Economy

COMMENTARY & ANALYSIS

This is a brief overview and summary of the state of the economy and impact of government policy and the global agenda.

Confidence

Money is and agreed upon means and method of exchanging goods and services. It is simply an idea backed by confidence. Surveys (mine) and others show conclusively and overwhelmingly that we as a people have lost confidence in Government, Wall Street, Corporate America, and Stock Brokers/Financial Advisors. Our elected officials in the main can no longer be trusted – on both sides of the aisle. The very entities that we have entrusted in our system of government and capitalism are the very entities (to an extent) that got us into this mess. And the media circus that surrounds us is nothing but a smoke screen. The government media complex is laced with bias.

Economy

Thirty-nine states are in the red. Ten are on the verge of collapse and bankruptcy-including FL, NV, WI, NJ CA. The economy will collapse in 2010. The economy is in utter shambles. This is a category 5 hurricane. An economic Pearl Harbor, a Geopolitical Tsunami–pick your favorite analogy. The U.S. (and world) are in a deep recession. We are heading into a prolonged hyperinflationary depression. This is very different from the Great Depression of 1929-1932. This will be worse-much worse. The Greatest Depression is at our doorsteps. All of this has been calculated and planned for decades. Nothing happens by accident or by chance. There are those with control and power over the media, governments and the currencies of the world. The conspiracy theories of yesterday are becoming the realities of today. The plans and programs that have been developed and implemented over these years are coming to fruition right here and right now. This has all been manufactured by evil intended beings for about 100 years. They are alive and in full throttle thrust today. Life, liberty and happiness, faith hope and charity are their enemies. America is being transformed and the fight for our freedom and very way of life is at stake. We are on the brink.

Banks

Citigroup sent a notice to its checking account customers throughout the U.S. indicating by law as of April 1, 2010 they can withhold distribution requests from accounts for up to seven days warning of a “bank holiday”. FDIC does not have the reserves to handle the banking crisis. There are over 1,800 banks in trouble with many more banks on the brink in the next 6 months. A “bank holiday” is inevitable. I believe that Nationalization of the banks is underway. Perhaps as soon as 2012.

Insurance Companies

HR 3200 will put many insurers out of business. Life, health and annuity companies are in trouble. These companies invest the majority of the general account in bonds, mortgage paper, real-estate, banks, other financial institutions and other insurance companies. Many have sub-prime toxic assets on their books many that don’t have derivatives on their books which is even worse. Although this conservative investment strategy has worked well for so many years, it is the very area where all of the problems are today. Insurance companies are going into receivership. Many will drop like flies in 2011 and beyond. Household named companies that have been in business for over 100 years are scrambling behind the scenes. Regulation and socialized health care will shut down many companies. Northwestern Mutual a company in business for 152 years just purchased over $400 Million in gold to help protect the company from this collapse. Rating agencies (as recent history has shown us) can no longer be trusted and often review companies on a yearly basis. The state guaranty association guaranteeing up to $100,000 in annuities and $300,000 in life insurance is not prepared (under -funded) for this coming collapse.

Employment

Many factors contribute to gauging a depression. The most critical statistic is employment. At the height of the great depression unemployment was at 24.7%. Today, the real rate of unemployment has just reached 19.7%. This statistic will rise and we shall soon surpass the 24.7% mentioned above. Unemployment at these levels brings increased crime an, class warfare and civil unrest.

Pensions

Pension both government and private are underfunded to the tune of $3.2 Trillion. Pension crisis is looming. Pensions are loaded with bonds and toxic assets. The pension guaranty association is also underfunded and not prepared for what is unfolding daily across this country. Pensions are being reduced and are defaulting.

Social Security

September 2010 S.S. will be broke. No news flash here. SS is in the red to the tune of trillions. This has worked out to be the greatest Ponzi scheme in history making Bernie Madoff look like a candy store thief. Don’t count on S.S.

Ira’s 401k’s

New pending legislation indicates the government wants your IRA & 401k. This will be mandatory. The bill suggests that IRA’s and 401k’s will be taken over by the government and invested in U.S. Treasuries in exchange for a guaranteed income. This is called the GRA. You lose control.

