contributes to corruption. In fact the payoffs themselves are corrupt. We say cut out foreign aid, period, and we’ve expressed that position since 1967. CANADA We’ve been asked a number of times, can Canadians invest in the Prudent Bear Fund www.prudentbear.com and the answer is yes. All they have to do is call FIRSTAR BANK, the custodian for the fund at 800-711-1848. We bought the fund for ourselves last week. A growing number of Argentine citizens are claiming refugee status in Canada due to their loss of everything of value. These are not refugees and this is an insult to legal immigrants who have patiently been waiting their turn. A group of auditors, brokers, lawyers and directors that includes former Ontario premier David Peterson have agreed in principle to pay a record $85-million to shareholders who lost money following the collapse of YBM Magnex International Inc. "This is the largest recovery ever made in a stock fraud case in Canada," said Harvey Strosberg, who represents shareholders in one of two Ontario class actions against YBM. "It shows that the judicial system can deliver a remedy for people who are victims of a fraud." Lawyers estimate about 2,000 YBM shareholders lost $360-million following the company's sudden collapse in 1998, which left investors holding worthless stock. The combined $120-million would give shareholders an average 25 to 30 cents for every dollar lost. Defendants named in the class actions included YBM's accountants Parente Randolph Orlando Casey & Associates of Philadelphia; Deloitte & Touché; Toronto law firm Cassels Brock & Blackwell; Bay Street brokerages Griffiths McBurney and Partners and First Marathon Securities Ltd. (later acquired by National Bank Financial Inc. and a number of YBM's former executives and directors including Mr. Peterson. Canada will contribute $100 million to the Joint Strike Fighter project of which Britain is contributing $2 billion. The project will cost $200 billion and would bring 3,500-5,000 jobs to Canada. EUROPE German stock funds assets were $149 billion in 2001 versus $181 billion in 2000. In 2001 European stock funds fell 21%. The biggest drop since 1974. The DAX in Frankfurt fell 20% and the UK’s FTSE 100 slumped 16%. The money that did move out of stock funds went into bond funds. Russian President Vladimir Putin has called for an Asian Alliance of natural gas exporting countries, under Russian leadership. It would be an OPEC for gas, another monopoly. The Russian pipeline system would be the principal route for future Caspian and Central Asia gas supplies to Europe. Moscow would have the last word on transit tariffs and on pricing policy. Turkmenistan is the main prize at stake, and primary target of the Eurasian Alliance proposal. They are ranked 3rd in the world in gas reserves. Euro zone inflation was 2.5% in January up from 2.1% in December. It is expected to fall to 2% in coming months. The IMF is endorsing $16.3 billion in loans to Turkey. Denmark cut its lending rate 1/2% to 3.25%. We could well be forming a bottom on the euro in the $.86 area. The dollar is at least 10-15% overvalued versus the new currency. The EU boom was shorter than the US boom and business is not nearly as heavily indebted. Thus, the correction could be less severe. The savings rate is 14% and because far fewer people own equities, the wealth effect won’t cause as much damage as markets decline. European stocks are much cheaper, so they probably won’t get hit as bad. Another plus for Europe is that the US current account deficit probably will be 4% this year and 6% in 2003. We would imagine that would bring a few European sellers into the dollar denominated markets. Two of Europe’s biggest companies Unilever and CGNU, plan to bar their auditors from carrying out lucrative consulting work as fears about accountants’ independence spread beyond the US collapse. President Jacques Chirac of France is about to experience his worst nightmare. He can’t go to jail but he sure may have a hard time getting reelected in three months. Didier Schuller, a fugitive, is returning from the Dominican Republic, at which he had been paid to stay. He will tell all about a major kickback scandal run by Jacques Chirac. Jean Marie LePen was right; both major parties are all crooks. German unemployment rose for the 13th month in a row. During the past 10 years US fixed investment spending was up 130% whereas Europe’s grew only 25%. Some believe that leaves room for further spending growth in Europe. We don’t think so. We believe Europe has less over-capacity, fewer people to lay off and less inventory problems. In this environment there will be really little growth anywhere. Skepticism is the prevailing mood among European economists on the prospects for the euro-zone economy, despite signs of a possible recovery in recent economic data. Everyone in Europe wants lower interest rates except the ECB, the European Central Bank. The ECB is reticent because inflation is 2.5% due to higher taxes and it will probably move higher due to price gouging in the changeover to the euro. Bankers are afraid of inflation but brokers are more afraid of deflation. If inflation rises and turns down abruptly then real interest rates will rise and deflation will set in as it has in Japan and is beginning to be felt in the US. The French Government, which as usual is way behind the curve, finally lowered its 2001 growth estimate to 1.5%. We call this socialist/Marxist turmoil. How can they be so inept? Wim Duisenberg will resign as president of the European Central Bank (ECB) next year to make way for French successor Jean-Claude Trichet. The deal was made to appease France, which wanted to play a key monetary role. ENGLAND Believe it or not England now has a consumer debt to income ratio higher than that of the US, but about the same as Germany. British consumer spending has been rising faster than real GDP by a substantial amount every year since 1995. Even government spending is increasing faster than real GDP. Fixed investment is on a downswing and has taken over a balancing role. The balance of payments deficits of 2000 and 2001 were $24 billion. The deficit in traded goods is running at about $42.3 billion or higher than in the 1980’s. MmO2, the mobile phone operator will cut 20% of staff or 1400 jobs. Lloyds of London has asked investors for $803 million to cover losses of 9/11/01. GERMANY As we predicted, the Socialist/Marxist government of Chancellor Gerhard Schroeder, has a large budget deficit at the worst possible time, due to their gamble on economic growth and their assumptions, which we said were ridiculous when they were announced. They also cut taxes and didn’t restrain spending. Furthermore, they had not balanced their budget in previous years. Growth was only 0.6% in 2001 versus 3% in 2000 versus an unbelievably stupid government estimate of 2.75% for 2001. We predicted 1.5-1.75%. Their structural deficit increased to 2.3% of GDP from 1.6% in 2000. German December unemployment rose to 4.29 from 3.96 million for December lifting the rate to 10.4% from 9.6%. Mind you, this is the biggest, strongest most prosperous economy in the EU. Unemployment figures have knocked chancellor Gerhard Schroeder for a loop. He had promised to hold unemployment to 3.5 million until the election in September; it is now 3.978 million and getting worse daily. Making matters worse, there is a budding scandal about the falsification of job-creation figures by state employment offices. That sounds like the US government. It was found that only 225 of the jobs listed were actually filled as opposed to government figures of 76%. Compounding that, Germany is approaching the budget deficit limit of 3% as set by the EU. Under those circumstances, Mr. Schroeder is unable to use public funds to stimulate the economy. At this rate Edmond Stoiber, the CDU/CSU candidate could be a shoo-in. Socialist Finance Minister Hans Eichel says international coordinated supervision of hedge funds may be necessary to reduce threats to the financial system. The biggest threat to the system is market manipulation by governments such as Germany, particularly in the gold and currency markets. He recently submitted a law to stop short selling of shares temporarily if the stock market is in turmoil and going down. It sounds just like our plunge protection team. There are only four hedge funds in Germany, so he wants an international banning of short sales and direct supervision of hedge funds. We’ll have to get Hans a brown shirt. Edmond Stoiber, CDU/SCU candidate for chancellor, accused Chancellor Gerhard Schroeder of abandoning the unemployed in Eastern Germany, where there is 25% unemployed and those are doctored figures. This is after 100,000 people have left since 1990 and migrated to Western Germany. Mr. Stoiber promised a new offensive focusing on support for small and medium-sized companies. LATIN AMERICAN We predicted the Argentine peso at 1.70 to the dollar two months ago. We shouldn’t be so conservative. That’s when everyone was talking about 1.1 or 1.2. It traded as 2.63 and was last seen at 2.2 to the dollar. The Argentine Supreme Court has ruled that a freeze on bank withdrawals, imposed two months ago to prevent depositors from removing their savings from banks, was unconstitutional. It is of interest that the freeze was put into effect by President Fernando deLa Rua, a Rockefeller flunky, and that’s wat brought about food riots and street protests that forced his resignation. We might ask the Argentine politicians how it was that JP Morgan was allowed to move billions of dollars out of the country? Fitch downgraded Venezuela’s long-term foreign-currency debt to single-B plus from double-B minus and on local currency debt to single-B from single-B plus. They also signaled more downgrades could follow if capital flight doesn’t ease. $1.6 billion left the country in January. Highly-placed diplomatic and IC sources, speaking exclusively to VHeadline.com on the strictest condition that their identities will not be revealed, have told us of a Washington-iniated plot to assassinate Venezuela's democratically-elected President Hugo Chavez Frias. Spanish-speaking US military operatives are already present in Venezuela lending logistic support to several anti-government terror cells in what's described as "a fail-safe plan" to dislodge Chavez Frias and to win US control over strategic oil supplies. US planners are also lending support to one or more anti-Chavez Frias plotters who are to be installed as Washington puppets in the event of a successful bid to kill the President. (Friday, February 8, 2002) Search! http://www.vheadline.com/p1 Peru accepted $1.2 