THE INTERNATIONAL FORECASTER

WEDNESDAY, JUNE 10, 2009

061009(3)_IF
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An international financial, economic, political and social commentary.

Published and Edited by: Bob Chapman

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Radio Liberty part 1 <http://www.youtube.com/watch?v=lZRH2CtEu2k>
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SCHEDULED ISSUES
Every Wednesday and Saturday June 2009

US MARKETS
On Friday, we had the latest edition of the FDIC “Friday Night Financial Follies”
as regulators on Friday shut down Bank of Lincolnwood, a small bank in Illinois,
marking the 37th failure this year of a federally insured bank. More are
expected to succumb amid the pressures of the weak economy and mounting
loan defaults.
The Federal Deposit Insurance Corp. was appointed receiver of the failed
bank, based in Lincolnwood, Ill., which had about $214 million in assets and $202
million in deposits as of May 26.
All of Bank of Lincolnwood's deposits will be assumed by Republic Bank of
Chicago, based in Oak Brook, Ill., which also agreed to buy about $162 million of the
bank's assets; the FDIC will retain the rest for eventual sale. Bank of Lincolnwood's
two offices will reopen on Saturday as branches of Republic Bank of Chicago.
The FDIC estimates that the cost to the deposit insurance fund from the failure
of Bank of Lincolnwood will be $83 million.
In a step that would substantially increase the price tag for Bernard L. Madoff's
long-running Ponzi scheme, lawyers for a group of his victims are asking a federal
bankruptcy judge to reject the way their losses in the fraud are being calculated.
The customers insist that, by law, they should be given credit for the full value
of the securities shown on the last account statements they received before Madoff's
arrest in mid-December, even though the statements were bogus and none of the
trades were ever made. According to court filings, those account balances add up to
more than $64 billion.
After months of private negotiations and Internet arguments, lawyers for these
customers formally put the issue before the federal bankruptcy court in New York in a
lawsuit filed late Friday evening, less than a month before the deadline for filing claims
for compensation.
The approach they seek would produce a significantly higher tally of cash
losses than the formula being used by the court-appointed trustee overseeing the
claims process for the Securities Investor Protection Corp., a government-chartered
agency financed by the brokerage industry.
The trustee, Irving H. Picard, is calculating investor losses as the difference
between the total amount a customer paid into the scheme and the total amount
withdrawn before it collapsed.
Customers who qualify are eligible for up to $500,000 in immediate
compensation from SIPC. Those whose eligible losses exceed that amount would
divide up the assets recovered by the trustee.

3
 Credit card holders who might have used tax refunds to pay down balances
apparently spent the money elsewhere as the recession deepened in the first quarter.
That's one conclusion that may be drawn from data showing the delinquency
rate for bank-issued credit cards rose 11 percent in the first three months of the year,
according to credit reporting agency TransUnion.
The delinquency rate - card holders who are three months past due - jumped to
1.32 percent this year, from 1.19 percent in the first three months of 2008, TransUnion
said.
The average total debt on bank cards also rose, jumping to $5,776 from $5,548
last year.
Balances typically rise in the first quarter, as holiday spending comes due, said
TransUnion's Ezra Becker.
The credit card delinquency rate remains well below the 5.22 percent for
mortgages in the first quarter, meaning card holders are trying hard to keep their
payments current.
It's too early to tell how changes in credit card regulations will affect payment
rates, Becker said.
- The biggest price swings in Treasury bonds this year are undermining Federal
Reserve Chairman Ben S. Bernanke’s efforts to cap consumer borrowing rates and
pull the economy out of the worst recession in five decades.
The yield on the benchmark 10-year Treasury note rose to 3.90 percent last
week as volatility in government bonds hit a six-month high, according to Merrill Lynch
& Co.’s MOVE Index of options prices. Thirty-year fixed-rate mortgages jumped to 5.45
percent from as low as 4.85 percent in April, according to Bankrate.com in North Palm
Beach, Florida. Costs for homebuyers are now higher than in December.
Government bond yields, consumer rates and price swings are increasing as
the Fed fails to say if it will extend the $1.75 trillion policy of buying Treasuries and
mortgage bonds through so-called quantitative easing, traders say. The daily range of
the 10-year Treasury yield has averaged 12 basis points since March 18, when the
plan was announced, up from 8.6 basis points since 2002, according to data compiled
by Bloomberg.
The trend of employment in the U.S. strengthened in May for the first time in 16
months, a report said Monday.
The Conference Board said its May employment trends index rose 0.2% to
89.9 from April's revised level of 89.7 that was originally reported as 89.5. The May
index was down 20% from a year ago.
In May, the percentage of firms not able to fill positions right now, the
percentage of consumers who think jobs are "hard to get", real business sales and job
openings showed improvement.
The privately owned Federal Reserve has subjected us to a 22-month period of
massive excess liquidity. The present increase in liquidity, formerly known as M3,
which is no longer published because it’s not cost efficient, or there isn’t sufficient
interest in the figures, says the Fed, is growing at about 18%. The major purpose for
the US Treasury and the Fed to commit to an increase in spending of $14.8 trillion is to
bail out banking, Wall Street and the insurance industry, all of which turned prudent
investment into a casino.
The method chosen to deal with a financial crisis caused by unsustainable debt
created by excess liquidity is to create more money and credit and channel it to the
financial sector to reflate their balance sheets, which are debt infested with toxic CDO
and ABS debt. The rich on Wall Street, banking and insurance are deleveraging with
the taxpayer taking all the risk, as the public gets very little in return. We are

4
surrounded by financial zombies, which we keep alive after they almost destroyed our
financial system.
Major inflation is the result as wages barely rise and the loss of purchasing
power is borne mostly by the poor and the lower middle class. Ever since free trade,
globalization, offshoring and outsourcing began about 1980 wages have not kept up
with inflation. Production gravitated to the low wage third world exacerbated by
massive condoned illegal immigration. This was accompanied by cronic overcapacity
that made conspicuous consumption relatively inexpensive. That was joined by much
easier credit. Twenty-three months ago we saw an implosion as a result of these
policies, which is still with us. Without this continuation of debt the system cannot
continue to function and the downward spiral feeds on itself. Everyone is looking for a
bottom soon. That isn’t going to happen, stimulus or no stimulus. Handing money to
citizens isn’t the answer. In this case 90% has gone to reduce debt.
The first step to recovery is to drastically cut government spending and to lower
corporate and individual taxes. Get rid of the Federal Reserve, which is directly
responsible for this mess and erect tariffs on goods and services. If we can accomplish
that the recovery will begin, but it won’t be easy. It will take years to accomplish.
As a result of flawed fiscal and economic policies nations are facing record
deficits. Some like England have been put on negative credit watch, which could lead
to a downward re-rating. The US, Japan and others are following close behind. In fact
down grades could come before the end of the year. Interest rates are already moving
higher and have been since the beginning of the year. Downgrades would bring even
higher rates.
The Chairman of the Fed, Ben Bernanke, would have us believe along with
other, so-called experts, that monetary easing will come in time to head off
hyperinflation. Unfortunately that cannot happen. The minute money and credit is
withdrawn from the system it will collapse. The underlying deflationary drag is too great
and that drag will take years to diminish. How can our Fed Chairman and our Treasury
Secretary think for a moment that they’ll just be able to turn the tap off when their
current orgy of spending ends? Politicians unfortunately see this, as only they would,
as an opportunity to purchase votes by making sure the spending continues. It will be
interesting to watch over the next several years, as many nations scramble in the bond
markets to raise money to keep their economies going. There is no telling at this point
how high interest rates are going to go.
Our President tells us of trillion dollar plus deficits are far as the eye can see.
Those deficits assume 3% growth rates in GDP, which is not going to happen and the
end of the Bush tax cuts. Deficits will be much larger than the Congressional Budget
Office estimates, if due to nothing more than exploding entitlement expenditures. This
plan involves the perpetual rolling of $5 trillion in Treasury paper much of which is held
by foreigners plus the new debt incurred, plus the interest on the existing debt. Do you
really believe foreigners are going to fund such deficits indefinitely? We don’t think so
with a falling dollar. The dollar is falling again and interest rates are rising and they
both are going to continue to do so, as gold and silver go higher. The minute the Fed
began creating money out of thin air to fund Treasury sales, plus buy Treasuries out of
the market, plus buy Agency securities and toxic junk to the tune of $2.2 trillion for
openers, you had to know the game was over. It’s all-downhill from here. This week
30-year fixed rate mortgages could hit 5-3/4%.
Last week we heard the VAT, Value Added Tax, may be on the way. It’s the
most vicious of all taxes and you do not want to experience it. It would help solve the
problem, but your standard of living will drop 20% if it is enacted. Such taxes cannot

5
come until 2011 because 2010 is an election year. Such taxes will exacerbate the
depression. In the end cutting spending is the only answer.
Mr. Obama speaks of the importance of living within our means and not
spending money we do not have on things we do not need. Obviously the president
hasn’t been told we are in a depression. The less the public spends the deeper the
depression gets.
That said Mr. Obama engages in profligate federal spending to deaden the
pain and essentially to prolong the financial and economic agony.
Then comes the creative destruction with government deciding who should
survive and who should fail by edict. Some call it crony capitalism and favoritism, we
call it taking care of fellow Illuminists.
The way Wall Street tells us we need hands on help from Wall Street and
banks, which led to this disaster. The president wants economic advisers who are
theoreticians. All paper has to be marked to a real market price to clean out the bad
assets. Government should not be giving free loans to hedge-funds and private-equity
firms, so they will buy assets they would not normally buy. Due to electronic trading,
which has led to major trading off established exchanges, and into the dark pools we
do not know who is doing what. A net flow of information so that the investors and
transparency is nearly gone. Bank holding companies, which own the Fed, can see in
advance what their clients are interested in buying and front run those orders in their
own accounts. If they make major mistakes they just get bailout out by the Fed.
There is no transparency. We only find out what went on when somebody slips
or in some way something gets exposed. Transparency, oversight and accountability
do not exist. Most everything important is done in secret. A good example was six
months ago when Bloomberg News attempted to force the Fed to reveal the details on
more than $2 trillion in loans that went to banks, including Citigroup and Goldman
Sachs. The Fed told the court to take a hike and said it was a state secret. We have no
word as well who made the short-dated, out-of-the money bets in March of 2008 that
Bear Stearns would fail. Those bids paid off in the millions, or why Lehman was
allowed to fail and AIG was saved, etc.
Not one banking or Wall Street executive owned up to what really happened to
cause the crisis. They are totally lacking in honesty, integrity and decency. As it now
stands we’ll never know the true inside story of what really went on. We have seen no
civil or criminal charges against any of these crooks. Not even investigations.
Whatever happened to RICO?
Over the past 25 years our financial industry has descended into darkness and
corruption and the people who caused it are getting away scott free.
Our Treasury Secretary Geithner’s ill-fated trip to China and our president’s
recent journey to Germany was humiliating. Crowds as well as the German
government were demanding the return of their gold. The US has been giving
platitudes to the Germans when the Germans know their gold has been sold or leased.
Leasing is tantamount to selling. This story has not been broken in the mainstream
media, but in time it will be and when it is propaganda will not deflect the ultimate
outcome.
The president and Larry Summers think they can restore confidence and trust
in the economy with lies and propaganda, but they are deluding themselves. The
stock, bond and capital markets are dependent on confidence, but they are more
dependent upon the deplorable state of the foundation on which our economy rests. In
22 months the Fed and the Treasury have accomplished very little except bailing out
their fellow elitists in the financial industry with taxpayer debt. The mantra that the
worst is over is simply more lies similar to those we’ve heard over and over again.