These accounts have been ravished by stock and bond markets declines and the worst is yet to come. There is a bill before congress which speaks about the government taking control over these assets (because they can do such a better job than us), and shore up S.S. and their socialized programs. Watch your IRA and 401(k).

Stocks

The stock markets in the U.S. have plunged from 14,300 on the DOW to 10,100 (presently) on the DOW – about a 29% decline. The DOW has produced about 0% growth in the past ten years. Stocks as an asset class are still overvalued. This is based upon PE (price to earnings ratios); technical analysis. Based on historical averages and technical analysis alone, stocks can fall approximately another 32% taking the DOW down to the 6,900 level. Some say the DOW when all is said and done may go as low as 1,800 (based on technical data). Bear market rallies are to be expected and will come and go. This is a sucker’s game. Sell out of such rallies. Get out of the stock market now!

Bonds

The bond market is in trouble. Corporation revenues are declining. Municipalities are going broke. Sales are down. Corporations will begin to see increased taxation and legal tax loopholes eliminated in 2010 and beyond. Bonds are beginning to default both municipal and corporate. Penalties will be imposed on corporations that do not comply with new rules as laid out in the new healthcare bill. U.S. companies are ailing. When interest rates rise-bond yields fall. Interest rates will rise. Watch the bond market. Get out of bonds before it’s too late. We feel interest rates will rise towards the end of 2010.

Real Estate

Bank of America is now foreclosing on 45,000 homes per month. Residential real estate has not hit bottom. There are approximately 2.1 million ARMS (Adjustable rate mortgages) resetting now and over the next 12+ months. This will cause residential real estate to further decline as mortgage payments double and people walk away from their homes. Residential real estate may decline over 1-2 years by another 15%-30% before hitting bottom. There are many other factors due to the systemic nature of this depression that will drive residential and commercial real estate down further. Commercial real estate is another problem significantly worse than residential. Today, approximately 40% of commercial real-estate in America is vacant. By 2012 it is estimated that approximately 60% of commercial real estate in America will be vacant. America has been transformed. There are $1.4 Trillion dollars of commercial real-estate loans over the next 18 months coming due. It is estimated that approximately 50% of these loans will default back onto the books of the banks.

Taxation

A value added tax is on the table. This will be disastrous. Taxes will rise (as promised). Not only for the “rich” but for most all of us. Taxes will rise on corporations making it even more difficult for struggling U.S. small to medium and large businesses to turn a profit. It is projected that taxes may go as high as 50% and perhaps 75% some years down the line to help pay for the bail outs, buy outs, TARP and M1 injection. (reckless and destructive actions of the Congress, the Fed & the Treasury). Healthcare reform bill is loaded with devastating taxation. Then there is cap and trade and the Chris Dodd Financial regulations bill– neither of which are good for America. Taxes and inflation at these incoming levels will be a burden that may be too much to bear.

Interest Rates

Rates must rise in the near future as the Fed needs to raise nearly $4.4 Billion dollars daily to run the country. Foreign capital is leaving treasuries and buyers of treasuries are not showing up at the treasury auctions. The U.S. bought 80% of the treasures sold in 2009. This will lead to a hyperinflation. In order for government to capture foreign capital they must raise rates. We believe this will happen perhaps in 2010. Raising interest rates has an inverse relationship to bond yields. When rates rise (and they will), the bond market and economy will collapse. Interest rates typically run in twenty year cycles. Twenty years of low interest rates (last 20) and twenty years of high interest rates (1970’s). We are ending one cycle and moving into the next-rates will rise.