billion in tender offers for its swap of Brady bonds. They will issue $930 million in 10-year global bonds. They also placed $500 million in 10-year global bonds at 9.48%. J.P. Morgan Chase and Citigroup made the placement. MEXICO Mexico posted a budget deficit of $4.59 billion for 2001, equivalent to 0.73% of GDP, well above the government’s original target deficit. The deficit was 1.1% of GDP in 2000 and the target for this year is 0.65% of GDP. Don’t hold your breath. Prudential, the second largest US insurers will buy half of Mexican pension fund manager Afore XXI for $128 million. Afore is the ninth largest of the country’s 13 pension fund managers handling $1.6 billion. Moody’s upgraded Mexico’s debt ratings to Baa2 from Baa3, one notch further into investment-grade territory. This put Moody’s rating two notches above S&P rating. S&P has raised Mexico’s sovereign debt rating to investment grade, a long awaited seal of approval that will lower borrowing costs. It will also make for a stronger peso that will hurt exports, balance of trade, its current account balance and increase unemployment. Their stock market may go up compared to others, but that won’t create jobs in today’s recessionary environment. MIDDLE EAST The Bank of Israel said foreign investment fell to $3.9 billion in 2001 from $11.2 billion in 2000 mainly due to the 16-month old Palestinian uprising and the turndown in high-technology-driven growth. Investment in tradable securities was down $5 billion to $268 billion, but direct investment fell from $4.4 billion to $2.7 billion. Israel’s polished diamond exports were up 20% in January after a sharp downturn last year. They supply 50% of the market in polished stones. Prices are tending higher and exports are expected to be up 15% this year. The industry has pledge not to use conflict diamonds and anyone using them will be bared from the industry. ASIA Deflationary pressures are forcing manufacturers to relocate to China, which has the very lowest cost slave labor. Japan’s imports from China account for 6% of China’s economy, and those are growing at a double-digit clip. Between one and two percent of China’s economic growth, forecast at 7% plus this year, may come, in fact, from factories that Japanese companies such as Sony have built in China. China’s share of US imports rose to 8.9% from 5.4% in 1993, as Japan declined from 18.5% to 11%. China’s neighbors share of US imports has fallen to a combined 13.2% from 16.2%. That means the yen’s devaluation is inevitable, it’s a lock, as were the currencies of all the neighboring countries. That means deflation is about to accelerate in a big way. Don’t underestimate the economy of India even though they are still working through two scandals and a savaged stock market. India has the most secure GDP growth in the world, which is estimated to be 5.5% this year. They devalue the currency 10% every year and everyone knows it, so it’s factored into business. It is no wonder India’s citizens love silver and gold as a store of value and they always will. Thailand’s consumer price index climbed for January edging up 0.2% on the year and 0.8% month on month compared with a contraction of 0.3% month on month and a rise of 0.8% year on year in December. The Bank of China’s monetary authorities said consideration should be lent to allowing greater flexibility in the Yuan’s exchange rate to offset the influence of the slide in Japan’s yen. This would allow a devaluation in the exchange rate to a more appropriate level to reduce the difficulties faced by China’s exports. We don’t expect immediate devaluation but if the yen falls below 1.45 you can expect China to act. China’s make work project, the $18 billion natural-gas pipeline has begun. Petro/China and Royal Dutch/Shell Group are the builders. South Korea’s central bank kept its key overnight call rate at 4%. JAPAN Hitachi will lay off 4,000 more workers bringing the total to 20,350 in five months. As we noted last week bond yields in Japanese treasuries are headed higher. The 10-year JGB jumped to 1.5% from 1.342 in just one month. At the same time the yen fell to a 40-month low at 135.15. Remember we went short at 1.04 and reemphasized that short at 1.22 as a lock. The goal is 1.42 but we eventually expect 200. After a Nikkei Dow short at 21,000 and a cover at 9,500 we reset the short in a bear market rally at 10,800. It is presently 9681. Take it from us the JGB market bubble is about to bust. Japan’s banks are bankrupt and the government just reneged on savings account insurance dropping to an average of $75,000 per account. This is what started the massive Japanese gold buying spree as we reported weeks ago. A Japanese banking collapse would be the catalyst that sends gold straight upward and breaks the gold cartel. S&P said last week that Japan faces its third rating downgrade in less than 12 months. Deflation and depression is already a fact of life and money and stock markets must follow. By March 2003, the end of the fiscal 2002-year the government deficit will be 140% of GDP. Both the stock market and now the JGB’s apparently no longer seem to be safe havens. Foreigners who only run 5.8% of JGB’s are big sellers. Bankruptcies are accelerating and business looks bleak. The further Japan sinks the more probability there is that they will export deflation. We believe that will happen and the massive flight to quality, gold, will greatly accelerate. The City of Yamoto will start experimental use of a local electronic currency this month using plastic smart cards with integrated circuit chips, the first in Japan. 73,000 residents have volunteered. They’ll receive 10,000 love-units that can be used like discount coupons at local stores. Big brother relentlessly moves forward. Capital flight has been a fact of life in Japan for some time. They bought a record $45.1 billion of foreign stocks and bonds in October and $6.3 billion in November. We see no rebound in the Japanese economy this year and if we are correct Japan faces the prospect of rising bankruptcies and mounting non-performance loans at the banks. That will force banks to sell positions in foreign stocks and bonds to offset domestic losses on their balance sheets. That also would cause havoc in stock and bond markets in the US and Europe. Disintermeditation would cause major pressure on the US dollar as well as the yen. That would unleash another round of competitive devaluations across Asia, which in turn means massive deflation. The average Japanese obviously realize this and they are taking the uninsured portion of their savings and buying gold. Making matters worse is that bad loans at Japanese banks rose 10% between April and September. The only slight hope they have is for a US recovery to export too. If that doesn’t materialize it’s over. As of September 30th bad loans at Japanese banks were $265 billion. The real figure is $1.1 trillion. Estimates vary but it’s believed that there is $1.5 trillion in uninsured deposits in Japanese banks. That is 40% of Japan’s GDP. We now expect as money flees the system in time another bomb will hit the system. That will be the end of deposit insurance. Remember you heard it here first. When that happens there will be panic and gold will go ballistic. Pumping fresh funds into the system won’t work. It isn’t working now, why should it in the future? A panic would affect the entire world financial system. Already the portion of time deposits above 10 million yen have fallen 16%. It looks like a lot of savings have already moved into gold. The number of cars made in Japan last year dropped to a 22 year low of 9.8 million. This is a result of expanding overseas production. The outlook for the Japanese semiconductor industry dimmed further as Moody’s downgraded NEC to Baa2 and Toshiba to Baa1. Japan is staggering and is about to fall. Supporters say the Japanese have $11 trillion in savings, but what they fail to mention is the household, corporate and government debt is $30 trillion. This is six times GDP. As a yardstick US debt to GDP, as horrendous as it is, is only twice GDP. Deflation today is already 2-4%. The yen has begun to fall reaching 1.35 recently and the Nikkei Dow is about to hit new lows. That means very cheap Japanese goods, which will drive world goods’ prices and deflation even lower. As bank assets continue to dissipate they’ll return $3 trillion in overseas assets of which some $330 billion is in US treasuries and bank loans. If that money is pulled we’ll get sucked right into the vortex with Japan. They repatriated $17 billion in the first six months of 2001. The US current account deficit is 4.3% of GDP. The US needs savings to offset this, but how can you save and consume at the same time to save the US economy? Honda Motor Co. President Hiroyuki says that the yen has fallen too far. This is smoke and mirrors to deflect criticism of a weaker yen policy by Japanese government and big industry cartels, which are synonymous. Asia - Japan's Death Spiral? NEW YORK - Japan is one step closer to a full-blown financial crisis, after Tokyo shares fell to 18-year lows Feb. 5 and are expected to extend losses for the fourth straight day Feb. 6. Prime Minister Junichiro Koizumi is pledging to stick by his plan to liberalize the economy, but his popularity, once well above 70%, has abruptly plunged to just above 50%. Last week, the Nikkei 225 Stock Average fell below the Dow Jones Industrial Average for the first time since 1957. The steadily eroding situation in Japan has some economic experts warning of a financial crisis that would dwarf 1997's problems in Thailand and drag the world's economies into depression. Former Federal Reserve Board Chairman Paul Volcker told Forbes magazine's Benjamin Fulford that he can't recall in his career a touchier global economic situation. AUSTRALIA AND NEW ZEALAND Strong prices and competitive exchange rates combined to boost New Zealand meat exports by almost a quarter. Demand for lamb has never been better as the sheep flock has fallen 3%. HEALTH Roger Mason of Young Again Products, Wilmington, NC 2840 A Natural “Cure” for Colds and Flu? You should understand that medical doctors have nothing for colds and flu’s, as we have no real anti-viral agents in the pharmacies. Science really cannot even define what a virus is other than a form of life that lives on its host and replicates itself. When you get pills and potions from your doctor when you have a cold you are just poisoning yourself and suppressing the symptoms that want to come out of your body, like mucous. One guaranteed way to cure a flu or cold is to immediately stop eating and just drink water as soon as you feel clear