Small update at bottom (11.11.02)

An Economy Hanging by a Thread

Devvy Kidd
November 9, 2002

People like me have been warning Americans for years about the true state of the economy. I continue to strongly urge individuals to purchase gold and pay off any debt you have as quickly as possible. I also like to give you a little of Bob Chapman's newsletter here and there because this man is so right on target, I want people to know the truth and not the bald face lies fed to them by self-serving politicians and TV mouthpieces who are paid to lie.

From this week's International Forecaster:

    "Only nine months into the year job seekers in record numbers have exhausted their six-month's unemployment benefits. Some are using the three-month extension, but over 20% have no benefits left. In Arizona 55,559 workers are out of benefits and of those 38,410 have exhausted the regular 26-week benefits. The other 16,249 have exhausted both benefits. This gives you an idea where things probably are nationally. Our guess is that in another three months 50% will have exhausted benefits putting us at 1975 levels. In addition, the Arizona DES is getting 4500 new claims weekly.

    "The number of murders rose by 2.5% in 2001 in Oakland, Ca. Cities the size of Oakland, 150,000 to 400,000, were the hardest hit with a 9% increase. Drugs are certainly part of the problem and will continue to be. Over the last 10 years the amount of drug offenders in state prison increased by 69%. Three percent of the population is either in prison or on probation. The real reason for these terrible crime figures is that we are in a recession and as recession deepens crime will increase to epic proportions.

    "Investors' thinking today seldom includes what happened in the 1930's. Those in their 70's and 80's are now leaving us in vast numbers, their lives here on earth now having been completed. During the 1930's interest rates fell as they are doing so today, and then as in today's Japan those almost zero interest rates were incapable of jump-starting a moribund economy. The 50% of banks that survived the first depressionary onslaught did quite well, especially with all the gold having been collected by the government, eliminating monetary competition.

    "Again, today the financial sector is plundering the business sector.  Banks and money produce nothing, our business and production do. Even recent legislation penalizes the business sector and not the banks and brokerage houses. We also never see any evildoers in the major banks and brokerage houses going to jail. They pay fines always and go on with what they were doing. It's those from business and industry that go to jail. Both are guilty but there is no equality of justice.

    "As the elitists who run our country try to dig themselves out of recession they employ lower interest rates. As you have seen in the 1930's and in Japan, over the last 13 years lower interest rates or effectively zero rates do not revive economies, but what they do do is make bond prices go higher and bring extraordinary profits to banks. Once gold was abandoned in 1933 and finally in 1971, the era of stable interest rates was over.

    "The mooring for our fiscal and monetary system was thus destroyed. More than anything else the end of the gold standard put power in the hands of the financial world and took that power away from productive America. Over the past 60 years we have watched the denigration of American industry, which will soon put our country into bankruptcy as production is shipped to the third world under the guise of free trade. Thus, without a gold standard or a gold exchange standard we are guaranteed a depression and that is what we are about to have. Those controlling the financial world know that zero interest rates don't revive economies and as we proceed headlong into trouble the price of gold has to be suppressed because higher gold prices would be a clarion call that something was wrong with the economy.

    "If investors do not see gold appreciating in value they think all will be well and they hold their stocks and buy even more bonds, particularly US government bonds, which subsidizes their adversary's profligacy. That is why we now have a bubble in the bond market. Once that bubble is broken and real interest rates rise there will be a flight to the only quality left, gold.

"Worse yet, the public doesn't have a clue as to what's being done to them and of course, writers such as we are totally insane. Soon we will have no inflation but it will be replaced by deflation and depression. This is why it is so important to be as much out of debt as possible. Complicating matters is the $150 trillion in derivatives. Derivatives are simply an insurance bookmaking operation. There wouldn't be a derivatives market of this size if we had relatively stable interest rates that are a result of a gold exchange standard. The heart of the problem is that as long as we don't have gold as the anchor to our standard we can never gain control of our economy and make it flourish again.

    "The capping of the gold price allows the looting to continue unabated. This is what central bank leasing and gold manipulation is all about. It allows endless profits in bonds for financial entities such as banks and brokerage houses. History tells us there is an end game and that is: sooner or later the system breaks down and when it does gold reasserts its rightful place as the ultimate currency. That time is close at hand.

    "We again want to bring to your attention that whopping $13.00 increase in Social Security, which was offset by a $4.70 rise in insurance. Health costs are going to double every 10 to 12 years at the current rate of increase, and with deflation taking away cash Social Security increases, health coverage could eat up a substantial part of Social Security benefits. Government is paying Social Security and Medical from a system that is broke and is subject to declining revenues for sometime to come. The system could collapse soon or it could diminish in value over the years to come, perhaps while America has 15-25% unemployment.