6
Thus far the smoke and mirrors and the “Working Group on Financial Markets have
managed to create a 35% to 50% bear market correction in the averages. Our
president, a professional con man and street hustler promises he will always tell you
the truth about the challenges we face. Trust him and you will find yourself somewhere
out in left field.
Thus far all we have seen is a papering over of the financial system. Our
Treasury and Fed offer the Term Asset-Backed Securities Loan Facility, the Public
Private Investment Program, the phony stress test and TARP. The commitment to
domestic and foreign financial entities is already at $14.8 trillion. There is no
discussion of building a new better system that rewards prudent risks, allocates capital
where it is really needed, not in the hands of banking and Wall street. It would as well
be a great idea if the SEC and the CFTC started protecting the investors and stop
collaborating with Wall Street and Washington to manipulate markets.
When will the rescues of the financial sector end – when it has bankrupted us
all? They are the ones who caused all this.
We now have Government Motors at the former General Motors and Chrysler
that has been given away to Illuminist Fiat. Is every company, bank and brokerage
house in America to be bailed out indefinitely?
Thirteen percent of Class A office space in NYC was empty in April, up 6.5%
yoy. Sublets account for 40% of space available in Midtown Manhattan versus 30%
yoy. That $150 per square space is now available for $40 per square foot.
In California the legislators have allocated $100 million for a tax credit for
homebuyers who purchase a new home between 3/1/09 and 3/1/10. The buyers
cannot sell for two years from date of purchase. Once the funds have been totally
allocated the subsidy is over.
Over 50% of used home sales are foreclosure related, as supply is heavily
unbalanced. For all intents and purposes organic house sales have not grown in 18
months.
Interest rates on government bonds are rising due to oversupply and
monetization. Debt as a percentage of GDP will be 80% in the US, in England 100%
and in Japan 200% in the next few years. Revenues are not meeting expectations.
Shortages are running 35% to 50%. As long as this persists excess money and credit
will never be withdrawn from the system. If additions continue along with monetization
inflation will rage until the system collapses. As an example the US will have a 50%
revenue shortfall for fiscal 9/30/09 of $2 to $2.5 trillion. The prices of oil, gold, silver
and commodities are currently reflecting inflation irrespective of government
manipulation as rotation takes place from stocks and bonds into those areas.
Government producing bogus CPI and other statistics is not fooling anyone. Wall
Street won’t talk about it but they know what is going on. Even with a 3.85% ten year
T-note the yield is a loser because real inflation is higher than that and will continue to
be so. We see it hovering around 9% irrespective of official figures. There is severe
upward pressure on interest rates because the US and other governments have such
an enormous demand for funds. They are crowding out business and individuals from
borrowing, plus they are trying to keep solvent balance sheets, which is an impossible
order. If government bonds are not risk free paper than investors will go elsewhere to
preserve capital. The stock market has already rallied some 35% to 50% and bonds
and the dollar are falling. That leaves commodities and gold and silver for safety. Gold
is the best hideout so to speak and that is why our government suppresses it so
diligently, secretly.
Foreigners are finally starting to get the message after eight years of a falling
dollar. You do not buy more of a bad asset just to protect your past investment in dollar

7
denominated assets. Bonds are now in a beginning state of collapse and you could
easily see the 10-year Treasury at an 8% yield in two years just like it was in 1992
when we called that market to a top and at a top. The only way the bond market can
stabilize is via confidence. Savings are increasing but confidence has yet to return. As
an antithesis our president wants citizens to spend. You cannot have it both ways. It
should be remembered that as yields rise disintermediation takes place. That is money
moving from one place to another. Money moves into bonds as yields rise and most of
these funds will come from the stock market. As yields rise so does economic
efficiency. Any stocks in any financial entity will suffer under such circumstances due
to the increasing cost of money causing a drop in profits, never mind the toxic assets
on their books.
Make no mistake a change in central bank investment policy and the demise of
the Fed will produce a gold price upwards of $6,000 an ounce. This move will be aided
and abetted by higher commodity prices, which will add to the inflation caused by
monetization. The justification for zero interest rates and an increase in money and
credit of 18% in deflation is underlying our financial system and that in part is true.
That is why policymakers want to borrow 10% of GDP not caring about the
consequences just to keep the system from collapsing. Thus we have two inflation
sources, commodity inflation and money and credit and monetization expansion. There
is a 100% chance of hyperinflation over the next two years and a 100% chance of
higher gold and silver prices. Use any dips to purchase more gold and silver coins and
shares.
May Employment Report Not Believable, notes that the BLS added the most
ever B/D jobs in May 2009, which is incredulous in the current environment. Yet most
of the Street and financial media trumpet the report without performing any due
diligence. Since January the absurd Birth/Death Model has created more jobs than in
comparable 2008. This is incredulous! It appears that Team Obama is determined to
be even more duplicitous with government economic statistics than prior
administrations. Desperate times demand desperate measures.
All told, nearly 25 million Americans were either unemployed, underemployed or
had given up looking for a job in April.
The ranks of involuntary part-timers has increased by 4.9 million in the past year,
according to a May study by the Federal Reserve Bank of Cleveland. Many
economists now predict unemployment won't peak until 2010. And since employers
generally increase the hours of existing workers before hiring new ones, workers could
be looking for full-time jobs for some time.
John Williams: May Jobs Loss Was About 538,000 Net of Biases versus 345,000
Official Decline - Birth-Death Model Upside Bias Increased by 27% - Annual Payroll
Decline Deepened to 4.0% - SGS-Alternate Unemployment at 20.5%
The jobs report also reflected upward revisions to March and April reporting, but
such were due largely to the gimmicked recasting of seasonal factors each month on
top of slightly improved unadjusted data. The concurrent seasonal factor bias (CSFB)
narrowed the reported jobs contraction by about 89,000, while the revamped birth-
death model likely narrowed the contraction by at least another 104,000 (60,000 usual
adjusted average plus 44,000 in new biases).
There has been a shift in reporting patterns to show upside prior-period revisions
in the establishment (payroll) survey, including upside changes to March reporting,
which had been revised lower in April’s reporting (successive revisions for a given
month usually continue in the same direction). This suggests that the BLS may have
shifted internal reporting assumptions, with the effect of generating less-negative
numbers. Assumptions include, for example, the handling of companies that fail to

8
report payrolls in the current month (are they out of business or just late in handling
paperwork?). There certainly has been a shift to the upside in terms of birth-death
model assumptions. http://www.shadowstats.com
Policy-makers at the U.S. Federal Reserve stepped up their anti-inflation rhetoric
this week after a bond market sell-off delivered a sharp reminder that they ignore
investors at their peril.
"This is a day of reckoning that the Fed would have hoped (would come) a year
or two from now," said Gregory Hess, an economics professor at Claremont McKenna
College" They have done big things and now they face the consequences."
Nobel Prize-winning economist Paul Krugman said the world’s economy is
showing “not a hint” of a “V-shaped” recovery marked by a swift decline and revival.
The economy is “stabilizing, not recovering,” Krugman, an economics professor at
Princeton University in New Jersey, said today at a conference in Dublin. “Things are
getting worse more slowly.”
David Rosenberg notes that the Household Debt-To-Net Worth ratio is currently
at an all time high of 26% and if the ratio normalizes at the pre-‘90s bubble level of
20% or the long-term average of 16%, debt elimination/destruction/default/write-offs
would be $3 trillion to $5 trillion, respectively.
David’s conclusion: A goodly chunk of this excess debt — bringing credit into
realignment with the permanently new and lower level of household net worth — is
going to have to be paid down (or defaulted on). This is the lingering deflation risk that
the bond bears have yet to factor in.”
Mr. Rosenberg echoes our view that the collapsing bond and dollar have
checked the Fed: “…if the Fed doesn’t step in and buy more government bonds,
investors are going to conclude that there is not enough demand to absorb all of the
new supply coming on stream. Yet, if the Fed were indeed open to the idea of
expanding its bloated balance sheet further, then the ‘monetization of debt’ would
cause the inflation- phobes to panic and sell their long-duration paper.”
Barney Frank convinced GM’s CEO to keep his district's plant open. Rep Barney
Frank (D-Mass.) won a stay of execution on Thursday for a General Motors plant in his
district that the automaker had announced it would close.
The Obama administration plans to appoint a "Special Master for Compensation"
to ensure that companies receiving federal bailout funds are abiding by executive-pay
guidelines, according to people familiar with the matter.
If President Obama and Democrats push through the proposed multi-trillion
dollar healthcare bill, the inflationary recession will turn into something much, much
worse.
Employers would be required to offer health care to employees or pay a penalty -
and all Americans would be guaranteed health insurance - under a draft bill circulated
Friday by Sen. Edward M. Kennedy's health committee.
The bill would provide subsidies to help poor people pay for care, guarantee
patients the right to select any doctor they want and require everyone to purchase
insurance, with exceptions for those who can't afford to.
U.S. pushed Fiat deal on Chrysler. The Obama administration rushed an alliance
between Chrysler LLC and Fiat SpA despite Chrysler's worries about Fiat's financial
health and its willingness to share technology, according to internal company emails.
The emails show Fiat ignoring requests for documents and trying to change
contract terms late in the talks. A Chrysler adviser at one point said the deal risked
looking as if the U.S. automaker and the Treasury Department, which helped broker
the pact, were "in bed with a shady partner." In another note, an official referred to the
Treasury Department as "God."

9
 Transpacific container rates are continuing to drop. Our rates just went down
again (3rd time this year) and we have companies getting in touch with us almost
every week offering us lower rates. If the US is coming off the bottom and China is
recovering, it seems odd the shipping rates from China to the US keep dropping.
The Obama Administration argued Monday that no court, including the Supreme
Court, has the authority to hear a challenge by Indiana benefit plans to the role the
U.S. Treasury played in the Chrysler rescue, including the use of “bailout” (TARP)
funds.
This morning, the economic research firm e-forecasting.com, in conjunction with
STR, announced that following a decline of 1.1 percent in April, HIP declined 1.3
percent in May. HIP, the Hotel Industry Pulse index, is composite indicator that gauges
business activity in the U.S. hotel industry in real-time. The latest decrease brought the
index to a reading of 83.1. The index was set to equal 100 in 2000.
Looking at HIP’s six-month growth rate, which historically has signaled turning
points in U.S. hotel business activity, HIP declined by an annual rate of 20.7 percent in
May, following a drop of 21.3 percent in April. This compares to a long-term annual
growth rate of 3.2 percent, the same as the 38-year average annual growth rate of the
industry’s gross domestic product.
A little more than five years ago Developers Diversified Realty bought 110
properties containing 18.8 million square feet of space from Benderson Development
in a $2.3 billion deal. Now Benderson is buying a portion of those assets back–
reportedly at a 30 percent discount...
This is fairly incredible. Speculation has been that values on retail properties
would fall 40 percent peak to trough. But the peak on values wasn’t reached until
2007. The fact that Benderson is buying properties at a 30 percent discount to 2004
values is a bit of a shocker.
The Fed monetized another $7.5B of govies (4s thru 7s) on Monday. But Ben
told Congress that ‘the Fed won’t monetize the debt’. So this must be something other
than monetizing the debt.
Banks will be able to increase charges for loans more easily after tightening so-
called market-disruption clauses in funding documents, according to HSBC Holdings
Plc.
The clauses, common in loans, enable banks to raise the rates they charge to
borrowers to reflect their true cost of funds. Historically, rates couldn’t be raised
unless at least half the banks involved in a loan were in agreement. That threshold is
now being set as low as 20 percent, HSBC Head of Syndicated Finance for Asia-
Pacific Global Capital Markets, Phil Lipton, said in a June 4 interview in Singapore.
The Obama administration wants Europeans to put their banks through more
rigorous public stress tests to help ensure that the institutions survive if the economy
slips from bad to worse. This is payback for Merkel’s statements.
Automobile dealers have been among the biggest contributors to U.S. political
campaigns over the past decade, surpassing all but two groups in donations. That $13
million investment may be paying off as the dealers get a lot of attention on Capitol
Hill.
Congress has held hearings on the planned shutdown of thousands of
dealerships and is debating ways to provide relief to the businesses. Almost a quarter
of the members of the House of Representatives signed letters to President Barack
Obama and his auto task force questioning plans to close the dealerships.
The lawmakers’ involvement may disrupt plans by General Motors Corp. and
Chrysler LLC to emerge from bankruptcy with a leaner dealer network.

