THE INTERNATIONAL FORECASTER

WEDNESDAY, JUNE 17, 2009

061709(5)_IF
P. O. Box 510518, Punta Gorda, FL 33951-0518
An international financial, economic, political and social commentary.

Published and Edited by: Bob Chapman

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SCHEDULED ISSUES
Every Wednesday and Saturday June 2009

US MARKETS
The next major move in the stock market will be down. We are seeing the last
vestiges of a rally similar to what we saw in 1931. The rally we expected at 6600 up to
8500 will end as soon as all the financial institutions that need to sell what stock is
necessary to bolster their balance sheets. Our guess is the rally has been aided in a
big way by short covering and the participation of the US government. Those who
believe the SEC has stopped naked short selling are sadly mistaken. Markets weaken
during the summer as volume dries up during the vacation season. In addition, second
quarter earnings will be very disappointing, especially in the financial segment.
Unemployment continues to worsen and capacity utilization is at its lowest level in
years. Banks continue to cut credit lines and not lend nearly as much as they did
before. Citigroup’s earnings should turn down again. They won’t have another $2.7
billion gain or another $400 million mark-to-market fictitious gain. Absent those gains
they would have lost $2.8 billion.
The credit crisis certainly isn’t over after 23 months. The credit markets are still
very tight and the residential and commercial real estate markets are still in a state of
collapse. In the midst of this ongoing fiasco the Fed is monetizing $2.2 trillion in
treasuries, Agencies and CDOs, collateralized debt obligation, otherwise known as
toxic junk. Our fiscal deficit for this year ended 9/30/09 will be between $2 and $2.5
trillion, followed by more than $2 trillion in 2010.
Times are tough, everywhere and export nations are determined to keep their
products cheaply devaluing their currencies.
When all is said and done the Fed will have to remove hundreds of billions in
toxic assets from lender balance sheets, get consumers to spend and allow banks to
lend again. Ben Bernanke at the Fed would really like to see a lower dollar, to get
consumers to spend. But if that happens interest rates will move higher hurting real
estate sales. As Ben dreams, unemployment increases adding more downward
pressure on home prices, causing lower prices and reducing equity. Congress is

3
pushing to have returned TARP money back to the Treasury and the PPIP program
looks like a nonevent, because it could cause insolvencies. Public funds would be
used to protect bondholders of mismanaged companies. Ben and Tiny Tim want to
reopen securitization markets that caused the problem in the first place. They have to
be insane. They want to bring back leverage that caused this monstrous problem we
have.
The TALF, Term Asset-backed Securities Loan Facility, makes non-recourse
loans, willing to buy AAA bonds backed by consumer and small-business loans, in a
market that is frozen. Then for private investors there is a guarantee because the loan
recipients cannot pay the loans back. This would cost taxpayers hundreds of billions
more dollars.
The public is de-leveraging, which means less consumption, less profits and
more savings. The bear market is far from reversible. The rally is over. Dow 6600 will
be retested. The basis and support for growth no longer exists. Credit markets are still
semi-frozen and the financial system is no better off now than it was 23 months ago.
The big foreign lenders have brought a new global dynamic into the game.
Rising yields are a signal that the unusual dollar rally that should never have been, is
over. The safety of the dollar is no longer sacrosanct. In fact, it is being in some
quarters perceived that the dollar is no longer safe and it has to vie with gold as the
safe haven go to asset. Fiscal deficits are projected this year to be $2 to $2.5 trillion
and well over $1 trillion annually for years to come.
Commodity prices have surged over the past several months as the dollar has
weakened, which reflects anticipated future inflation as well as rotation. We have seen
this reflected in precious metal prices as well. The leeway the Fed experienced some
months ago via deleveraging has past making it much more difficult to employ
quantitative easing, monetization. The job of pegging long-term as well as short-term
interest rates will be difficult and very injurious to the value of the dollar, as more and
more money and credit are made up out of thin air. Trillions of dollars of MBS, ABS
and CDO being purchased by the Fed incurring long-term losses can’t be tolerated
indefinitely.
Sadly as the Fed and the Treasury go so does most of the nations of the world.
In that case most all currencies depreciate against gold. Yes, the Fed can drive rates
down, but for how long? Especially as the economy fails to perform and taxes rise as
do borrowing costs. Import costs are already rising as well. Foreign lenders, with each
passing day, become more skeptical of monetization, the damage it will do to the dollar
and the Fed’s ultimate ability to retire dollars from the financial system. Dollar selling
will feed on itself under those circumstances pushing the dollar lower versus other
currencies and gold. It is now only a question of when will the system break? We do
not know that, but we do know it will break and the only safe haven to preserve wealth
is in gold and silver.
Higher interest rates have to have caused great consternation in the banking
community concerning their IRS and CDS swaps. This is an unregulated market so no
one except the players know what is going on inside. For a number of years these
contracts have caused interest rates to be abnormally low. If these swaps were to blow
up interest rates could and probably would move substantially higher.
The big loser in all of this will be the dollar as more and more dollar owners
become fearful and sell dollars. If you look at a USDX chart you will see what we
mean. A total breakdown as the dollar struggles to begin momentum and break out
over 81 again. It is not going to happen. The question is how long will it take to get to
71.18? We can list all the reasons for pressure on the dollar, but you already know
them.

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 The Fed is monetizing about $2.3 trillion in Treasuries, Agencies and CDOs.
We said week’s ago that these monetizations would be followed by an additional $2
trillion if not by the end of this year, by March 2010. The Fed has no other choice. This
is going to go on indefinitely until the dollar reaches 40 on the USDX and at that point
no one will want to buy dollar denominated securities or to even borrow dollars. That is
when we’ll have our next Bretton Woods type conference where all currencies will
devalue and default and gold and silver will reach great heights. We saw all this
coming when we warned you earlier in the year that you had until June to refinance
debt. We hope you did so. We are now entering a new stage in real estate. Price
pressure is going to press a further downward bias that will last a minimum of 3-1/2
years. How long we will be on the bottom no one knows.
This is why you do not want to own US Treasuries or US corporate or
municipal bonds. A better currency is the Canadian dollar if you must have money in
Treasuries. All your funds should really be in gold and silver related assets.
Interest rates have now become a dummy’s game driven by derivatives. They
are going to explode. It is only a question of when. All the major banks, holding 75% of
US deposits are insolvent, and they will collapse when the derivative bomb explodes.
In addition there are lots of other losses on the way as well. The ability of the Fed and
the Treasury in the misuse of “The Working Group on Financial Markets” will come to
an end. Much of what they have been up too will be exposed by an audit of the Fed,
which we believe is on the way. As a result legislation will follow that and will bring an
end to the criminally misused executive order number 1263, which Bill Keene and Sue
Herrera tell us on CNBC doesn’t exist. It will be discovered that the swaps market has
little or no collateral and as a result Goldman Sachs, Citigroup, JP Morgan Chase and
Bank of America will meet their demise. The biggest positions reside with JP Morgan,
thus they should be first to bite the dust. The losses are going to be in the trillions. The
loss of capitalization when the bomb explodes will engulf the entire world financial
system.
The Ron Paul strategy in HR 1207, now with 225 co-sponsors, the Federal
Reserve Transparency Act of 2009, and the companion Bill in the Senate S604, The
Federal Reserve Sunshine Act, sponsored by Bernard Sanders (I-VT) will uncover
what the Fed and its owners – the major banks – have been up too; particularly in
rigging markets.
It looks like HR 1207 will be passed in the House. Now train your guns on the
Senate. Hit every Senator with: Dear Senator, Please co-sponsor S604, the Federal
Reserve Sunshine Act of 2009, and make it become law. Sincerely, etc. Short and
sweet and to the point. No comments or opinions.
The Fed is in a box and cannot get out. We have to make sure they do not get
out by investigation, exposure and destruction. The Fed is the core, the nexus of the
Illuminati. Few in the media or in business will tell the truth because they are either in
on it or they are terrified to talk about it for fear of being destroyed. This is the kind of
world we live in. you can still do your part by contacting the Senators. We want them
buried in emails. This is our chance to finally win without bloodshed.
President Obama has begun selling his healthcare program. He presents it as
a reduced cost, guaranteed choice, quality plan for all. The reality is government
programs will result in higher costs, no choices and inferior care. The legislative
vehicle for this health care deception is planned to be in the budget reconciliation bill,
which requires only 51 Senate votes for passage instead of the 60 needed to authorize
new programs.
The Kennedy Plan promises that all Americans will have health care,
employers will have to contribute to the costs. A government program will subsidize

5
premiums for people up to 500% of the poverty level, that is $110,000 for a family of 4,
and private insurers will have to pay out a specified percentage of their premium
revenues in benefits. There is no provision for funding the program, so it looks like
perpetual deficit spending to cover the costs.
Healthy people will be forced to pay more for their insurance in order to
subsidize those not as healthy, those who have ruined their bodies and minds and the
old.
Fines will be imposed if you do not provide health care for employees. That
means the employers will not insure employees and pay the cheaper fine, or just go
out of business.
That means 100 million people happy with their programs will have to take an
inferior government plan. Then, of course, is the bureaucracy, which dictate treatment
and who will live and who will die.
Part of the proposal includes a proposal to tax these health benefits with
current employer-based health insurance.
We are promised cost savings by putting all Americans’ health records on a
uniform computer system, which will be eventually mandatory for all countries. These
totalitarian controls will be forced on all doctors and terminate all medical privacy.
Healthcare will be rationed letting bureaucrats decide who gets treated and
how and who will be allowed to die. Seventy percent of medical lifetime costs occur in
the last year of life. We already experienced this with a doctor and I asked him which
side of his head he’d like his brains blown out of.
Part of the legislation would provide healthcare for illegal aliens, which 80% of
American voters are opposed too.
It would be far more constructive to begin to fix the problems in Medicare and
Social Security then try to create an expensive new system.
On the other side of the spectrum are those who want a single-payer-approach
like those used in Europe. Congress has said they won’t even consider it, this in spite
of the fact that any other plan will leave the big insurance companies in charge and
keep hurting patients. Someone should tell these poor ignorant souls that both parties
are promoting corporatist fascism.
The real deep-seated problem is that the health insurance companies and
related industries are major campaign contributors to members of Congress on both
sides of the aisle. Senator Grassley is a good example. Since 2005, he has collected
$1.3 million in donations from industries related to the health insurance debate.
In a different perspective on healthcare the US will spend 15.4% of GDP both
state and private. With that it gets 2.6 doctors per 1,000 people; 3.3 hospital beds and
its people live to 78.2 years.
The question is how do we cut down medical costs? There has been some
pressure to do so, but costs go relentlessly higher. Senators and congressmen receive
hundreds of millions of dollars from the industry to continue their gravy train. Then
there are the investors, bureaucrats and preexisting conditions.
Mr. Obama doesn’t have the answers and neither does the industry.
How can anyone not expect interest rates to rise? Mandated programs such as
Medicaid, Medicare, Social Security and the FDIC and the Pension Benefit Guarantee
Corp., and a host of others have us over $100 trillion the short-term.
We have been in a crisis financially and economically for 23 months. We were
in recession from February 2007 to February 2009, and we have been in depression
since this past February. The budget deficit for the fiscal year ended 9/30/09 should be
about 15% of GDP the largest deficit since WW II or five times last year’s deficit. The
Treasury and the Fed have created money and credit of some $14.8 trillion and next

