Many market funds increased by $2.38 billion on the week ended
3/12/02 for a total of $2.292 trillion. This puts funds flat for the
month. The funds inflow was mainly from institutional investors,
which tells us, as we previously stated, funds did not run the
market up nor did the public. It was foundations, trusts and the
Plunge Protection Team driving the market. The average
seven-day compounded yield was 1.36% versus 1.39% last week
and 30-day compounded yields were 1.40% versus 1.41%.
In this era of free trade we find it extraordinary that no one
questions US trade policy with Japan, which is that Japan make
an effort to curb exports and increase imports, yet the balance of
trade with China is horrendous and nothing is said. Even now
that China is in the WTO their economy is still not transparent
and its currency is still not convertible. China may have over a
billion people, but they have one of the highest savings rates and
like Japanese live frugally and don’t spend. The Chinese
mega-market is a myth. Of course the strongest administration
argument for Chinese imports is the cheap goods, the result of a
cheap currency and slave labor, which keeps US inflation down.
That has been so successful that we have been fighting deflation
in China, Asia and the US for the past two years. This policy has
driven American manufacturing overseas, caused lower US
wages, lower interest rates, lower inflation and deflation. The
winners in this so- called free trade are transnational
corporations. The average American is far worse off for it. We
now have perpetual war for perpetual peace and terrorism as an
environment or cover, which allows government to exercise power
and coercion over Americans. Government is now expanding
exponentially under the guise of defeating terrorism.
While these events are taking place the public’s attention is
diverted from the decay of the financial system, manipulated
markets and scandal after scandal. One of the unplanned
scandals was Enron, a simple case of greed gone mad. The
auditors will swing and everyone else will make off with their
billions, because they are part of the elitist network.
This then leads us to another reason for war or unilateral police
actions. Deficits have to be serviced by growth. Our economy is
coming unglued and the stock market is being held up by smoke,
mirrors and manipulation. The only way deficits can be serviced
otherwise is during war. Its called monetizing debt. Under the
guise of war government can issue a lot of debt. It does this by
converting debt from short-term instruments into long-term
instruments. It is normally inflationary, but with today’s
tremendous deflationary pull it is neutralized. This means that in
all probability the 30-year bond won’t be terminated at the end of
the year. The move back to long-term bond issuance is taking
place at nearly record low interest rates, which is auspicious for
government. War is a way probably the only way these deficits
can be financed. This is why we have wars when we have them.
Elitists believe this is a cheap price to pay for not having
depression. They can tell that to the millions who gave their lives
on both sides. Our current tax base cannot support debt service
and a failing economy simultaneously. Then of course, there are
the war profits the elitist get richer from. Remember they’ve been
doing this for the last thousand years. This is also why these
criminals lie to the public. They have to keep the dollar strong
and that is based on confidence and perception. That is why the
piece of gold has to be suppressed. If gold goes up the jig is up.
They have to keep the people believing in the fiat dollar and the
fiat economy. That is why no one in Congress, government, Wall
Street and the media will allow the American people to know the
truth. Whoever blows the whistle becomes the goat and it will cost
them their lives.
Mortgage rates on 30-year loans are 7.0% from Fannie Mae up
from 6.45%. That means the public is paying about 7.20%.
We predicted a glut of apartment buildings throughout the nation
and we now officially have a glut. The vacancy rate for higher-end
apartments rose to 5.8% in the fourth quarter from 3.5% in the
third quarter. Estimates for current rates are 6.3%. Worst yet are
Atlanta, Dallas, Charlotte and Phoenix. The Northeast is next.
This year’s construction will be 119,914 up from 111,964 last year,
so vacancies will jump well over 10% this year. It should stay
there as home building slows due to higher mortgage rates.
Businesses just never learn. They listen to Wall Street and
government economists and forever make wrong decisions.
Inventories grew 0.2% in January while total business sales grew
by only 1.1% in December. The inventory to sale ratio went from
a bottom of 1.38 to 1.39 in December to 1.44 in January. Auto
inventories, in spite of their virtually giving them away at cost,
were up 3%. One of businesses problems is that imported goods
are so cheap that they can’t pass up the deals. The current
account deficit fell only 6% over the one-year recession.
For the first time, big businesses appear to employ more U.S.
workers than small businesses. Big companies employed 49.7
percent of the 111 million U.S. workers in 1999, up from 45.5
percent in 1988, the latest U.S. Small Business Administration
data show. The share of the workforce employed by big
companies probably passed 50 percent in 2000, the agency says.
Up until now American consumers have continued to spend in a
most contrary manner, which has helped delay a deeper recession.
They have displayed a certain fatalism regarding the future. The
economy has been assisted by wonderful winter weather, but these
celestial gifts have a way of evening themselves out as the year
progresses. The recovery has been aided to a degree as Americans
quickly come together with remarkable will, coolness and grace
after the impact of 9/11. They have gotten on with life perhaps
stronger for the tragic incident, making our nation, in every sense
the envy of the world, in spite of our dreadful leadership in
government, business and the media. Enron and Anderson are
not going to go away and more will follow. Earnings are yet to
display their morbid side, which shouldn’t hit investors squarely
between the eyes. The excesses and scandals are yet to be finally
played out. Stocks are not cheap they are very overpriced and we
expect soon they’ll be brought back to earth. |