10
 Inventories at U.S. wholesalers fell in April for the eighth straight month as
distributors tried to cut excess supply apace with decreasing sales.
The 1.4 percent decline in stockpiles was larger than forecast and followed a
revised 1.8 percent decrease in March that was larger than previously estimated, the
Commerce Department said today in Washington. Sales fell 0.4 percent to the lowest
level since 2005.
The economy shrank at a 5.7 percent annual pace in the first quarter, reflecting
a record drawdown in inventories that may set the stage for a return to growth later this
year. Companies including General Motors Corp. are among those still paring output to
limit the glut of stocks.
“You probably won’t see a big hit to GDP in the second quarter from
inventories,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.
“Even though they’re falling quite sharply, they’re falling at a slower rate.”
At the current sales pace, it would take 1.31 months for distributors to deplete
the amount of goods on hand, compared with 1.32 months in March. The reading was
as low as 1.1 months in June 2008.
Inventories at wholesalers were forecast to drop 1.2 percent after an initially
reported 1.6 percent decrease in March, according to the median estimate of 36
economists surveyed by Bloomberg News. Projections ranged from a decline of 1.7
percent to an increase of 1 percent.
The U.S. Treasury approved 10 banks to buy back $68 billion of government
shares, reducing officials’ authority to intervene in everything from lending and hiring
strategies to compensation policies.
“These repayments are an encouraging sign of financial repair, but we still
have work to do,” Treasury Secretary Timothy Geithner said in a statement released in
Washington today.
Today’s decision reflects rising pressure from banks to free themselves of
government stakes that left them vulnerable to political interference, following a
popular outcry against Wall Street bailouts.
The Treasury didn’t name the banks. JPMorgan Chase & Co. is among those
allowed to repay Troubled Asset Relief Program money, a person familiar with the
situation said yesterday. Morgan Stanley said it is among the group, in a release within
minutes of the Treasury’s announcement.
Goldman Sachs Group Inc., American Express Co. and State Street Corp. are
among those that have sold shares and debt unguaranteed by the government, steps
officials have sought to demonstrate lenders can go without federal stakes.
Bank of New York Mellon Corp., BB&T Corp., Capital One Financial Corp. and
U.S. Bancorp were among firms found to have no additional capital need in regulators’
stress tests on the 19 biggest U.S. banks a month ago.
The pace of prime borrowers going into foreclosure is accelerating, especially
in states with mounting unemployment or property values that saw a big run-up during
the housing boom.
It's a marked shift from earlier this year, when foreclosures were driven by
defaults on subprime loans. And it has major implications — ravaging the credit scores
of borrowers who once had unblemished records and dragging down property values
in more affluent neighborhoods.
It also threatens to undermine the housing recovery.
"It's definitely a concern," says Brian Bethune at IHS Global Insight.
"(Unemployment) is a major driver of foreclosures, and it will frustrate the housing
recovery process."

11
 In the first quarter, almost half of the overall increase in the start of foreclosures
was due to the increase in prime, fixed-rate loans, according to the Mortgage Bankers
Association (MBA). At the end of the fourth quarter, 2.4% of prime mortgages were
seriously delinquent, more than double the 1.1% at the end of March 2008, according
to a report by the Office of the Comptroller of the Currency and the Office of Thrift
Supervision.
"In the beginning, the higher-end (homes) were a bit isolated," says Kevin
Marshall, president of Clear Capital, a provider of real estate asset valuation. "But in
the last several months, we're seeing a significant erosion in the higher-end homes. It's
reached into the prime loans."
California, Florida, Arizona and Nevada represent 56% of the increase in
foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts,
according to the MBA.
That coincides with states reporting some of the highest unemployment rates.
In California, the unemployment rate in April was 11%, according to the Department of
Labor. In Nevada, it was 10.6%.
National chain store sales slumped 4.3% in the first week of June versus the
previous month as Wal-Mart Stores Inc. (WMT) is no longer included in the readings,
according to Redbook Research's latest indicator of national retail sales.
The drop was compared to a targeted 4.1% fall. Wal-Mart, as of May, stopped
providing monthly sales figures. Redbook said it didn't have figures which excluded the
impacts from Wal-Mart now being excluding from the readings.
The Johnson Redbook Index also showed seasonally adjusted sales in the
period were down 4.4% versus a year earlier, compared to a targeted 4.2% drop.
Redbook said that on an unadjusted basis, sales in the week ended Saturday were
down 4.4% from the same week a year earlier.
The International Council of Shopping Centers and Goldman Sachs Retail
Chain Store Sales Index rose 0.2% in the week ended Saturday from its level a week
before on a seasonally adjusted, comparable-store basis.
On a year-on-year basis, retailers saw sales fall 0.8% in the latest week, the
biggest decline in five weeks.
From a default rate of 2% a year ago, Moody’s now expects the US default rate
on speculative grade bonds to hit 14.5% this year. Between 2011 and 2015, $972
billion of index-eligible institutions loans and high-yield bond debt must be refinanced.
This does not include privately negotiated revolving credit lines. Seventeen percent of
these loans could easily default. Structures that repackaged risky debt for institutional
investors no longer exists. The ability of distressed banks under government scrutiny
to make risky loans no longer exists. Where these borrowers will borrow almost $1
trillion and at what price is questionable.
The Fed has been creating money out of thin air and monetizing a good part of
it. This new money has gone to the Treasury and the financial sector. It is not being
lent. It is being used to bolster balance sheets. It is not reaching consumers in the form
of increasing employment, raising wages to restore fallen demand or to enhance
economic recovery. Buying power is falling fast as underlying inflation persists
reducing demand, which you are now seeing in falling retail sales. These funds from
the Fed at the same time support an overpriced stock market. Lenders are opportuning
the markets with public loans as they lay off workers to cut operational costs. That
perhaps brings financial profit inflation and tends to cost price deflation. The result is
financial profit inflation on a temporary bases, which misleads people into thinking
there is a recovery underway when no such economic recovery is at hand. This leads
to stock market corrections of the bubble variety in the context of a bear market rally.

12
All this is the result of intervention by the Treasury and the privately owned Federal
Reserve, the result of which is inflation, which destroys wealth, except for those who
own gold and silver related assets. This production of current money and credit
degrades wealth and money as a store of value. Most of the loss of purchasing power
is borne by the poor and the lower middle class.
The basic problem for the world economy for the past 30 years has been free
trade, globalization, offshoring and outsourcing. Wages have been driven down
worldwide in order to feed mercantilist profits into the hands of transnational elitist
conglomerates. Boom or bust wages spiral lower. This has created massive
overcapacity masked by unsustainable demand. Now even low wageworkers are
unable to buy or pay off their credit cards. Government stimulus is not the answer,
purging the system is the answer.
Republicans have delayed the House vote on a $90 billion Bill funding the war
in Afghanistan and Iraq. It has been postponed until this week because of strong
opposition from the Republicans due to a provision giving additional money to the IMF.
It probably will be dropped from the Bill and be set up as a stand-alone Bill.
A House of Representatives committee on Tuesday said it would subpoena the
Federal Reserve to force the central bank to surrender documents regarding its role in
Bank of America's <BAC.N> takeover of Merrill Lynch last year.
The subpoena comes two days before Bank of America Chief Executive Ken
Lewis is set to testify before the House Oversight Committee, which is probing the
transaction, what Lewis knew about Merrill's financial condition and potential
regulatory pressure to complete the deal.
Lewis, in testimony prepared for the hearing, said he became aware of
"significant, accelerating losses" at Merrill in mid-December after the shareholder vote.
Lewis has consistently maintained in statements that he did not realize the severity of
Merrill's problems until after that vote.
The CEO, who has since been ousted as chairman, also said he told Treasury
and Fed officials he was considering declaring a "material adverse change" which
would have allowed it to walk away from the acquisition.
"Treasury and Federal Reserve representatives asked us to delay any such
action, and expressed significant concerns about the systemic consequences," Lewis
said in the testimony.
Fremont Investment & Loan Co., once one of the state's largest subprime
mortgage lenders, agreed to pay $10 million to settle charges that it offered predatory
loans in low-income neighborhoods across Massachusetts, Attorney General Martha
Coakley said yesterday.
"They essentially agree that their actions were unfair and deceptive, and they
have agreed to pay damages for that," Coakley said.
Fremont had previously denied the charges in court.
Company officials did not comment on the settlement, referring all inquiries to
the company's website. The site did not include information about the settlement, but
said the company has changed its name to Fremont Reorganizing Corp. and that
Fremont loans will now be serviced by Litton Loan Servicing LP.
Fremont, based in California, originated more than 15,000 loans in
Massachusetts between 2004 and 2007 before its parent company, Fremont General
Corp., filed for Chapter 11 bankruptcy in 2008.
Talbots Inc., the US women's clothing chain, said it's eliminating about 20
percent of corporate jobs to reduce expenses in the third round of cuts in little more
than a year.

13
 That includes the elimination of open positions across all corporate locations
and may save $21 million a year, the Hingham, Mass.-based company said yesterday.
Sixty-one open positions are being cut and 264 workers are leaving the company,
Talbots spokeswoman Julie Lorigan said yesterday. The retailer reduced corporate
headcount in June 2008 by about 9 percent and in February by about 17 percent.
U.S. mortgage applications fell last week to the lowest level since February as
a jump in borrowing costs discouraged refinancing and signaled that Federal Reserve
Chairman Ben S. Bernanke’s efforts to cap rates is stalling.
The Mortgage Bankers Association’s index of applications to purchase a home
or refinance dropped 7.2 percent to 611 in the week ended June 5, from 658.7 the
prior week. The refinancing gauge fell 12 percent. The purchase index gained 1.1
percent.
Fixed U.S. mortgage rates jumped to the highest level this year last week,
threatening to deepen the housing slump and sideline prospective home buyers. An
improving economic outlook spurred an increase in rates even as a rising jobless rate
is contributing record home foreclosures. Still, lower property values are helping the
housing market stabilize.
The mortgage bankers’ refinancing gauge issued today fell to 2,605.7, the
lowest level since November, from 2,953.6 the previous week, today’s report showed.
The purchase index rose to 270.7 last week from 267.7.
The share of applicants seeking to refinance loans fell to 59.4 percent of total
applications last week from 62.4 percent.
The average rate on a 30-year fixed-rate loan surged to 5.57 percent, the highest
since November, from 5.25 percent the prior week.
At the current 30-year rate, monthly borrowing costs for each $100,000 of a
loan would be $572, or about $44 less than the same week a year earlier, when the
rate was 6.25 percent.
The average rate on a 15-year fixed mortgage rose to 5.10 percent from 4.80
percent the prior week. The rate on a one-year adjustable mortgage increased to 6.75
percent last week from 6.61 percent.
The Washington-based Mortgage Bankers Association’s loan survey, compiled
every week, covers about half of all U.S. retail residential mortgage originations.
The U.S. trade deficit widened in April for a second month as exports dropped
to the lowest level in almost three years, offering little sign of an end to the worst global
recession in the post-World War II era.
The gap between imports and exports grew 2.2 percent to $29.2 billion, in line
with forecasts, from a revised $28.5 billion in March that was larger than previously
estimated, the Commerce Department said today in Washington. Foreign demand for
U.S. goods dropped 2.3 percent, exceeding a decrease in imports.
A group led by Fiat SpA will complete its purchase of most Chrysler LLC assets
this morning New York time, after the U.S. Supreme Court rejected creditors’
objections and cleared the way for a new U.S. automaker, said two people familiar with
the matter.
The new company, Chrysler Group LLC, will be owned 20 percent by Turin,
Italy-based Fiat, 9.85 percent by the U.S., 2.46 percent by Canada and 67.69 percent
by a United Auto Workers union retiree health care trust fund. The U.S. and Canadian
governments financed the sale with $2 billion.
Chrysler LLC won court permission to cancel 789 car dealership agreements,
as a judge overruled objections from dealers who said their long family ownership and
sales figures made them a boon to the reorganizing company.

14
 U.S. Bankruptcy Judge Arthur Gonzalez in New York ruled yesterday that
about a quarter of Chrysler’s dealers must stop selling the automaker’s vehicles
immediately, as required under an agreement to sell the bankrupt car company’s best
assets to a group led by Fiat SpA.
The 3-year bond auction yielded 1.96% and the bid to cover was 2.82 versus
2.66 to 1. That is because foreign central banks purchased 43.8% of the issue versus
37% at the last auction.
President Barack Obama on Tuesday proposed budget rules that would allow
Congress to borrow tens of billions of dollars and put the nation deeper in debt to
jump-start the administration's emerging health care overhaul. The "pay-as-you-go"
budget formula plan is significantly weaker than a proposal Obama issued with little
fanfare last month.
It would carve out about $2.5 trillion worth of exemptions for Obama's priorities
over the next decade. His health care reform plan also would get a green light to run
big deficits in its early years. But over a decade, Congress would have to come up with
money to cover those early year deficits.
Obama's latest proposal for addressing deficits urges Congress to pass a law
requiring lawmakers to pay for new spending programs and tax cuts without further
adding to exploding deficits projected to total about $10 trillion over the next decade.
Voters now trust Republicans more than Democrats on six out of 10 key issues,
including the top issue of the economy. The latest Rasmussen Reports national
telephone survey finds that 45% now trust the GOP more to handle economic issues,
while 39% trust Democrats more. This is the first time in over two years of polling that
the GOP has held the advantage on this issue.