6
year we project over $20 trillion - this as our government acquires large stakes in
banks, brokerage houses, insurance companies, health-care, mortgage companies
and auto and truck manufacturers.
As a result of this dreadful profligacy last month in May we began the
beginnings of inflation resumption that will soon become hyperinflation. Interest rates
will continue to rise as will gold, silver and commodities and bonds, stocks and the
dollar will decline against other currencies and gold and silver. Business will be forced
to pass on price increases or go out of business. Currency in circulation, which
nominally is 10%, is now 50% of the monetary base and bank reserves have risen by
20-fold. Banks have this huge position as a reserve against their liabilities. This allows
banks to float or extend the day they’ll have to write off their losses.
Banks are able to expend their loan making abilities, but they have not done so
as yet. As this loan constriction continues the expansion of money and credit is
running at about 18% annualized. This will in time result in higher interest, which are
underway and higher inflation, which we’ve begun as well. By way of example, M1 is
near 15% the highest level in 50 years.
We are looking at a monetary policy far more inflationary than in the late 1970s,
we know we were there. That wasn’t a pretty picture and neither will this be. We saw
inflation at 13.5% and the prime rate at 21.5%. We saw gold rise from $35.00 to
$850.00. This time it could cross $6,000.
We’d like to see the Fed purge the system, something they should have done
six years ago. We hear talk of contraction, but that is not going to work even if the FED
wanted to do it, which they don’t. They contract and the whole house of cards
collapses. Some talk of raising reserve requirements, but if the FED does that the
system will implode due to the continuing deflationary drag. Real estate is still a long
way from the bottom and it will experience trouble for years to come. The bottom won’t
be hit until 2012 or 2014. The demand for liquidity by the Fed and the Treasury is so
great that just over the coming year it will be close to $5 trillion. There you have it and
it is not a pretty picture.
Quite frankly, we have a once in 100-year opportunity to destroy the Federal
Reserve. The House should pass Ron Paul’s HR 1207, so we have to now make sure
S 604 is passed in the Senate. After the investigations begin it’s terminate the Fed.
The Fed has done as it pleases for 96 years looting the American public. They
are almost totally secret and when a federal judge demanded the Fed to disclose
where funds went, why, and how they were used, they told the judge to drop dead – it
was a state secret. There is so little transparency congress just had to subpoena the
Fed over the Bank of America affair, where our Treasury Secretary Paulson and Fed
Chairman Bernanke told Mr. Lewis, BoA Chairman and CEO that if he didn’t take over
Merrill they’d destroy him and his board. These people are criminals and should be
treated as such. Let’s begin the charges and let’s pass HR 1207 and S 604 and follow
that with terminating the Fed and return our monetary policy where the founding
fathers directed it – to the US treasury. The Fed is fighting a battle behind the scenes
against new accounting rules that would make banks move more assets onto their
books. The issue is toxic assets. The banks instead of lending 8 to 10 dollars for every
dollar on deposit lent 40 to 60, made bad decisions and lost. These banks, some of
whom own part of the Fed are insolvent. That is why the Fed does not want rule
changes. They cannot deal with the toxic waste that runs into the trillions of dollars.
The Fed has been buying this worthless waste in anticipation of the American taxpayer
paying for it. The Fed cannot stand transparency because they are criminals and don’t
want the public to know what they are up too. The mortgage market is frozen and may
never be unfrozen. That is why the Fd is trying to clear the banks books. We find it of

7
interest that the Fed won’t tell us what they are paying for this garbage. Yes, what did
they pay and what are they worth? Who has gotten bailed out by the Fed
shareholders? Americans have a right to know.
Foreigners, or at least some of them, are dumping dollars in a big way because
they see what is going on. That isn’t going to end anytime soon. The further the dollar
falls the more heat the Fed will get from foreign investors. If they do not clear bank
balance sheets, fund and monetize the Treasury and increase money and credit on a
continual massive basis, the economy will collapse as well as the financial system.
The Fed will not be forced to slow down monetary creation because they have no
other choice to gain time. Yes, and lest we forget, zero interest rates. Japan has had
them for 16 years and they have never come out of depression. Removing money and
credit from the system is just wishful thinking. All we can tell you is the dollar has seen
its highs and it won’t be too long until the bubble bursts. Before this is over there will
be many criminal indictments of Illuminist and the entire world economy will be
zombieized. This depression will last at least ten years and probably twenty years
unless the elitists fund both sides and have another war. Then it could be another dark
ages. The same kind of fascism existed in the 1930s under FDR but no one
understood what the elitists really were up too and that was world fascist government,
but again they couldn’t make it work. What did work and we live with that legacy today
and it is preeminence of industrial America, Wall Street and banking.
Our Treasury Secretary Mr. Geithner tells us the $700 billion from TARP that is
and will be returned will go back to the General Fund, but the treasury will continue to
use those funds on a permanent basis in any way Treasury sees fit. That means a
slush fund for perpetuality. Needless to say, we need legislation to change this. The
reason 10 of our biggest banks, that hold 75% of deposits, want to go back to paying
their executives hundreds of millions of dollars a year. The next step is to concentrate
regulatory power over the financial system with the Fed and restart massive derivative
creation and securitization, so the banks can return to profitability in a big way, and
these CEO’s can get ever richer, as the economy goes deeper into the abyss. This is
why we have fought for Ron Paul’s HR 1207, the Federal Reserve Transparency Act
of 2009. Once the Congress and the people see what the Fed has been up too, they
will want to get rid of it. Once gone we have to end the revolving door between Wall
Street and banking and government. As we slip deeper into depression congress will
then consider tariffs on goods and services to bring our jobs and companies back
home.
It is also time to press for the companion Bill in the Senate S 604 sponsored by
Bernard Sanders (I-VT). It is now in the Senate Committee on Banking, Housing and
Urban Affairs. Deluge every Senator on this issue and haul in the co-sponsors as you
did in the House.
The US Treasury has to be stopped from subsidizing the major banks that own
the Fed under TARP. The taxpayers are supplying the capital and are guaranteeing all
of these bank’s derivatives and other bad debt. It is no wonder they want the Fed to
oversee things. These are the people who own the Fed. You will see more shotgun
weddings, like you saw in the Bank of America-Merrill Lynch rescue, or the
Countrywide-Bank of America caper. Both rescued firms were virtually worthless, but
BoA was forced to buy them both out.
Economist Paul Krugman sees the current economic situation in comparison
with Japan’s last 18 years. He sees the risk of long-term stagnation as really high and
these past two years as being worse than those Japan endured. As we have predicted
he says a second stimulus package will be needed late next year.

8
 Banks over the past year have accumulated $949.6 billion, up from $96.5
billion in April 2008. We guess those funds will be used to purchase the shortfall in
what the Treasury needs due to falling reserves. We have said that we believe all the
toxic garbage being purchased by the Fed is providing further funds to buy treasuries
in daisy chain fashion. We also expect some falling off of domestic Treasury and
Agency buying of $2 trillion as the stock market declines and bond yields attempt to be
capped at 4% to 4-1/4%. Another thought is that the Fed and Treasury have created
negative events to shift to positions, which allow them to better control markets. The
manipulation, which we cannot see, is unbelievable. That is why we need a Fed audit
and real oversight, not just a wink and a nod.
Internet advertising in the United States dropped 5 percent in the first quarter,
marking the marketing medium's first downturn since 2002 when the Web was still
recovering from the dot-com bust.
The data released Friday by the Interactive Advertising Bureau and
PricewaterhouseCoopers LLP provided another reminder of the widespread pain
wrought by the longest U.S. recession since World War II.
But the Internet's financial backbone isn't sagging as badly as that of more
established media like newspapers and broadcasters, where far more severe
advertising losses have triggered massive layoffs, bankruptcy filings and doubts about
whether their businesses will ever be the same again.
By contrast, the setback for ad-driven Web sites and services is considered
temporary.
`"We're confident that growth will resume as the U.S. economic climate improves," said
Randall Rothenberg, the Interactive Advertising Bureau's chief executive.
Advertising revenue has been drying up as more companies clamp down on
their marketing budgets to save money during tough times. The drought has gotten
worse during the past year as traditionally big spenders like banks, automobile makers
and dealers, department stores and real estate developers have been grappling with
major crises that have forced some of them to merge with rivals or simply close their
doors.
Even before the Internet recorded the first-quarter decline in ad revenue, sales
have been slowing down after years of rapid growth.
U.S. advertisers spent $5.48 billion on search, display, video and other Internet
ads during the first three months of the year, a decline from $5.77 billion during the
same quarter last year.
It was the first year-over-year decrease since the fourth quarter of 2002, when
Internet advertising fell 4 percent.
Mahmoud Ahmadinejad won Iran’s presidential election with 62.6 percent of
the vote, the country’s Interior Minister Sadegh Mahsouli said in comments broadcast
on state television.
Textron Inc.’s Cessna unit will cut 1,300 more jobs as the planemaker revises
its production forecast amid continued order cancellations.
The reductions are in addition to the 6,900 previously announced, Karen
Gordon Quintal, a company spokeswoman, said in an e-mail. With today’s cuts,
Textron will eliminate 9,600 jobs companywide, including the 8,200 at Cessna, she
said.
A legal loophole lets bill collectors seize Social Security and veterans' benefits,
even though federal law is supposed to protect the payments from most creditors.
That loophole is direct deposit.
Creditors have been seizing payments by getting court orders to freeze and
garnish bank accounts that receive the benefits through direct deposit and it's

9
happening more often as more people opt to have their benefits deposited straight into
their bank accounts.
For their part, banks say they're often confronted with court orders to garnish
accounts that include deposits from multiple sources.
They often respond by freezing the account until the bank customer and the
creditor resolve the issue.
Lawmakers from both parties have been pressing the Treasury Department for
years to close the loophole.
The Obama administration is promising action but has offered no timetable for
developing new rules.
Confidence faltered in June among U.S. home builders, left uneasy by a rise in
mortgage rates.
A market sentiment index published monthly by the National Association of
Home Builders dipped this month. The gauge reflects builder confidence in sales of
new, single-family houses.
The drop in the NAHB's housing market index reported Monday, to 15 from 16
in May, followed two months of increases that had nurtured hopes of a bottom to the
housing crisis. Signs have surfaced this spring indicating the worst of the recession is
past.
But mortgage rates have climbed in recent weeks, pushed by rising
government bond yields. Investors are concerned about inflation because of increased
spending in Washington meant to pull the economy out of recession. Freddie Mac
(FRE) data showed the average on a 30-year mortgage loan was 5.59% last week - 73
basis points higher than the average four weeks earlier of 4.86%, an advance that
could hurt demand for houses.
Net long term securities transactions have been $11.2 billions in April, down
from from revised $ 55.4 billion in March, according to figures by the US Treasury
Department. Net foreign purchases of US securities have totalled $34.3billion in April,
from which $18.3 billion were purchased by private foreign investors, and $16.0 billion
by foreign official institutions. US residents sold a net $23.0 billion worth of long term
foreign securities. USD/JPY has the most sensitive pair, in regards to TIC data, and
the Dollar has broken below the intra-day support level ar 98.00/10, and rejection from
98.55 has extended to 97.94 intra-day low minutes after TIC data was released.
Economic conditions for NY manufacturers have worsened in May, as the NY
Fed manufacturing Index dropped to a reading of -9.41 from -4.55 in April. The Dollar
has remained little moved by manufacturing figures. New orders Index remained in
the negative side; -8.15 in May from -9.01 in April, while the index of employment
improved slightly, although at very low levels; -21.84 from -23.86.
Extended Stay Hotels, the operator of mid-priced hotels acquired at the peak of
the commercial real estate market for $8 billion, filed for bankruptcy protection as the
recession cut corporate and leisure travel.
The Spartanburg, South Carolina-based chain, with more than 680 properties
in 44 states, collapsed two years after Lightstone Group LLC purchased the company
with $7.4 billion in financing. The company said it had $7.1 billion in assets and $7.6
billion in debts at the end of last year, according to papers filed today in U.S.
Bankruptcy Court in New York.
The latest act in the drama of the American International Group opens Monday
when the ailing insurance giant takes its former chief executive to court, accusing him
of plundering a trust that it says was set up to pay top performers.