Inflation-Hyperinflation

The real rate of inflation today as analyzed by John Williams Ph.D. (and many others), of shadow government statistics is around 11%. By “monetizing the debt” and printing money via bailouts, buyouts, TARP, shoring up banks and pumping money into the system, is inflationary. Inflation is projected, based upon technical analysis and fundamentals, to double from 11% to 22% in 2010 and may reach as high as 30%-40%-50% by the end of 2011. We are looking at TRIPLE DIGIT INFLATION come 2012 and beyond. We have inflation today at nearly triple its historical average. As 2011 arrives we enter super inflation and the stage is set for hyperinflation between 2012-2014 which will lead to the collapse of the U.S. dollar. The U.S. Dollar will be replaced as the world’s reserve currency. We believe this may happen sometime before 2012 plays out (or much, much sooner)

U.S. Dollar

The dollar will be devalued, revalued and replaced. The U.S. dollar has been declining in value for a very long time. The greenback is in dangerous levels on the dollar index hovering between 84.00-86.00 (and this is up not due to a fundamentally stronger dollar but rather a collapsing Euro). When the dollar hits 72 on the index hyperinflation will be felt on Main Street. When the dollar hits 50 on the index the currency collapses as hyperinflation sets in. It is not a matter of if but when the U.S. dollar will cease to exist. We believe we will lose our AAA status as the world’s reserve currency sometime between 2010 and 2012. Foreign countries are fleeing from the dollar and the talk at the global summits (G20); indicate we will eventually have a one world currency. A regional currency may be a stepping stone before the one world currency. The U.S. dollar will be destroyed by the policies of the government and inflation will collapse the dollar. When the currency is replaced the exchange rate to the new currency will wipe away your wealth. The dollar as of May 2010 has been trading between 84.00-86.00 on the index. The dollar has lost nearly 95% of its purchasing power since 1913.

Precious Metals

Gold and silver are undervalued and in a bull market-Buy Gold-Buy Silver-Buy Now! Gold & Silver have been in a bull market for 8 years averaging approximately 30% per year for the past 8 years. These metals like many other commodities and hard assets (RE) run in 17-23 year cycles. We are in year 8 of the bull market in gold and silver. Gold & silver have nearly tripled in value over the past 8 with almost 400% appreciation as the stock market is up approximately 8% over the past 10 years (adjusted for inflation-down significantly). Gold & silver act as a flight to safety. Governments (like China, India and others) are buying up as much of the metal as they can and continue to do so. Supplies are short-demand is high. As the currency devalues, as inflation soars, metals rise. As interest rates rise and stock markets fall-metals rise as civil and world unrest and wars escalate–metals rise. When the eventual collapse of the U.S. dollar (perhaps less than two years from now and probably much, much sooner), metals will increase in value. Tangible gold and silver are the #1 asset class in the world today. The worse things get–they better they perform. This raging bull market in liquid, tangible precious metals is expected to continue on for 5-8 more years before reaching their peak. Gold and silver are an undervalued and growing asset class. This is your ultimate inflation protection and survival vehicle to not only survive this crisis, but to emerge from this crisis with confidence and increased wealth.

Paradigm

Tax-spend-redistribute- Tax-spend-redistribute -Tax-spend-redistribute Redistribution of wealth is well underway. America is being transformed. The world is changing and Americans are being advised and programmed to make decisions and take chances they simply cannot afford to take. What we do here and now will determine the quality of life we live for the rest of our lives. If you are operating in the old paradigm the old model-the old rules of the game-while listening to the advice of government, Wall Street, advisors and the media-you will be wiped out as we are merely in the beginning phase of transformation. The rules of the game have changed and are changing as we sleep and every second of the day as thousands of unread pages of new laws are enacted by a congress that is taking this and transforming this country into something else-Socialism? Fascism? Consider at least a 50-50 paper to tangible ratio.

Temperament

We are angry, we are sad, we are devastated and in disbelief. We know something is wrong but we don’t know what we can do about it. Some of us are the proverbial “deer in the headlights”. Some of us have our head in the sand. We don’t want to look. We don’t want to know…but we do know. Some are eternal optimists-this; will cost you dearly. Some are eternal pessimists-this leads to no solutions and bridge jumping. This is no time for complacency. We should consider being a realist. Get the facts from independent no-biased expert resources – then confront it! Then and only then will you be on the road to making pro-survival decisions to protect and preserve your assets and way of life. Trust yourself.