*****
From a Fellow Subscriber:
Bob, this is as you can see, this is a typical weasel answer:

The response I received from my Rep (Parker Griffith) Huntsville Alabama....he

claims it has to come out of committee before he can vote - duh - can't he still
support HR1207 so that it would come out of committee? - what do you think?

Dear Friend:

Thank you for contacting me concerning H.R. 1207, the Federal Reserve

Transparency Act of 2009. I am honored to have the opportunity to respond to

you on such a pressing issue.

In your letter you expressed a concern for H.R. 1207, legislation would allow
the Comptroller General to carry out an onsite examination of an open insured
bank or bank holding company. Additionally, this legislation would direct the
Comptroller General to complete an audit of the Board of Governors of the
Federal Reserve System and of the Federal Reserve banks, followed by a
detailed report to Congress by the end of FY2010. Please know, I support the
highest level of accountability of tax payer dollars and I refuse to support any
policy that spends them unwisely. As you may already know, this legislation is
awaiting action in the Committee on Financial Services. Unfortunately, I am not
a member of this committee. However should this legislation reach the House

15
floor for a vote, I will be sure to keep your views in mind.
Again, I thank you for reaching out to me, and I encourage you to contact me if
ever I can be of any more assistance.

Sincerely,
Parker Griffith
Member of Congress

*****
Why Home Prices May Keep Falling
By ROBERT J. SHILLER
http://www.nytimes.com/2009/06/07/business/economy/07view.html?_r=3&ref=busines
s

*****
Obama’s Speech
By Paul Craig Roberts
http://www.lewrockwell.com/roberts/roberts268.html
*****

Don't Pry Into Our Intimate Secrets

By Ron Paul
http://www.24hgold.com/english/news-gold-silver-don-t-pry-into-our-intimate-
secrets.aspx?article=2104263392G10020&redirect=false&contributor=Ron+Paul

*****
Max Keiser US$350,000,000,000 TARP missing!
http://www.youtube.com/watch?v=Jp1DRoodaks&eurl=http%3A%2F%2Fwhatreallyha
ppened%2Ecom%2F&feature=player_embedded

*****
The Empire Strikes Back: Preparing for the Worst
By William Buppert
http://lewrockwell.com/buppert/buppert25.1.html
*****
Canadian, US, UK Life, Health Insurers Investing Heavily in Tobacco Companies
http://www.truthout.org/060809HA
*****

From a Fellow Subscriber:

PERM Fake Job Ads defraud Americans to secure green cards for
http://www.youtube.com/watch?v=TCbFEgFajGU&feature=channel_page

*****
The Fed Is Worried About Ron Paul
Posted by Lew Rockwell at June 6, 2009 07:40 AM
The central bank of the United States government--the Federal Reserve--thinks it
needs a lobbyist, to work in Congress against Ron Paul. The Bloomberg story doesn't
mention Ron, but instead interviews some ex-Fed think-tank hack in DC. But it is Ron

16
Paul the Fed fears. What a great achievement of Ron's, to make what Andrew
Jackson called "the Monster," the all-powerful, globe-dominating, special-interest
funding. bankster-enabling, dollar-depreciating, business cycle-generating central bank
worry about its image, for the first time since 1913. His presidential campaign alerted
millions to the fact that we are being ripped-off by the Fed. His Audit the Fed bill (190
cosponsors!) scares the heck out of them. And wait until his End the Fed manifesto is
published this summer! They'll need a whole corps of lobbyists, not that any number of
fixers will be able to protect what is in essence a criminal counterfeiting gang, when its
time is up at last. (Thanks to Jacob Orlowitz)

*****
UPDATE - HR 1207 Now Up To 207 co-sponsors!
http://www.dailypaul.com/node/90775
******
The Economy Is Still at the Brink
http://www.nytimes.com/2009/06/07/opinion/07cohanWEB.html?_r=1&pagewante
d=print
*****

U.S. May Permit 9/11 Guilty Pleas in Capital Cases – What a disgrace for our
country.
http://www.nytimes.com/2009/06/06/us/politics/06gitmo.html?_r=1
*****
Unemployment Climbs to 9.4 Percent, Rate of Job Loss Continues to Slow
Moderately
http://www.truthout.org/060609Y
*****

Contrary Investor Cafe interviews (audio file) Rob Kirby about U.S. trade figures
and U.S. gold exports.
U.S. gold is gone.
http://www.contraryinvestorscafe.com/broadcast.php?media=252
*****

Exclusive Interview with Future Prediction Expert Gerald Celente

http://www.humanevents.com/article.php?print=yes&id=32152
*****
The National Debt Road Trip
http://www.youtube.com/watch?v=P5yxFtTwDcc
*****
Last Friday with Alex Jones
Bob Chapman http://www.mediafire.com/?f2ynyywkruy
<http://www.mediafire.com/?f2ynyywkruy>
*****
Fed to Hire PR Wizard to Fight Against HR 1207
http://www.blacklistednews.com/news-4418-0-5-5--.html
*****

Obama's Outreach to Muslims: Empty Rhetoric, Same Old Policies

17
by Stephen Lendman
http://sjlendman.blogspot.com/
*****
Readying Americans for Dangerous, Mandatory Vaccinations
by Stephen Lendman
http://sjlendman.blogspot.com/
*****

Green Shoots, Red Ink, Black Hole

Truly terrifying data about the real state of the U.S. economy.
By Eliot Spitzer
http://www.slate.com/toolbar.aspx?action=print&id=2219599
*****
What Geithner, Bernanke and All the Smart Bankers Forget
Long-Term Economic Memory Loss
By PAUL CRAIG ROBERTS
http://www.counterpunch.org/roberts06082009.html
*****
Mexican trucks unleashed on U.S.
http://www.redalert.wnd.com/index.php?fa=PAGE.view&pageId=334
*****
The New World Order Wants the New World Order to Fail: Order Out of Attacking
the New World Order
http://www.rumormillnews.com/cgi-bin/forum.cgi?read=148295
*****
FEMA Web Page Shows Martial Law Exercise With Foreign Troops
http://www.infowars.com/fema-web-page-shows-martial-law-exercise-with-foreign-
troops/
*****
Federal Reserve Hiring Lobbyist for Political War
WRITTEN BY THOMAS R. EDDLEM
http://www.thenewamerican.com/economy/commentary-mainmenu-43/1202
*****
EIR EXECUTIVE INTELLIGENCE REVIEW -- HARLEY SCHLANGER
http://gcnlive.com/Archives2009/jun09/Nutrimedical/0608093.mp3
*****

http://www.thenewamerican.com/usnews/election/1215

"The current UN-D'Escoto-Stiglitz-SI plan for world government proposes something

closely akin to that 81-year-old Soviet program. However, considering the scope of
the UN's proposed global restructuring scheme, there has been very little mention of it
by the Obama administration, members of Congress, or the so-called mainstream
media. To the extent that it has been mentioned, the general line seems to be: "Oh,
don't worry about that; the G8-G20 folks won't go along with anything that radical."

*****
True or False: U.S. Economic Stats Lie
http://www.smartmoney.com/investing/stocks/True-or-False-U-S-Economic-Stats-Lie/
*****

18
$50M TOXIC AVENGER
http://www.nypost.com/seven/06102009/business/50m_toxic_avenger_173446.ht
m
*****
http://mgray12.wordpress.com/2009/06/09/are-we-fed-up-yet/

Are you Fed up yet?

Bernanke tip-toes around Congress while Ron Paul's bill gets watered down.
Michael Gray
Deputy Sunday Business Editor
New York Post
mgray@nypost.com
*****

The Media Fall for Phony 'Jobs' Claims; The Obama Numbers Are Pure Fiction
http://online.wsj.com/article/SB124451592762396883.html
*****

Fuel and Food Price Increases Cause Riots

http://www.youtube.com/watch?v=oIopgxv-MYU&feature=email
*****

From a Fellow Subscriber:

Dear Mr. Chapman,
None of the global warming terminating the ice age was man-made, although all
increase in average temperature, due to placement of thermometers in growing cities
& airports, or clear-cut forests, is inherently anthropogenic. No physical chemist claims
that CO2 is a greenhouse gas, otherwise all short, linearly symmetric gas molecules
would qualify, such as N2 or O2, which are instead ideal gases. CO2 is a greenhouse
gas only due to establishment fads successfully stampeding scientific herds via peer-
reviewed journals: e.g. although special relativity has passed more tests and of greater
rigor than has carbon dioxide's greenhouse effect, it's still not a law. CO2 follows the
ideal gas law, such that any increase in temperature is merely due to the pressure
cooker effect when adding more molecules into the atmosphere, but for every
molecule that's added to the atmosphere by burning a hydrocarbon, one molecule of
oxygen needs to be removed, so the net effect is zero. It's the non-ideal gases, such
as water vapor and ozone, which form greenhouse temperature inversion layers, as in
smog. While fluorocarbons are likewise greenhouse gases, it's simply bad science to
thereby condemn all carbon-bearing molecules, which is likely why no climatologist or
other enviromentalist has ever won a Nobel prize in a physical science. Yet the
globalist foundations are on their side via unlimited funding so as to justify the carbon-
tax agenda.
*****
From a Fellow Subscriber:
Bob, I wanted to let you know that I have been sending crystal clear emails to various
congressmen, scolding them for not co-sponsoring HR 1207. I shame them
(particularly members of the Financial Services Committee) and remind them there is

19
no reason for any rationale person not to co-sponsor it.

I also emailed Rep. Kanjorski and scolded him specifically for being largely responsible
for the mark-to-model accounting change and demanded the nonsense stop. Not
surprisingly, he also has not co-sponsored the Bill yet. I bet they are getting hundreds
of emails like this from other people.

The funny thing is I'm Canadian.

*****
From a Fellow Subscriber:
Bob:
Getting ready for tomorrow here as I always do on Sunday evening and this e-mail just
showed up. Don't know if there is any truth in this story in terms of whether it really
happened or not, but the moral of the story is spot on in my humble opinion.

I think most of Obamas staff were in this class and they failed with honors.

An economics professor at a local college made a statement that he had never failed
a single student before but had once failed an entire class.

That class had insisted that socialism worked and that no one would be poor and no
one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on socialism. All
grades would be averaged and everyone would receive the same grade so no one
would fail and no one would receive an A.
After the first test, the grades were averaged and everyone got a B.

The students who studied hard were upset and the students who studied little were
happy.

As the second test rolled around, the students who studied little had studied even less
and the ones who studied hard decided they wanted a free ride too so they studied
little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

The scores never increased as bickering, blame and name-calling all resulted in hard
feelings and no one would study for the benefit of anyone else.

All failed, to their great surprise, and the professor told them that socialism would also
ultimately fail because when the reward is great, the effort to succeed is great, but
when government takes all the reward away, no one will try or want to succeed.
Could not be any simpler than that.

*****
From an Interested long-time Subscriber:
Hi, Bob:
I have a couple of reports for you today.

20
1) Considering
http://www.msnbc.msn.com/id/30892505/#31073805
<http://www.msnbc.msn.com/id/30892505/#31073805>
Road to Roota XIV

By Bix Weir
<http://www.msnbc.msn.com/id/30892505/#31073805>
I was watching the NBC special called "Inside the White House" last night and was
struck by a meeting with Larry Summers and the President.

It was touted as an "all access" day in the life of the President but at 7:15 minutes into
Part 1 Larry Summers and a man who I believe is Austan Goolsbee come into the
Oval Office for a call with "the Germans". Summers is obviously on edge and shuts
down the cameras when he begins to discuss the problem.

Summers: "Life has changed..ahh..since the briefing…ahh”

Obama: "For the better or for the worse?"

Goolsbee: "Net-net for the better…wouldn’t you say Larry?" (Goolsbee speaks
loudly and unconvincingly for the cameras.)

Summers: “(nervous laugh)..there’s elements of both. The Germans...actually

we should stop (the cameras) here."

The cameras and staff are quickly “ushered out” of the Oval Office.