10
 A.I.G. contends Maurice R. Greenberg, 84, who ran the company for decades,
unlawfully took $4.3 billion in stock in 2005, the year he was forced out as chief
executive.
Mr. Greenberg and his lawyers say that those A.I.G. shares — owned by Starr
International, a privately held company, of which he is chairman — were not held in a
trust at all. As Starr’s chairman, they say, Mr. Greenberg had the authority to sell the
shares and invest the proceeds in new offshore insurance businesses and in a new
charitable arm.
The government bailout of A.I.G. occurred after the main events in the case,
which revolve around the intricacies of trust and securities law. But the trial may delve
into the broader questions of who is responsible for A.I.G’s near collapse and whether,
as chief executive of A.I.G., Mr. Greenberg was more preoccupied with financial
maneuvers than with fostering sound risk management. For his part, he has accused
the government of destroying a company that he nurtured.
U.S. credit card defaults rose to record highs in May, with a steep deterioration
of Bank of America Corp's lending portfolio, in another sign that consumers remain
under severe stress.
Delinquency rates -- an indicator of future credit losses -- fell across the
industry, but analysts said the decline was due to a seasonal trend, as consumers
used tax refunds to pay back debts, and they expect delinquencies to go up again in
coming months.
"I find it hard to believe that it is really a trend. You need to see stabilization in
unemployment before you see anything else," said Chris Brendler, an analyst at Stifel
Nicolaus. "It is too early to see some kind of improvement."
Bank of America Corp -- the largest U.S. bank -- said its default rate, those
loans the company does not expect to be paid back, soared to 12.50 percent in May
from 10.47 percent in April.
In addition, American Express Co, which accounts for nearly a quarter of credit
and charge card sales volume in the United States, said its default rate rose to 10.4
percent from 9.90, according to a regulatory filing based on the performance of credit
card loans that were securitized.
The credit card company also holds a large exposure in California and Florida,
two of the states most affected by the housing crisis and unemployment.
Citigroup -- the largest issuer of MasterCard branded credit cards -- reported credit
card chargeoffs rose to 10.50 percent in May from 10.21 percent in April.
"Chargeoffs went up to record highs," said Walter Todd, a portfolio manager at
Greenwood Capital Associates, referring to the entire U.S. credit industry.
Credit card losses usually follow the trend of unemployment, which rose in May to a
26-year high of 9.4 percent and is expected to peak over 10 percent by the end of
2009.
If credit card losses across the industry surpass 10 percent this year, as
analysts and bank executives expect, loan losses could top $70 billion.
"Until lenders show stabilization then trend-bucking improvement over a
several-month period, we remain bearish on credit card lenders -- and the U.S.
consumer," said John Williams, an analyst at Macquarie Research.
"We continue to believe that macro challenges and credit quality concerns will
pressure U.S. card issuers over the next 12 months," he added.
However, some smaller credit card companies such as Capital One Financial
Corp and Discover Financial Services reported defaults rates grew less than expected.

11
 Capital One said its credit card default rate rose to 9.41 percent from 8.56
percent, while Discover said its charge-off rate increased to 8.91 percent from 8.26
percent.
JPMorgan Chase & Co -- the second-largest U.S. bank and the biggest issuer
of Visa-branded credit cards -- said its default rate rose to 8.36 percent in May from
8.07 percent in April, but it still holds the best performance among the largest credit
card companies.
The stock market's main fear gauge moved past a key level on Monday,
indicating possible troubles ahead for the market.
And one options player with deep pockets is making a big bet that volatility will
increase sharply, making this a tumultuous summer.
The Chicago Board Options Exchange Volatility Index, or VIX, moved past 30,
a mark it hasn't closed above since June 4. A VIX (Chicago: VIX) reading of better
than 30 generally indicates high volatility that usually accompanies stock market drops.
Following suit, stocks lost more than 1 percent.
The joint moves in the VIX and stocks come just a few days after a big investor
bet on the VIX caused tremors in the options market.
One trader on Thursday bought 20,000 July VIX calls at the 45 strike and sold
55 strike calls for an overall premium of 42.5 cents in a trade that cost about $850,000
to execute. The net impact is that the VIX would have to beat the 45.42 level by the
July expiration for the investor to make money. The VIX hasn't been past 40 since
April 21.
"The last few weeks we've come under 30 and we've been under 30 as
investors became more sanguine in their approach," said Andrew Wilkinson, senior
strategist at Interactive Brokers. "This was a standout trade that went against the
grain."
While there would be no direct correlation between such a huge trade and the
actual VIX movement, the bet could be indicative of a shifting mood.
VIX options premiums have been generally drifting higher, with trading last
week on July calls for a 35 in the index exceeded open interest. Implied volatility on
the index also has risen sharply, also suggesting higher moves in the index and
tougher sledding for stocks.
The inverse relationship between the stock market and the VIX was in full
effect Monday as stocks fell on a stronger dollar and news that
New York manufacturing activity had slowed more than expected in June.
At 69.7, the Index is now down two points from a week ago and down six points
from one month ago.
Nationally, 26% of adults believe the economy is getting better, while 52%
disagree and say it is getting worse. Democrats are much more optimistic than
Republicans. Thirty-five percent (35%) of Democrats think the economy is getting
better, while only 16% of Republicans feel the same way. Meanwhile, 45% of
Democrats say the economy is getting worse and 62% of Republicans say the same
thing. Nationally, only 9% of adults rate the economy as good or excellent, while 57%
disagree and say the economy is poor.
There's $3.6 trillion, the amount of leveraged loans made since 2000. But right
now, the leveraged loan market is fixated on one number: $430 billion, the amount in
leveraged loans due to mature between 2012 and 2014. Despite the big numbers of
the past, this might be simply too big.
To get a fix on how much work remains to be done, consider the substantial
amount of short-term debt coming due at financial companies in the next year or two.
As you absorb these figures, keep in mind that many of the entities that bought this

12
debt when it was issued aren’t around now — they’ve either left the market or are
gone, casualties of the crisis.
As a result, they’re not around to step up and buy the debt again. So issuers
can’t roll it over. They’ll be forced to buy back the debt, at a time when they’re already
wallowing in other forms of troublesome debt and short on liquidity.
Barclays Capital has analyzed financial company debt among United States
institutions coming due over the next decade. During the rest of the year, for example,
roughly $172 billion in debt will mature; in 2010, an additional $245 billion comes due.
That amounts to about $25 billion a month in debt rolling into a market with a shortage
of buyers willing to invest in it…
Of the $172 billion coming due by year-end, Barclays says, $123 billion was
floating-rate debt. And of the $245 billion maturing next year, some $141 billion pays a
variable rate.
This much is evident: it is too soon to celebrate the end of the banking crisis.
Less debt is the answer, but shrinking balance sheets is hard.
Dozens of US cities may have entire neighbourhoods bulldozed as part of
drastic "shrink to survive" proposals being considered by the Obama administration to
tackle economic decline. The government is looking at expanding a pioneering
scheme in Flint, one of the poorest US cities, which involves razing entire districts and
returning the land to nature. Local politicians believe the city must contract by as
much as 40 per cent, concentrating the dwindling population and local services into a
more viable area.
Shocker: Number of Americans who say U.S. should support Israel drops from
71% to 44% in one year.
U.S. and Mexican officials took another step Monday in their ongoing effort to
crack down on border violence, signing an agreement to boost security by inspecting
southbound vehicles for weapons and drug money.
At the same time, the agreement, signed by U.S. and Mexican officials, will
make it easier for tourists and workers to pass through customs when returning to
either country.
"People traveling south across the border will see more license-plate scanners
and more canine teams in place," Homeland Security Secretary Janet Napolitano said
at a news conference.
But she said U.S. officials don't want to create traffic jams and will make the
process as efficient as possible.
Signed by Napolitano and Agustin Carstens, Mexico's minister of finance and
public credit, the agreement declares the two nations' intent to build on efforts to work
together to combat drug smuggling and border violence. It also calls for the U.S. to
help Mexico train more customs officers. Mexico is poised to add about 1,500 officers.
To encourage cross-border tourism, Mexico and the U.S. are working on a
customs form that would be recognized by both nations so tourists and businesses
engaged in trade don't have to fill out two separate forms.
This is back up the border big time. Guns are not going from the US to Mexico;
they come over the border from the South. This is just another effort to harass
Americans. It will cut border traffic into Mexico by at least 30%. Another stupid idea.
The problem is going the other way and they all know it.
It's hard to know whether President Obama's health care "reform" is naive,
hypocritical or simply dishonest. Probably all three. The president keeps saying it's
imperative to control runaway health spending. He's right. The trouble is that what's
being promoted as health care "reform" almost certainly won't suppress spending and,
quite probably, will do the opposite.

13
 Health spending, which was 5 percent of the economy (gross domestic
product, GDP) in 1960 and is reckoned at almost 18 percent today, would grow to 34
percent of GDP by 2040 -- a third of the economy.
Medicare and Medicaid, the government insurance programs for the elderly
and poor, would increase from 6 percent of GDP now to 15 percent in 2040 -- roughly
equal to three-quarters of present federal spending.
Employer-paid insurance premiums for family coverage, which grew 85
percent in inflation-adjusted terms from 1996 to $11,941 in 2006, would increase to
$25,200 by 2025 and $45,000 in 2040 (all figures in "constant 2008 dollars"). The huge
costs would force employers to reduce take-home pay.
The question of whether and how to limit the Fed's power turns in part on
what may replace it. Republicans want to limit the government's ability to bail out any
institution, but Democrats are pushing for the creation of a regulatory council designed
to oversee systemically important institutions.
Some said the creation of a systemic risk council and giving the government
power to seize and resolve systemically important institutions would lessen the need
for the Fed to have emergency powers.
Housing starts jumped 17.2% in May from April to a 532,000 annual rate, the
Commerce Department said Tuesday, more than twice the gain economists in a Dow
Jones Newswires survey had expected.
Building permits, a leading indicator, rose as well. And single-family starts -
which economists tend to focus on for a less-volatile reading on housing trends - rose
7.5% from April, their third-straight rise.
The good news on housing was offset by another grim report on the state of
U.S. manufacturing. Industrial production tumbled 1.1% in May from April, the Federal
Reserve said. Capacity utilization fell to 68.3%, well below its long-run average, an
indication that there's still a great deal of disinflationary slack in the economy.
The producer price index for finished goods advanced 0.2% in May from April,
much less than the 0.6% rise that economists had expected. The PPI was down 5%
from one year ago, the biggest decline since August 1949.
National chain store sales fell 4.5% in the first two weeks of June versus the
previous month, according to Redbook Research's latest indicator of national retail
sales released Tuesday.
The fall in the index was compared to a targeted 4.1% drop.
The Johnson Redbook Index also showed seasonally adjusted sales in the
period were down 4.6% compared with May 2008, versus a targeted 4.2% fall.
Redbook said that on an unadjusted basis, sales in the week ended Saturday
were down 4.8% from the same week in 2008 after a 4.4% fall the prior week.
The International Council of Shopping Centers and Goldman Sachs Retail
Chain Store Sales Index fell 0.6% 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 1.5% in the latest week.
The Obama administration has turned back pleas for emergency aid from one
of the biggest remaining threats to the economy -- the state of California.
Top state officials have gone hat in hand to the administration, armed with dire
warnings of a fast-approaching "fiscal meltdown" caused by a budget shortfall.
Concern has grown inside the White House in recent weeks as California's fiscal
condition has worsened, leading to high-level administration meetings. But federal
officials are worried that a bailout of California would set off a cascade of demands
from other states.