symptoms. Drink water for about three days and eat no food or other liquids whatsoever. Even if you are very ill this will work. But few people are willing to fast even to get over their suffering. So, what’s a more practical way to heal a cold or flu? I don’t like the word “cure” here and that is why it is in quotations. Many years ago a recovered heroin addict was telling me that people addicted to heroin almost never get colds. Despite poor diet, exposure to the elements, a poor state of health to begin with, and regular drug use addicts rarely get colds and flus. He also said if you were already sick that an injection of heroin would drive it right out of you in a matter of hours. This would logically apply to any real opiate such as morphine, paregoric (opium tincture), opium, codeine as well as heroin (which is the diacetyl form of morphine). This also may well apply to the semi-synthetic opiates such as oxycodeine and hydro codeine, which is slightly, modified forms of natural codeine. There are no synthetic opiates, as the morphine molecule simply cannot be made in a laboratory (codeine is the methyl form of morphine). I doubt that the synthetic analgesics such as fentanyl and Demerol would have any value except to alleviate your suffering while you are sick. In Oriental diagnosis colds and flus are very “yin” and this is why they occur during cold (yin) weather rather than in the summer (yang). All opiates are extremely yang and, therefore, according to Oriental medicine have the potential to treat yin illnesses like colds and flu. A very bad five-day virus was making its rounds here in North Carolina. Some neighbors had been sick for two days, were miserable, couldn’t go to work and figured they probably had another three days of suffering to go. We knew the wife had a prescription for codeine due to spinal degradation in her neck but hadn’t used any for a while. A suggestion was made that they both take two tablets and go to bed. Within four hours they were basically well! They felt great. Of course being on two tablets of codeine will generally make anyone feel pretty good. They ate a meal, watched TV, went back to bed and both of them went to work the next day. Well, one swallow does not make a summer we all know. They knew a couple from work who were sick. The husband had a prescription for oxycodeine in his medicine cabinet. This is merely codeine with an oxygen molecule added and is several times stronger than regular codeine. They both took three tablets and their flu was gone in six hours. Two more people were ill and had a bottle of paregoric (tincture of opium containing both morphine and codeine) in their medicine cabinet for diarrhea. As late as 1970 this was sold legally over the counter in many states for diarrhea and is still sold over the counter in some Caribbean countries and South American countries. The husband took two full tablespoons and the wife took four teaspoons (there are three teaspoons to one tablespoon) before they went to bed. They woke up well and both went to work. I think this pretty much demonstrates the point. Codeine cough syrups used to be sold over the counter in the US back in the 1960’s. They are now very restricted to the point that many family doctors are literally afraid to prescribe any real pain killers even to patients who need them very badly for chronic pain. You often now have to go to an expensive “pain specialist” and pay even more extortionate office visit fees. Most prescriptions for natural and semi-synthetic ones are more expensive. So, it may not be easy for you to get a natural of semi-natural opiate to heal your cold or flu. If you travel outside of the country or live near the Mexican border it isn’t a problem. It’s a shame that a natural medicine like the opium family is now illegal and highly restricted because a handful of people choose to become addicted. Opium has been a popular medicine of the world for over 2,000 years now and is safe and non-toxic when used moderately on a temporary basis. The next time you are coming down with a cold or flu if your family doctor is willing to prescribe codeine, paregoric, oxycodeine or hydro codeine try this and see if you don’t immediately get better. Roger Mason of Young Again Products, Wilmington, NC 28403 *Per SEC Rule 17B, an asterisk denotes that the International Forecaster is required to disclose compensation for investor relations and has in previous representations. This is a standard footnote in the weekly letter. For further compensation disclosure, please contact us at 941-639-4756 or request the same by replying to this email. This is a standard footnote in our market letter. Trading is risky and has inherent dangers of volatility and of loss of capital. The IF is specifically not an investment advisor but is a publisher of information. The IF strongly urges you to consult with your investment advisor to determine your suitability before acting on any information herein. Reference to securities herein should not be considered as an offer to buy or sell the same. Such can be done only in accordance with applicable law and only by authorized persons. SUBSCRIPTION INFORMATION: 1-year $99.95 U.S. Funds. Make check payable to Robert Chapman, P. O. Box 510518, Punta Gorda, Fl 33951. Please include name, address, telephone number and email address. We now accept Discover, VISA and MasterCard charges. Please provide us with your card number and expiration date. We will charge your card $99.95 for a one-year subscription. Please note, we publish twice a month by surface mail or 3-4 times a month by email. Our email is: bif4653@home.com Phone: 941-639-4756 2/7 Europe: "UBS Warburg Has Liquidity/Gold Problems" February 7 – Gold $299.80 up $2.40 - Silver $4.34 down one cent Europe: "UBS Warburg Has Liquidity/Gold Problems" A bunch of arrogant, young snot noses with the attitude of the Enron senior executives have been running many of the over-all operations for gold-holding central banks. Many are going to soon face the same fate as the Enron executives as a result of their smugness and lack of knowledge about the value of gold to those banks. The price of gold is going to skyrocket and the citizens of their respective countries are going to question the sanity of these misguided mental midgets for dumping gold at sub-$300 prices the past many years. But, the worst fate will be in store for some of the senior management bullion bankers when the gold scandal breaks. They are going to be implicated in a conspiracy to manipulate the price of gold that has hurt to many unsuspecting people. That "hated" conspiracy word again. Can’t understand why after what happened at Enron and on September 11. It is time for the public to wake up to the fact that "conspiracy talk" is ridiculed by the banking/ business/press interests because they are the ones doing the manipulating and conspiring. Yesterday, it was J.P. Morgan Chase having to deny the rumor spreading around the Chicago bond pits about their gold derivative problems as reported to the internet by Midas. Today, I received word from Austria that UBS Warburg has both liquidity problems and gold derivative problems. The source is an excellent one and known to me for years. Isn’t interesting that UBS Warburg is the one that took over some of Enron’s operations! That was most strange. Who knows what is going to surface regarding Citibank, J.P.Morgan Chase, UBS Warburg and gold? Here is the best part of this story. My Austrian source informed that it was the Swiss central bank who stopped the gold rally yesterday in order to protect UBS Warburg’s massive short gold positions. The Swiss are petrified of what could happen here and gold is only at $300. How will they handle $400 bid? UBS bullion bankers had better take an extra pare of pants to work from here on in! Talk about confirmation: At 09:49 AM 2/7/2002, My elliott Wave News letter mentions that they have heard that the Swiss will sell what ever gold they need to.. to keep the price of gold down to $300.... Brad C Other Café sources close to senior people at UBS Warburg told me late morning that UBS has no problems at all. OK!? OK, Baloney Maloney! The fact that news about the Swiss gold selling is so widespread and even I have been told the reason why, tells me the world investment sharks are going to smell blood. The massive gold short positions of UBS Warburg (along with J.P. Morgan Chase) are going to come under brutal attack. It is important to also keep in mind that the GATA story is spreading everywhere. More and more people realize that the central banks have lent out around 15,000 tonnes of gold and cannot get it back. In effect, they are prisoner of their own shorts. The jig is up on The Gold Cartel Bandits. Yes siree, this IS the year of the Patriots! The Gold Cartel was on the sell side all night long and all day long, doing what they could to stop gold from closing above $300 per ounce, which will attract all sorts of attention by the investing public in the West. The cabal is in BIG, BIG trouble. Gold demand is already kicking in all over the world and will mount very soon. This morning I received a call from Germany. A well known stock German stock outfit is putting out a very bullish report on gold this weekend and they would like to interview me tomorrow morning. Then, there is Japan, of course, from www.CBSMarketWatch.com: Feb 7, 2002 Tokyo gold futures hit 40-month high on yen, bank woes TOKYO (CBS.MW) -- With Japanese asset prices and economic indicators of all kinds pointing down in Japan, gold has taken on a special luster for investors here. So much so that some analysts say Japanese demand for the yellow metal is likely to remain robust at least over the next few months, even if the global surge in gold prices were to temper after having spiked briefly above $300 a troy ounce on Wednesday, to a two-year high of $306. "Gold buying in Japan is clearly on the rise," said Itsuo Toshima, a regional director of the World Gold Council. "It's not the driving force in the world market, but it's one of the contributors to the overall surge." Gold futures prices on the Tokyo Commodity Exchange sprinted to their highest level in nearly three and a half years on Thursday -- the December contract hit 1,298 yen per gram -- on active buying from individual investors and major trading houses such as Sumitomo and Mitsui. Gold for December delivery ended at 1,280 yen per gram, up 6 yen from the previous day, during which the contract had been bid up the maximum daily limit of 40 yen; orders for other futures contracts had risen across the board with some trades delayed because of strong order flow. A host of domestic and