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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (561)	6/20/2002 3:42:43 PM
From: mt_mike	Read Replies (1) \| Respond to of 89467

One of the best articles I read over the last year. gold-eagle.com

To: Jim Willie CB who wrote (561)	6/20/2002 9:18:19 PM
From: SOROS	Read Replies (1) \| Respond to of 89467

Someone sent me Bishop's opinion of Seabridge. Basically says if you think gold is going north of $350 and especially $400, there is no better leveraged way to play a rising gold market. And with Seabridge's skill at acquiring new, good properties, the leverage can only get better and better. Says all gold companies are really a bet on higher gold prices, so if the downside of being wrong is the same no matter what gold company you buy, why not place your bet on the one that offers the most upside? I remain, SOROS p.s. Hoping for one more buying opportunity (as painful as it is short-term), but looking forward to building bridges of gold over the next few years.

To: Jim Willie CB who wrote (561)	6/21/2002 3:35:38 PM
From: habitrail	Read Replies (1) \| Respond to of 89467

Scenario 2002 Revisited (June 2003) The information within is not intended as a recommendation to buy or sell anything. Do your own Due Diligence! SUMMARY: I wrote an essay entitled "A Scenario for Year 2002" in November of 2001. I leave to the reader to grade my accuracy on the first half of the year. This essay can be found at: www.gold-eagle.com/editorials_01/wallybently112201.html I have been asked numerous times by e-mails as to any changes in my thinking. This essay is my revised scenario for the remainder of 2002 from July thru December. No one can predict the future and that includes me. In short, July thru August is the quiet before the financial chaos. Signs of this financial chaos appears with increasing frequency in the media during September. The media information is mostly ignored by the American public and politicians. The first effects of the financial chaos will be experienced in October. This financial chaos will include economic meltdowns that will last into 2004. This is not all doom and gloom. Opportunities of different kinds than the present will abound. Most who act now can preserve or grow their wealth. This requires going against the popular media, government, and Wall Street investing hype. This means: immediately abandoning most areas of the stock and bond markets, getting rid of personal debt if possible keeping precious metals and other hard physical assets in hand. reestablishing priorities which include God, family, friends becoming adaptable to the changes as they occur to take advantage of opportunities. making your own decisions by your own analysis of situations and questioning all information Be prepared and "Expect the Unexpected" JULY 2002 THRU DECEMBER 2002 SCENARIO BY FINANCIAL AREAS PRECIOUS METALS GOLD: Gold prices will rise in July about $20/oz from the current $310 range. A second shake out of weak players similar to the June price retracements will occur in August. These shake outs are orchestrated by floor traders so that most call options near the money for futures contracts and stocks will expire worthless. Beginning in September, Gold prices will rise and reach $500 in December Most of the price increase will occur in November and December. Gold prices will continue to rise in 2003 and 2004. SILVER: Silver prices will follow a similar pattern to gold. Silver will reach $15.00 in December from a June price around $5.00 DJIA & U.S. STOCK MARKETS I earlier projected Dow Jones Industrial Average (DJIA) to decline to 5, 000 in December 2002. I am revising this decline to a DJIA of below 7000 by December 2002. The DJIA will decline further, in 2003. October/November will be the period of greatest trading volumes and price gyrations. There will be similar declines of more than 20% in the S&P 500 and the NASDAQ indexes. One sign in September of the coming financial chaos will be numerous trading curbs placed on many stocks. One curb is that when a stock price declines more than 2.5% during the trading day, Sell orders can only be made only after an uptick in the stock price. A second curb is that when a stock price declines more than 5% during a trading day, the market is closed for an hour or more. A second sign of the financial chaos will be an initial rising of stock Price/Earning ratios due to lower than expected earnings. A third sign is that many foreign indexes have a "head and shoulder" chart pattern appearing. This is indicative that most foreign stocks will be declining at the same time as the U.S. stock market. This will contribute to increased fear by investors world wide. The options market for stocks will interesting to watch. A fourth sign will be more bankruptcies of the size of ENRON (50 billion) and Global Crossings (5 billion). Corporate defaults which exceed 200 billion dollars in 2002 as compared to 115.4 billion dollars in 2001. The corporate bankruptcies will be coupled with: Distrust of accounting practices and auditing firms with government prosecutions going forward in addition to Anderson firm. The total absence