Dr. Batra ("Batty"???} speaks again:-
Crony capitalism and The Crash of the Millennium
(excerpted from lemetropolecafe.com)
In the August 5th, 1999 issue of J Taylor's Gold Resource & Environmental Stocks, a monthly newsletter (www.miningstocks.com), editor Jay Taylor interviewed economist and best-selling author, Dr. Ravi Batra. Dr. Batra's new book, "The Crash of the Millennium" will be available at Barnes & Noble on August 24th. Previous works by Dr. Batra that made the best-seller lists include: The Downfall of Capitalism and Communism, The Great Depression of 1990, The Myth of Free Trade, Ravi Batra's Forecasts, The Stock Market Crashes of 1997 and 1998, The Asian Crisis and Your Future and Surviving the Great Depression of 1990.
Following are some of key points made by Dr. Batra in his July 29, 1999 interview with Jay Taylor:
· Crony capitalism in America and around the world is shaping laws and regulation in favor of the ruling elite.
· The influence of the Crony Capitalists on lawmakers is resulting in laws and regulation that lead to an enormous and growing wage gap.
· By wage gap, Dr. Batra measures the degree to which wages have not kept up with economic productivity.
· Dr. Batra points out how this wage gap will inevitably lead to an economic depression.
· He provides a number of reasons why he thinks the market will crash and the economy will begin to tank before the end of 1999.
· A 30-Year cycle of money creation and inflation, traced back to 1770 remains intact. This suggests the rate of inflation in the U.S. has bottomed and that we are about to see much higher rates of inflation over the next few years. Dr. Batra points out that the Federal Reserve has not only had little control over this cycle, but that it has in fact actually enhanced it!
· He is predicting that the U.S. will enter into an Inflationary Depression. Why inflation when economic activity grinds to a halt? In addition to his faith in the 30-year cycle, he reasons that the enormous amount of debt taken on by Americans (most significant of which is debt owed to foreigners) will lead to collapse in the U.S. Dollar that will in turn lead to much higher prices for Americans. He points out that the Asian and Latin American countries recently experienced high levels of inflation as a result of their collapsing currencies even as economic activity in those countries sharply declined.
In his interview with Jay Taylor, Dr. Batra points out that since the mid 1970's and especially since the Reagan economic policies were instituted in the early 1980's the wage gap has been growing at an accelerating pace. This has resulted in a shortage of effective demand in the aggregate. So why have we not had a problem by now? Batra suggests that since 1990, we bought time by artificially stimulating the demand side of our economy and taking on unprecedented levels of private, public, corporate and foreign debt.
In his book he poses the question: "Is the boom in the U.S. stock market and growth of the U.S. economy real or a mere postponement of the day of reckoning?" He answers his own question by observing that....."With billions of dollars in loans, even a pauper can become a tycoon and gloat about his riches. But one day, the loans come due with interest, something that has already bedeviled many parts of the world. The U.S. hour of judgement is almost here, and then the great depression, postponed in 1990, could make a ferocious comeback."
For a host of reasons, Dr. Batra is predicting the U.S. stock market will crash before the end of this year and then we will face rising prices and huge levels of unemployment. How should we protect ourselves against the devastation that would result from this kind of environment? In one word, GOLD. Batra says this is the only asset he is suggesting people invest in at this time. He also likes gold shares of major mining companies.
In his July 29, 1999 interview with Dr. Batra, Jay Taylor, editor of J Taylor's Gold Resource & Environmental Stocks, who is a friend and supporter of GATA (Gold Anti-Trust Action Committee), had the following exchange regarding GATA's efforts to investigate possible market manipulation by crony capitalists.
TAYLOR: I believe you said that crony capitalism is an underlying cause of the rising wage gap. You also noted that crony capitalism is a huge problem in the U.S. just as it is in lesser-developed nations. You mentioned the Long Term Capital Management debacle that took place last year and pointed out how the ruling elite in the United States, who ran that hedge fund for the benefit of themselves and other very rich investors, were essentially bailed out by the Fed. I am in complete agreement that crony capitalism (which I view as the policies of economic fascism) is alive and well today in America. In fact, it is my belief that since the 1987 crash, our government and/or central bank may in fact be manipulating our stock market by "going long" in the S&P Futures markets, at key times like today when the market is getting hit very hard. By so doing, they may be managing the thought process and investment behavior of millions of Americans.