For those who don’t know, Austan Goolsbee

<http://www.whorunsgov.com/Profiles/Austan_Goolsbee> is on the Presidents Council
of Economic Advisers and is touted as Larry Summers’ “Economic Internet Guru”. In
that capacity there is no doubt in my mind that he monitors all the gold internet sites as
well as being in charge of coordinating all the “gold disinformation” articles. Like
Summers, Goolsbee believes in a kind of “Psychological Tendencies Economic Model”
touting that it is perception that steers the worlds economic markets not necessarily
fact. Having fought the gold manipulation battles for so long we all know perception
can be managed and manipulated as I discussed in my articles “Operation Confidence
Con” <http://news.goldseek.com/GoldSeek/1236881987.php> and “Geithner
Plan=Sustained Manipulation”
<http://news.goldseek.com/GoldSeek/1238779140.php> .

On May 28th, the night before the White House taping, Jim Willie of
Goldenjackass.com posted an article called “The Hitman Cometh”
<http://news.goldseek.com/GoldenJackass/1243491300.php> where he claimed the
Germans are trying to withdraw all their physical gold from US control and several “hit
men” have been hired to take down the COMEX and the LME:

"The Germans have demanded that gold bullion held in US custodial accounts be
returned to their owners, with physical gold shipped back to Germany ."

I'll bet my last gold Kruggie that the Oval Office phone call was a desperate plea to buy
more time before the Germans destroy the physical gold manipulation scheme.

21
This together with rumblings of China, Russia, Saudi Arabia and Dubai scrambling to
get their hands on physical gold has put the Obama Manipulation Team in major gold
panic mode.

It's amazing to see these few people in the White House scrambling to prolong a failed
policy of trying to manipulate the gold markets of the world.

What a sad state we find ourselves in.

I tried to find out what happened.

My source reported: Obama was in the Oval Office, preening himself. He enjoys being
filmed. Then Larry Summers and the other man came in. The Germans were on the
phone and they had to talk to Obama.

The Germans wanted their gold back. They had been offered electronic receipts for it
instead. This confirmed what they had heard, that the US Treasury regarded all its
holdings, including metal putatively owned by other countries, as backing for its debts.

The gold had been pledged.

The Germans complained at length about a developing failure-to-deliver emergency on

the Comex. They wanted their physical gold back.

Here's something that really alarmed the Germans. They had discovered that the US
government regarded some of its foreign creditors as more important than others.
They wondered if China had been given preferential treatment.

Larry Summers blandly denied that, but he lied. The Chinese had been promised the
debt would be secured with gold.

The German gold had been leased and borrowed against. In essence it had been sold
several times over.

A few bitter words were exchanged between Summers and the German, to the general
effect of 'after World War II you agreed to let us keep your gold on deposit.' 'Well that
was then. But we have rights now.'

Obama was dragged into the conversation but he did not really pay much attention. He
finds economics boring. In answer to the stressed-out German he offered bland
platitudes and a promise that the matter would be looked into right away.

Then he gave the phone back to Summers, who promised to give the Germans back
their gold and asked for a little more time to get it together.

The Germans now fully understood that their gold was gone. Sourly they insisted on
delivery as soon as possible.

More platitudes. Summers hung up.

At their end the Germans looked at each other and said the German equivalent of

22
“we're really screwed.”

2) A visit to the Russian economic conference in St. Petersberg.

My correspondent reported:

The ambience was very different from the Bilderbergers meeting. The Russian event
was academic and featured serious discussions between major players. By contrast
the Bilderbergers meet looked more like a place where people would go to party and
be seen. A fountainhead of innovation, it was not.

The Russians were dead serious. They had presentations on various topics, but the
underlying tone was worry about the global financial system.

They had an idea about how to cope with the collapse of the dollar and perhaps of all
fiat currencies. At this conference they worked hard to implement it.

The idea was to develop a rough system of commodity equivalents so that nations
could trade by barter. Equivalents were worked out for set quantities of grain. One unit
of wheat was worth so much of this, that and another commodity. Industrial chemicals
such as fertilizers were included. Oil and gas had floating equivalents, not in currency
but in grain.

It looks like the Russians will still be in business after the dollar crashes.

I got some insight into the situation with Ukraine. As far as the Russians are
concerned, Ukraine bit the hand that fed them by trying to join NATO, and is now
begging for a loan so they can afford to buy Russian natural gas. The Russians are
bitter and see no reason to help them.

Ukraine won't give up its NATO bid. It wants a big, fat NATO base on its territory and
the lavish payments and perks that go with such a base.

The Russians will not help Ukraine unless it abandons its NATO bid. Unless someone
else comes forward with the loan (such as the IMF, which various countries are now
pouring money into for no discernible reason) Ukraine will simply take gas for its own
needs from the Russia-Europe feed.

That will cause a big stink in Europe, but the Russians don't care. They have decided
that enough is enough.

FWIW.
All good wishes,
*****

From an Interested Reader:

Letter to Senator Shelby:
Senator Shelby,

With respect to proposed legislation concerning the auditing of the Federal Reserve, I
understand that you are largely responsible for some recent significant amendments

23
that severely dilute the intent and limit the scope of the proposed legislation.

Given you are a senior member of the Banking Committee, may I ask why you would
do this? I find it quite odd that a member as learned as yourself would want to limit, in
any way, the authority of Congress to audit the private Federal Reserve.

For your information, millions of people know what is going on and want it to stop. The
Federal Reserve is likely in the twilight of its existence, and you should support the full
auditing of it, not block the auditing of it.

I am sure you know that those who are found to be complicit in treason, are guilty of
treason.
Kind regards,
*****

From a Fellow Subscriber:

I was told by an excellent source tonight (30 minutes ago) .... that information coming
out of the Shell Oil Refinery in Texas (largest refinery in U.S.) ...that oil is headed
towards $100.00 a barrel and that gasoline would hit between $5.00 and $7.00 a
gallon before the end of the year. This source is very OIL connected.
*****

GOLD, SILVER, PLATINUM AND PALLADIUM

Monday early saw lots of minuses. The Dow was off 87 to 8675; S&P fell 100;
Nasdaq was off 102 and the FTSE fell 104. The Nikkei gained 98, the CAC was off 51
and the DAX fell 80. The yen rose .0004; the euro fell .0148 and the pound lost
.0113. The 2-year T-bill yield rose again to 1.33%; the 10’s rose to 3.85%; one-month
Libor was 0.32% and the 3-month was 0.63%. Oil fell $10.01; gas fell $0.03 and
natural gas fell $0.09. Gold fell $14.10 to $948.50; silver fell $0.48 to $14.90 and
copper fell $0.04 to $2.24.
The beasties attacked early and held gold and silver down all day. The spot
gold price fell $10.60 to $590.40 and the outside month was $0.90 stronger. Spot silver
fell $0.45 to $14.95 and July was $0.03 weaker. Gold open interest fell 9,739 contracts
to 391,960, as silver OI fell 3,483 to 105,791. The XAU rose .41 to 158.01 and the HUI
fell .69 to 367.13.
The yen fell .0003 to $.9837; the euro fell .0071 to $1.3890; the pound rose
.0066 to $1.6012; the Swiss franc fell .0047 to $1.0917; the Canadian dollar rose .0004
to $.8945 and the USDX rose .21 to 80.88. Oil fell $0.35 to $68.09; gas fell $0.01 to
$1.95 and natural gas fell $0.13 to $3.79. Copper fell $0.01 to $2.28; platinum fell
$39.10 to $1,247 and palladium fell $7.80 to $251.25. The CRB fell 1.99 to $255.93.
The Dow off 150 at half hour before the close closed up 1 to 8765, another
miraculous recovery. S&P fell 8 and Nasdaq fell 42. The 2-year T-bill closed at 1.43%,
up 13 bps from Friday and the 10’s were 3.90%, up 6 bps. The Fed has lost control of
the Treasury market.
China’s State Administration of Foreign Exchange says gold reserves
increased to 33.89 million ounces by the end of April.
The ETF-GLD increased holdings 13.39 tons last week for a total of 1.132.15
tons. All WGC gold funds together added 19.94 tons to 1.318.90 tons of gold.
SLV inventory rose 257.25 tons to 8,605.43 tons.

24
 Last week’s COT report for the week ended 6/2 showed another increase in
commercial shorts 18,385 contracts to net 226,521. 95,000 ounces is considered a
permanent short position. If we remember correctly the former high was about
250,000. As gold rose almost $100 the shorts increased positions by 76,913 contracts,
or 51.4%.
The COT silver situation is much different. The silver shorts added only 195
contracts to net 42,974 contracts.
Early Tuesday the Dow fell 35 to 8734; the S&P fell 17, Nasdaq fell 3 and the
FTSE fell 12 Dow points. The Nikkei fell 18, the CAC fell 1 and the DAX fell 12. The
yen fell .0001; the euro fell .0063 and the pound rose .0029. The 2-year T-bill was
1.34%; the 10’s 3.84%; one-month Libor was 0.32% and the 3-month Libor 0.65%. Oil
was up $0.61, gas rose $0.01 and natural gas was up $0.01.
Gold fell $2.50 to $950.00; silver lost $0.02 to $14.94 and copper rose $0.03 to
$2.38. By 7:30 a.m. gold had slowly risen to a plus $1.9 to $954.40 and silver plus
$0.19.
On Tuesday spot gold rose $2.70 to $953.10. The outside month was $0.80
higher. Spot silver rose $0.17 to $15.12. July was $0.11 higher. Gold open interest
rose 2,940 contracts to 394,900. The shares were mixed as the XAU rose 8 to 1.51
and the HUI fell 202 to 365.11.
The yen rose .0101 to $.9740; the euro rose .0186 to $1.4076; the pound rose
.0291 to $1.6330; the Swiss franc rose .0166 to $1.0780; the Canadian dollar rose
.0146 to $.9091 and the USDX index fell 1.06 to 79.85.
Oil rose $1.76 to $69.85, gas rose $0.03 to $1.97 and natural gas rose $0.01 to
$3.74. Copper rose $0.10 to hit a new high at $2.36. The next stop could be $3.30.
Platinum rose $9.50 to $1,253 and palladium rose $5.20 to $256.45. The CRB rose
4.45 to 260.38.
The Dow fell 1 to 8763; S&P rose 30 and Nasdaq rose 106 Dow points. The 2-
year T-bill rose to 1.30%, the 10’s were 3.85%, one-month Libor was 0.32% and 3-
month was 0.65%.
Early Wednesday just about everything was up. The Dow gained 108 to 8850,
S&P rose 122, Nasdaq rose 89 and the FTSE was up 155 Dow points. The Nikkei rose
205, the CAC gained 67 and the DAX was up 123. The yen fell .0043; the euro gained
.0031 and the pound was up .0086. The 2-year was 1.31%, the 10’s 3.88%, the 1-
month Libor was 0.32% and the 3-month was 0.65%. Oil rose $1.21 to $71.22; gas
gained $0.02 to $1.99 and natural gas gained $0.11. Gold was up $6.50 to $961.20,
silver rose $0.20 to $15.34 and copper rose $0.01 to $2.37.

*****
Bad News, Good News

By: Theodore Butler

http://news.silverseek.com/TedButler/1244574104.php

*****
Will “Silver Bullet” finally KILL the Manipulators?
http://www.bullionbullscanada.com/index.php?option=com_content&view=articl
e&id=532:will-a-silver-bullet-finally-kill-the-
manipulators&catid=51:commentary&Itemid=99
*****

25
BLOOMBERG: Buffett Gets ‘Comeuppance’ After Gold Outperforms - Say Gold
and Silver Investments Limited: Bloomberg Chart of the Day
http://blog.goldassets.co.uk/2009/06/04/buffett-gets-comeuppance/
*****
From a Fellow Subscriber:
Hi Bob,

Here's something you don't see on Fox News very often.

The original interview was with U.S. Representative Kirk from Illinois, yesterday, June
9, and is on you tube. He says the Chinese have funded and are planning to buy $80
billion worth of gold.

What's really interesting, is someone saw the same interview today on Fox, and they
edited out the last part about buying gold!

Part of the original interview transcript is as follows:

"China has lent about $300 billion to the US for Fannie Mae and Freddie Mac. They're
very worried about that; another $700 billion in treasury bills. And. they're particularly
worried about the feds new policy of buying treasury debt. Cause they're worried that
one part of the federal government is buying another part of the federal government.
Sounds like printing money... They already are beginning to hedge. I think they expect
quite a bit of inflation in the United States next year, so they made a major investment.