of federal government prosecution of CEO's, Directors, and other officers of the bankrupt corporations who walk away with tens of millions of dollars. This will contribute to decreasing investor confidence in management of most companies. Increasing federal government prosecution of brokerage firms, brokers, inside traders, and others who have violated securities & exchange laws. Increasing numbers of financial newsletter writers who recommend to their subscribers in blunt but clear language to "be out of most sectors of the stock market." One such newsletter is the "Safe Money Report", special issue of May 2002. Their recommendation can be found at: www.safemoneyreport.com/specials/26810/printer_friendly.asp U.S. BOND MARKETS & INTEREST RATES The federal reserve discount rate of 1.75% will rise to over 2.5% by December 2002. Currently, most interest rates are negative in real power purchasing terms. Interest rates typically reflect components of a 2% interest rate, risk of the investment, anticipated inflation rate, taxation implications, and investor confidence. The interest rate will be forced upward due to U.S. government attempts to slow the dollar devaluation by foreign owners dumping a portion of their four trillion dollars of U.S. government bonds and dollar denominated investments. Increasing investor inflation fears due to the trillion dollar increase to 8 trillion dollars in the M3 money supply within the last year. Increasing investor fears of an approaching economic slowdown and recession. As interest rates rise, existing long (typically 3 to 20+ year) term bonds will decline in value if you need to sell it immediately. You do not lose dollars if bond is held to maturity. However, you lose purchasing power when high inflation rates makes the bond redemption dollars worth far less in purchasing power. U.S. BANKING SYSTEM Consumer debt rises from 1.7 trillion to over 2.2 trillion by December 2002. Most unemployed will resort to credit cards to carry them over during their unemployment. The number of individual bankruptcies in 2002 will exceed 2 million people. In 2001, the number of individual bankruptcies was 1,437,000 and a record breaking year. U.S. inflation rate of greater than 5% in November or December 2002. Stagflation is a possibility. U.S. dollar to decline 3% in value or more in many foreign markets. U.S. dollar vs foreign currencies Currently oil is denominated in U.S. dollars. A shift to Euro's by oil producers and others will reduce demand for U.S. dollars and U.S. financial services. Foreign investors will continue to repatriate U.S. dollars due to various fears. U.S. commercial banks will have major losses from billions or trillions of financial derivatives that unexpectedly went bad. They will scream for taxpayer bail out of the shareholders and the banks. Examples of such banks include CitiBank and JPM. Question: The U.S. banking system is based on the fractional reserve banking whereby every $1 dollar deposited can produce up to $10 in loans. These new dollars are created and stored as computer entries, checks, savings certificates and other paper representations. Usually, no U.S. currency (fiat) is printed to represent the dollars. Many foreign banks outside of U.S. control have various types of similar accounts in U.S. dollars. What is to stop one or more of the foreign banks from doing fractional reserve banking based on U.S. $1 of deposit creating $100 or even $1,000 in loans. What is to stop these dollars from ending up in the U.S. economy and banking system? How could these dollars be differentiated? U.S. ECONOMIC ACTIVITY U.S. will enter a recession lasting 6 months or more in the last three months of 2002. A recession is defined as three or more months of decreasing GDP when inflation is accounted for. Unemployment will be greater than 7% by December 2002. Corporate layoffs and downsizing will continue in the name of improving business efficiency. Corporate Business Activity Declines Factors discouraging business expansion include: Falling corporate profits in part due to one time write downs of large debts and changes in accounting practices. Consumers are tapped out with debt and cannot start a economic boom. Business are short on capital to expand with. Increased business expenses from more government regulations/reporting as well as increasing interest rates for borrowed money. Increased difficulties in borrowing money for business purposes due to lower investor confidence in business accounting practices and growing distrust of business executives. Corporate mergers again becomes a popular topic under the false premise that two different businesses can be combined to become more cost effective. U.S. trade wars with foreign countries expand despite U.S. govt. pronouncements of wanting free trade. The imposed steel tariffs is an example. The recently passed congressional agricultural subsidy of $190 billion is another example. The 14 trillion dollar real estate bubble will show signs of bursting in the last three months of the year. Growing numbers of unemployed home owners will find it difficult to continue mortgage payments. There will be increasing numbers