14
 With an economy larger than Canada's or Brazil's, the state is too big to fail,
California officials urge.
"This matters for the U.S., not just for California," said U.S. Rep. Zoe Lofgren,
who chairs the state's Democratic congressional delegation. "I can't speak for the
president, but when you've got the 8th biggest economy in the world sitting as one of
your 50 states, it's hard to see how the country recovers if that state does not."
The administration is worried that California will enact massive cuts to close its
deficit, estimated at $24 billion for the fiscal year that begins July 1, aggravating the
state's recession and further dragging down the national economy.
The House is considering imposing a $37 billion tax on drugmakers by denying
deductions for advertising of prescription drugs, Ways and Means Committee
Chairman Charles Rangel said.
“One thing that’s not off the table is you can pick up $37 billion knocking out the
deduction for advertising” for prescription drugs, said Rangel, a New York Democrat.
Lawmakers are seeking ways to help pay for a health-care overhaul.
Rangel identified the proposal as one of a series of revenue-raising measures
House lawmakers may include in broader health-care overhaul legislation later this
month. Members of his tax-writing committee are meeting daily this week to discuss
ways to pay for the legislation.
Rangel said he and other lawmakers believe it is “wrong” to let drug companies
deduct their advertising costs for prescription drugs.
“The whole thing is messy, but you can raise $37 billion,” Rangel said. “Which
means you’re taxing somebody $37 billion, and they don’t like that.”
Yesterday, the Congressional Budget Office said a separate health-care plan
proposed by Senator Edward Kennedy of Massachusetts would cost about $1 trillion
over the next decade and would provide coverage to about 16 million more people.
The estimate was based on a preliminary analysis that focused only on major
provisions, the CBO said.
Rangel said last week a health-care overhaul being drafted by House
Democrats would include $600 billion in tax increases and $400 billion in cuts to
Medicare and Medicaid.
News Corp.’s MySpace social-networking unit fired almost 30 percent of its
staff to save money in response to falling ad sales and gains by rival Facebook Inc.
The cuts lower US staffing at Los Angeles-based MySpace to 1,000, according
to a statement yesterday. The announcement suggests the company eliminated about
400 jobs. Dani Dudeck, a MySpace spokeswoman, declined to comment.
Mortgage applications in the U.S. fell last week to the lowest level since
November as a jump in borrowing costs discouraged refinancing and threatened to
deepen the housing slump.
The Mortgage Bankers Association’s index of applications to purchase a home
or refinance a loan dropped 16 percent to 514.4 in the week ended June 12, from 611
the prior week. The group’s refinancing gauge declined 23 percent, while the purchase
index fell 3.5 percent.
Homeowners and prospective buyers are also being thwarted by signs that the
housing market isn’t improving. U.S. home prices may fall another 14 percent before
reaching a bottom as an increase in unemployment offsets lower prices, Deutsche
Bank AG said in a report this week.
The biggest price declines are likely to occur in the New York and Orange
County, California, metropolitan areas, Deutsche Bank said.
Rates are rising as President Barack Obama and Federal Reserve Chairman
Ben S. Bernanke are trying to spur a housing recovery. Obama has pledged to spend

15
$275 billion to help keep as many as 9 million Americans in their homes and stem the
rise of foreclosures. His measures also include a tax break of as much as $8,000 for
first-time homebuyers that wouldn’t require repayment.
The Fed said in March it would purchase as much as $1.25 trillion in securities
from mortgage-buyers Fannie Mae and Freddie Mac to help drive borrowing costs
lower.
The mortgage bankers’ refinancing gauge decreased to 1,998.1 from 2,605.7
the previous week, today’s report showed. The purchase index dropped for the first
time in a month, falling to 261.2 last week from 270.7.
The share of applicants seeking to refinance loans fell to 54.1 percent of total
applications last week from 59.4 percent.
The average rate on a 30-year fixed-rate loan fell to 5.50 percent, the first
decrease in a month, from 5.57 percent the prior week, when it reached its highest
level since November.
Still, at the current rate, monthly borrowing costs for each $100,000 of a loan
would be $567.79, or about $72 less than the same week a year earlier, when the rate
was 6.62 percent.
The average rate on a 15-year fixed mortgage fell to 4.99 percent from 5.10
percent the prior week. The rate on a one-year adjustable mortgage decreased to 6.54
percent from 6.75 percent last week.
Hartford Financial Services Group Inc. and Lincoln National Corp. debt
investors are exiting the “fear trade” that turned credit-default swaps upside down
before the life insurers secured U.S. bailouts.
Concern has abated that Lincoln, Hartford, MetLife Inc. and Prudential
Financial Inc. may suddenly fail to make debt payments, according to prices for swaps
used to insure against company defaults. As recently as April, a year of protection cost
as much as 10 percentage points more than five-year contracts, a condition known as
an inverted curve that signals uncertainty about a company’s ability to survive.
Now, the costs are about equal, after the panic subsided as stocks and credit
markets recovered and the insurers replenished funds that had been eroded by the
recession. Treasury’s offer last month to inject capital into six insurers, which was
accepted by Lincoln and Hartford, also bolstered confidence in the industry.
“We’ve seen that fear trade unwind,” said David Havens, a managing director
at Hexagon Securities LLC in New York. “To a large extent, the insolvency or severe
downgrade worries over the life insurance sector have been taken off the table. It was
probably overdone to begin with.”
Hedges against default jumped in October as investors -- concerned about the
failure of Lehman Brothers Holdings Inc. and near-collapse of insurer American
International Group Inc. -- began to withhold debt and equity financing. The housing
slump lowered the value of holdings backing policies, while the stock market slide
increased the cost of guaranteeing minimum returns on clients’ equity-linked
retirement accounts.
Last month’s unadjusted yoy figures show permits fell 50% and housing
starts 54%.
Those of you who question whether hyperinflation is on the way, we say we are
in a subtle, quiet time when monetized inflation is being sown. When it hits it will be too
late to protect yourself and gold and silver will be long gone to higher prices.
The powers behind government will force the government to choose between
inflation and default. The choice, of course, is inflation and then hyperinflation. That will
be followed by a deflationary depression. Wait until the 10-year note rates jump over

16
4% and head for 5%. The Fed won’t be able to stop them, the dollar will fall and
inflation will rage.
The market Demand Index for trucks fell to 3.52 from 3.87 the previous week,
as the trucking market again weakened. Load availability dropped by 4%. New
England was the weakest. Load searching rose 10% and truck availability rose 8%.
Truck searching fell 9%. Fuel prices rose from $2.35 to $2.50 a gallon. Inbound rates
fell 1% to $1.47 from $1.49 and outbound rates fell 1% to $1.43 from $1.45.
In an industry that calls customers “Dead Beats” - because they pay off their bill
every month in full, there is going to be difficult times ahead.
Credit Card issuers have been confronted in unprecedented numbers by
troubled customers and have been forced to settle delinquent accounts for
substantially less then owed. The Fed reports that 6.5% of credit card debt is at least
30 days late.
After six months of being delinquent the value of the debt on the bank’s books
has to be reduced to zero. As a result of unemployment lenders can expect to collect
5 cents on the dollar.
Increased housing starts are ridiculous. They only add to the existing overwhelming
inventory.
Capacity utilization fell to a record low of 68.3%. Only 10% of our industry is left
due to free trade, globalization and outsourcing.
It is absolutely insane that the BLS would want us to believe that prices fell
1.6% in May, as food commodities soared. The lies get more unbelievable.
The Obama administration last night detailed a series of proposals that would
involve the government much more deeply in the private markets, from helping to steer
consumers into affordable mortgage loans to imposing new limits on the largest
financial companies, in a sweeping effort to prevent the kinds of risk- taking that
sparked the economic crisis.
It would vastly increase the powers of the Federal Reserve in an effort to create
stronger and more consistent oversight of the largest companies and most important
markets.
It also would create a new agency to protect consumers of mortgages, credit
cards and other financial products.
Treasury's latest TARP transaction report shows Countrywide (now nestled
inside
Bank of America) just got another $3.3 billion in gov't incentive payments to modify
distressed mortgages -- many of which Countrywide originated while it was on its own.
Countrywide is among nine mortgage servicers which got additional TARP payments.
The other "adjustment" payments were small fractions of Countrywide's.
For the first time in 11 months China's holdings of US Treasury bonds fell - to
$763.5 billion in April, US government data showed. The figure, down from March's
$767.9 billion, was the lowest since June 2008.
They do not include US Treasury bond holding in Hong Kong Special
Administrative Region, which climbed to $80.9 billion in April from $78.9 billion the
previous month.
The decline in the China holding "seems to stem from net selling of Treasury
bills," said Chirag Mirani of Barclays Capital Research. On the whole, foreigners
decreased holdings of Treasury bills by $44.5 billion in April, the data showed.
Two Japanese men are detained in Italy after allegedly attempting to take $134
billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly
sketchy, so naturally the global rumor mill is kicking into high.
Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash

17
in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for
terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are
the bonds real or counterfeit?
The implications of the securities being legitimate would be bigger than investors
may realize. At a minimum, it would suggest that the U.S. risks losing control over its
monetary supply on a massive scale.
The trillions of dollars of debt the U.S. will issue in the next couple of years needs
buyers. Attracting them will require making sure that existing ones aren’t losing faith in
the U.S.’s ability to control the dollar.
The dollar is, for better or worse, the core of our world economy and it’s best to
keep it stable. News that’s more fitting for international spy novels than the financial
pages won’t help that effort. It is incumbent upon the U.S. Treasury to get to the
bottom of this tale and keep markets informed.
On his blog, the Market Ticker, Karl Denninger wonders if the Treasury “has been
surreptitiously issuing bonds to, say, Japan, as a means of financing deficits that
someone didn’t want reported over the last, oh, say 10 or 20 years.”
McCaskill Statement on IG Termination:
U.S. Senator Claire McCaskill today made the following statement about President
Barack Obama’s removal of Gerald Walpin, the Inspector General for the Corporation
for National and Community Service. The president informed Congress of his decision
on Thursday, citing only that he had lost confidence in Walpin. McCaskill authored a
law that requires the president to give Congress 30 days advance notice of an IG’s
dismissal, along with cause for the termination.
“The White House has failed to follow the proper procedure in notifying
Congress as to the removal of the Inspector General for the Corporation for National
and Community Service. The legislation which was passed last year requires that the
president give a reason for the removal. ‘Loss of confidence’ is not a sufficient reason.
I’m hopeful the White House will provide a more substantive rationale, in
writing, as quickly as possible,” McCaskill said.
This is a summary by writer Charles Krauthammer. We watch him on Cable
Fox News nearly every night between 5:30 & 6:00. We think he is one of the smartest
men in our country. I trust what ever he says or writes is true.<>
Be forewarned on what is happening.
A friend went to hear Charles Krauthammer. He listened with 25 others in a
closed room. What he says here, is NOT 2nd-hand but 1st. You would do well to read
and pass this along to EVERYBODY who loves his country. This is VERY serious for
the direction of our country. The ramifications are staggering for us and our children.
To my Friends & Associates:
Last Monday was a profound evening, hearing Dr. Charles Krauthammer speak
to the Center for the American Experiment. He is brilliant intellectual, seasoned &
articulate. He is forthright and careful in his analysis, and never resorts to emotions or
personal insults. He is NOT a fear monger nor an extremist in his comments and
views. He is a fiscal conservative, and has a Pulitzer Prize for writing. He is a
frequent contributor to Fox News and writes weekly for the Washington Post. The
entire room was held spellbound during his talk. I have shared this with many of you
and several have asked me to summarize his comments, as we are living in uncharted
waters economically and internationally. Even two Democrats at my table agreed with
everything he said! If you feel like forwarding this to those who are open minded and
have not ‘drunk the Kool-Aid’, feel free.

18
Here is his resume from Wikipedia:
http://en.wikipedia.org/wiki/Charles_Krauthammer
<http://en.wikipedia.org/wiki/Charles_Krauthammer>
A summary of his comments:
1. Mr. Obama is a very intellectual, charming individual. He is not to be
underestimated. He is a ‘cool customer’ who doesn't show his emotions. It's very hard
to know what's ‘behind the mask’. Taking down the Clinton dynasty from a political
neophyte was an amazing accomplishment. The Clintons still do not understand what
hit them. Obama was in the perfect place at the perfect time.

2. Obama has political skills comparable to Reagan and Clinton. He has a way of
making you think he's on your side, agreeing with your position, while doing the
opposite. Pay no attention to what he SAYS; rather, watch what he DOES!

3. Obama has a ruthless quest for power. He did not come to Washington to make
something out of himself, but rather to change everything, including dismantling
capitalism. He can’t be straightforward on his ambitions, as the public would not go
along. He has a heavy hand, and wants to ‘level the playing field’ with income
redistribution and **punishment to the achievers of society. He would like to model the
USA to Great Britain or Canada.

