- Jan 31, 2005
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I dont know how accurate it is in regards to the numbers thrown out, but none the less I did find it a good read so figured I'd share. I think it goes to show just how on edge everything is right now.
I didnt post the whole article as theres lots of graphs and charts and such.....
Article
The rally you saw last week was little more than a normal, bear-market bounce ? predicated on the myth of government omnipotence ... spurred by the blind faith in fiat money ... and triggered by the official attacks on short-sellers.
For investors who jump into financial and other vulnerable stocks now, it's a trap door. But for those who feel like they're still stuck in all the stocks we've been telling you to get rid of, it's an escape hatch. Use it as your selling opportunity. And don't look back.
We spelled out the reasons in our Special Midyear Update. And behind me on my monitor is just one of them.
I hope you were able to attend. But whether you did or not, this gala, double-length edition of Money and Markets is the edited transcript, which I've taken the liberty to update with the latest inflation numbers ...
Special Midyear Update
The Great American Nightmare:
What Washington Won't Tell You About
This Unfolding Financial Debacle
(Edited Transcript)
Martin Weiss: This is the first stage of the dangerous bear market we've been warning you about. And just as we've warned, the market is being driven down by the single most important sector: Financial companies, the heartbeat of our economy.
Nearly every major bank, brokerage and lender you can name is up to its eyeballs in leveraged investments whose value is going up in smoke. They're borrowing hundreds of billions from the Fed. They're raising billions more from investors, diluting their shares. They're selling massive amounts of assets ? scrambling any way they can to raise cash to survive.
Merrill Lynch, America's largest brokerage firm, has lost more than two thirds of its stock value. Citigroup, once America's largest bank by market cap, has lost even more. Washington Mutual has given up nine tenths of its value. On average, even including the strongest of the banks, half of the wealth of bank shareholders has been wiped out.
This is the first stage of the deep recession we've been warning you about. Banks have no choice but to deny loans to all but the most highly qualified borrowers; and as a result, corporations and consumers have no choice but to cut back on their spending.
Consumer confidence is the worst since 1980. Mortgage default rates are the worst since the 1970s. Even the government's highly suspect official numbers show that the growth of the U.S. economy is grinding to a halt.
This is also bringing the runaway inflation we've been warning you about, with oil and energy leading the way. This time, unlike the 1970s when we had artificial energy shortages created by OPEC or by Iran, the planet is confronting chronic, long-term energy shortages.
But at each step of the way, what truly angers me is that our government leaders ? the very people we elect to protect our interests ? continually minimize, downplay and sugarcoat this crisis.
First, they told us it would be limited to the subprime mortgage market. Then, they told us it would be limited to housing. And of course, every time the Fed pumped in more money for a new bailout, they swore on a stack of Bibles that it would not re-ignite inflation.
The gap between what you see and what they say has never been greater. Today, we're going to show you how they're cooking the nation's books, distorting key economic data, and perpetuating the deception that things aren't nearly as bad as they really are. And we're going to show you why this great deception is, in itself, one of the greatest dangers of all.
As grim as the situation is, though, never forget: As a nation, we will get through this. We faced reality in the Great Depression and we created a stronger country as a result. We faced reality during World War II and we helped create a better world in its aftermath. And that's what we need to do again ? face reality.
But right now, unfortunately, we live in two worlds. We live in a real world that average citizens experience each day ? sinking home values, surging gas and food prices, the disappearance of easy credit. Plus, we live in a fantasy world that Washington bureaucrats have created ? an American economy that they say is "still growing," inflation that they say is still "still moderate," a credit crisis that they repeatedly say has been "overcome."
How big is the gap between fiction and reality? Is it getting bigger? What are the real consequences for investors?
To help us answer those questions, John Williams, the founder of Shadow Government Statistics, was scheduled to join us. But John had a personal conflict and couldn't make it today. So he will join us on another occasion.
Separately, our own Larry Edelson has been issuing similar warnings about the government's rigged numbers for many years. And he knows John Williams' work very well. So we've invited Larry to provide his own analysis, based on Mr. Williams' data and writing. Thank you for joining, Larry.