****They funded a second strategic petroleum reserve and they plan to Knox's. Both of
those investments only make sense if you expect significant dollar inflation.****

Here is the original video with the remark about gold:

http://www.youtube.com/watch?v=PUl9DedlQJw

(The remark about gold is near the end)

*****

CANADA
May Housing Starts rise a 9.2% to 128.4K.
It is our suspicion that the Canadian government is hiding the fact that the gold
was submitted for delivery in behalf of the US government in order to rig the gold
market.
Mounties probe potential gold heist from mint
http://www.theglobeandmail.com/news/national/mounties-probe-potential-gold-
heist/article1175559/
*****
From a Fellow Subscriber:
Hi Bob,
Canada continues on the path of tyranny while many Canadians watch hockey and
buy the lie that the world wide depression will not affect us. The incoming head of
Canada's spy agency says new rules requiring digital fingerprints and photos at foreign
visa offices will be extended to every visitor from any country in the world – including
close European allies such as France and Britain. “The intention is to capture

26
everybody.”

Ottawa to seek biometric data on visitors

http://www.theglobeandmail.com/news/national/ottawa-to-seek-biometric-data-on-
visitors/article1175705/
This should do wonders for tourism.
*****
From a Fellow Subscriber:
Gday Bob,
I have finally convinced my mate to get into precious metals and with the hitting of the
markets by the PPT hard recently, I though the time was right time for him to get
physical from our Illuminati founded mint in Perth, Western Australia.

He spent about $6000 on a mixture of gold and silver and compared to market prices
in places such as Ebay and Oztions it is saved him a few
hundred dollars on the price.

But here is the interesting thing. I was speaking openly with the ladyat metals desk and
she mentioned that physical silver has been flying out of the place. So much so they
have very few coins left and are resulting in this years issuance of Kookaburra's 1oz,
no 2oz at all and only a few 5oz and 10oz coins left. They are forced to sell 1oz 2008
"Year of the Mouse (read Rat)" coins at a diminished value to compensate until there
new issuance begins in late October.

In short, that’s 300,000 oz of silver in 1oz coins form gone so far this year and it hasn’t
even really hit many people in our community out there that this is a method of storing
wealth in troubling times, which we now are facing.

She also mentioned gold was also in high demand but didn’t get into the specifics.

On the work front engineering projects is still not happening in Australia unless you
working of the governments "Shovel Ready" and "Green Shoots" road and bridge
projects. I think a similar thing happened in an European country in the 1930's when
international banks also controlled their government.
Keep you powder dry.
*****

LATIN AMERICA
Chile’s economic activity shrank by the most in a decade and the annual
inflation rate fell to a two-year low, boosting expectations that the central bank will cut
interest rates for a record sixth straight month.
The economy contracted 4.6 percent in April from a year earlier, the biggest
drop in a decade, the central bank said in a report on its Web site. A separate report
today showed consumer prices fell for a fourth month in 2009, pushing the annual rate
down to the lowest since 2007.
The pace of consumer inflation in Brazil's largest city, Sao Paulo, slowed in the
four weeks ended June 7, as food and transport prices dropped, the Fipe research
foundation said Tuesday.
Fipe, which is affiliated with the University of Sao Paulo, said its consumer
price index rose 0.23% in the period, compared with a rise of 0.33% in May.

27
The figure was below market forecasts for an increase of between 0.25% and 0.30%.
Food prices fell 0.11% in the four weeks ended June 7, compared with an increase of
0.07% in May.
Transports prices dropped 0.17% in the period, compared with a fall of 0.12%
in the previous period. With recent figures indicating inflation is under control and signs
of an economic slowdown, Brazil's central bank cut the Selic base interest rate to
10.25% from 11.25% in April.

MEXICO
Banco Compartamos SA, Mexico’s second-best performing stock the past six
months, expects past- due loans to rise to the highest in its 19-year history as the
recession sparks layoffs and curbs migrant-worker remittances, Chief Executive
Officer Carlos Labarthe said.
Non-performing loans at the Mexico City-based bank, which targets the
nation’s poorest borrowers, will climb to about 2.5 percent of its portfolio by year-end
from 1.9 percent in March, he said. The bank will open 20 branches this year, down
from 60 in 2008, and will stop adding loan officers in cities to keep costs down,
Labarthe said.
“Maintaining the quality of the portfolio is one of our biggest challenges,”
Labarthe, 40, said in an interview in New York yesterday. “Some of our clients are not
selling what they used to sell. Some of our clients, maybe their husband lost their job.
Some of our clients are not receiving the amount of remittances that they used to.”
Mexican annual inflation slowed in May to a seven-month low, leaving the way
clear for the central bank to keep lowering borrowing costs to help pull the economy
out of its worst recession since 1995.
Twelve-month inflation <MXCPIA=ECI> fell to 5.98 percent as seasonal
electricity subsidies kicked in and food price increases slowed, the central bank said
on Tuesday.

EUROPE
Dutch voters gave the Freedom Party of Geert Wilders, the lawmaker who
made a film linking the Koran to violence, its first seats in the European Parliament,
preliminary results showed.
Wilders’ party received 17 percent of the votes or four of the 25 Dutch seats,
participating in the European polls for the first time yesterday, news agency ANP
reported, citing preliminary results. The Freedom Party aims to reduce European
Union influence, curb immigration and reject Turkey’s membership in the bloc. The
Irish and Czechs will cast their votes today. Final results will be released June 7 after
all 27 EU nations have voted.
While Prime Minister Jan Peter Balkenende’s Christian Democratic Alliance
remains the largest party, the vote indicated the ruling coalition risks losing its majority
in the Dutch parliament after yesterday’s vote suggests the Freedom Party was the
country’s second largest.
“The cabinet should step down, the sooner the better,” Wilders told Dutch
public television NOS. Dutch parliamentary elections are scheduled for 2011.
A Spanish scheme granting up to EUR500,000 to businesses squeezed by the
economic downturn doesn't break strict European Union rules on state aid, the
European Commission said Monday.
"The Spanish scheme will help alleviate the difficulties of businesses affected
by the current situation without giving rise to any undue distortions of competition,"
said Competition Commissioner Neelie Kroes.

28
 The commission has temporarily relaxed the rules a little to allow aid to
companies that were financially healthy before the crisis hit. This is nothing but a
blatant subsidiary. Sales of new cars in Russia plunged 58% in May compared with
the same month last year, an auto industry body said Monday, underlining the heavy
impact of the economic crisis on the country.
The figure covered cars and light commercial vehicles, said the Association of
European Businesses (AEB), a grouping of big foreign companies in Russia, adding
that sales fell 47% from January to May on a 12-month comparison.
German manufacturing orders were unchanged in April after a solid rise in the
previous month, with domestic demand picking up while foreign orders fell slightly,
economics ministry data showed Monday.
The rate of inflation in Latvia continued to fall in May as its economy faltered
and currency worries mounted.
The troubled Baltic country's consumer price index fell 0.5% on the month in
May, with the annual rate at 4.7%, Statistics Latvia said Monday.
The rate of inflation has fallen steadily as economic activity plummeted from
overheated growth and as concern mounted over the country's ability to defend its
fixed exchange rate in the face of such a severe economic downturn.
In April, the CPI fell 0.4% on month and was 6.2% higher on year. The
country's first-quarter gross domestic product contracted 18% on the year-earlier
period.
EU Sentix Investor improves to -27 in June.
Switzerland May Unemployment Rate s.a. rises to 3.5%.
Ireland had its credit rating lowered for the second time this year by Standard &
Poor’s, which cited the nation’s rising bill for propping up its banks.
The rating was cut one step to AA, from AA+, S&P said in a statement today,
moving it to the same level as Japan, Slovenia and the United Arab Emirates. The
rating company assigned a “negative” outlook to the grade, signaling it’s more likely to
cut it again than leave it unchanged or raise it. S&P removed Ireland’s AAA rating in
March this year.
“Ireland has many, many problems and we continue to view it as the weakest
fiscal risk in the European Monetary Union, but investors should not leap to the view
that this is an Iceland in disguise, Harvinder Sian, a strategist at Royal Bank of
Scotland Plc in London, wrote in a research note.
The difference in yield, or spread, between Irish and benchmark German 10-
year government bonds rose three basis points in the wake of the rating change,
climbing to 203 basis points. The spread jumped to 284 basis points on March 19, the
most in 10 years, compared with an average of 22 basis points during the previous
decade.
“The fiscal costs to the government of supporting the Irish banking system will
be significantly higher than what we had expected when we last lowered the rating in
March 2009,” David Beers, head of sovereign ratings at S&P in London, said in a
statement. “Consequently, the net general government debt burden will also be
significantly higher over the medium term.”
Arcandor AG, owner of the century-old Karstadt department-store chain, filed
for insolvency after attempts to win government help foundered, jeopardizing 43,000
German jobs.
The company said this afternoon that it filed to open insolvency proceedings
with the district court in its home town of Essen, citing “threatening illiquidity.” German
Chancellor Angela Merkel said the collapse was “unavoidable” after investors and
banks offered too little to save the company.

29
 Two pleas for help by Arcandor were rejected yesterday by the government,
which said it wanted retail heiress Madeleine Schickedanz and shareholder Sal.
Oppenheim Jr. & Cie. to stump up more funds. According to Spiegel magazine,
Arcandor Chief Executive Officer Karl-Gerhard Eick told Merkel’s office that he’d
decided to file for insolvency rather than proceed with another application for an
emergency government loan.
“Surveys have shown that Germans aren’t in favor of state aid, and the leading
parties really couldn’t rally for taxpayers’ money to help Arcandor’s billionaire main
shareholders,” said Sebastian Hein, an analyst at Bankhaus Lampe in Dusseldorf.
The International Monetary Fund has called on eurozone governments to take
urgent steps to clean up the banking system as losses mount, and advised the
European Central Bank to prepare "all unconventional options" in case the crisis
deepens.
"To restore confidence, you need total disclosure of possible losses," said
Dominique Strauss-Kahn, the IMF's managing director. "Not only losses which are
linked to the original sub-prime crisis, but also the losses linked to the slowdown in the
economy, and impaired assets. There are lots of things that still have to be disclosed,"
he said, adding that credit mechanism remained jammed.
The latest IMF report said the chance to raise fresh bank equity while optimism lasts
should be "seized without delay" and demanded a "comprehensive review to assess
capital needs and viability."
"Stresses persist, conditions for access to bank lending are tight, funding costs
remain high. Sizeable losses lie ahead as the recession unfolds. The financial sector is
hamstrung in fulfilling its vital intermediation role."
The IMF says eurozone banks will need to raise a further $375bn (£235bn),
compared to $250bn for US banks, and has called for a stress-test along the lines of
the US Treasury probe.
There are widespread concerns that Germany in particular is hiding bank
problems until after the September elections, using its "bad bank" scheme to keep
"zombie institutions" alive.
German industrial production fell more than expected in April due to weak
industrial and capital goods output, but there are signs that things could bottom out
soon, data from the Federal Economics Ministry showed Tuesday.
Industrial production fell a seasonally adjusted 1.9% in April from March, which was
worse than the 0.5% drop forecast by economists.
The worse-than-expected figure shows that Germany's economy is still weak,
but the ministry said that the "downturn pace has weakened notably" for industrial
production.
"The chances for a foreseeable bottoming out of industrial production have
improved due to the stabilizing demand for industrial goods and a change in the
tendency of sentiment indicators," the ministry said in a statement.
UniCredit Group economist Alexander Koch said: "Despite the setback in April,
industrial production is down 'only' 2.8% compared to the first quarter, after a collapse
of -11.9% quarter-on-quarter in the first quarter.
"The rate of decline in industry is moderating quickly and considering the latest
further improvement in business expectations and new orders, the coming month(s)
can be expected to bring nicer figures also for industrial production - especially as the
timing of the Easter holidays, combined with an expansion in short-time work, could
have biased the March figures downward."
When adjusted for working days, industrial output fell 21.6% in April on the
year-earlier period; in unadjusted terms, production fell an annual 26.7% in April.