of houses for sale and far fewer home buyers around. The major effects won't be felt until 2003 or 2004. A growing high vacancy rates for business office and industrial space will make it difficult for meeting mortgage payments. Investors will begin steering clear of mortgage paper or insist on much higher returns. The U.S. underground economy will continue to increase by the working class to avoid taxes. The rich and corporations will continue to use offshore banking to avoid taxes and to increase privacy. Despite government claims of reducing taxes, the "tax freedom day" continues to be later each year and this year was in May or June. "Tax freedom day" is that day of the year when the average worker's earnings equals the taxes he will pay during the year. In my opinion, I expect a major natural disaster to occur on U.S. soil which will result in billions of dollars in economic losses. This may be a devastating hurricane, a 7.0 earthquake in a populated area, a volcanic eruption or something else. INTERNATIONAL A second country, the size of Argentina GDP (100 billion?) was projected to experience bankruptcy as well. This could be Brazil (300 billion) and may include Venezuela, Uruguay, and Peru. There will be continued banking concerns in Germany and Turkey. Japan and China will experience bankruptcies or more than a trillion U.S. dollars equivalent each in 2003 or 2004 which will add to the financial chaos. Their impacts will be devastating and may cause depressions and/or hyper inflation in other countries from a banking domino effect. TERRORISM U.S. Federal government ineffectual terrorism policies and laws will add to the trend of an America developing a Fortress (or bunker) mentality. The terrorism policies in the banking area will promote foreign repatriation of their U.S. assets. U.S. terrorism policies while intended for catching terrorists will cause alienation of additional U.S. citizens and a larger disenfranchised public. U.S. government security laws and actions will continue to drive away more airline travelers. This will bankrupt most airlines. I stick with prediction of two major terrorist attacks on U.S. soil in 2002. I do not expect a nuclear weapon be it spreading of radioactive material or an outright nuclear explosion on U.S. soil. One major terrorist attack will be of biological nature which will causes billions of dollars in agricultural losses. The other attack will be the use of military style weaponry. This may be ground to air missiles or a ship exploding in a harbor. I still believe a nuclear explosion or radioactive material spreading weapon will be used elsewhere in the world. Most likely this will be in an India-Pakistan conflict or on Israel soil. It is unknown how the U.S. foreign policy makers will react and if they have a plan in place for action. U.S. FEDERAL POLITICS: The U.S. government's "War on Terrorism" policy will continue and intensify as a promoted "Perpetual War for Perpetual Peace." The U.S. politicians in the November congressional elections will continue to appeal to voters that terrorism is the "only important issue" and they can win the "War on Terrorism" if elected. Such an appeal diverts voter attention from major and immediate economic and banking problems. The terrorism policies will contribute to the U.S. economic recession by diversion of economic resources for ineffectual and expensive terrorism protection programs. Federal Government legislation will continue with the "more government" philosophy of: more spending more pork barrel projects more media disinformation & spin more taxation more new taxes more studies & more hearings more borrowing more bad accounting practices more indecisiveness more regulation more "feel good" laws more confiscations more political correctness more legislative gridlock more finger pointing & blaming others more political rantings more unethical revelations more talk of ethics being important more Wall Street scandals more people in jails more poor people more subsidies more govt. reorganizations more political promises to be broken. Most of the federal laws proclaimed to be for winning the war on Terrorism actually contains large amounts of money for pork barrel projects unrelated to terrorism. It is politics as usual in Washington D.C. A problem that will become increasingly noticed is that local, country, state, and Federal Government tax revenues will shrink. Only the Federal Government can print (federal reserve notes) fiat. Local, county and state governments cannot. Many of the smaller governments will face budget problems which will necessitate service cutbacks, postponing projects, and/or bond defaults. The Federal Government will experience a big increase in the official debt. The current interest payments on the federal debt of 6 trillion dollars is approximately 300 billion of the Federal annual budget of 2,000+ billion. Interest payments will rise to 600+ billion dollars in 2004 as a result of the larger debt and investor demand for much higher interest rates. This will make federal interest payments larger than any other expenditure including "defense." Wally Bently wallybently@aol.com gold-eagle.com