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August Economic Rant -Roger Mason

The looming Iran war is the most important event in the world, even though we simply do not know when it will occur. The House passed Resolution 362 and the Senate passed Resolution 580 for a naval blockade to Iran! The disasterous economic events are very secondary to this coming war. Roger Weigand, Jim Willie, and others feel we have a 90% chance of this happening in the next few months. They are not alarmists. (Read such articles every week at www.kitco.com. We have some new advice here at Economic Rant….store some gasoline. Store at least 20 gallons of gasoline in five gallon approved fuel storage cans. If you live in an apartment you can’t do this. Keep your gas tank full and always fill up when you are half empty. Yes, we get most our oil from Canada and Mexico, but the coming war will shut off gasoline, diesel,  and heating oil anyway.

At least 150 banks will fail, and maybe double that figure. You think the FCIC insures your deposit? You’re kidding yourself. The FDIC is almost broke after bailing out IndyMac. Banks are refusing to cash the IndyMac checks, even though they are government FDIC checks! Wells Fargo and WaMu have totally refused to cash them. The banks are failing folks andmuch worse than the “bank holidays” 80 years ago. Keep a minimum in your checking account, and no money in your savings account. Empty your safe deposit box except for papers. All your money should be in silver bullion or silver stocks. Dump your 401k or IRA.

The SEC has now forbidden you and I to sell short (bet on the price to fall) nineteen of their favorites banks. This includes Bank of America, Citigroup, Barclays, Credit Suisse, Beutschebank, J.P. Morgan, HSBC, Lehman Brothers, Merrill Lynch, Morgan Stanley, Fannie Mae and Freddie Mac. No More free markets. Paulson wants to nationalize the entire stock markets just like in Russia.

Some people are reporting they can buy small amounts of silver for about $2 over spot. In good faith we can no longer recommend any supplier because we’re out of silver basically. Yes, the world is out of silver for the first time in history. You cannot buy any real quantity of silver at fair prices. Buy the eight stocks instead (Fury has been sold, so sell it if you own it.) Quaterra (QTA), Silverstone (SST), Impact (IPT), First Majestic (FR), ECU Silver (ECU), U.S. Silver (USA), Endeavor (EXK), and Genco (GGC). There are only about 50 real silver mines in the world and there are various good reasons not to buy the other 42. Yes, the silver stocks have been beaten down for eight months now, but the metals have gone up dramatically. The mines will follow. You can only get silver from silver mines. Keep remembering that. You can only get silver from silver mines, and silver is going to $200 an ounce. Buy and hold and add on dips. This is a great opportunity to buy more silver stocks. Buy and hold and add on dips. All legendary investors have bought value and held for the long term. Silver stocks are value for the long term. If you can find a source of silver bullion for $1 over spot or less buy all you can. Demand to know that this is in stock and exactly when it will be delivered. Get this in writing before you send a check. Don’t even think about buying paper silver like ETFs or have anyone store it for you.

Freddie Mac and Fannie Mae have lost over 90% of their value. This is the most important economic event so far. This is the most important economic event in 80 years. Freddie and Fannie hold HALF the mortgages in America. They are the largest financial institutions in the world and they are bankrupt! They are totally broke, and you are going to bail them out. Every man, woman, and child will cough up $30,000 to do this. Paulson has asked for a blank check! It won’t cost “$25 billion”- it will cost well over a trillion. Helping stupid people, and stupider banks, who bought homes they couldn’t afford. Instead of Fannie and Freddie giving mortgages to deadbeats at your expense, they will now rent all those empty houses to deadbeats at your expense. That’s right, the biggest two financial organizations in the world will be mere slumlords. Isn’t government wonderful? The government will nationalize both Freddie and Fannie at your expense. Yes, every American citizen (except those countless millions of illegal aliens) will cough up about $30,000 apiece to bail them out. That’s a fact. Then the government will go on to nationalize (as in Marxist socialism) banks, airlines, trucking companies, railroads, and God only knows what else.

Want some good news? True inflation is down to “only” 16% now. M3 money printing is down to “only” 16% (www.shadowstats.com). This means you have to make 16% on your investments just to break even. The stock market has fallen from 14,200 to 11,000 and still has a long way to fall. Adjusted for inflation it is much worse of course. If you own an IRA or 401k you have to sell it, take the 40% tax bite, and invest your money in silver. Famous Rite Aid drug store stock is down to a dollar. They will go under. We can’t list failing and bankrupt chains anymore because they are just too numerous. Costco fell 20% in ONE WEEK! Walmart has been failing for two months now. Target is down one third this year. The auto and airline stocks are hopeless. McDonalds has been the best of the performers for five years now, but it down badly in the last 90 days. Lowe’s and Hope Depot are down about one third yearly. General Motors is down 75% yearly. The Dow should have a price/earning ratio or about 12 to 1 historically. Instead it is an insane 87 to 1 and will collapse to 5,000. Ten months ago I told you the Dow would fall to 10,000 and (adjusted for inflation) it did.

The senate passes the Housing Bailout Bill by 72 to 13 (15 didn’t show up!). This means more of your money helping stupid people and stupider banks who bought houses they couldn’t afford.

Las Vegas as you knew it is over, dead, done, through, finished. It will never come back.

Boyd Gaming is one of the biggest casino owners, and it down 49 to 8. MGM Grand is down 100 to 22. LVS (Venetian, etc.) fell 149 to 31. Why are we bringing up Las Vegas? It is one of the best and proven barometers of the economy we have.  New Orleans as you knew it is also over, dead, done, through and finished. Remember the flood never hit the French Quarter, which is the center and heart of NOLA.  More and more you will see cities like this self destruct and be left to the welfare recipients. If you live in a city move out to the suburbs or to the country. You’ll never survive in a city as they are too vulnerable. Start storing gasoline. You need at least 20 gallons, and preferably 40 gallons.  