30
 The unemployment rate for the 29-member countries of the Organisation for
Economic and Cooperation and Development rose to its highest level for 15 years in
April as recession weighed on labor markets across the world.
The jobless rate across the OECD area rose to 7.8% in April from 7.7% in
March, matching a level last seen in April 1994, the Paris-based think tank said
Tuesday. The rate, which has risen 2.2 percentage points since April 2008, was just
one percentage point short of the highest level since comparable records began in
1988, it said.
The jobless rate in the Group of Seven leading industrial nations - Canada,
France, Germany, Italy, the U.K., U.S. and Japan - rose to 7.7% from 7.5% in March,
the highest rate since records began on that figure in 1992 and also 2.2 percentage
points higher than April last year.
The 16 countries that use the euro saw their unemployment rate increase to
9.2% from 8.9% in March, a 1.9 percentage point increase over the previous 12
months. European Union statistics agency Eurostat said earlier this month that 9.2%
was the highest rate since September 1999.
The highest unemployment rate across the OECD countries was registered by
Spain, where it soared to 18.1% in April from 17.3% the previous month. A collapse in
the country's construction sector led to Spain's biggest economic contraction since
records began in 1970 during the first quarter.
In joint second place, Ireland and the Slovak Republic both saw their
unemployment rates rise to 11.1% from 10.6% in March.
At the other end of the scale, the Netherlands posted the lowest unemployment
rate among the OECD countries at 3.0%, followed by South Korea with 3.8% and
Austria at 4.2%.
Portugal's economy continued to shrink in the first quarter as exports and
investment plunged and consumers reduced spending, final data from the Instituto
Nacional de Estadistica showed Tuesday.
In a statement, the INE said first-quarter gross domestic product fell by 1.6%
from the fourth quarter and by 3.7% from the first quarter of last year. It was the
biggest year-on-year decline in more than 13 years.
On May 15, the INE estimated Portuguese GDP had fallen at a 1.5% quarterly
rate and a 3.7% annual rate in the first quarter.
The Portuguese economy has suffered from sluggish growth in recent years,
and was beginning to pick up speed when the world's economy started to contract,
causing Portugal's exports to plummet and leading the country's companies to slash
investment.
Investment spending, including spending on construction, dropped by 19.8% in
the first quarter from the same period a year earlier, after a decline of 7.6% in the
fourth quarter, while exports fell 20.8%, compared with a decline of 8.8% in the
previous quarter. Imports also dropped after consumers reacted to news of the crisis
and rising unemployment. Imports fell 20.4% in the first quarter from a year earlier,
following a drop of 4.7% in the fourth quarter.
Greek annual consumer price inflation slowed in May to its lowest rate in 41
years, with prices rising 0.5%, down from a rate of 1% in April, the National Statistics
Service said Tuesday.
On the month, consumer prices rose 0.2% in May, compared with a 0.3% on-
month rise in April.
The last time the inflation rate was so low was in July 1968, when inflation was
also at 0.5%, according to statistics service data.

31
 The yearly increase in May came primarily from higher prices of alcoholic
beverages and tobacco as well as higher education prices, which rose 6.2% and 4.7%,
respectively. Prices in the heavily weighted category of food and non-alcoholic
beverages rose 2.6% on the year, while prices at hotels, restaurants and cafes were
up 2.7% on year.
However, these increases were offset by a drop in transportation prices, down
7.1%, reflecting lower energy costs. Likewise, in the housing category, prices fell 3.9%
also on lower home heating fuel costs.
Telecommunications prices fell 0.7%, mirroring the continued drop in the cost
of fixed-line telephony services.
The inflation rate, measured on a 12-month running average from June 2008 to
May 2009, was 2.8% on the year.
Spanish house sales transactions fell 34% on the year in the first quarter of
2009, pointing to a sustained correction for Spain's once-flourishing home- building
industry, according to data Tuesday from the country's housing ministry.
Spanish home sales fell at a 35% annual rate in the fourth quarter of 2008 and
by 34% in the third quarter.
France's trade deficit narrowed in April to EUR3.79 billion from EUR4.31 billion in
March, due to a drop in imports while exports remained stable, data from the French
customs services showed Tuesday.
Russia may switch some of its reserves from U.S. Treasuries to International
Monetary Fund bonds, the central bank said today. The comment drove Treasuries
and the dollar lower.
Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said some
reserves may be moved from Treasuries into IMF debt, reiterating comments made
last month by Finance Minister Alexei Kudrin. Ulyukayev’s remarks were confirmed by
a Bank Rossii official who declined to be named, citing bank policy.
Treasuries fell, pushing 10-year yields toward the highest level in seven
months, in response to Ulyukayev’s statement. The dollar fell against the euro on
speculation that Russia will reduce its holdings of U.S. debt.
About 30 percent of Russia’s international reserves, which stood at $401.1
billion on May 29, are currently held in Treasuries, Ulyukayev said. Kudrin said on May
26 that Russia planned to buy $10 billion of IMF bonds using money from its foreign
reserves.
The IMF securities would give countries a different way to contribute to the fund
and are unlike traditional bonds because they pay an interest rate pegged to the IMF’s
basket of currencies, known as Special Drawing Rights.
China is expected to buy as much as $50 billion of the bonds, IMF Managing
Director Dominique Strauss-Kahn said yesterday.
Sweden’s four largest banks can handle loan losses in Estonia, Latvia and
Lithuania of 150 billion kronor ($20 billion) over a three-year period, the Nordic
country’s Financial Supervisory Authority said.

*****
Economy Shows Cracks in European Union
http://www.nytimes.com/2009/06/09/world/europe/09union.html?_r=2&ref=global-home
*****

ENGLAND

32
 HSBC Holdings Plc’s U.S. securities division will no longer extend financing to
hedge-fund investors to leverage their investments, a person familiar with the
company’s plans said.
The bank is halting the financing by its structured-funds products division and
eliminating an unspecified number of jobs in New York, said the person, who asked
not to be identified because the information hasn’t been made public. The group
reports to Steven Phan, global head of the investment access and solutions groups in
London, the person said. Phan declined to comment.
“Hedge fund-linked strategies tie up a lot of capital because of the illiquidity of
the underlying hedge fund,” said Keith Styrcula, chairman of the Structured Products
Association, a New York-based industry group. “Those were among the very first lines
of business that firms were cutting back on.”
The cost of borrowing in dollars between banks rose the most in almost three
months on growing speculation policy makers will start increasing interest rates by the
end of the year.
The London interbank offered rate, or Libor, for three- month loans jumped two
basis points to 0.65 percent today, according to the British Bankers’ Association. It was
the biggest increase since March 10. The Libor-OIS spread, a measure of the
unwillingness of banks to lend, climbed for the first time in four days, widening almost
three basis points to 42 basis points.
Signs that the global economy is emerging from the deepest slump since World
War II are fueling bets the Federal Reserve will raise its target interest rate by year-
end. Fed funds futures showed a 31 percent likelihood that the central bank will lift its
target rate to 0.5 percent at its September meeting, up from a 15 percent chance a
week ago.
“Maybe the market thinks things aren’t going to be as easy as they started
believing they would be,” said Natalia Druzhinina, a money-market trader at the dollar
desk at Bank of Ireland in Dublin. “If you look at Libor-OIS spread forwards, there is
definitely the possibility for rate hikes priced in.”
Contracts in the forward market show traders are betting the Libor-OIS spread
will widen to 60 basis points by December, according to data compiled by Tullett
Prebon Plc, the second- biggest broker of interbank transactions after ICAP Plc.
Fight or flight? Hedge fund managers warning of an exodus from London are not
making idle threats. Some have already left. Others are drawing contingency plans.
Hedgies may have no choice but to flee the UK if the European Commission’s
proposals to regulate alternative investment fund managers are adopted in their
current form.
Restrictions on borrowing, shoe-horned into the Commission’s draft directive at
the last minute, would hobble entire trading strategies.
Global macro managers, who depend on leverage to boost returns, would have
few options but to set up shop elsewhere. Even managers that make money in ways
not directly threatened by the Commission’s proposals, such as long/short funds, may
choose to relocate to Geneva, New York or Hong Kong rather than comply with a
directive that would also impose costly reporting requirements. Worst of all though are
fears that the language used in the proposals would restrict non-EU domiciled funds
from marketing themselves to even supposedly “sophisticated” European investors
unless those funds’ home countries instituted similarly restrictive regimes. No wonder
some big funds are talking about entirely foregoing European money rather than play
along.
UK officials have expressed hope that the directive’s more absurd provisions will
be rewritten before they become law, and with good reason.

33
 The Alternative Investment Management Association, the global hedge fund
body, reckons hedge funds and related support services account for 40,000 jobs in the
UK alone.
There are also the tax revenues that fund managers paid to the UK Treasury last
year – and all this from an industry that has not asked for a cent of government
support anywhere during the financial crisis. There is more at stake here than where
high-flying fund managers eventually choose to park their Ferraris.
Lloyds Banking Group Plc, the government-controlled bank that bought HBOS
Plc, plans to cut as many as 1,660 full time jobs and shut all 164 of its Cheltenham &
Gloucester branches.
The C&G branch network will close in November and customers will be asked
to use Lloyds’ 1,800 offices around the U.K. or telephone banking, the London-based
bank said today in a statement. It will also stop writing new mortgages via brokers from
Bank of Scotland and Intelligent Finance from July 1.
The average monthly interest rate offered by U.K. lenders on a two-year fixed-
rate mortgage for 75% of the value of the property on which it is secured fell to an
almost six-year low in May, data showed Tuesday.
The average interest rate dropped to 3.97% in May from 4.02% in April, data
from the Bank of England showed.
This is the lowest rate since 3.87% in July 2003, the BOE's data show.
The data also show that the average standard variable mortgage was unchanged in
May from April at 3.82%, the lowest level since the series began 14 years ago.
The data suggest lenders are increasingly able to pass on much of the 450
basis points the Bank of England has reduced rates by since October last year.
The average two-year fixed mortgage rate has fallen sharply from its recent
peak of 6.35% in July last year, with the rate hovering around the 4% level for three
straight months. Interest rates have been at 0.5% since March this year and the
central bank's decision to maintain rates at this record low level is likely aiding the
housing market, which is showing increasing signs of recovery.
DCLG House Price Index down a 13% in April.
Metropolitan Police officers subjected suspects to waterboarding, according to
allegations at the centre of a major anti-corruption inquiry, The Times has learnt.
The torture claims are part of a wide-ranging investigation, which also includes
accusations that officers fabricated evidence and stole suspects’ property. It has
already led to the abandonment of a drug trial and the suspension of several police
officers.
However, senior policing officials are most alarmed by the claim that officers in
Enfield, North London, used the controversial CIA interrogation technique to simulate
drowning. Scotland Yard is appointing a new borough commander in Enfield in a move
that is being seen as an attempt by Sir Paul Stephenson, the Met Commissioner, to
enforce a regime of “intrusive supervision”.
The waterboarding claims will fuel the debate about police conduct that has
raged in the wake of hundreds of public complaints of brutality at the anti-G20 protests
in April.
The part of the inquiry focusing on alleged police brutality has been taken over
by the Independent Police Complaints Commission. It is examining the conduct of six
officers connected to drug raids in November in which four men and a woman were
arrested at addresses in Enfield and Tottenham. Police said they found a large amount
of cannabis and the suspects were charged with importation of a Class C drug. The
case was abandoned four months later when the Crown Prosecution Service said it
would not have been in the public interest to proceed. It is understood that the trial, by

34
revealing the torture claims, would have compromised the criminal investigation into
the six officers.
U.K. manufacturing rose for a second month in April as a rebound in motor
vehicle production helped end the yearlong factory slump and temper Britain’s
recession.
Output climbed 0.2 percent from March, when it increased by the same amount
after being revised up from a drop, the Office for National Statistics said today in
London. Economists predicted a 0.1 percent gain, according to the median of 26
forecasts in a Bloomberg News survey.

CHINA
China’s passenger-vehicle sales rose 47 percent in May, the biggest jump
since February 2006, as tax cuts and government subsidies helped extend the
country’s lead over the U.S. as the world’s biggest auto market this year.
Chinese drivers bought 829,100 cars, sport-utility vehicles and other passenger
vehicles last month, the China Association of Automobile Manufacturers said in a
statement today. Overall vehicle sales rose 34 percent to 1.12 million.
China has cut retail taxes on vehicles and handed out subsidies in rural areas
after auto sales slowed on the global economy and job concerns. The moves helped
General Motors Corp., the largest overseas automaker in China, to boost sales in the
country 34 percent in the first five months of the year even as plunging U.S. demand
forced it into bankruptcy.
“Sales of small cars have been driving growth,” said Ricon Xia, an analyst with
Daiwa Institute of Research (H.K.) Ltd. in Shanghai. “Whether automakers can reverse
profit declines this year will depend on demand for big cars and heavy- duty trucks that
carry bigger profit margins.”
Combined profit at the country’s top 19 automakers fell 28 percent in the first
four months, while revenue declined 11 percent, according to the association. During
the period, five automakers boosted profit, 10 reported declines and the rest had
losses, it added.