4. His three main goals are to control ENERGY, PUBLIC EDUCATION, & NATIONAL
HEALTHCARE by the Federal government. He doesn't care about the auto or
financial services industries, but got them as an early bonus. The cap and trade will
add costs to everything and stifle growth. Paying for FREE college education is his
goal. Most scary is his healthcare program, because if you make it FREE and add
46,000,000 people to a Medicare-type single-payer system, the costs will go through
the roof. The only way to control costs is with massive RATIONING of services, like in
Canada. God forbid.

5. He’s surrounded himself with mostly far-left academic types. No one around him
has ever even run a candy store. But they’re going to try and run the auto, financial,
banking and other industries. This obviously can’t work in the long run. Obama’s not a
socialist; rather he's a far-left secular progressive bent on nothing short of Revolution.
He ran as a moderate, but will govern from the hard left. Again, watch what he does,
not what he says.

6. Obama doesn’t really see himself as President of the United States, but more as a
Ruler over the world. He sees himself above it all, trying to orchestrate & coordinate
various countries and THEIR agendas. He sees moral equivalency in all cultures. His
Apology Tour in Germany and England was a prime example of how he sees America,
as an Imperialist Nation that has been arrogant, rather than a great noble nation that
has at times made errors. This is the first President ever, who has chastised our allies
and appeased our enemies!

7. He’s now handing out goodies. He hopes that the bill (and pain) will not ‘come due’
until after he’s reelected in 2012. He’d like to blame all problems on Bush from the
past, and hopefully his successor in the future. He has a HUGE ego, and Mr.
Krauthammer believes he is a narcissist. (psychiatrists analyse him as such).

8. Republicans are in the wilderness for a while, but will emerge strong. We’re ‘pining’

19
for another Reagan, but there’ll never be another like him. Krauthammer believes Mitt
Romney, Tim Pawlenty & Bobby Jindahl (except for his terrible speech in February)
are the future of the party. Newt Gingrich is brilliant, but has baggage. Sarah Palin is
sincere and intelligent, but needs to really be seriously boning up on facts and info if
she’s to be a serious candidate in the future. We need to return to the party of lower
taxes, smaller government, personal responsibility, strong national defense, and
States’ rights.

9. The current level of spending is Irresponsible and Outrageous. We’re spending

trillions that we don’t have. This could lead to hyper inflation, depression or worse. No
country has ever spent themselves into prosperity. The media is giving Obama, Reid
and Pelosi a pass because they love their agenda. But eventually the bill will come
due and people will realize the huge bailouts didn’t work, nor will the stimulus package.
These were trillion-dollar payoffs to Obama’s allies, Unions and the Congress to
placate the left,so he can get support for #4 above. (three goals)

10. The election was over in mid-September when Lehman brothers failed. Fear and
panic swept in, we had an unpopular President, and the war was grinding on
indefinitely without a clear outcome. The people are in pain, and the mantra of
‘change’ caused people to act Emotionally. Any Dem would have won this election; it
was surprising it was as close as it was.

11. In 2012, if the unemployment rate is over 10%, Republicans will be swept back
into power. If it's under 8%, the Democrats continue to roll. If it's between 8-10%, it’ll
be a dogfight. It’ll all be about the economy.

I hope this gets you really thinking about what's happening in Washington and
Congress. There’s a Left-wing revolution going on, according to Krauthammer, and he
encourages us to keep the faith and join the loyal resistance. The work will be hard,
but we’re right on most issues and can reclaim our country, before it's far too late.
*****

1. 40% of all workers in L. A. County ( L. A. County has 10.2 million people) are
working for cash and not paying taxes. This is because they are predominantly illegal
immigrants working without a green card.
2. 95% of warrants for murder in Los Angeles are for illegal aliens.
3. 75% of people on the most wanted list in Los Angeles are illegal aliens.
4. Over 2/3 of all births in Los Angeles County are to illegal alien Mexicans on Medi-
Cal, whose births were paid for by taxpayers.
5. Nearly 35% of all inmates in California detention centers are Mexican nationals here
illegally
6. Over 300,000 illegal aliens in Los Angeles County are living in garages.
7. The FBI reports half of all gang members in Los Angeles are most likely illegal
aliens from south of the border.
8. Nearly 60% of all occupants of HUD properties are illegal.
9. 21 radio stations in L. A. are Spanish speaking.
10. In L. A. County 5.1 million people speak English, 3.9 million speak Spanish.
(There are 10.2 million people in L. A. County )
(All 10 of the above are from the Los Angeles Times)
Less than 2% of illegal aliens are picking our crops, but 29% are on welfare. Nearly
90% of the United States ' annual population growth (and nearly 100% of California ,

20
Florida , and New York ) results from legal and illegal immigrants and offspring. 29%
of inmates in federal prisons are illegal aliens.
We are a bunch of fools for letting this continue!
HOW CAN YOU HELP ?
Send copies of this letter to at least two other people. 100 would be even
better.
*****
Inside the Beltway
SWORDLESS SAILORS

Graduating midshipmen of the U.S. Naval Academy in Annapolis are being told in
writing to leave at home or in their vehicles all "ceremonial swords" and anything else
"that might be considered a weapon or a threat by screeners" for Friday's outdoor
commencement ceremonies featuring an address by President Barack Obama.

Inside the Beltway has obtained the academy's list of prohibited items for this year's
graduation exercises, which, besides ceremonial swords, includes umbrellas.

Yes, cell phones and texting are still allowed.

http://washingtontimes.com/news/2009/may/21/inside-the-beltway-97423759/
*****
http://mgray12.wordpress.com/

I'm Fed Up Now

Obama wants to giving Big Ben more keys to the banks.
Michael Gray
Deputy Sunday Business Editor
mgray@nypost.com
*****

New UN Report Denounces America's Human Rights Record

by Stephen Lendman
http://sjlendman.blogspot.com/
*****
Afghanistan's Operation Phoenix
by Stephen Lendman

http://sjlendman.blogspot.com/
*****

AN OPEN LETTER TO PRESIDENT OBAMA

By Lou Pritchett
http://www.afa.net/youscareme.asp
*****
Senators Held Stock in Bailed-Out Banks
Friday 12 June 2009

21
http://www.truthout.org/061309Z
*****
The Obama Enigma: Imperial Interventionism and Militarism
by Prof. Rodrigue Tremblay

http://www.globalresearch.ca/index.php?context=va&aid=13959
*****
Local military, civilian police training builds skills - You are the enemy
http://www.peterson.af.mil/news/story.asp?id=123153323
*****
DOJ Seeks Rehearing of ACLU Rendition Case
http://blog.aclu.org/2009/06/12/doj-seeks-rehearing-of-aclu-rendition-case/
*****

Carlyle Sets Its Sights on Battered Banks

http://www.washingtonpost.com/wp-
dyn/content/article/2009/06/14/AR2009061402268.html
*****
Kucinich Grills Ken Lewis on Fed Emails
http://www.youtube.com/watch?v=Hro6tyGr5N0
*****

Kids attend prom from 'sexual hell'

You won't believe how children as young as 12 years old partied
By Chelsea Schilling
http://www.wnd.com/index.php?fa=PAGE.view&pageId=100806
*****
United States President Barack Obama and Sacramento Mayor Kevin Johnson
http://accesstoinfo.blogspot.com/2009/06/united-states-president-barack-
obama_15.html
*****
Bernanke's Next Parlor Trick
By MIKE WHITNEY
http://www.counterpunch.org/whitney06122009.html
*****
Senators Who Opposed Tobacco Bill Received Top Dollar From Industry
http://www.truthout.org/061309D
*****
Obama fires watchdog who barked at his crony
Rush Limbaugh calls action illegal, 'bigger' than Alberto Gonzales fray
http://www.wnd.com/index.php?fa=PAGE.view&pageId=101031
*****

John Nichols Why Vote "Yes" for the War and the IMF?
http://www.truthout.org/061309F
John Nichols, The Nation: "The Obama administration and House Speaker Nancy
Pelosi are aggressively whipping House Democrats to support the 2009 war
supplemental bill that seeks to steer another $100 billion in US tax dollars into the

22
quagmires of Iraq and Afghanistan while at the same time squandering at least $5
billion on the failed economic schemes of the International Monetary Fund ... This is a
very bad bill."
*****
Robert Reich The Healthcare War is Now Official
http://www.truthout.org/061409A
Robert Reich, Robert Reich's Blog: "[Wednesday] the American Medical Association
came out against a public option for health care. And [Wednesday] the President
reaffirmed his support for it. The next weeks will show what Obama is made of -
whether he's willing and able to take on the most formidable lobbying coalition he has
faced so far on an issue that will define his presidency."
*****
Jeremy Scahill Blackwater Still Working in Iraq for the International Republican
Institute, According to New Lawsuit
http://www.truthout.org/061409C
Jeremy Scahill, Rebel Reports: "It seems as though every week there is a new lawsuit
filed against Blackwater for the killing of civilians in Iraq. While the Justice Department
has failed to prosecute most of these cases (the September 2007 Nisour Square
massacre being an exception), attorney Susan Burke has dedicated a substantial part
of her practice to holding the company responsible for its crimes. She works in
cooperation with the Center for Constitutional Rights ... beyond the specifics of her
lawsuits, Burke is also alleging Blackwater/Xe remains firmly entrenched in Iraq, using
affiliate companies like Greystone."
*****

Billions smuggled in U.S. bonds

http://www.redalert.wnd.com/index.php?fa=PAGE.view&pageId=350
*****

What If Ahmadinejad Really Won?

http://www.consortiumnews.com/2009/061509c.html
*****
From a Fellow subscriber:
Check out this nice old lady:
http://growingbolder.com/media/technology/vehicles/romancing-the-road-259598.html

*****
Concealed-carry bill shot down in Oregon Senate
http://www.msnbc.msn.com/id/31332754/ns/local_news-portland_or/
*****
Pentagon Multiple Choice: Dissenting Americans are Terrorists
http://www.infowars.com/pentagon-multiple-choice-dissenting-americans-are-terrorists/
*****

Breaking: Perpetual wars, deadly vaccines we can believe in: House Approves
$106B Supplemental War, Vaccine Spending Bill
<http://www.washingtonpost.com/wp-
dyn/content/article/2009/06/16/AR2009061601628.html> --Wasted billions

23
includes $7.7 for pharma-terrorists' flu vaccines 16 Jun 2009 The House has
narrowly approved a $106 billion bill to ensure financing for war operations in Iraq and
Afghanistan over the coming months. The vote was 226-202. The measure contains
about $80 billion to fund defense activities in Iraq and Afghanistan through the end of
September. It also contains some $10 billion for foreign aid, $7.7 billion to combat
foment the flu pandemic, and $1 billion in rebates for consumers who turn in their old
cars for more fuel-efficient models. [The definition of insanity is doing the same
thing over again and expecting different results.]

Schools put on notice they may be turned into shot clinics

<http://news.yahoo.com/s/ap/20090616/ap_on_go_ca_st_pe/us_sebelius_swine_
flu_11> 16 Jun 2009 Schoolchildren could be first in line for [deadly] swine flu vaccine
this fall -- and schools are being put on notice that they might even be turned into shot
clinics. Health and Human Services Secretary Kathleen Sebelius said Tuesday she is
urging school superintendents around the country to spend the summer preparing for
that possibility, if the government goes ahead with mass vaccinations. [See: Baxter
working on vaccine to stop swine flu, though admitted sending live pandemic flu
viruses to subcontractor <http://www.legitgov.org/baxter_flu_vaccine_260409.html> 26
Apr 2009.]