More recently, an organization named the Gold Anti-Trust Action Committee (GATA), has been using its web site (www.lemetropolecafe.com) to bring to the public's attention, circumstantial evidence that the Fed and various gold bullion trading entities, most notably Goldman Sachs, have been manipulating the price of gold to lower levels. Indeed some recent comments by Alan Greenspan in Congressional hearings related to the Long Term Capital Management debacle, appear to support that possibility.
GATA says that the Fed (and perhaps other central banks) have been leasing gold at 1% to a bullion trading firm like say a Goldman Sachs, who then sells the gold for dollars. The dollar proceeds are then reinvested in U.S. Treasuries at 4% or 5%, thus earning a 3% or 4% spread. To ensure these favored companies reap windfall profits from this activity, GATA believes central banks are doing all they can to push the market price of gold down. In that way, when it is time for Goldman Sachs to repay borrowed gold to the central banks, it will earn a still larger profit because it will then be able to pay less than it received when it initially borrowed and sold the same amount of gold. Of course, this activity, to the extent it has been taking place, has been hurting some of the poorest countries around the world, such as those that depend greatly on income derived from gold mining. If the Fed were involved in this activity, would it surprise you? Isn't this crony capitalism?
BATRA: Yes, definitely if the Fed were involved or if other central banks were involved in this type of operation, that certainly would be another example of crony capitalism. Essentially it is the rich stealing from the poor countries again, and I would not be surprised if it is happening.
(Ravi Batra's views are most probably not welcome in the boardrooms of the crony capitalists who appear to be gaining power in America today. A recent Bill Moyers documentary titled "Free Speech For Sale" illustrates how corporate donations through political actions committees are being used to shape laws in favor of crony capitalists. On page 165 of The Crash of the Millennium," Dr. Batra states the following with respect to the issue of crony capitalism.)
"When President Clinton appointed Robert Rubin, formerly the head of an investment banking firm, Goldman Sachs, as U.S. Treasury secretary, it was a classic case of crony capitalism at work. When in the name of free markets they both pushed for financial deregulation around the world, they gave into the self-interest of their patrons, particularly bankers.
When the IMF and the U.S. administration bailed out Mexico to save investments of American bankers such as Goldman Sachs, it reflected the influence of money over politics. What else were professional bankers like Rubin and Greenspan expected to do when American banking institutions were saddled with huge speculative losses? When bailouts were extended to the Asian Tigers that had borrowed copious amounts from U.S. bankers and mutual funds, it as simply crony capitalism. When Congress routinely grants last minute tax breaks to its patrons in the annual budget, it is nothing but money dominating politics.
Crony capitalism is not the sole preserve of the Third World and emerging markets. It may be more pervasive and virulent there, but it plagues the American economy and society as well. In the ultimate analysis, it is crony capitalism that is responsible for the bubble of the millennium and the resulting global collapse that is knocking on our doorstep."
Dr. Ravi Batra exposes the underbelly of our political economic system. He tells why a crash in our stock market is not only likely but is 100% certain. He also tells why it is likely to happen in the last few months of this century. Dr. Batra describes a political and economic environment that is ripe for the kinds of hanky panky GATA believes is going on with respect to the gold markets.
"The Crash of the Millennium" can be purchased at a 30% discount through www.BN.Com or at Barnes & Noble bookstores.
You can also receive the entire interview with Ravi Batra plus a three month trial subscription to J Taylor's Gold Resource & Environmental Stocks (www.miningstocks.com), which includes three sixteen-page newsletter plus J Taylor's Gold Resource & Environmental Stocks weekly telephone hotline for just $15. Visit www.miningstocks.com to subscribe or write to: Taylor Hard Money Advisors, Inc., Box 770871, Woodside, N.Y. 11377 or call (718) 457-7507. |