I didnt post the whole article as theres lots of graphs and charts and such.....
Article
The rally you saw last week was little more than a normal, bear-market bounce ? predicated on the myth of government omnipotence ... spurred by the blind faith in fiat money ... and triggered by the official attacks on short-sellers.
For investors who jump into financial and other vulnerable stocks now, it's a trap door. But for those who feel like they're still stuck in all the stocks we've been telling you to get rid of, it's an escape hatch. Use it as your selling opportunity. And don't look back.
We spelled out the reasons in our Special Midyear Update. And behind me on my monitor is just one of them.
I hope you were able to attend. But whether you did or not, this gala, double-length edition of Money and Markets is the edited transcript, which I've taken the liberty to update with the latest inflation numbers ...
Special Midyear Update
The Great American Nightmare:
What Washington Won't Tell You About
This Unfolding Financial Debacle
(Edited Transcript)
Martin Weiss: This is the first stage of the dangerous bear market we've been warning you about. And just as we've warned, the market is being driven down by the single most important sector: Financial companies, the heartbeat of our economy.
Nearly every major bank, brokerage and lender you can name is up to its eyeballs in leveraged investments whose value is going up in smoke. They're borrowing hundreds of billions from the Fed. They're raising billions more from investors, diluting their shares. They're selling massive amounts of assets ? scrambling any way they can to raise cash to survive.
Merrill Lynch, America's largest brokerage firm, has lost more than two thirds of its stock value. Citigroup, once America's largest bank by market cap, has lost even more. Washington Mutual has given up nine tenths of its value. On average, even including the strongest of the banks, half of the wealth of bank shareholders has been wiped out.
This is the first stage of the deep recession we've been warning you about. Banks have no choice but to deny loans to all but the most highly qualified borrowers; and as a result, corporations and consumers have no choice but to cut back on their spending.
Consumer confidence is the worst since 1980. Mortgage default rates are the worst since the 1970s. Even the government's highly suspect official numbers show that the growth of the U.S. economy is grinding to a halt.
This is also bringing the runaway inflation we've been warning you about, with oil and energy leading the way. This time, unlike the 1970s when we had artificial energy shortages created by OPEC or by Iran, the planet is confronting chronic, long-term energy shortages.
But at each step of the way, what truly angers me is that our government leaders ? the very people we elect to protect our interests ? continually minimize, downplay and sugarcoat this crisis.
First, they told us it would be limited to the subprime mortgage market. Then, they told us it would be limited to housing. And of course, every time the Fed pumped in more money for a new bailout, they swore on a stack of Bibles that it would not re-ignite inflation.
The gap between what you see and what they say has never been greater. Today, we're going to show you how they're cooking the nation's books, distorting key economic data, and perpetuating the deception that things aren't nearly as bad as they really are. And we're going to show you why this great deception is, in itself, one of the greatest dangers of all.
As grim as the situation is, though, never forget: As a nation, we will get through this. We faced reality in the Great Depression and we created a stronger country as a result. We faced reality during World War II and we helped create a better world in its aftermath. And that's what we need to do again ? face reality.
But right now, unfortunately, we live in two worlds. We live in a real world that average citizens experience each day ? sinking home values, surging gas and food prices, the disappearance of easy credit. Plus, we live in a fantasy world that Washington bureaucrats have created ? an American economy that they say is "still growing," inflation that they say is still "still moderate," a credit crisis that they repeatedly say has been "overcome."
How big is the gap between fiction and reality? Is it getting bigger? What are the real consequences for investors?
To help us answer those questions, John Williams, the founder of Shadow Government Statistics, was scheduled to join us. But John had a personal conflict and couldn't make it today. So he will join us on another occasion.
Separately, our own Larry Edelson has been issuing similar warnings about the government's rigged numbers for many years. And he knows John Williams' work very well. So we've invited Larry to provide his own analysis, based on Mr. Williams' data and writing. Thank you for joining, Larry.
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