June 17, 2007
by John Galt
I just love going on vacation. It's like a refreshing breath of freshair where I can act like the rest of the sheep for a week, take in theblessings of God's beautiful earth he has bestowed upon us and reallynot care too much about what is going on in this world, where we havewatched many document what has been happening to the once proud nationknown as the United States of America. You never really appreciate whatwe have left here, until you go to another country and realize that westill have it pretty good compared to others. So the question of theweekend is simple:
What, me worry?
The answer: No.
My readers and listeners might well have thought I've lost my mind.Have no fear. After years of paying attention to current events andlistening to the advice of many others I do not worry. I am about asprepped as I can be so anything added now is what could be called"gravy" in some circles or just more prudence in others. The economicsituation, despite the cheer leading efforts of the residents on theDenial River, is doing exactly what many of us thought it would; unwindin an ugly fashion. This one notice I received while I was gone fromDow Jones Newswires should have been the red flag, blaring siren andslap upside the face of the pollys, yet it was not. For those thatstill have their heads in an uncomfortable position and physicallyimpossible for the rest of us, here it is:
"US Treasury Awards $8B In Reopened 10-Year Notes At 5.230%" at 1:18:21PM EST includes this: The Treasury received no bids from foreign andinternational monetary authority accounts on a noncompetitive biddingbasis.
Now while this sleepy little tidbit of news is not disturbing if youhave been a regular reader of the material I write and post, if youhave not been awake, this was not a surprise. It means that theforeigners, gasp, are doing what they said they would do. They wantedhigher yields and the fraud we perpetuate as a stock market is not safeenough for them to invest in. Despite years of financial market fraudand deceit, we the sheeple are still expected to dump our entire futureinto this casino and accept the advances on paper as "wow, I'm rich"and the declines as "the normal ebb and flow of markets", both of whichcan be honestly appraised by anyone with more than one working braincell, even my critics. The markets when priced in real money orcommodities are not exactly setting the world ablaze. Add in the factthe real rates of inflation are outpacing the alleged gains andaccelerating the losses in the equity markets and your 401K statementmight as well be a Disney comic book or toilet paper.
As a huge student of history, I only have to look back twenty years tosee the kind of equity market set up we once faced and the same stupidFederal Reserve decisions which caused the crash of 1987. The samesituation is setting up, but with far more dire consequences for theU.S. economy than at that time. If you look at the current status ofthe U.S. dollar, it's not exactly done much more than a dead cat bounceof the lows in the 81 range. That fact should cause even the mostcasual critic or polly to turn off bubblevision for five minutes andsee the handwriting on the wall. But alas, my critics and those whosubscribe to the theory that this wasn't a housing bubble and it's justa correction, will not see the semi that is about to hit them. The Fedis looking more and more like there will have to be a short term rateincrease to save the dollar and defend against the inflationarypressures which are building up. Despite their best efforts tomanipulate the numbers, inflation
is still on pace for a real increase of over 11% annually and that iswhere the business community is most concerned. The hidden tax onAmerica's wealth is showing up everywhere, yet as a friend of minelikes to say "the band plays on". What this hidden tax is doing isfinally putting pressure on wages to be increased and as that happens,you will begin to see what I call the "Exodus". Those in the financialknow can see it as plane as day. Heck, even old Bubba and Ms. Hillaryknow what's coming.
Do you?
Probably not. The fact that the super wealthy are liquidating theirU.S. equity holdings quietly but rapidly should be some sort of anindicator. The Denial River though flows through some people's brainsand the critics will say what they always do which bothers me that theypreach the "Party on Wayne, Party on Garth" approach to investingwithout realizing what their words inspire stupid people to do. Theonly safe approach is a slow, steady, and intelligent selection ofinvestments to protect your family and it's future. I just happen to bea big believer in physical silver, which is safe, sane and always willretain some basis of value in trade or barter even as our societyimplodes. When the collapse hits, paper will be useful in only one roomof your home, and that room just happens to have a porcelain throne init. My preparations have me at the point where I do not worry much anylonger, I just observe. Sometimes it's better to be in the stands thanto be on the field. Except in this case, some of the cheerleaders arepretty darned ugly and it makes me wonder just what kind of moralcharacter these folks have, urging average citizens to dump theirfutures into a black hole as safe as a roulette wheel wager in Vegas.