    "Not a happy thought, but a very realistic one. As the economy deteriorates so does corporate ability to service pension fund liabilities. Of course, a solution to part of the situation is to eat properly, take supplements and stay healthy. If you don't, the drug manufacturers will surely have you ill, dependent and prematurely dead. Health care is already out of the reach of 40% of our citizens. The exception, of course, is illegal aliens. Medical services' costs and the costs of all services are making life difficult for us all, but particularly the elderly. The bottom line for government is that tax revenue can't possibly service the needs of our social problems and perpetual war for perpetual peace.

    "Arizona's taxpayers may be stuck with paying the full tab of jailing thousands of illegal immigrants convicted of crimes. Congress has failed to fund a Justice Department program to provide $546 million to states to cover such costs. President Bush wants to kill the program and lawmakers want to increase funding to $750 million for 2003. The federal government refuses to control illegal immigration leaving the entire burden to the states. States are spending $1.6 billion to keep criminal illegal aliens behind bars.

    "You have no doubt heard of the US interventions into Bosnia, Somalia, Haiti and Kosovo, but not about Sierra Leone. The Sierra Leone government had Nigerian troops assist them in their fight against rebels along with South African mercenaries and by a US company managed by Special Forces operatives called International Charter Inc. of Oregon. This is one of several companies that supplies mercenaries for foreign adventures sanctioned by the State Department, Defense and the CIA.

    "These actions are part of a global trend of military outsourcing and foreign policy by proxy. There are 90 private military companies (PMCs) that have operated in 110 countries worldwide. Mercenaries are officially outlawed under Article 47 of the Geneva Convention. These mercenaries supposedly stay behind the scenes, but always end up in or close to combat. As we mentioned in an earlier article, since 1994 the US Defense Department has entered into 3,061 contracts with 12 US based PMCs. More than 2700 contracts were with Kellogg Brown and Root and Booz Allen Hamilton.

    "We won't go into all the other companies but they are all elitist owned and controlled. PMCs are potentially destabilizing forces. They have lack of transparency and public oversight, perform for profit rather than national interest, form a bridge between government and former employees, and present potential for conflicts of interest. Many are also working for foreign governments. We have extensive research on the subject but the bottom line is the US Government should not be using mercenary armies to work against perceived enemies. It undermines our constitution and American morality and it should be stopped.

    "The US and Europe are both in recession. The euro is trading at about parity again probably by default. Both the US and Europe are in a terrible mess. The dollar index is fast approaching 106 again and if that is broken support exists at 102 to 102.50. After that it's freefall. Once interest rates go to 1% or 1.25% they probably can't go lower, which means that mechanism can no longer be used to support the dollar.

    "2003 will be the most dangerous year in 73 years as many economic forces converge into what could be the biggest depression in modern times. This is the result of systemic cracks in the world financial system and globalization/free trade. This is resulting in worldwide deflation and an abundance of even cheaper goods and now services. World trade volumes increased 8.2% from 1994-2000 or 50% faster than the 5.6% average growth over the preceding decade.

    "Global foreign affiliate sales hit 60% of world GDP in 2001, a record. Since the collapse of the equity and real estate markets in Japan in 1994, domestic growth has been 1.3% a year and it is still fading. This is what is going to happen in the US. All the comparisons are there and all the red lights are flashing. If you think the telecom-DotCom collapse was bad, wait until you see the real estate collapse. The excesses since 1999 throughout mortgage finance are simply outrageous. Fannie and Freddie were creating $3 trillion a year in mortgages, certainly an unsustainable rate. Worse yet, the entire structure has been built on derivatives.

    "Of course, there is no recession. That's why seniors are returning to the workforce, some in their mid-eighties. About 4.2 million people 65 or older were working in 2000, up from 3.5 million in 1990. The number will grow to 5.4 million in 2010. The number of workers 75 and older has jumped more than 80% in the last 20 years to some 800,000. Returning to work is a financial necessity especially since the stock market tanked. Some have lost annuities thru the failure of insurance companies.

    "Most seniors go back to work because illness of a spouse has wiped out savings so now they can't pay for medications, eyeglasses, and dental work. This is a find for many companies because they can hire people who made between $20 and $100 an hour for $7 to $12 an hour. They are always on time and are a great help to younger workers. Most seniors love going back to work. They have been retired and know what a curse it can be.

    "All that production from Asia will not find ready buyers in the US as the US consumer cuts back. That means Asian producers will cut prices on goods to make them more attractive causing further deflation. It is quite obvious that we never left the recession we were in and the recession is about to deepen.

    "Prices continue to fall along with weakening commodity prices. Over the last 10 years goods' prices are off 15% largely due to steep price cuts over the past two years. As we forecast, Asian countries continue to devalue to keep their goods flowing into the US cheaper then ever. This is a fundamental reason why free trade can't work. Even Japan is joining the deflationists by weakening its own currency in spite of the fact they are already in depression.