*****
China airs fears on US debt, dollar--lawmaker
http://services.inquirer.net/print/print.php?article_id=20090609-209518

*****
JAPAN
Japan's current account, the broadest measure of the country's trade with the
rest of the world, logged a Y630.5 billion surplus in April, the government said Monday,
as recent record falls in exports abated.
But the current account surplus was still down 54.5% on year, Ministry of
Finance data showed, as global trade remained depressed.
The figure was worse than a 41.6% decline in the surplus to Y806.6 billion
forecast by economists polled by Dow Jones Newswires and The Nikkei. In March the
surplus fell 48.8% to Y1.489 trillion.
Exports decreased 40.6% on year, as a slight pickup in overseas demand
moderated the fall in this crucial segment, which had seen a 46.5% drop in the
previous month. Imports fell 37.8%, the data also showed.
Income surplus, a component of the current account, continued to fall, dropping
18.5%. The second straight month of gains in direct investment from rising overseas

35
subsidiary dividends could not offset the continued slump in profits from overseas
securities.
The current account measures trade in goods, services, tourism and
investment. It is calculated by determining the difference between Japan's income
from foreign sources against payments on foreign obligations and excludes net capital
investment.

AUSTRALIA AND NEW ZEALAND

Australian business confidence improved in May despite a slight setback in
business conditions as financial markets continued to stabilize and stimulatory
government fiscal policies assisted sentiment in the infrastructure sector.
According to a monthly survey by National Australia Bank Ltd. released
Tuesday, business conditions fell four points in May from April to a reading of minus 14
points.
However, business confidence rose 12 points on-month to minus 2 points, NAB
said.

HEALTH
REGULATING COMMON SENSE
We live in an era of regulation. Education, health care, employment, transportation,
banking are all being heavily regulated more than ever before in our history. Being
dependent is in fashion and being independent is discouraged. This is just another
step of control with a goal to regulate common sense. Decisions are being made for us
with the assumption that we are simple-minded. Hate speech laws are creeping into
states across the nation and around the world. This is to regulate your thoughts and
tongue. How else do you teach the next generation to have common sense, to know
who God is and think independently? Laws such as these are not going to be limited to
race or religion. Oh ye simple-minded how long will you be so? (Proverbs 1:22, 22:3,
27:12)

“Responsibility is the key to greatness.” Winston Churchill

(Ironic huh?)
THE PATH TO HEALTH
How did we get to where we trust scientific theory over hundreds and thousands of
years of common sense? For instance, let’s look at anticoagulants both artificial and
natural. No doubt you have heard from physicians that you shouldn’t use aspirin prior
to any surgery because it thins the blood and can promote bleeding. There are foods
that do the same thing but without the side effects.

OTC BLOOD THINNER

Aspirin’s real name is acetylsalicylic acid, which was originally derived from willow
bark. Acetylsalicylic acid alone is so potent that if it were discovered today, it would
require a prescription from a physician. However, aspirin is one of the FDA
grandfathered drugs now sold over the counter. Currently aspirin manufacturers find it
more cost effective to produce a synthetic form of salicylic acid. Unfortunately aspirin
does more than reduce pain or inflammation. Aspirin blocks the production of
prosaglandins, which are key elements for the blood to clot. People with
cardiovascular disease or hypertension are put on aspirin to thin their blood. These
prostaglandins are also important for the body’s immune system. Without
protsaglandins your body can’t identify germs in the blood and signal the brain to
induce a fever and produce macrophages to kill the germs. This is how aspirin turns off

36
a fever by blocking the signal and disables your immune system. Aspirin also affects:
uterine contractions, elasticity of blood vessels and the normal functioning of blood
platelets.

FOODS PREVENT BLOOD CLOTS

There are organic foods that can help reduce the risk of unwanted blood clots such as
garlic, ginger, black mushrooms, salmon or sardines. How do these foods accomplish
this? These foods (like aspirin) block a substance called thromboxane, which reduce
platelet clumping responsible for blood clots and possibly angina pain.

WHAT FOODS MAKE YOUR BLOOD CLOT?

It is helpful to be aware of what kinds of foods will make your blood more prone to clot.
Foods which make the blood thick and sticky, such as dairy products and red meat,
will encourage blood clots.

WHEN YOU ADD THESE FOODS

Some foods, more than others and when eaten regularly, have pharmacological
effects on the body. Heart doctors don’t tell you that your main defense against heart
disease are foods which reduce blood clotting. So, if you don’t want blood clots take a
lesson from the Egyptian physicians from 2000-years-ago and eat garlic and onions.
The ancient Egyptians said that onions were a blood tonic. However, the therapeutic
action of onions isn’t just for humans. The French use onions with garlic to resolve leg
clots in horses. If you are thinking this approach is ok for animals but not for man, then
consider all the animal studies pharmaceutical companies use to test their drugs for
human use. If you don’t care for the Egyptian approach, you may find Russian folklore
more appealing where they combine garlic with vodka.

THE REAL TEST

When we get down to brass tacks and compare the use of garlic to aspirin as a blood
thinner, which is better? A study by Dr. Eric Block of NY State University showed that
in regards to efficiency both garlic and aspirin have the anti-thrombotic (blood thinning)
action with garlic slightly edging out aspirin. He found that garlic and aspirin both shut
down the production of thromboxane (lipids which strengthen blood clots), however
garlic goes a step further and also prevents the blood platelets from clumping together
in seven different ways. This research led Mahendra Jain, Ph.D. in biochemistry of the
University of Delaware to confirm and state that “Garlic’s mechanism is unique.”
Science has not pinpointed exactly what makes garlic a superior blood thinner and
anti-clot agent. George Washington University also concluded through their medical
researchers the same thing and included onions in their studies. Dr. Victor Gurewich of
Harvard found that his patients who ate onions every day improved their heart disease.
He found it was the compounds in the onion (which is cousin to the garlic) helped
block platelets from sticking together causing blood clots. Plus he found onions helped
to dissolve existing clots. The icing on the cake would be a study done by a physician
from India, N. Gupta at the medical center in Lucknow. Gupta documented that onions
would block the blood clots promoted by eating fatty foods (butter, cream, red meats).
His research showed that by eating ½ cup of onion it would cancel the detrimental
effect of a fatty meal, which normally produced thick and sticky blood and promotes
blood clots. I like the white onion – it’s hotter and you’ll have fewer colds.

HOW MUCH

37
How much garlic and onion do you have to eat to have this therapeutic benefit?
According to German research, garlic definitely speeds the dissolving of blood clots
and improved blood flow. Their research recommended 3 raw cloves of garlic per day
for a 20% cardiovascular improvement. The study also stated that the garlic not only
improved circulation but also purified the blood of impurities. I know what you are
thinking, “Can’t I cook the garlic, maybe add a little butter and put it on French bread?”
I will let you know when a study on the cardiac benefits of garlic toast is released. Heat
changes the chemicals of medicinal compounds in foods and herbs and lowers the
therapeutic benefit.

Rx FOR GOOD HEALTH

Don’t let anyone regulate your common sense. God’s foods and herbs are superior to
any drug. So, add garlic and onion to your diet as much as possible. If you don’t like
the taste of these foods or they don’t agree with your digestion you can use them in a
concentrated liquid to obtain the medicinal benefit. Look for All-In-One formula or
Heart/Cholesterol/BP formula at Apothecary Herbs http://www.thepowerherbs.com
866-229-3663, International 704-875-8010.

OTHER HERBS
Celtic Sea salt is unrefined and contains minerals to support the cardiovascular system
and helps give elasticity to the arteries and veins to help prevent plaque build-up. In
most cases it does not cause hypertension (high blood pressure) and compared to
regular table salt you will use 1/3 less salt. With regular use, the minerals in this salt
help to dissolve the fat and calcium deposits of the arteries and veins. Meadowsweet
herb contains salicylates (similar to aspirin), is an anti-inflammatory, pain reliever and
helps to thin blood without aspirin side effects. It is recommended to take 2-4 droppers
full of Meadowsweet tincture 2-3 times daily. You will find Celtic Sea salt $16.50/pound
and Meadowsweet herb (in the Pain Relief Formula $17.95) at Apothecary Herbs
http://www.thepowerherbs.com 866-229-3663.

Portuguese Sea Salt® - imported from the traditional salterns (a 2000-year tradition)
along the coast of Algarve, Portugal. Salt crystals are harvested by hand and sun-
dried. This is a true artisan sea salt providing richness as well as a smooth and elegant
flavor to food. 1/2 pound ground unrefined Portuguese Sea Salt® just $8.50 at
Apothecary Herbs 866-229-3663, International 704-875-8010
http://www.thepowerherbs.com.

EXTRA HEART ATTACK PREVENTION

In addition to the heart strengthening therapies above, while you have some extra
prevention on hand for the onset of a heart attack. For a combo of five potent formulas
in a handy carry pack for emergencies especially when you can’t get medical attention
- look for the Heart Attack Pack (just $99.00) at Apothecary Herbs
http://www.thepowerherbs.com 866-229-3663, International 704-875-8010.

YOUR EASY SELF-CARE PLAN

As you heal and become stronger, consider the next step to better health by boosting
your immunity and adding longevity by cleansing the organs of the body. Remove
toxins from the organs and regenerate your body, function better and help prevent
disease. Go to the experts in immune boosting and organ cleansing, go to Apothecary

38
Herbs http://www.thepowerherbs.com 866-229-3663, International 704-875-8010. Call
for a free product catalog and empower yourself.

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HERB TALK LIVE – with Herbalist Wendy Wilson every Tuesday & Thursday at 7:00
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#10 CANS SURVIVAL FOOD – call Freeze Dry Guy 866-404-3663 or

www.freezedryguy.com.

*****
Unanswered Chemtrail
Questions... As Evidence Mounts
©By Dr. Ilya Sandra Perlingieri
http://www.rense.com/general86/unans.htm
*****

Glutathione Accelerator - Any Good?

http://americansjourney.blogspot.com/2009/06/glutathione-accelerator-any-good.html

39
 *****

From a Fellow Subscriber:

This article is the biggest load of crap I ever read - and I've read a lot of crap from our
government and medical industry. Having been diagnosed with prostate cancer two
months ago, I began a regimen of diet change, organ cleansing, supplements and
alternative cancer cures. My health has never been better in many respects which I
will soon document in a series of articles. After one month, my PSA dropped from 5.4
to 2.9 and all pain in my prostate area is gone. My blood pressure, cholesterol and
organ functions have all improved tremendously without drugs. I have seen several
oncologists and urologists and consider them salesmen for their profession and
treatments. All were unaware or in denial of treatments that have worked and are
endorsed by other brave oncologists and doctors who have risked everything to tell the
truth. This article is simply a warning that the world government and their hitman the
FDA will soon crack down on anything that allows individuals to prevent and cure
diseases and illnesses. Their "studies" of alternative care and conclusions/results are
totally bogus. Meanwhile they do nothing to stop GMO foods, foods filled with
antibiotics and hormones, pubic water poisoned with chlorine and air poisoned with
heavy metals and other crap which is being dropped by aircraft on citizens of the world
(chemtrails). Alternative treatment is only being used by the establishment as cover
for their radiation, chemo and surgery which are HEAVILY promoted to cancer patients
who are scared to death and unaware of the harmful effects and low cure rates of the
slash, burn and poison approach which attacks the patients natural defenses and
pocket books. Herbs and supplements are under attack by the government while
cigarettes, coffee, liquor and contaminated foods are all permitted and promoted.
They are killing off the world's population through government induced diseases and
are preventing the public from defending themselves through natural means. Wake
up doctors, military, law enforcement and people of the world!!!!!! Chuck Augustin.

http://apnews.myway.com//article/20090608/D98M5H3O0.html
AP IMPACT: Alternative medicine goes mainstream
June 7, 8:17 PM (ET) By MARILYNN MARCHIONE
*****
SCHEDULED ISSUES
Every Wednesday and Saturday June 2009

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