overseas factors are driving futures and spot gold prices higher in Tokyo, but analysts say two major ones right now are the falling yen and anticipation of the government's gradual removal of insurance guarantees on bank deposits, which starts in April. Shattered myth These twin influences on Japanese individual and institutional investors have coincided with a series of shocks going back to the September terrorist attacks in the U.S., which triggered a gold rally. "At the end of the day, September 11 was a one-off event in the gold market, as far as Japanese investors were concerned," said Toshima. "But then came events that shattered the myth of safe paper assets," he said, "and Japanese investors turned to gold and dollars." First, a large Japanese retailer called Mycal defaulted on corporate bonds worth 350 billion yen ($2.6 billion). Then came U.S. energy trader Enron (ENRNQ) , whose collapse rocked Japan's money management fund (MMF) industry. Individual investors stampeded out of MMFs after several funds marketed by Nomura, Daiwa and Nikko as safe fixed-income instruments fell below par value in late November because of exposure to bonds issued by Enron. Withdrawals of 10 trillion yen ($75 billion) left outstanding balances of all MMFs at 8 trillion yen by the end of last year, from 18 trillion yen at the end of October. "Defaults on Argentine samurai bonds late last year amounting to about 320 billion yen dealt a further blow to the credibility of paper assets," Toshima said. Flight to safety For the last four months of 2001, gold sales in totaled 21 metric tons, up 50 percent from the same period a year earlier, according to the World Gold Council. This increase, however impressive, needs to be put into perspective. In dollar terms -- roughly $200 million (27.3 billion yen) -- it's about 4 percent of the gold market's annual investment volume of less than $5 billion. As a proportion of the 2,500 metric tons of newly mined gold in a year, 21 tons is a smidgeon. Japan's gold sales for all of 2001 came to 64 metric tons, less than half of the 139 tons sold in 1995, when the Kobe earthquake and the collapse of several home-mortgage lenders prompted gold buying. From anecdotal accounts, gold transactions have accelerated this year. At Tanaka Kikinzoku Kogyo, Japan's largest bullion dealer, spokesman Osamu Ikeda says January sales were five times greater than in January 2001. "Gold buying started to heat up last July," he said. "Stock prices were falling, land prices kept dropping, interest rates are zero and there are credit concerns here and around the world." Weak yen Ikeda said the spot gold rate quoted at Tanaka late Thursday was 1,333 yen per gram, compared with 1,049 yen in January 2001. "The weaker yen and the deposit-insurance changes are coming into play," he said. While surely there is a measure of speculative investing going on here, both in the spot market and more so in the futures market, most Japanese individual investors are looking for an asset that offers protection and a return -- and there aren't many around. With consumer prices in Japan falling for a few years now, cash has a certain attractiveness as deflation persists because consumers' yen will buy more tomorrow than today. Or will it? Ken Landon, currency strategist at Deutsche Bank in Tokyo, says inflationary signals are flashing. "The price of gold in yen terms has increased 30 percent in little over a year," he said. "And if you've held yen (C_JPY) , you've lost 15.5 percent against the dollar over the last 12 months. You don't want to hold yen cash because the value is really falling." The yen finished Tokyo trading near 134.10 to the dollar, down from 133.90 the previous day. Foreign-exchange deposit accounts pioneered years ago here by Citibank (C) and copied by local banks are doing brisk business with customers converting yen into dollars and other currencies. Individual investors have also poured money into foreign government bonds. The top three securities houses report sales of 1.08 trillion yen so far in the fiscal year ending March 31, nearly double the 570 billion yen in foreign government bond sales seen over the entire previous year. "It indicates a lack of confidence in the Japanese financial system," Landon said. To combat deflation, Japan's central bank has pumped so much liquidity into the system that the monetary base last month by 23 percent -- the fastest pace since December 1972. "The price of a paper currency can be driven lower by expectations that a government will overly inflate the supply of its currency," said Landon. Creaky banks What Japanese savers will do in the days leading up to April 1 is of keen interest to economists and policy makers. On that day, insurance on time deposits at banks will be limited to accounts of less than 10 million yen ($75,000). Richard Jerram, economist at ING Barings, estimates about 100 trillion yen -- 20 percent of Japan's GDP -- will become uninsured, and another 100 trillion yen the following April, when the insurance cap applies to all bank deposits. "There is already evidence of funds moving out of accounts that will become uninsured and out of weak institutions," Jerram said. Where will the money go and what will happen to the weak? Takatoshi Kato, a former Finance Ministry vice minister who now advises the Bank of Tokyo-Mitsubishi (MTF) , does not expect a banking crisis this spring. "People can open multiple accounts," he said in a recent conversation. "They may choose different banks and put money into postal savings accounts." BTM is relatively healthy. Much of the market focus will be on lenders in rural areas. Ishikawa Bank, a second-tier regional bank, filed for bankruptcy in December after disclosing to regulators its negative net worth. Last year 37 credit cooperatives and nine "shinkin" banks, which specialize in services for small and midsize companies, went bust. Said Toshima of the World Gold Council, "None of the depositors at Ishikawa lost their money. But after April, some people might lose their shirts if their bank collapses. "I'm not happy at all about this as a Japanese citizen," he said. "But as a member of the Gold Council, I think it presents a strategic opportunity to market gold as a safe asset to buy and hold." Why Japanese demand for gold will grow even stronger in the months to come: Asia Japan's Death Spiral? Forbes.com staff, Forbes.com, 02.05.02, 7:00 PM ET NEW YORK - Japan is one step closer to a full-blown financial crisis, after Tokyo shares fell to 18-year lows Feb. 5 and are expected extend losses for the fourth straight day Feb. 6. Prime Minister Junichiro Koizumi is pledging to stick by his plan to liberalize the economy, but his popularity, once well above 70%, has abruptly plunged to just above 50%. Last week, the Nikkei 225 Stock Average fell below the Dow Jones Industrial Average for the first time since 1957. The steadily eroding situation in Japan has some economic experts warning of a financial crisis that would dwarf 1997's problems in Thailand and drag the world's economies into depression. Former Federal Reserve Board Chairman Paul Volcker told Forbes magazine's Benjamin Fulford that he can't recall in his career a touchier global economic situation. John Brimelow was one of the first to send out the alert about Japanese gold demand and sends us this today: Indian ex duty premiums: AM -82c PM -77c, with world gold at $297.75. Legal imports not possible.(Indian gold prices still exceed world prices, this morning by $15.14 and $15.20, but there an import duty of 25 rupees per gram.) The Japanese public did a stalwart job last night. Tocom gold volume was a record 10.95 Mm ozs, and, more impressively, open interest leapt 10.7% or 1.09 million ozs to 11.3Mm ozs (Tuesday's Comex open interest was also startling: up 11.1% or 1.38Mm ozs to 13.8Mm ozs). This gives an idea of the magnitude of the buying - or selling, depending on one's temperament. Standard London observes yesterday's opening surge on Comex was quelled when "strong selling appeared from Switzerland" and the Japanese commodity broker Nihon Unicom reports that the move over $300 early this morning during Japanese hours "was erased as..giant trading firms entered arbitrage sales aggressively.." What this means is that Trade Houses like Mitsui found supplies of cheap gold overseas which enabled them to sell Tocom futures contracts. Those who feel the gold market is managed can at least take comfort that the manager had to get up unusually early! The media is now carrying numerous stories about the Japanese public buying gold on Bank anxieties. Reuters has a particularly charming one of a Japanese housewife buying two kilo bars for about $20,000, after spending "two or three months" (!) discussing with her husband where to re deploy a maturing time deposit. Other articles discuss the overall Japanese banking situation. It is worth emphasizing how minor (and therefore plausible) the proportion of money moving goldwards is in proportion to the volumes being switched. Japanese individuals hold $5640 billion in bank instruments. Some $746 billion is about to lose insurance. At $300, $1 billion is equivalent to 3.3 million ozs, or about 104 tonnes. World mine production is about 2500 tonnes. With Marketvane's Bullish Consensus up to 71% last night and considerable hot money sloshing around in the gold shares, a pause is perhaps due. Moreover stimulating yen weakness is unlikely to be allowed around the G-7 meeting, and Japan is closed on Monday. But it should be remembered that, although Tocom gold volume was an all time record, open interest is far from such a level, being 66% higher in February '96 for instance. For equity managers an any upcoming lull should probably be seen as an opportunity. JB Gold demand will soon be on the upswing all over Europe: I got a piece today that says starting at the end of Feb, all of those drug cartels in Russia and Europe will be converting dollars to Euros. The reason: The euro has a 500 denomination and the dollar a 100 (maximum) denomination. Which is easier to carry? Secondly, the europeans which have been converting cash to dollars and gold will start converting dollars to euros come 3-1-02, so they can spend the money. Sounds interesting. Rick This is story confirmation day: Hi Bill, I received the communication below as part of a private solicitation to put funds into Euro futures. I think it has some interesting implications in the gold vs dollar turmoil currently under way. Thanks for GATA and the Club Metropole. You're doing a great service for us goldbugs out here!! Frank R "I’m in Europe right now, and I’m dead certain that the next big move in the