    "Granted, goods are only 22% of the economy but we can see weakness beginning to appear in services. We are seeing 30% lower prices on fees for golfing as a start. Services are becoming globalized and it won't be long before you see a foreign effect. The CPI is at a 48 year low and services are starting to show deflation. Again, get out of debt with cheap dollars. A year from now it will be much more costly.

    "Our President will provide any justification he can to begin a war. Our President is ignorant, arrogant and corrupt and will do whatever is necessary to enhance the wealth and power of his own, fascist, elitist clique. Given the opportunity, he will plunge this nation over the abyss into endless misery, degradation and lack of freedom. We must stop him from forcing us to descend into darkness.

    "What makes this recession different is that the US economy is suffering a very different kind of joblessness than in previous recessions. The unemployment is primarily white collar and highly educated. Not only have they never been unemployed before but also they haven't had a bad day in their entire lives. Jobs are both scarce and hard to get, especially for well-paid professionals. This is why confidence is eroding. Now it's not only the over 40's who are being jettisoned, some of our best minds are out of work. That's why the austere are starting to save and get out of debt, but as they do that others are forced out of their jobs for lack of business.

    "It's getting tighter out there. Many US companies now offer their employees payroll-deduction cards that work like interest-free cards. Workers can charge up to 2.5% of their salary and take up to two months to pay the loan off through payroll deductions. You have to say to yourself, where does this all end?

"Bankruptcy, Chapter 11 filings were up 8% in the second quarter from a year earlier, compared with a less than 3% increase in personal bankruptcies overall. That rise comes as the total amount of mortgage debt outstanding has jumped 50% to $5.7 trillion in just the past four years. The number of homeowners in bankruptcy has risen sharply to a record 750,000 versus 450,000 five years ago and this is just touching the surface.

    "There are people entrapped by lower interest rates, who through easy financing with virtually no rules, bought up to even larger more expensive homes. This trend is an unmitigated disaster because it comes as Americans continue to increase credit card debt, which is up 5% for each of the last five years. A record 1.2% of all mortgages are in foreclosure. If new legislation is passed exempting credit card and auto finance debt from bankruptcy you can prepare for debtors prison and a total and complete economic collapse. It is better for the lenders to go bankrupt than the entire nation."

Subscription information: 1-year $99.95 U.S. Funds.  Make check payable to Robert Chapman, (NOT International Forecaster), and mail to: P. O. Box 510518, Punta Gorda, Fl 33951.  Please include name, address, telephone number and email address. We accept VISA and MasterCard charges.  Please provide us with your card number and expiration date. We will charge your card $99.95 for a one-year subscription. Please note, we publish twice a month by surface mail or 3-4 times a month by email.  Our email is: or For new or renewal subscriptions please contact 941-639-0619 or the above email addresses.

                                                                    * * *

Buy your gold from Harvey Gordin at USA Gold Vault. Protect your assets. Gold doesn't lie and it's the only real money. Gold will move and when it does, those who were smart enough to invest now will be the lucky ones. This war for control of oil in the Middle East is going to have an even bigger negative impact on our economy and security. Demand for gold is bigger than the supply making it even more precious. USA Gold Vault: 602.228.8203 or

This e-mail is a good example of what will happen to our constitutional Republic if Americans don't wake up and re-build America for Americans first:

From the Gulag
John Brimelow Report

John Brimelow
Greenwich:(203) 422-2241/2239 Fax
New York Office:(212) 813-2600/1084 Fax
Cell Phone: (917) 680-3877

Russell Comment -- and you wondered why the Fed dropped rates half a percent yesterday!

The e-mail below, received last night, may give you some idea of what US business is confronted with --

Dear Richard (Russell) --

    "To back up what you've been surmising...a patient of mine just returned from China where he spent a few weeks and is being paid as a consultant. (he was one of the people who figured out how to bond metallic oxides to other materials like astronaut face plates)...he went with some trepidation as he has been in Thailand and Korea ,etc.....well he came back astounded...he was in a mid-sized town on the coast, no big city metropolis, his hotel was all marble and beautiful ...$43/day and from his 12th story room he counted 19 hi-rise cranes building other structures...nice paved roads and no cars. the plant he was at had thousands of workers imported from farm areas 2000 mi away, they had uniforms and lived in co. supplied very nice dorms..they wok 9 hour days 5 days a week with 1/2 hour lunch and do not talk to fellow other words a giant beehive filled with worker bees -- they are paid $10/week and encouraged to work on weekends, most do. The factory parking lot had four parking spaces for cars and 2000 bicycles

    "They want his help in building a new factory, and he said he would need to get together with some engineers to discuss it ..the next day they had 60 engineers in one room and started laying out the needs...he said they accomplished in 2 days what would take 6 mos. here. Also the Chinese will not buy Chinese tools and there are no import taxes on tools from elsewhere...why? because they take apart imported tools and copy them, and they are excellent copies. He said they copy everything from music c.ds. to DVDs (they don't have tape they skipped that phase of development and went right to c.d's.