*****
From a Fellow Subscriber:
FYI Hi Bob, No idea if this is authentic or not. If it is you may have already read it. Very
interesting stuff if true. http://www.akasha.de/~aton/swfqw.html
Cheers.
*****
From a Fellow Subscriber:
BACK DOOR GUN REGISTRATION?
Senate Bill SB-2099 will require us to put on our 2009 1040 federal tax form all
guns that you have or own. It may require fingerprints and a tax of $50 per gun.
This bill was introduced on Feb.. 24. This bill will become public knowledge 30
days after it is voted into law. This is an amendment to the Internal Revenue Act of
1986. This means that the Finance Committee can pass this without the Senate voting
on it at all.
The full text of the proposed amendment is on the U.S. Senate
homepage, http://www.senate.gov/ You can find the bill by doing a search by the bill
number, SB-2099.
You knows who to call; I strongly suggest you do. Please send a copy of this e-
mail to every gun owner you know.
*****
From a Fellow Subscriber:
Hi Bob,
Here are some interesting articles about how much the FHA program is being used in
Orange County, CA. FHA market share used to be less than1% in Orange County,
now it is 25%. As you mentioned before in the IF, it wouldn't be surprising to see a
large number of these default on the back of the taxpayer.
"People who used a Federal Housing Administration insured loan to purchase an
Orange County house in April made an average 3.6% down payment, the same as in
March 2009 and April 2008, reports DataQuick.

24
The minimum FHA allows is 3.5%.

How big is FHA in O.C.? As I previously wrote, for the five months ending in April
roughly one out of every four homebuyers in Orange County used an FHA loan...
During the housing boom, FHA had less than a 1% market share in the county. FHA
loans are harder to get than subprime was during the boom —no stated income — and
FHA loans were once restricted in size to less than the county’s median house sales
price. But the FHA limit has bee nraised to nearly $730,000 in Orange County.
I had guessed that folks are using FHA’s program to buy with as little down as
possible, but this confirms it. While FHA will take 3.5%, the rest of the lending world
wants to see 10% to 20% down on purchase loans."

http://mortgage.freedomblogging.com/2009/05/24/1-in-4-oc-home-buyers-using-
federal-loan-program/10947/
http://mortgage.freedomblogging.com/2009/06/03/oc-homebuyers-put-36-down-with-
federal-help/11449/

COMMODITIES
Crop scientists fear the Ug99 fungus could wipe out more than 80 percent of
worldwide wheat crops as it spreads from Eastern Africa. It has already jumped the
Red Sea and traveled as far as Iran. Experts say it is poised to enter the breadbasket
of northern India and Pakistan, and the wind will inevitably carry it to Russia, China
and even North America -- if it doesn't hitch a ride with people first.
Employment at U.S. passenger airlines fell 5.5% in April from a year earlier,
according to the Department of Transportation's Bureau of Transportation Statistics, as
carriers continue to shrink capacity.
The decline marks the 10th consecutive decrease for the industry, which
grappled in the first half of last year with skyrocketing fuel prices and since then with
the economic downturn.
Low-cost airlines bucked the broader trend with a 2.2% increase in full-time-
equivalent employees, the second-straight monthly increase. Before March, the figure
had dropped every month since America West and US Airways Group Inc. (LCC)
merged in October 2007.
The old-line-network airlines, which still account for two-thirds of airline
employment, reported a 6.5% drop, their eighth decline in a row. Regional carriers
posted a 7.4% decrease.
*****
GOLD, SILVER, PLATINUM AND PALLADIUM
Monday early started with the same cast of cronies on CNBC. As usual all the
news was positive as they attempted to hold the market up. In spite of government
efforts the Dow was off 93 at 8645; S&P lost 105; Nasdaq fell 82 and the FTSE was off
120 Dow points. The Nikkei fell 96; the CAC lost 57 and the DAX fell 105. The yen
rose .0032; the euro was off .0172 and the pound fell .0079. The 2-year was 1.22%;
the 10’s were 3.75%; 1-month Libor was 0.32% and the 3-month was 0.62%. Oil fell
$0.83; gas fell $0.01 and natural gas rose $0.01. Gold was off $7.20 to $933.50; silver
fell $0.55 to $14.32 and copper lost $0.07 to $2.31. Gasoline is up $0.17 over the past
two weeks to $2.66 a gallon.
On Monday, gold fell $12.70 to $926.60, as silver fell $0.81 to $14.07. In gold
the June contract was better and silver the same. Gold open interest fell 4,736
contracts to total 383,603, as silver rose 196 to 109,232. We saw a signal that China,

25
Japan and Russia, large purchasers of US Treasuries, all cut back on US debt and
that will put further downward pressure on the dollar and upward pressure on gold and
silver. Agency purchases by foreigners was $2.5 billion versus $15.6 billion in March.
China cut back on Treasury purchases by $4.4 billion, Japan by $800 million, Russia
by $1.4 billion. The net was a negative $50.2 billion on the month. This said, as we
suspected last November, that the Treasury itself is illegally monetizing debt, or the
Fed is. We have to have the Fed investigated to really find out what is going on. We
wonder if all this has anything to do with the two Japanese who were nabbed in Italy
with bullions of dollars in US bonds? We also suspect the Fed is reporting bogus
numbers, because they just do not add up. As we have said for a long time, we believe
that the Fed has been buying domestically traded Treasuries from offshore accounts.
Another reason we need an audit. We believe they are buying enough Treasuries to
offset the budget deficit and not making that public information. Again, the Treasury
and the Fed are trapped and there is no way out. We might add that credit card
defaults rose to 9.41% at Capital One and international default rates rose to 9.77%.
This is better than the competition but disastrous.
We also wonder if the bullion banks in Canada went short and had to use Bank
of Canada gold to make delivery? We saw that in the late 1990s when the Bank of
England sold more than half their gold incurring an $8 billion to date loss for British
citizens.
The HUI fell 14.66 to 334.99. The yen rose .0061 to $.9768; the euro fell .0222
to $1.3786; the pound fell .0154 to $1.6295; the Swiss franc fell .0110 to $1.0921; the
Canadian dollar fell .0120 to $.8821 and the USDX rose .96 to 81.10. Oil fell $1.66 to
$70.45; gas rose $0.01 to $2.05 and natural gas rose $.0.32 to $4.18. Copper fell
$0.08 to $2.28; platinum fell $49.40 to $1,209 and palladium fell $8.10 to $244.95. The
CRB fell 5.88 to 256.37.
The Dow fell 187 to 8612; S&P fell 202 and Nasdaq fell 254 Dow points. The
2-year was 1.23%; the 10’s 3.72%; 1-month Libor was 0.32% and the 3-month was
0.62%.
Early Tuesday the Dow fell 9 to 8573; S&P fell 8; Nasdaq fell 2 and the Nikkei
fell 287 and the FTSE rose 16 Dow points. The CAC rose 8 and the DAX 5. The 2-year
was 1.25% and the 10’s were 3.72%. The yen rose .0037; the euro rose .0094; the
pound was up .0151. Oil rose $0.82; gas rose $0.02 and natural gas rose $0.07 to
$4.20. Gold rose $6.80 to $934.30; silver rose $0.22 to $14.25 and copper rose $0.01
to $2.57.
Tuesday was a good day for gold and silver. Gold rose $4.30 to $930.90. The
August contract month was $4.40 higher. Spot silver rose $0.04 to $14.11 and July
was $0.07 higher. Gold traded to $940, and the crooks came on the scene evidently
with orders to hold gains to $3.00 to $4.00.
The same thing happened to silver that had been up $0.34. Again, the Russian
President Medvedev had good things to say about gold overruling his finance minister.
At the BRIC meeting in Yekaterinburg, Russia, Russia said it may shift its reserve
funds investments from dollars to bonds issued by China, India and Brazil if they
reciprocate the move. Gold open interest fell 9,018 contracts to 374,585, as silver OI
fell 2,881 contracts to 106,351. The HUI gained 3.15 to 338.44 and the XAU rose .66
to 140.56.
The yen rose .0120 to $.9650; the euro rose .0057 to $1.3843; the pound rose
.0141 to $1.6436; the Swiss franc rose .0035 to $1.0880; the Canadian dollar fell .0007
to $.8814 and the USDX index fell .40 to 80.73. Oil fell $0.22 to $70.50; gas was up
$0.02 to $2.07 and natural gas fell $0.07 to $4.11. Copper fell $0.05 to $2.24; platinum

26
fell $11.00 to $1,224 and palladium fell $1.70 to $243.25. The CRB Index fell 0.28 to
255.85.
The Dow fell 108 to 8505; S&P fell 106 and Nasdaq fell 121 Dow points. The 2-
year was 1.18% and the 10’s were 3.65%.
Early Wednesday the Dow fell 17 to 8442; S&P fell 18; Nasdaq rose 10 and the
FTSE fell 88 Dow points. The Nikkei rose 88, the CAC fell 38 and the DAX fell 56. The
yen fell .0029; the euro rose .0044 and the pound fell .0129. The 2-year was 1.21%;
the 10’s were 3.67%; the 1-month Libor was 0.32% and the 3-month was 0.61%. Oil
fell $0.47; gas fell $0.04 and natural gas fell $0.01. Gold was off $0.30 to $931.90;
silver fell $0.07 to $14.06 and copper fell $0.02 to $2.24.
The action in gold last week was reminiscent of that of February and July of
last year. A seller in size was in the market and the seller didn’t care who knew it,
which tells us the Plunge Protection wanted us to know they would try to stop any gold
move through $1,000. Through all this, the ETF-GLD’s inventory remained unchanged
at 1,132.15 tons of gold, which we again question. The value was $34.1 billion. All
ETF’s held by the WGC added 0.98 tons to 140.03 tons.
Barclay’s SLV remained unchanged as well at 8,605.43 tons of silver. It looks
like the sale of iShares will be to Lawrence Fink’s Blackrock Inc., another Illuminist
company. CVC lost out.
In Comex, the 3 large bank shorts increased their short positions again totaling
123,110 contracts, and the CFTC is nowhere to be found. The net short position of all
traders was 226,521, so you can see almost 55% was in the hands of banks in behalf
of the US government. These 3 banks hold the largest concentrated short in the gold
pits at Comex.
In silver, 2 banks held 27,478 contracts net short. That position has fallen from
96.3% to 63.9% of all net commercial shorts.

*****
Making The Case

By: Theodore Butler

http://news.silverseek.com/TedButler/1245173905.php

*****
Mint moves to halt possible 'run' on
goldhttp://www.ottawacitizen.com/Business/Mint+moves+halt+possible+gold/1690805/
story.html
*****
From a Fellow Subscriber:
Hi Bob, The Comex default is coming soon, just like you said in this weeks Forecaster.
I have been waiting for my April gold contract delivery for weeks now. Mf global sent all
my paperwork to NY, I called the depository and they tell me to call Mf global because
there is a problem and vice versa. (Mf global knows what they’re doing because I’ve
dealt with them before and took delivery so I don't think it’s their fault.) I will be on the
phone next week and I will be screaming because I'm getting nervous! Keep up the
good work Bob.

*****

From a Fellow Subscriber on the scene in Australia:

27
Hi Bob,
One of my mates gave me AUD$1000 today to get some silver for him on the
expected dip while he was working. I got in at about 9:30am and I was about 6th in line
at the time.

Perth mint is now out of all 30,000 1 ounce Kookabura's, limited supplies of the Year of
the OX, in fact I got the last 2 they had, but they still had some 2008 year of the Mouse
(Rat) 1 oz coins but supplies are dwindling fast. They still have 10z, 20z and Kilo bars
no idea of quantity on that front.

No new minting until October 2009 on silver coins.