dollar is going to be against the Euro. I think the Euro is going to gain anywhere from 5 cents to 15 cents against the dollar. The reason is that the French franc, Italian lira, and German D-mark - along with most other European currencies - become totally, completely worthless in 4 weeks: on February 28, 2002. Citizens have to bring in their cash and convert it to Euros by then or they can kiss it goodbye. In some countries, they have even less time. But huge amounts of European cash is off-the-books. Farmers, merchants, and shopkeepers routinely do business in cash to escape Europe’s sky-high taxes. If they suddenly show up with all this cash at a bank, they’re going to be interrogated about where it came from and how much tax they did or didn’t pay. To avoid this, they’ve been converting their old currencies into dollars to the tune of $40 billion a month. Small amounts of cash were converted at the banks, while larger amounts went through the grey market. That’s why the dollar has been so strong. Billions of dollars of black market European currencies have been pouring into the dollar. But … Come March 1st, Europeans are going to start dumping their dollars and buying Euros. It will no longer be $40 billion a month flowing into the dollar, but $40 billion a month flowing out. Why? Simple. You can’t walk into a grocery store in Milan or Paris, or anywhere else in Western Europe, and spend greenbacks. You spend the local currency, and now that’s the Euro. And in Eastern Europe, the super-wealthy Russian Mafia and other black marketers will have an additional powerful reason to switch from dollars to Euros. Large piles of cash take up a lot of room, are hard to handle, dangerous to transport, and tough to hide. The less paper you have, the better. The highest dollar banknote in circulation is the $100 bill. But there is a new 500 Euro note that’s worth more than four $100 bills. Switching to Euros cuts these black marketers’ paper-handling burden by 75%. That makes it soooo much easier to hide and transport large sums of money - it’s a HUGE benefit. To give you an idea, I just took out my wallet and counted the bills in it. There were 28 bills, and my wallet wasn’t even bulked out. If those were all 500 Euro note bills, I’d be easily carrying almost $12,000. Bush won’t step in to stop the dollar’s slide - that’s his ticket to bail out the US economy and get re-elected. The cheaper the dollar, the easier for the American companies to sell more goods overseas. It also protects their domestic markets from foreign competition. The higher the Euro goes, the more it costs to buy a BMW or a Volkswagen in America. This is great news for GM and Ford, both of which have been battered by the recession. That goes for almost every manufacturing industry in America. So the last thing Bush is going to want to do is halt the dollar’s slide. He figures a weaker dollar will help him get re-elected. And it probably will. With $40 billion a month flowing out of the dollar, and Bush standing by and letting it happen, the rise in the Euro is going to be big. When the black market billions started flowing into the dollar, the Euro fell 32 cents against the dollar." All the while, The Gold Cartel is losing their supply to continue the fraud: Bill, For whatever it is worth, I read a Reuters article today which stated that Anglo intends to unwind 6 million ounces of hedges this year and, of course, they mentioned the 8 million ounces that Newmont intends to unwind after completion of the Normandy deal later this month. If you divide 14,000,000 by 32,000 (the number of ounces in a ton, (2000 pounds) (or is it 2200 in the case of gold), in either case it comes out to around 400 tons. If the news of the Bank of England selling 400 tons over several years was seen to be a drag on the market, maybe there is a way to publicize this comparable reversal of supply (over a shorter time period) to the benefit of gold. Yes, I know that the cartel holds the real key to prices, but it doesn't hurt to help form perception. Regards and kudos for your tireless work, Kevin S. The Gold Cartel has begun to fall apart. They have jeopardized the world’s financial system. The cabal hotshots know what the Enron executives are going through and what they have done is far worse in terms of the human damage – like to the poor of in many of the world’s gold producing countries. The pressure on many of the gold fraud perpetrators to come clean must be enormous: Hi Bill: Here’s a hoot! From another gold site: Feb 07, 12:08 The Treasury Secretary was actually crying today when he was berated by Senator Byrd. Apparently visible tears were seen rolling down his cheeks. LOL! Long live the fiat system, NOT! Its all over but the -- crying. ++++++++++++++++++++++++ This is good evidence that the Mini MoTUs [Masters of the Universe] are cracking at the Fed and Treasury. It has gotten so bad that they can’t even tell Senator Byrd WHY certain things can’t be done to alleviate the situation. Your Cartel Capitulation Watch should be upgraded to a Warning. Best, Mike Could not agree more Mike. CARETEL CAPITULATION WATCH WARNING IS NOW IN EFFECT! A note on the troubled J.P. Morgan Chase: Bill, Dunno if you are aware of this or not, but on Jan 14/02 J P Morgan Chase purchased over $5,000,000 au stock in a reasonably popular Aussie gold producer St.Barbara Mines.----Could be just the tip of the iceberg...might get em out of trouble waddya think?...haven’t checked further but possibly worth a look...Regards Col C Not a chance Col C. Too little, too late. GATA cannot thank James Turk for all he has done to help expose the manipulation of The Gold Cartel. We strongly support his www.goldmoney.com venture. James sent me the following, which is my pleasure to share with you:Bill, The following press release is important for GoldMoney, but also for everyone else who believes in gold's usefulness as money. http://www.knelson.com/technical/presentation.palo?presID=13 February 4th, 2002 Langley, Canada - Following the lead of TSE listed IAMGOLD who announced their new gold money policy earlier this month, Knelson has moved a significant portion of their cash holdings into the yellow metal. "We support what IAMGOLD has done, and also feel that holding physical gold reduces our exposure to the US dollar", said Mike Lloyd, VP of Finance at Knelson. While Knelson has previously used gold to pay employee bonuses, the plan to hold hard currency instead of paper represents an important shift in fiscal policy. "Our company relies on the gold industry to provide a significant portion of our annual revenue and with the launch of this new policy we are showing our support for the gold industry, and our belief in the fundamentals of gold as a safe haven against the volatility of paper currency", Lloyd commented. unquote IAMGOLD started the bandwagon, and now others are quickly catching on. First, it is better to keep your liquidity in gold rather than paper money, particularly now when the solvency of some major banks is being called into question. Second, by using GoldMoney to make payments to (and receive payments from) suppliers, contractors, engineers and others providing services, gold companies are making use of their own product - gold. The point is that gold has significant advantages over national currencies as money and also when used as digital gold currency, and these advantages can be easily and inexpensively be realized through GoldMoney. Regards James Ugh! I don’t like this one from a fellow Café member: Look at what this says about Citibank!! http://www.thegully.com/essays/argentina/010227corruption.html *** Murder On The Beach The murdered investment banker was Mariano Losanovsky Perel, 56, the shady top money man for Antfactory Latin America. The company is jointly owned by the London-based venture capital firm Antfactory and Citicorp Venture Capital, a division of the New York-based Citigroup, the largest financial services company in the world. Launched last July, Antfactory Latin America announced it was going to invest $100 million in the region's fast-growing Internet industry. Losanovsky Perel and his wife, Rosa Berta, 49, were found dead on the floor of their cabin at the exclusive Argentinean beach resort of Cariló, on February 5th. Each had taken a bullet in the back of the neck. The police said that it was "a clean and professional job" and that the killers had used a gun with a silencer, since no one in the crowded resort heard a thing. So far, there are no witnesses and no suspects. According to the Buenos Aires daily La Nación, the killers left a message on Losanovsky Perel's laptop saying that Citigroup's failure to pay bribes in Argentina was the reason for the murders. The message read, "I am a gringo who collaborates with Citibank, dead for not paying Citigroup's bribes." Police also found in the cabin an underlined newspaper clipping about legislator Carrió's anti-money-laundering crusade. Carrió's phone has been ringing off the hook with death threats since the double murder, and she has been placed under increased police protection. "We're beginning to eliminate the mafia state," a defiant Carrió told a television reporter the day after the murders. Dirty Money Investigators suspect that Losanovsky Perel may have been laundering money for high-ranking Argentinean government officials, drug cartels—or both. He and his wife were murdered shortly after the U.S. Senate Permanent Subcommittee on Investigations released a "preliminary inquiry" report that confirmed some of Carrió's charges. Lax supervision by Citibank and other U.S. banks, the report said, had allowed banks in Argentina and other countries to launder drug money. The murders could be a warning both to investigators and potential witnesses, people like Losanovsky Perel who knew too much for their own good. Top dog at Citi is Robert Rubin, one of the architects of the gold price manipulation. Rubin is an alumnus of the U.S. Treasury and Goldman Sachs, both cabal leaders. Citi is being sued by Reg Howe for their role in the manipluation. Just one big happy family. Well, one big ex-happy family! The Gold Cartel is a bad lot. It is time they get what they deserve and they be "Enronized." The Dow closed at 9625, down 28, while the Nasdaq closed at 1782, down 30. One can sense a panic coming. As I said in yesterday’s Midas, the U.S. stock market, especially the Nasdaq is in DEEP, DEEP trouble and could crater at any moment. The crisis in confidence in Wall Street is only beginning. Investors are realizing that Wall Street has become a sewer-like arena that has perpetuated one lie after another over the past years to line their own pockets