    "He said it was the most amazing thing he has ever witnessed to use his words "we don't have a chance". On a tour of one work area in the plant with 45 workers all trimming plastic flash from an extruding machine one employee looked up at another of his fellow drones and then went back to work..the supervisor leading the tour dropped everything and berated the man grabbed his I.D. badge and dismissed him on the spot.

    "Growth rate 19% year, and this is not a major metropolitan area. It looks like Mao's cultural revolution in reverse, instead of moving every one to the farms they are moving everyone back from the farms and there so excited to have jobs they work 7 days a week. He said there was a school below his room and the students ran to get to school, and the children all seem to be learning English..he said it was actually kind of scary. regards norm

                                                                            * * *

Stop buying foreign products. Go without like I do.

Quit funding our mortal enemies like Communist China.

Demand Made in the USA and help us reopen America's factories and put our people back to work in meaningful jobs. You can buy Made in the USA more than you know. You can start at:

Support American farmers by refusing to buy foreign fruits and vegetables and tell your grocer you'll do without. I do it all the time and have for years.

Open your eyes America. This is no laughing matter. America became the greatest nation on this earth because of our industrial, manufacturing and agricultural base. It's almost gone and America is becoming a nation who can't support themselves, but depend on foreign products and goods. This is so dangerous and yet most Americans don't have a clue.  Make like Paul Revere and help get the truth to them. E-mail this to ten people and ask them to do the same.

American businesses are firing their own customers, like me, because I care about the long term survival of my nation, not saving a buck on a blouse from some third world dump or a communist country like Hong Kong and China.

Your children have no future except as indentured servants to the banking cartel. Help bring America back to greatness as an independent and strong nation dependent on no one - especially countries who are not our friends.

Former Secretary of Ag, Ezra Taft Benson, from his book,  An Enemy Hath Done This, pg 155:

    "Already, I can hear the chorus chanting "isolationism, isolationism, he's turning back the clock to isolationism. How many use that word without having the slightest idea of what it really means! The so-called isolationism of the United States in past decades is pure myth. What isolationism? Long before the current trend of revoking our Declaration of Independence under the guise of international cooperation, American influence and trade was felt in every region of the globe. Individuals and private groups spread knowledge, business, prosperity, religion, good  will and, above all, respect throughout every foreign continent.

    "It was not necessary then for America to give up her independence to have contact and influence with other countries. It is not necessary now. Yet, many Americans have been led to believe that our country is so strong that will can defend, feed and subsidize half the world, while at the same time believing that we are so weak and "inter-dependent" that we cannot survive without pooling our resources and sovereignty  with those we subsidize. If wanting no part of this kind of "logic" is isolationism, then it is time we brought it back into vogue."

November 11, 2002:

Bouncing paychecks blindside some workers

By Stephanie Armour, USA TODAY

    "As the economy struggles and more companies collapse, some employees are finding their employers can't afford to pay them.

    "The paycheck woes are coming because many companies are struggling to hold on: About 160 publicly traded companies have filed for Chapter 11 bankruptcy reorganization this year, according to Employees are staging walkouts over bounced paychecks and unexpectedly finding themselves unable to pay rent and bills.

    "I was so mad and felt betrayed," says Laurie Skinner, 31, a sales and marketing employee in Centerville, Ohio. Her bank told her it couldn't cash a former employer's check because there wasn't enough money to cover it. "All I knew was that my mortgage was due, my car payments were due. I was wondering, 'Will I have money for groceries?' "

    "Other examples:

    "Teachers in the West Fresno, Calif., School District stayed home for several days this month after they didn't get paid. Parents picketed and carried signs demanding that the instructors be paid. Teachers worried about how to buy food and make house payments.

    "Almost all teachers stayed home," says Becky Zoglman, a spokeswoman for the California Teachers Association. State officials vowed to take over the financially troubled district and that teachers would be paid for October.

    "More than 140 employees at Highlanders Alloys, a metals production company in New Haven, W.Va., walked off the job in June after paychecks bounced, union officials say. The strike lasted nearly three weeks.

    "The company has made up for the unpaid checks and agreed to a contract with guaranteed wages.

    "Thousands of health care workers' checks bounced in October because National Century Financial Enterprises in Dublin, Ohio, a company that expedites insurance payments for hospitals and physician groups, missed payments it makes to health care providers. "We're working very hard to resolve issues," says National spokesman Jim Nickell.

    "For some companies, the bounced checks can be a last gasp for survival. Working at a company in Los Angeles, Melanie Terrell was given her paychecks but told not to cash them until later because they'd bounce. The company would take money from clients and rush it to the bank so that paychecks could be handed out."