Action

The wrong thing to do is nothing. The other wrong thing to do is the same thing over and over again expecting different results. Trusting politicians, brokers, bankers and Wall Street is the kiss of death. For those of us of faith-believers-put your trust in God and prayer. Live by the golden rule despite counter efforts to do otherwise. And protect and preserve your assets so that you will be in a better position to awaken, guide and direct those that you care about-your family, friends etc.

Surround yourself with like - minded individuals who understand the times in which we live. We may not be able to change or reverse this transformation (take over) of America overnight but we must immediately protect and preserve our assets. This we can and should be doing at once. This is what the Asset Preservation Institute is doing. Helping so many Americans through education, analysis and consultation. This is what this firm is all about.

Once you have protected your assets you can and should spread the word to those in your circle of life and living. Then get involved with your church or house of worship. Become politically active-vet and vote. Join your local patriot, political or TEA PARTY chapter. Write to your congressman and representatives. You will be operating from a more stable position once you have got your assets out of harm’s way. Should you miss this first and critical step-your value to others that you serve and desire to help-will be greatly diminished as poverty consumes ones attention just to merely stay alive.

The Four Pillars

A solid framework for optimum survival is outlined in API’s “Four Pillars”. 1-Preserve Wealth. 2-Protect Life 3-Politicaly Active 4-Pray to God.

Preservation Model

Liquidity, inflation protection and safety. You must be as liquid as possible in this crisis. Without inflation protection (tangible gold & silver) your assets will erode at an alarming rate just to buy the goods and service that you need on a daily basis as inflation ravishes. Without gold & silver your wealth will be confiscated as the new currency is ushered in. There will be many opportunities some years down the road to move into other asset classes-perhaps interest rate products, stocks, energy, commodities, China, India etc. But for now, stay out of banks except for “in and out” money or your assets will be captured in the bank holiday. Liquidity, inflation protection and safety. Our Preservation Model will serve as a needed educational tool to help you get from where you are to where you need to be. We can help you with this transition.

Attend our very successful Boot Camp. This is the wake up call. Attend our Public Roundtable Briefings, get educated. Attend our client only monthly roundtables-stay updated. Read our daily e-blasts, monthly newsletters, and special reports keeping you informed of what is really going on so you can make the best decisions to protect your assets. Contact us for a private closed door discussion-there is neither a fee nor obligation for this appointment and time together. We can meet face to face in our office or over the phone for out of town and out of state individuals. Act now. The hour is at hand. Something is wrong. Something must be done. Trust yourself. You know.

Closing Comments from Dr. Kirk Elliott

I appreciate what John has done in putting together a clear and concise analysis and summary of the current geo-political and economic situation that we are faced with.

Quite honestly, trouble begins brewing when just one of the subtopics listed above begins on the course it is on; however, all of them seem to be behaving badly at the same time. This is the perfectly horrible economic storm that you cannot run away from. Unfortunately there is nothing you can really do to change it in a significant way either. However, what you can do is act accordingly based on the information in front of you and protect yourselves. This is where re-positioning your portfolio to take advantage of the massive growth trend in precious metals to not only act as an insurance policy against a collapsing currency but also take advantage of possibly the largest bull market in any asset class that this generation will experience.

There are so many big issues we are facing as a nation it’s hard to pinpoint any one major issue, but inflation tops my list because it will affect all of us in a dramatic way. The continuous printing of “bailout” money by the Federal Reserve will devalue the U.S. Dollar. This will result in rising prices and an eventual collapse of the U.S. Dollar, which looks like it will be replaced by a new global reserve currency. This will be the straw that breaks the camel’s back and potentially cause the AAA status of the U.S. Treasury bonds to be downgraded—then the bottom falls out of the U.S. markets. Hold on because this will be like nothing any of us have ever experienced. The best way to protect your assets in the midst of a collapsing currency is with precious metals. I urge you to read this document carefully and take action now.

Asset Preservation Institute
www.jmchambers.com
727-329-0048

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