at the expense of the American public. U.S. investors are going to pull out in disgust and pull out in droves. Batten Down The Hatches! Gold and gold share investments will be King and Queen of the Hill for many years to come. The gold shares came right back today after yesterday’s setback. The XAU is all the way back up to 67.30, up 2.51 on the day. This is a time to buy more and not to take rinky-dink profits. The share price of Golden Star Resources is putting in the best performance of all the gold producers in North America. It closed at $1.29. Pick a number for where that one is going. http://www.LeMetropoleCafe.com/man_ray_table.cfm?cfid=10570&cftoken=84247431&pid=1988 KESEPH – PART 1 THE MONEY OF THE AGES The dramatic impact of silver on the lives of man through the chapters of time is simply unfathomable. In an age where little importance is placed on the lessons of history or tangible assets, the role that silver has played in shaping the events of mankind down through the ages is easily overlooked or forgotten. In Part 1 of this two-part essay, we look at the dramatic and important role silver has played in shaping our world. KESEPH – THE MONEY OF EVERYDAY To even the staunchest of precious metals advocates, it can sometimes come as a surprise to learn that, in the course of history, the money of the everyday commerce has been silver and not gold. During the passage of the great empires of the ancient world, we find that, in most cases, gold was too precious and rare to be used in everyday commerce. Most often gold was reserved for the settlement of large transactions, international trade and as the money of rulers - “the pride of kings”. Silver on the other hand was the workhorse money of an expanding middleclass and of everyday commerce. Favoring silver as the money of choice were several natural characteristics; it was portable, divisible, internationally recognizable, indestructible and most of all, precious. Interesting is the correlation between “money” and “silver” buried deep in our linguistic traditions. In both ancient and modern Hebrew, “keseph” denotes both silver and money. The words “danaro” and “dinero” found in the modern languages of Italian and Spanish are both descendents from the Latin word “denarious”, the common silver coin of the realm in ancient Rome. The Latin word “agentum” and French “argent” both depict silver, while the French word “monnaie” (of which our English word “money” is a derivative) stands for both silver and money. THE MONEY OF EMPIRES The long use of silver in the settlement of trade predates by many centuries man’s written history. It has been said that at the time of mans first written records, the use of silver as money was a tradition so ancient that no man could recall a time when it had not served as money. For close to six thousand years, silver provided the framework for the monetary systems of the world and became the foundation for trade, commerce, innovation and invention. Increased trade and commerce afforded by “keseph” - the white metal, in-turn led to wealth, power and influence being amassed in a given region. Primarily, it was silver, the money of everyday commerce, which led to the rise of every great empire. This has been true right through to our present era. The history of the debasement of money is outside the scope of this short essay, however it is interesting to note this reoccurring theme replayed throughout history. While it can be accepted that great empires were built on the integrity and availability of their silver money, it is undeniable that they have all fallen upon the abandonment of the same. THE MONEY OF SOCIAL CHANGE Overtime it was keseph more than any other single factor that gave way to the greatest social change. Urban centers, towns and eventually cities have been long recognized as the means by which man advanced in the arts and sciences, through proliferation and interchanging of ideas that comes from men living in close proximity with each other. Structured centers of learning, libraries and universities, made possible through urbanization, greatly enhanced the knowledge and thinking of man down through the ages. It has been argued that it was if it were not for the role of silver, cities of the size and magnitude of Alexandria and Rome would never have risen. Before the use of a convenient form of money and the store of wealth that silver offered, man was relegated to an agrarian subsistence way of life. The produce of cultivated land could only be exchanged with ones immediate neighbors through the tedious and inefficient “barter of exchange” system. The natural advent of “keseph” made it possible for efficient trade and exchange to be conducted over vast distances. People living in large population centers could no-longer feed themselves and relied instead on imported food, which must be paid for. Imported food at times came from great distances, so transportation and storage costs required payment. Cities incurred other costs, which were irrelevant to the man on the land. Cities could only survive by trading both internally and externally with a form of money that would be instantly acceptable in both markets. Overtime silver played a vital part in the emancipation of the slaves and the emergence and growth of a middle class. There are many accounts in ancient records where slaves received gratuity while going about their master’s work. Again silver made it possible for the diligent slave to save these payments, or to store wealth for a later date. Eventually the point would come where he could buy his freedom, or that of his family, in the form of instantly acceptable money. In like fashion, the man that worked the land was little better than a slave, in most cases completely subservient to his demanding landlord. However, when payment could be made in silver, it was possible for the tiller of the land to sell at least a small portion of his produce or labor, save the coin, and again, his road to freedom had begun. It has been said “a leather bag of silver coins under the dirt floor of a peasant hut meant, for many, hopes of independence and of some measure of human dignity.” * The whole concept of he who is “neither lord nor slave” was made possible through the role of silver as money. While silver made it possible for man to buy his freedom, it also enabled the middle class to grow, thrive and prosper. Men going about their business, that owned their labor, were able to produce, invent, labor, experiment and ultimately profit from their enterprise. Silver, the money of everyday business and transactions, made it possible for them to convert their labor into wealth, save their wealth, build their business, reinvest in capital works, and ultimately leave an inheritance for their children’s children. It was primarily the use of silver as money, and the resulting quest to secure new sources of the metal that led to the discovery and exploration of the world. As the known world grew and expanded, and as new innovation and invention brought further products and services to market, there was continual pressure placed on monetary stocks. While the history of the plundering and looting of conquered lands and people can at times be shameful reading, the pursuit for the precious metals to feed the monetary stocks in the developed world is one of the most fascinating and constant themes in history. Whether the search was for new mines or the hoarded treasures of a foreign land, there can be no doubt that, without the pressure to secure new reserves of money, Asia, Africa and the Americas would never have been opened up at the rate or intensity that they were. Given the attention historians place on the quantities of gold looted from South America in the mid 1500’s, it can come as a surprise to learn that gold flows to Europe were an insignificant 2% of total bullion flows, compared to silver’s 98%. Thousands of feet in the Andes, for over thirty years, the mines of the Cerro de Potosi alone, produced an amazing 22 tons of silver annually (an awesome annual yield at that time), highlighting the importance of the capture of viable sources of silver to the development of Europe in the later middle ages. THE MAINTAINER OF INTEGRITY The object of this essay is not to discount the vitally important role of gold in the monetary history of the world. For more than 3 millennia the world had adhered to a Bi-metallic system, where both gold and silver, alongside each other, served as money. They where exchangeable with each other at a long established ratio of 13:1 to 16:1 (silver: gold ratio). Each imposed a natural control over the integrity and flows of the other. Through the natural forces of the free market, silver imposed a balance to gold money and gold imposed a balance to silver money. For example, when silver money was diluted or debased, the scales of the gold relationship was thrown into disarray, leading to disastrous results within that economy. Likewise, if gold coinage was manipulated and debased, its natural custodian of integrity, the silver trading relationship, would also be adversely affected. In his recent excellent and insightful essay “Gold Standard – Fiat in Disguise”, J.N. Tlaga points out that it was England’s “war on silver” in the 1700’s that led to the gold standard that was eventually adopted worldwide. Tlaga states that the “demonetization of silver alone was enough to put the British Empire on the road toward the fiat money regime”. He rightfully points out that under the gold standard, gold was no longer priced in silver but in gold, or convertible fiat unit of account (paper money). Tlaga argues that, “gold must be priced in something other than gold, otherwise every sale of gold would end up as exchange of equal amounts of gold. Something other than gold must have full intrinsic value of its own (i.e. silver) if the honest money regime is to be maintained.” KESEPH TODAY As any precious metals observer would well know, over the last 250 years the governments and central banks of the world have waged an evil and successful war on honest money. The first and most strategic battle of this war was waged on silver, which led to the nations of the world to the abandoning their silver and bi-metallic standards. The war was finally completed in the 1900’s with the complete dismantling of the international gold standard, with the end of the final battle on August 15th 1971 when President Nixon’s closed off the US dollar’s convertibility to gold. Over this period silver has born the brunt of international demonetizing of the precious metals. A reflection of this may be found in today’s silver to gold ratio. As already stated, for