Did you know the Government can now monitor every credit card purchase you make without a warrant now? That’s right. They can watch every single dollar you spend. They already watch your bank account. What else is new? WE LIVE IN A POLICE STATE FOLKS. Get it straight. Life in Russia is now better in some ways.

There are many serious crises that are taking our country down. Let’s look at them:

Housing Crisis: The housing crisis is just getting warmed up. Houses will sell for a quarter on the dollar adjusted for inflation within two or three more years.

Gross Domestic Product Crisis: 70% of the GDP is due to consumer spending. Is that insane or what? America used to make things, produce things, create things. Now they are busy buying things they don’t need with money they don’t have. All that is over though. More and more those fat brood sows won’t drive their SUVs to grocery stores to push around overloaded carts of fat and sugar filled garbage.

National Debt Crisis: The supposed national debt is “only” 10 trillion dollars with a half trillion added every year. It is actually ten times that ($100 trillion) when you take in REAL liabilities like Social Insecurity, Medicaid/Medicare, Unemployment, etc.

Budget Crisis: We cannot go on with half trillion dollar budget deficits. The entire GDP is only $13 trillion. All this money is for socialist government waste instead of free market and free enterprise business.

Inflation Crisis: Real inflation is “only” 16%. The U.S. dollar is hopeless. It used to be $1.45 in the international currency basket, is now 72 cents, and will soon be 50 cents. Just hope it bottoms at 50 cents, because it could get a lot worse. Soon it will no longer be the reserve currency of the world. Nations will no longer buy our T-Bills and T-Bonds. Why should they? More and more we cannot sell our government paper.

Energy Crisis: We refuse to pump our own oil, while China is busy pumping it off the coast of Florida. We have no real refinery capacity and will not build, or even update, the few we have. We refuse to build SASOL plants to convert coal to clear fuel for $2 a gallon. We don’t build the nuclear reactors we need. We have enough oil and gas right here in America for the next 200 years. We have enough coal for the next 1,000 years. We have enough uranium to infinity. THERE IS NO ENERGY CRISIS! There is no oil shortage! It’s all a great big lie.

Iraq/Iran/Afghanistan Crisis: The illegal, immoral, unethical attack on Iraq was the worst mistake America ever made. The attack on Afghanistan is equally senseless.

The coming attack on Iran will be completely different as they will vaporize one of our major cities. Just the monetary cost alone is hard to tally.

Stock and Bond Crisis: The Dow topped out at 14,200 and it’s all downhill from here. Remember the Dow- and every other investment- has to go up 16% a year just to break even. The stock markets are hopeless. Everyone with an IRA or 401k will end up in a soup line.

Consumer Crisis: The party is over, the punchbowl is empty, the drunks are waking up, and the liquor is all gone. The average American is $10,000 in debt and paying heavy interest. 1 in 10 will lose their homes and maybe more.  Food and energy prices are killing them, and getting worse by the day. Soon we will have the crappy standard of living the pitiful socialistic Europeans have. If you haven’t been to Europe you have no idea just how bad their standard of living is compared to ours.

Employment Crisis: The real unemployment rate is 14%, but it is actually much worse.

Many people take jobs they are overqualified for just to get a paycheck and take care of their bills. As the recession deepens into the Much Greater Depression the unemploy-ment rate will go to at least 25%.

Fannie and Freddie Crisis: This is the worst economic event is 80 years. In fact it is the worst economic event in 232 years. These are the LARGEST economic institutions in the world, and they are both broke, bankrupt, penniless. Each man, woman, and child will cough up $30,000 to bail out crooked bankers and stupid homeowners. They hold HALF the mortgages in this country. They should hold none. The government should have never gotten into the mortgage business. If the government took over the Sahara desert, there would soon be a deficiency in sand.  “Senile in Omaha” Warren Buffet continues to hemorrhage. Why do people see a pitiful, demented, overmedicated old man, has been as some kind of economic oracle? He preaches against derivatives, while  he is up to his ears in them. His investment choices are just plain terrible. His oh-so-famous Berkshire Hathaway stock is down 23% in seven months. That’s right, BRK.A and BRK.B are hemorrhaging. This old fool is drooling at the mouth, but the great unwashed masses still hang on his every word as Holy Writ.

Richard Fisher, head of the Dallas Federal Reserve said our National Debt is not $10 trillion at all, but rather $100 trillion in reality due to the liabilities. These unfunded liabilities include Social Insecurity, Medicaid, Medicare, and Unemployment among others. The GDP of the entire U.S. is only a lousy 13 trillion, so how are we going to pay off $100 trillion?

Stop blaming Big Oil and the Arabs for our gasoline prices. It is YOUR government that is doing this. You know, the anal orifices you elected to office. We get most of our oil from Canada, Mexico, (formerly) Venezuela, and Nigeria. Venezuela is not producing much oil after Chavez nationalized the fields. They are selling what little they have to Russia for weapons.

The entire world economy is coming unglued. Your only saviour is silver (and to a lesser extent, gold). Jim “Mad Money” Cramer is telling everyone gold is dead. Always do the opposite of what the media is telling you and you’ll get rich and stay rich.  Buy all the silver stocks you can. Party like a rock star while all your friends and neighbors are eating baloney sandwiches down at the Salvation Army. The news gets worse every day, and events are now moving faster and faster. Look for $25 silver by Christmas. Expect the Much Greater Depression around 2010.

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