*****

CANADA
April Manufacturing Shipments down 0.1%.
April New Motor Vehicle Sales steady at 5.5% from last month.
*****
Sam Labrier on The Alex Jones Show:What The Global Elitists Plans Are For Canada
http://revolutionarypolitics.com/?p=1215
*****
MEXICO
From a Fellow Subscriber:
This video is about the Mexican drug war that you mentioned to Alex Jones:
http://www.youtube.com/watch?v=pND34smtQFU
*****
EUROPE
European governments have approved $5.3 trillion in aid, more than the GDP
of Germany, to support banks during the credit crisis.
The eurozone lost a record 1.22 million jobs in the first quarter, as employment
fell 1.2% yoy, the worst since statistics began in 1995.
In spite of more favorable confidence among business and the public for the
future six months the liquidity crisis is deepening in Germany. The $3,500 bonus for
trading in old cars has given the economy an artificial boost for the last few months.
The result is a retrenchment in auto sales. All they did was move sales from one
period to another.
More than a third of large companies are seeing credit conditions tighten
further, if they can borrow at all. Financial conditions continue to deteriorate in
important sectors of the economy. Even though interest rates at the ECB are close to
zero at 1% borrowing, costs continually rise as the banks squeeze business.
The ECB has used quantitative easing, that is monetization, by purchasing $84
billion of covered bonds. As a result the eurozone economy will contract at least 4.6%
this year and perhaps 5% next year.
Polish annual inflation slowed to 3.6% in May, below expectations and down
from 4.0% in April, figures released by the Central Statistics Office, or GUS, showed
Monday.
On the month, May consumer prices rose 0.5%, compared with a 0.7% rise in
April, GUS said. The figures are preliminary.
The annual increase was slightly below the average forecast of 3.7% in a Dow
Jones Newswires survey of 10 bank economists and below the finance ministry
estimate of 3.8%.

28
 May inflation still remains a touch above the upper range of the central bank's
annual inflation target of 1.5%-3.5%,but it is on a downward trend after gradually rising
during the last few months.
The number of people in work in the 16 countries that use the euro fell by 1.2
million during the first three months of 2009, the largest decline since records began in
1995, data showed Monday.
The number of active workers in the euro zone fell by 0.8% in the first quarter,
according to data released by the European Union statistics agency Eurostat. It was
the third straight quarter in which employment fell, and marked a substantial pick-up in
the rate of job losses. In the fourth quarter of 2008, employment fell by 0.4% on the
quarter, while in the third quarter it fell by 0.2%.
There have been indications recently that the pace of the economic contraction
in the euro zone has eased in the second quarter, although it's not clear that the first
quarter will mark the high point for job losses. Some recent surveys have indicated that
the rate at which businesses are cutting jobs eased in May.
However, it's clear employment will continue to fall. Indeed, finance ministers
from the Group of Eight leading industrialized nations - which includes euro-zone
members Germany, France and Italy - Saturday said unemployment may continue to
increase "even after output growth begins picking up."
Czech producer prices fell 3.8% on the year in May, the biggest decline since
1991, largely due to accelerating annual price decreases for refined oil products,
coking coal and metals, the Czech Statistics Office, or CSU, said Monday.
The market expected producer prices to decline 2.9% on the year, according to
a Dow Jones Newswires poll of seven economists.
The producer price index fell 2.5% on the year in April.
On a monthly basis, prices fell 0.4% in April, compared with a 0.5% decrease in
April.
Prices for refined oil products and coking coal dropped 39.1% on the year in
May, following a 34.2% annual decline in April.
Prices for base metals fell 9.4% on the year in May, compared with a 4.2%
annual drop in April.
Spanish home sales transactions fell 48% on the year in April, in the wake of
the collapse of a decade-long housing boom that has pushed Spain's economy into a
deep recession, data from Spain's National Statistics Institute, or INE, showed
Tuesday.
In an interview with Spain's state-owned television station TVE, Spanish
Finance Minister Elena Salgado said the ailing construction sector is one of Spain's
biggest problems.
"It's one of the factors that differentiates the situation in Spain from that in other
countries," Salgado said.
Spanish home sales fell by 24% in March and by 38% in February.
Maria Jesus Fernandez, analyst at think tank Funcas, said recent year-on-year
comparisons have been distorted by an Easter vacation period that fell in April this
year, rather than in March as seen last year.
Nonetheless, she said the Spanish home-building sector is undergoing a
dramatic correction. "It will take longer to recover than the overall economy," she said.
The global financial crisis last year exacerbated a correction that was already
underway in Spain's once-buoyant home-building industry after prices had reached
nearly three times their 1997 levels and after years of overbuilding. The labor-intensive
industry started shedding tens of thousands of jobs, sending shock waves throughout
the wider economy.

29
 In the results of a survey of 14 Spanish economists published Tuesday, Funcas
estimated that Spanish gross domestic product will fall by 3.7% in 2009 and 0.7% in
2010. It estimates unemployment will rise to 18.3% this year and 20.5% next year.
Russia may shift its reserve funds investments from dollars to bonds issued by
China, India and Brazil if they reciprocate the move, the Kremlin's chief economic
advisor said Tuesday.
The comments came as the four rapidly developing nations - dubbed the BRIC
- held their first-ever summit in bid to shore up their market potential through
cooperation.
"We could invest our reserves not only in U.S. and European countries, but in
the financial instruments traded by our partners in BRIC," Arkady Dvorkovich said on
the sidelines of the summit in the Russia city of Yekaterinburg.
"This would be absolutely logical, if our partners agreed to place part of their
reserves in our Russian instruments."
Russia last month already pledged to buy $10 billion worth of the International
Monetary Funds' first-ever bond offers to back the institution's goal to provide loans to
countries hard hit by the global economic crisis.
Dvorkovich reaffirmed Moscow's intention to buy the IMF bonds but suggested
the institution should revise the basket of currencies used to value its financial
products to include the Russian ruble and the Chinese yuan.
The question of whether a new global reserve currency should emerge to
balance the dollar was also on Moscow's agenda for the summit Tuesday, he said.
But Dvorkovich insisted that none of the Russian proposals was targeted at
undermining the dollar, which dropped in value after Russian leaders cast doubt on its
status as a reserve currency.
"There is an understanding that the last thing we need now is turmoil on
financial markets," Dvorkovich said.
"No one wants to ruin the dollar, including us. We need to discuss every
nuance of the problem and this is an approach we are sticking to."
The euro zone's annual inflation rate dropped to a record low of zero in May,
cementing expectations that consumer prices will decline in annual terms in the
coming months due to the drop in fuel prices over the past year, final official data
showed Tuesday.
On the month, inflation slowed to 0.1% in May from 0.4% in April when the
year-on-year rate was 0.6%, the European Union Eurostat statistics agency said. Six
of the 16 member countries that make up the recession-hit euro zone registered
annual deflation in May, with more expected to follow in the coming months.
German economic expectations in June rose to 44.8 from 31.1 in May as
experts predict a recovery will start by year-end, the Center for European Economic
Research said Tuesday.
This is the highest reading since May 2006. Economists in a Dow Jones
Newswires consensus forecast had expected a reading of 37.0.
Labor costs in the 16 countries that use the euro eased in first quarter of 2009 from the
record high rate in final quarter of 2008, while wage costs also dropped back over the
same period, European statistical agency Eurostat said Tuesday.
The total measure, which is made up of wage costs and non-wage costs
including taxes paid by employers, grew 3.7% from a year earlier, down from a 4.0%
rise in the fourth quarter of last year. The fourth quarter rate was the highest since
records began in the first quarter of 2001.
Wage costs grew 3.6% in the three months to March compared with the first
quarter of 2008, down from a 3.9% gain in the final quarter of 2008. The fourth quarter

30
increase here matched the series record high reported in the first quarter of 2001 when
the series began.
The fourth quarter numbers for both measures were revised downwards.
The slowdown in earnings growth comes as unemployment in the euro area is
rising sharply. Eurostat reported Monday that the number of people in work fell by a
record 1.2 million in the first quarter from the final quarter of 2008.
The euro-zone unemployment rate has been rising sharply since the middle of
last year, with further increases expected in the coming months. Finance ministers
from the Group of Eight leading nations - which includes euro-zone members
Germany, France and Italy - Saturday said unemployment may continue to increase
"even after output growth begins picking up."
Recent euro-zone data have shown some promising signs that the worst of the
economic slowdown is over, however, many firms look set to continue to shed jobs in
an effort to keep costs to a minimum in the coming months.
A country breakdown shows that in France wage costs actually declined 0.4%
in the first three months of 2009 compared with a 2.1% rise in the fourth quarter of last
year. Total labor costs there fell 0.6% in the first quarter of 2009 compared with a 2.1%
rise in the previous quarter.
Despite the decline in France and slowdown reported elsewhere in the region,
wage costs in Germany surged on the year in the first quarter of 2009, rising 6.1%
compared with the fourth quarter of last year. This rise helped to push total German
labor costs up to 6.6% compared with a 4.8% gain in the previous quarter.
Labor costs in the services sector continued to slow sharply, rising 2.4% on the
year in the first three months of 2009, down from a 3.0% increase in the fourth quarter
of last year and a 3.7% gain in the third quarter, Eurostat said.
Labor costs also slowed in the construction sector, rising 3.6% in the first
quarter compared with a 4.6% rise in the fourth quarter of last year. In the industry
sector, labor costs surged 6.1% in the first three months of this year, up from a 5.6%
increase in the previous quarter, Eurostat said.
Within the 27-member E.U. as a whole, labor costs rose by 1.5% on the year in
the first quarter of this year, while wages rose by 1.1%.
Austrian consumer prices increased on average by the smallest amount in May
for more than ten years, largely due to the dramatic decline in energy prices, said the
Austrian Statistics Office Tuesday.
The Austrian consumer price index rose 0.3% on the month and 0.3% on the
year in May, while the European Union-harmonized inflation rate was 0.1%, the
statistics office said.
In April, prices rose 0.2% on the month and were up 0.7% on the year, while in
March they increased 0.3% on the month and by 0.8% on the year.
E.U.-harmonized inflation was 0.5% in April and 0.6% in March.
The statistics office said that excluding the stark decreases in prices for fuels
and heating oil, the May inflation rate would have been 1.8%.
Swiss 1Q industrial production down 13.1% QoQ.
Russian President Dmitry Medvedev says the world needs new reserve
currencies.
Medvedev told a regional summit Tuesday that the creation of new reserve
currencies in addition to the dollar is needed to stabilize global finances.
Medvedev has made the proposal before. It reflects both the Kremlin's push for
greater international clout and a concern shared by other countries that soaring U.S.
budget deficits could spur inflation and weaken the dollar.
Airing it at a summit meeting underlined the challenge to U.S. clout.

31
 Medvedev spoke at a summit of the Shanghai Cooperation Organization, which
includes China and four Central Asian nations.
Later Tuesday he hosts a summit of the BRIC group of leading emerging
economies — Brazil, Russia, India and China.
The Swiss government cut its 2009 economic forecast for a second time this
year after the worst global recession in more than six decades eroded exports.
Swiss gross domestic product may drop 2.7 percent this year and 0.4 percent
in 2010, the State Secretariat for Economic Affairs in Bern said today. That’s the worst
contraction since at least 1975. In March, the government projected the economy to
shrink 2.2 percent this year and expand 0.1 percent in 2010.
The global economic slump has exposed Switzerland’s reliance on exports as
an Achilles Heel, forcing companies to cut output and eliminate jobs. Swiss leading
economic indicators remained at a record low in May. The Swiss government today
announced a third stimulus program to counter the crisis.
“After the initial main hit to the financial sector and the export industry, the
domestic economy and the still rather robust private consumption will be hurt by the
downswing,” the state secretariat said in the statement. “That means a further drop in
GDP can be expected for the coming quarters.”
Michelin & Cie., the world’s second- largest tiremaker, plans to eliminate 2,900
French jobs, about 10 percent of its domestic workforce, as part of a reorganization of
to focus on higher-margin tires.
Michelin will cut 1,093 positions starting in 2009 as it concentrates production
of tires for light trucks and high- performance cars at two sites. In addition, Michelin will
negotiate 1,800 voluntary departures over the next three years, said Fabrice Lenica, a
spokesman at the Clermont-Ferrand, France-based manufacturer. The company
employs more than 30,000 workers in France, according to its Web site.