close to 25 centuries, silver was freely exchangeable into gold at a ratio of 13 - 16 oz of silver to 1 oz of gold. Today that ratio stands at 65:1.While examining the silver: gold trading ratio, it is interesting to note that throughout all of last century, the ratio was outside the long established historical norm, averaging 45:1 (peaking as high as 92:1). The only time the historic ratio returned was briefly in January 1980 at the peak of the last bull market run in gold and silver. Today, the money that brought man his freedom and served to build and preserve his wealth over the ages has been lost from the minds and memory of the everyday man in the west. The very markets that were initially established and made possible through it, now shun the once proud metal. The hard working money that made kingdoms and empires great and paved the way for the industrializing of the world has been relegated to the status of mere commodity, and an unfashionable one at that. WHAT WE HAVE LOST Professor Roy Jastram, when writing about the demonetizing of silver stated “we have escaped from clipped, debased, and manipulated coinage into manipulated, debased and politicized paper – not much of an exchange”. It seems a tragedy to me to reflect on the change that this shift from freely circulating silver to debt issued paper has bought. Once silver brought man’s freedom from slavery. One hundred and fifty years ago, man owned his labor – what he earned he kept. He paid little or no taxes. Tragically, once again today, we no-longer own our labor. Each day as man goes about his business, he must face the realization that he will labor until lunchtime just to pay his taxes. Of his afternoons labor, up to half of that may be taken to pay the usury on the paper he has loaned from the moneylender (bank). Whatever is left is his. Man is more in debt today than at any other time in history. Children suffer as both parents labor for long hours away from the home. The very nations that were made great and prosperous trading centers through the use of silver money, are today massive debtor nations. Every child born into the world inherits many thousands of dollars of national debt. In ages gone by, it was a man’s pride to leave an inheritance to his children’s children. How many men today, after laboring their entire life, are able to leave a substantial inheritance to their children (after death duties)? It can be argued that today we have once again returned to the status of mere slaves. Despite silver’s fall from fashion, I believe that it is entirely premature to write silver’s epitaph. THE METAL OF TOMORROW In 1939, Professor Anatole Murad of Rutgers University said, “silver is no-longer of interest to anyone except those unfortunate enough to be producing this unwanted commodity.” Between Murad’s comments in 1939 and its peak in 1980, it had soared by 10,000%. In Keseph - Part 2, we examine why January 1980 will be a very poor dress rehearsal compared to what is in store for this ancient and matchless metal in the days ahead. *Silver – the Restless Metal - Professor Roy Jastam Other sources; Silver Bonanza - James Blanchard & Franklin Sanders http://www.butlerresearch.com Philip Judge is a director of the Gold Heritage Certificate www.goldheritagecertificate.com, an offshore Bullion Banking and Certificate Company, and editor of www.millennium-money.com. He was producer and director of the 2-hour feature documentary "Millennium Money" which won a 1st place Gold Award at the 1998 US International Film Festival. Philip can be reached at pjudge@goldheritagecertificate.com World Bank Insider Speaks Out by Greg Palast February 1 2002, Fri, 3:45pm The World Bank’s former Chief Economist’s accusations are eye-popping - including how the IMF and US Treasury fixed the Russian elections The Globalizer Who Came In From the Cold Observer, London Wednesday, October 10, 2001 JOE STIGLITZ: TODAY’S WINNER OF THE NOBEL PRIZE IN ECONOMICS by Greg Palast The World Bank’s former Chief Economist’s accusations are eye-popping - including how the IMF and US Treasury fixed the Russian elections. "It has condemned people to death," the former apparatchik told me. This was like a scene out of Le Carre. The brilliant old agent comes in from the cold, crosses to our side, and in hours of debriefing, empties his memory of horrors committed in the name of a political ideology he now realizes has gone rotten. And here before me was a far bigger catch than some used Cold War spy. Joseph Stiglitz was Chief Economist of the World Bank. To a great extent, the new world economic order was his theory come to life. I "debriefed" Stigltiz over several days, at Cambridge University, in a London hotel and finally in Washington in April 2001 during the big confab of the World Bank and the International Monetary Fund. But instead of chairing the meetings of ministers and central bankers, Stiglitz was kept exiled safely behind the blue police cordons, the same as the nuns carrying a large wooden cross, the Bolivian union leaders, the parents of AIDS victims and the other ‘anti-globalization’ protesters. The ultimate insider was now on the outside. In 1999 the World Bank fired Stiglitz. He was not allowed quiet retirement; US Treasury Secretary Larry Summers, I’m told, demanded a public excommunication for Stiglitz’ having expressed his first mild dissent from globalization World Bank style. Here in Washington we completed the last of several hours of exclusive interviews for The Observer and BBC TV’s Newsnight about the real, often hidden, workings of the IMF, World Bank, and the bank’s 51% owner, the US Treasury. And here, from sources unnamable (not Stiglitz), we obtained a cache of documents marked, "confidential," "restricted," and "not otherwise (to be) disclosed without World Bank authorization." Stiglitz helped translate one from bureaucratise, a "Country Assistance Strategy." There’s an Assistance Strategy for every poorer nation, designed, says the World Bank, after careful in-country investigation. But according to insider Stiglitz, the Bank’s staff ‘investigation’ consists of close inspection of a nation’s 5-star hotels. It concludes with the Bank staff meeting some begging, busted finance minister who is handed a ‘restructuring agreement’ pre-drafted for his ‘voluntary’ signature (I have a selection of these). Each nation’s economy is individually analyzed, then, says Stiglitz, the Bank hands every minister the same exact four-step program. Step One is Privatization - which Stiglitz said could more accurately be called, ‘Briberization.’ Rather than object to the sell-offs of state industries, he said national leaders - using the World Bank’s demands to silence local critics - happily flogged their electricity and water companies. "You could see their eyes widen" at the prospect of 10% commissions paid to Swiss bank accounts for simply shaving a few billion off the sale price of national assets. And the US government knew it, charges Stiglitz, at least in the case of the biggest ‘briberization’ of all, the 1995 Russian sell-off. "The US Treasury view was this was great as we wanted Yeltsin re-elected. We don’t care if it’s a corrupt election. We want the money to go to Yeltzin" via kickbacks for his campaign. Stiglitz is no conspiracy nutter ranting about Black Helicopters. The man was inside the game, a member of Bill Clinton’s cabinet as Chairman of the President’s council of economic advisors. Most ill-making for Stiglitz is that the US-backed oligarchs stripped Russia’s industrial assets, with the effect that the corruption scheme cut national output nearly in half causing depression and starvation. After briberization, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is ‘Capital Market Liberalization.’ In theory, capital market deregulation allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the "Hot Money" cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation’s reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation’s own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%. "The result was predictable," said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries. At this point, the IMF drags the gasping nation to Step Three: Market-Based Pricing, a fancy term for raising prices on food, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls, ‘The IMF riot.’ The IMF riot is painfully predictable. When a nation is, "down and out, [the IMF] takes advantage and squeezes the last pound of blood out of them. They turn up the heat until, finally, the whole cauldron blows up," as when the IMF eliminated food and fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots, but there are other examples - the Bolivian riots over water prices last year and this February, the riots in Ecuador over the rise in cooking gas prices imposed by the World Bank. You’d almost get the impression that the riot is written into the plan. And it is. What Stiglitz did not know is that, while in the States, BBC and The Observer obtained several documents from inside the World Bank, stamped over with those pesky warnings, "confidential," "restricted," "not to be disclosed." Let’s get back to one: the "Interim Country Assistance Strategy" for Ecuador, in it the Bank several times states - with cold accuracy - that they expected their plans to spark, "social unrest," to use their bureaucratic term for a nation in flames. That’s not surprising. The secret report notes that the plan to make the US dollar Ecuador’s currency has pushed 51% of the population below the poverty line. The World Bank "Assistance" plan simply calls for facing down civil strife and suffering with, "political resolve" - and still higher prices. The IMF riots (and by riots I mean peaceful demonstrations dispersed by bullets, tanks and teargas) cause new panicked flights of capital and government bankruptcies. This economic arson has it’s bright side - for foreign corporations, who can then pick off remaining assets, such as the odd mining concession or port, at fire sale prices. Stiglitz notes that the IMF and World Bank are not heartless adherents to market economics. At the same time the IMF stopped Indonesia ‘subsidizing’ food purchases, "when the banks need a bail-out, intervention (in the market) is welcome." The IMF scrounged up tens of billions of dollars to save Indonesia’s financiers and, by extension, the US and European banks from which they had borrowed. A pattern emerges. There are lots of losers in this system but one clear winner: the Western banks and US Treasury, making the big bucks off this crazy new international capital churn. Stiglitz told me about his unhappy meeting, early in his World Bank tenure, with Ethopia’s new president in the nation’s first democratic election. The World Bank and IMF had ordered Ethiopia to divert aid money to its reserve account at the US Treasury, which pays a pitiful 4% return, while the nation borrowed US dollars at 12% to feed its population. The new president begged Stiglitz to let him use the aid money to rebuild the nation. But no, the loot went straight off to the US Treasury’s vault in Washington. Now we arrive at Step Four of what the IMF and World Bank call their "poverty reduction strategy": Free Trade. This is free trade by the rules of the World Trade Organization and World Bank, Stiglitz the insider likens free trade WTO-style to the Opium Wars. "That too was about opening markets," he said. As in the 19th century, Europeans and Americans today are kicking down the barriers to sales in Asia, Latin American and Africa, while barricading our own markets against Third World agriculture. In the Opium Wars, the West used military blockades to force open markets for their unbalanced trade. Today, the World Bank can order a financial blockade just as effective - and sometimes just as deadly. Stiglitz is particularly emotional over the WTO’s intellectual property rights treaty (it goes by the acronym TRIPS, more on that in the next chapters). It is here, says the economist that the new global order has "condemned people to death" by imposing impossible tariffs and tributes to pay to pharmaceutical companies for branded medicines. "They don’t care," said the professor of the corporations and bank loans he worked with, "if people live or die." By the way, don’t be confused by the mix in this discussion of the IMF, World Bank and WTO. They are interchangeable masks of a single governance system. They have locked themselves together by what are unpleasantly called, "triggers." Taking a World Bank loan for a school ‘triggers’ a requirement to accept every ‘conditionality’ - they average 111 per nation - laid down by both the World Bank and IMF. In fact, said Stiglitz the IMF requires nations to accept trade policies more punitive than the official WTO rules. Stiglitz greatest concern is that World Bank plans, devised in secrecy and driven by an absolutist ideology, are never open for discourse or dissent. Despite the West’s push for elections throughout the developing world, the so-called Poverty Reduction Programs "undermine democracy." And they don’t work. Black Africa’s productivity under the guiding hand of IMF structural "assistance" has gone to hell in a handbag. Did any nation avoid this fate? Yes, said Stiglitz, identifying Botswana. Their trick? "They told the IMF to go packing." So then I turned on Stiglitz. OK, Mr Smart-Guy Professor, how would you help developing nations? Stiglitz proposed radical land reform, an attack at the heart of "landlordism," on the usurious rents charged by the propertied oligarchies worldwide, typically 50% of a tenant’s crops. So I had to ask the professor: as you were top economist at the World Bank, why didn’t the Bank follow your advice? "If you challenge [land ownership], that would be a change in the power of the elites. That’s not high on their agenda." Apparently not. Ultimately, what drove him to put his job on the line was the failure of the banks and US Treasury to change course when confronted with the crises - failures and suffering perpetrated by their four-step monetarist mambo. Every time their free market solutions failed, the IMF simply demanded more free market policies. "It’s a little like the Middle Ages," the insider told me, "When the patient died they would say, ‘well, he stopped the bloodletting too soon, he still had a little blood in him.’" I took away from my talks with the professor that the solution to world poverty and crisis is simple: remove the bloodsuckers. A version of this was first published as "The IMF’s Four Steps to Damnation" in The Observer (London) in April and another version in The Big Issue - that’s the magazine that the homeless flog on platforms in the London Underground. Big Issue offered equal space to the IMF, whose "deputy chief media officer" wrote: "... I find it impossible to respond given the depth and breadth of hearsay and misinformation in [Palast’s] report." Of course it was difficult for the Deputy Chief to respond. The information (and documents) came from the unhappy lot inside his agency and the World Bank. www.gregpalast.com/detail.cfm?artid=78&row=1 add your comments ------------------------------------------------------------------- © 2000-2002 San Francisco Bay Area Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the SF IMC. Disclaimer | Privacy Security Tips Regarding Passports and Credit Cards. I received this from a friend. It could be one of the most important pieces of information you will ever read. It is a way to stop IDENTITY THEFT before it can hurt you. Place the contents of your wallet on a photocopy machine, do both sides of each license, Credit card, etc. You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe place. A corporate attorney sent this out to the employees in his company. I pass it along, for your information. We’ve all heard horror stories about fraud that's committed using your name, address, SS#, credit, etc. Unfortunately I (the author of this piece who happens to be an attorney) have firsthand knowledge, because my wallet was stolen last month and within a week the thieve (s) ordered an expensive monthly cell phone package, applied for a VISA credit card, had a credit line approved to buy a Gateway computer, received a PIN number from DMV to change my driving record information online, and more. But here's some critical information to limit the damage in case this happens to you or someone you know. As everyone always advises, cancel your credit cards immediately, but the key is having the toll free numbers and your card numbers handy so you know whom to call. Keep those where you can find them easily. File a police report immediately in the jurisdiction where it was stolen, this proves to credit providers you were diligent, and is a first step toward an investigation (if there ever is one). But here's what is perhaps most important: (I never ever thought to do this) Call the three national credit reporting organizations immediately to place a fraud alert on your name and SS#. I had never heard of doing that until advised by a bank that called to tell me an application for credit was made over the Internet in my name. The alert means any company that checks your credit knows your information was stolen and they have to contact you by phone to authorize new credit. By the time I was advised to do this, almost 2 weeks after the theft, all the damage had been done. There are records of all the credit checks initiated by the thieves purchases, none of which I knew about before placing the alert. Since then, no additional damage has been done, and the thieves threw my wallet away this weekend (someone turned it in). It seems to have stopped them in their tracks. The numbers are: Equifax: 1-800-525-6285 Experian (formerly TRW): 1-888-397-3742 Trans Union: 1-800-680-7289 Social Security Administration (fraud line): 1-800-269-0271. We pass along jokes; we pass along just about everything. Do think about passing this information along. It could really help someone. I hope and pray that you or someone you know will never need this advice but an ounce of prevention is worth a pound of cure. PS. The same is true about your passport. The aforementioned was forwarded to me by a friend. While in Jerusalem 4 years ago a travel mate was mugged while 10 of us were standing around her. The youth were fast and unafraid. If she would have had a photocopy of her passport it could have been reissued quicker at the US Consulate. By John Crudele New York Post February 7, 2002 Is J.P. Morgan Chase too big to bail? Last week I posed the more common question: Was the bank too big to fail, or allowed to fail by the government? It's a logical question, since J.P. Morgan Chase has had a string of bad luck recently, including involvement with Enron. The bank says its luck hasn't been as bad as it looks, and I'll get to that in a minute. But J.P. Morgan chief exec William Harrison admitted publicly yesterday that the bank had assumed too much risk in dealings with Enron. But I saved potentially the most ominous and admittedly most confusing of J.P. Morgan Chase's bets for last -- derivatives. Lot and lots and lots of derivatives. Enough derivative exposure, in fact, to dwarf the entire gross domestic product of the United States. What are derivatives? They are investments -- gambles, really, like those made by Enron -- on things that are "derived" from other investments. The dollar, interest rate spreads, stocks, livestock -- you name it, because your guess will be as good as anyone else's outside of J.P. Morgan. J.P. Morgan declined a request to discuss its massive derivative position even as it was defending its streak of bad luck. Just how massive is Morgan's derivative gamble? Get this -- it has a potential, or notional, value of $29 trillion. That is in addition to net credit exposure of $94.7 billion. Trillions in derivatives. As in three times the nation's entire annual gross domestic product. Here is another comparison to consider: Citigroup, another giant bank, only has $9 trillion in derivative exposure. Says Jim Grant of Grant's Interest Rate Observer: "So dominant is Morgan Chase in the derivatives market that its exposures look like typographical errors." Adds bank analyst Charles Peabody of Ventana Capital, "It's an incredible figure and it's very dangerous. There's no exit." On the bright side, J.P. Morgan Chase's derivative position has been growing steadily for years, so far without an apparent mishap. But, then again, the country and the banking industry hasn't been through a recession in recent years. As for its bad luck in loans to companies like Kmart, Global Crossing, Enron et al., as well as Argentina, J.P. Morgan Chase says that its losses on commercial loans are equal to less than 1 percent of its total portfolio. And it promises that it isn't hiding any losses off the balance sheet -- like PNC Bank is accused of doing. And apparently taking one from the Ken Lay quote book, J.P. Morgan Chase says I'm relying too much on a small group of bank industry analysts in my critique. I hope the bank is right, because J.P. Morgan Chase's dabbling in derivatives makes it too big for even the Federal Reserve to bail out. |
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International Forecaster February 2002 (#3) **SAMPLE ISSUE**
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