ENGLAND
Three British companies have been short listed to bid for contracts to work on
Iraq's oil and gas fields, pitting themselves against 32 other non-Iraqi companies in a
televised, two-day bidding procedure revealed at Baghdad's Oil Ministry.
BP, which provided technical assistance to the Iraqi state oil company in 2004-
2006, BG International and Premier Oil were among the 120 companies who put
themselves forward in June last year, and which now appear on the shortlist of 35
companies who are invited to submit proposals for consideration by a panel of experts
at the Ministry.
Along with other oil majors including Exxon Mobil and Total, they are due to
present proposals on June 29 and 30 to work on one of six oil fields and two gas fields.
It will be the first major foreign investment in Iraqi oil for 40 years, which has the
world's third-largest oil reserves but needs massive foreign investment to resurrect the
country's energy infrastructure.
May CPI rises 2.2% yoy, +0.6% mom.
U.K. unemployment rose less than economists forecast in May and the Bank of
England said the risk of a deeper slump has receded, the latest evidence to indicate
the economy is past the worst.
Claims for jobless benefits rose 39,300 to 1.54 million in May, the smallest
increase since July last year, the Office for National Statistics said today. Economists
predicted a gain of 60,000, the median of 28 forecasts in a Bloomberg News survey
shows. Separately, the Bank of England said in London “the risk of a continued sharp
contraction” has “receded somewhat.”

32
 *****
Struggling BA asks 40,000 staff to work for nothing in desperate fight for
survival
http://www.dailymail.co.uk/news/article-1193242/Struggling-BA-asks-40-000-
staff-work-desperate-fight-survival.html
*****
CHINA
China has introduced an explicit “Buy Chinese” policy as part of its economic
stimulus program in a move that will amplify tensions with trade partners and increase
the likelihood of protectionism around the world.
In an edict released jointly by nine government departments, Beijing said
government procurement must use only Chinese products or services unless they
were not available within the country or could not be bought on reasonable commercial
or legal terms.

AFRICA
*****
Gold For Bread - Zimbabwe
http://www.youtube.com/watch?v=7ubJp6rmUYM
*****
HEALTH
GETTING MORE VITAL PROTEIN – reprint from April 11, 2008
Our bodies need protein. The effectiveness of our bodies getting and using protein
relies on amino acid. Some amino acids are provided to the body via the diet and are
essential amino acids in foods to prevent us from nutritional deficiency. There are nine
amino acids not made by animals nor are they provided in our regular foods. These
nine amino acids are critical to man’s health because they help establish the quality of
the protein absorbed by the body. When we consume protein it must be broken down
into peptides and amino acids before it can be absorbed into the bloodstream to
nourish the body. If our digestion system cannot accomplish this task well enough, we
age much faster and are sitting ducks for disease.

“The secret of man's being is not only to live but to have something to live for.”
Fyodor Dostoevski, Russian Novelist (1821-1881)

IT AIN’T THE YEARS – IT’S THE MILEAGE

When we look at purchasing a car we take into account the mileage no matter the year
of the car. We know that wear and tear can be represented on the car’s odometer.
With humans it is a bit different. Age and mileage are both elements in the state of our
health. As we age, our digestive system produces fewer enzymes and amino acids
and we cannot break down the protein as efficiently and our bodies absorb less
protein. We are also less able to absorb iron and calcium. In other words, the older we
get we may not get as many miles to the gallon.

“When you discover your mission, you will feel its demand. It will fill you with
enthusiasm and a burning desire to get to work on it.” W. Clement Stone 1902

POPSTAR SOLUTIONS

33
In recent years the sales for amino acid supplements (the isolated and purified
versions) have skyrocketed as Baby Boomers attempt to turn back the clock and try to
improve their energy. Some of the amino acids promoted are; carnitine for the heart
(famous ads still on the airwaves for Cartivite brand), tryptophan to help us sleep,
tyrosine for antidepressant, lysine for sold sores and shingles, glutamine to help with
addictions, cysteine for an antioxidant and histidine for arthritis. Many amino acids sold
are hydrolyzed vegetable proteins. Some of these amino acids are used in Chelation-
type therapies because they help in the absorptions of minerals. Again, as we get
older we don’t absorb enough minerals. The word Chelate (pronounced keelate)
comes from the Greek word “chels” meaning claw. The amino acids surround the
minerals and hold them until they are absorbed by the body. The amino acids help
protein and mineral nutrition get to various organs of the body via the bloodstream.
The body will read the dominant amino acid configuration and send it to the
appropriate organ tissue. When you use the proper amino acids in your diet you can
avoid needing what is called “shotgun” mineral supplements which try to supply trace
minerals.

“Mix a conviction with a man and something happens.” Adam Clayton Powell

YOUR BEST HERBAL PROTEIN

Several herbs provide the body with very high protein and the natural amino acids
necessary for absorption. A few herbs on the list are; spirulina (make sure your source
comes from Hawaii), senna leaf, nettle leaf, horseradish root, peppermint leaf, alfalfa,
and juniper. For a more complete list write http://www.thepowerherbs.com and ask for
protein & amino acid herbs & food list. A very important element in these herbs is that
they also contain riboflavin to help release energy from the proteins absorbed. Think of
riboflavin as the spark plug that ignites the fuel. Riboflavin in these herbs will also
manufacture healthy red blood cells and natural corticosteroids (anti-inflammatory
hormones that are made naturally in the body). For those of you with arthritis, that last
point is critical. The important thing to remember about riboflavin is that even though it
may be in other foods, it is usually destroyed with cooking. Arthritis is a cooked food
disease and if you incorporate fresh vegetables and fruits into your lifestyle you will do
much better.

“It's not so much how busy you are, but why you are busy. The bee is praised.
The mosquito is swatted.” Mary O’Connor, American Writer (1923-1964)

YOUR SHOPPING LIST

You will find your natural protein, amino acids and riboflavin in these products at
Apothecary Herbs; Body Foundation Food Mix (a powdered vitamin mix), Bowel
Cleanse Formula A, Prostate Kit, All-In-One Formula (immune system stimulant),
Peppermint Leaf Tincture (digestive aid), Bladder & Kidney Kit, Digestive Travel Kit,
and Juniper Berries Tincture (urinary cleanser). Call Apothecary Herbs 866-229-3663,
International 704-875-8010 to order these products direct from the manufacturer or for
a free product catalog.

“You are only as strong as your purpose, therefore let us choose reasons to act
that are big bold righteous and eternal.” Barry Munro, American Writer

WHAT’S NEW AT APOTHECARY HERBS? By popular demand The Power Herbs e-

book is available with symptom/herb reference guide, information on organ cleansing

34
and how to make your own herbal tinctures plus a whole lot more. Go to
http://www.thepowerherbs.com and click on The Power Herb book cover on the right
side of the home page to order. You must have email to order and receive the e-book
download version of The Power Herb book for just $14.99. At this time, we do not offer
this title in hard copy.

NEW 2008 PRODUCT CATALOG AT APOTHCARY HERBS. Call for your free copy
866-229-3663, 704-875-8010 or request online http://www.thepowerherbs.com

SURVIVAL ITEMS – STAND-UP FOOD POUCHES

Order your convenient and compact, dehydrated food in the stand-up pouch for food
emergencies or recreational camping. Light weight food pouches have a long shelf life,
are easy to store for your rainy day food shortages and don’t cost a lot to ship. We
have several meals to choose from in single and double serving sizes to avoid waste.
Mix and serve in the stand-up pouch and avoid the need for extra utensils and
cleanup. Order a single meal or by the case and don’t forget the reusable Flameless
Oven for a hot meal. Call Apothecary Herbs 866-229-3663, International 704-875-8010
or order online http://www.thepowerherbs.com.

ONE-YEAR SUPPLY OF HERBAL MEDICNE (shelf life 10 to 15 years)

See Apothecary Herbs One Year Supply of Herbal Medicine at
http://www.thepowerherbs.com or call 866-229-3663, 704-875-8010.

ARE YOU GETTING PREPARED?

Get prepared and stock up. These ethical businesses are ready to prepare you and
your family - call them today!
FREEZE DRY GUY www.freezedryguy.com 866-404-3663 ask about specials on
dehydrated food by the case.
APOTHECARY HERBS www.thepowerherbs.com 866-229-3663 for potent herbal
supplements, immune boosting & organ cleansing formulas with a 10-year shelf life
which every doctor wished you didn’t have. Also, ask about their portable, lightweight
stand-up dehydrated food pouches and year-supply of herbal medicine.

WENDY WILSON’S HERB TALK LIVE RADIO SHOW & ARCHIVES - Herb Talk Live
is Internet streamed on www.gcnlive.com every Saturday 7-8:00 a.m. EST. Weekly
short-wave; Thursday 4:00 p.m. rebroadcasts at 11:00 p.m. on WBCQ 7.415,
American Voice Radio (pod cast, DSL, satellite) Tuesday & Thursday 7:00-8:00 p.m.
EST. Radio show archives at http://www.thepowerherbs.com. Be well – Herbalist,
Wendy Wilson
*****
Wendy also sent us the below:
Dairy Farmers are at the Mercy of Milk Industry Giants
I just got an important email from Democracy Now. Normally I don't ask you to
take political action, but this is a topic that is dear to me. Here in North Carolina as well
as all over the country, over the past decade the number of dairy farms has dwindled.
According to Senator Kay Hagan, in 1970we had 5000 dairies, now we have
340. Whether you love to drink milk or eat cheese, or don't eat dairy products, this is
an important issue. We want to support our local farmers. It supports our economy,
provides fresher food, has a smaller carbon footprint, keeps our countryside looking

35
bucolic, and builds community. I'm asking you to read this and if you feel compelled to
take action.
Thanks. Liz Lipski, PhD, CCN
Since December 2008, the price that farmers are paid for the milk they produce
has dropped over 50 percent -- the largest single drop since the Great Depression -- to
a point far below the cost of production. This unprecedented collapse in prices has
occurred in large part due to market manipulations and increased foreign imports by
milk industry giants.
Increasingly, dairy farmers are at the mercy of these giants, such as the Dairy
Farmers of America, the country's largest dairy "cooperative" which controls 40% of
US milk production. Last year DFA was fined $12 million for price fixing by the US
government and has also been implicated in the recent massive increase of imported
milk products.
Already banks across the country are cutting off farmers' access to credit and
at least two dairy farmers have committed suicide in California. The latest estimates
are that the crash in domestic prices might lead to the loss of up to 30 percent of the
remaining dairy farmers by the end of this year -- as many as 20,000 family dairy
farmers could be off the land by the end of this year.
The loss of this many family farmers across the country will have a devastating
economic impact on rural America, erasing over $52.7 billion of economic
development in less than one year. Even worse, the loss of domestic supply will also
create a serious gap in U.S. food safety as the DFA and others dramatically increase
foreign milk protein concentrate (MPC) imports from countries such as Mexico, India
and China -- countries which have much lower food safety standards than we do.
Today we're asking that Secretary Tom Vilsack, head of the United States
Department of Agriculture, halt this injustice and adjust the price of milk paid to farmers
to "reflect the price of production" by invoking his authority under Section 608c (18) of
the Agricultural Marketing Agreement Act of 1937. This legally mandated "floor price"
should be at least $17.50 per cwt (a cwt is the standard measure for milk producers).
*****
One girl's hope, a nation's dilemma
http://www.boston.com/news/world/latinamerica/articles/2009/06/14/one_girls_h
ope_a_nations_dilemma/
*****
Sw ine Flu Vaccinati on Poses Serious Threat to Your Healt h
http://euro-med.dk/?p=9152
*****
Study Shows Possible Link Between Deaths and ADHD Drugs
http://www.truthout.org/061609T
Shankar Vedantam, The Washington Post: "Children taking stimulant drugs such as
Ritalin to treat attention-deficit hyperactivity disorder are several times as likely to
suffer sudden, unexplained death as children who are not taking such drugs, according
to a study published yesterday that was funded by the Food and Drug Administration
and the National Institute of Mental Health."
*****

SCHEDULED ISSUES
Every Wednesday and Saturday June 2009

36