THIS IS WILLIE’S LASTEST PIECE AND VERY DISTURBING. There are two sections:
A) on the deteriorating conditions in
B) on the deteriorating conditions within
I urge you all to read the paper slowly and carefully and understand its significance.
Jim Willie CB June 20, 2008
Jim Willie CB, editor of the “HAT TRICK LETTER”
Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.
WHAT UP WITH THE MEXICAN PESO ??
At the same time the US Federal Reserve relaxed its rules, expanded it Lending Facilities, and rescued big
First theory, the Mexican central bank just announced an official interest rate hike to 7.75% on their official lending rate. This makes for a 5.75% higher rate than offered by the USTreasury short-term yield. Forex traders have seized on the differential, to lift the MexPeso. They have been anticipating the hike for a few months. Technical traders make up a bigger portion of FX traders these days, focused intently on the charts and breakouts, now fixated on interest rate differentials, ignoring the fundamentals of a nation. Mexican politicians and analysts warn that high borrowing costs put their economy at risk of further slowdown. Already, their consumer prices are up 4.95% in June versus a year ago. Food prices are up on par with those of the
Second theory, money is moving back to
Third theory, an implosion is occurring in
The situation in
As a group the Mexican oligarchs exert great control over the politicians, using the system to sustain power and wealth. Also, the PEMEX oil revenue is on the decline, a factor which forces change from huge strain to national finances. A shrinking pie always causes chaos. Their national oil industry is grossly mismanaged, suffers from inadequate investment, is seen predominantly as a government revenue source (cash cow), and is subject to intense control by labor unions. Lastly, PEMEX is forbidden to enter contracts with any foreign business entity as partner, consultant, or exploration agent. Mismanagement accusations by me are kind and soft lobs.
Violence has spread widely across
A failed nation state is the likely outcome south of the
UGLY DETAILS ON MEXICAN OIL INDUSTRY
The supply of crude oil to the
The Mexican energy picture has been deteriorating for some time, with an impact on their national finances soon to be felt. The elephant oil field Cantarell had been on an established 15% annual decline in year 2006 and year 2007, offset by expansion elsewhere in smaller volume from other Mexican projects. Now the Cantarell decline rate is 30% annually. However, according to the
No new gasoline refinery has been built in
Then there is the North American Alliance, all surreptitiously planned by those in power. The greater plan seems intended (without debate, analysis, or vote) to share US financial might, broad technology expertise, pharmaceutical depth, augmented by military prowess WITH Canadian energy supply and mineral wealth and certain other expertise WITH Mexican cheap labor, energy supply and mineral wealth, and a bonus of new port facilities.
Faltering crude oil supply interrupts the Mexican contribution. A chaotic state down south in Mexican might conceivably disrupt the entire
A snapshot of home foreclosures exposes the continuing nightmare, nowhere near end, with
In the month of April, foreclosure filings were reported on more than 243,000 properties, a 65% increase compared with April 2007, according to RealtyTrac. In
Freelance credit analyst Jas Jain said of
The $4.8 state billion budget cut by Gov. Schwartzeneggar in educational funding this year has hit hard, cutting 20 thousand jobs among teachers and other school employees. Many wealthier communities in
The national housing inventory problem grows worse, not better. Pollyanna analysts continue to miss the direction toward more bloated, as prices are threatened continually. The inventory for existing homes was high in March, at 9.9 months supply, and went to 11.2 months in April, a record covering 23 years. In
The Standard & Poor Case Shiller composite index provides broad aggregate price data, but two months old. Its index of 20 metropolitan areas showed prices of existing homes fell 2.2% in March, accelerating to worse than a scary 20% annualized decline. The venerable serial bubble engineer Greenspan estimates that house prices will decline by another 10% from February levels, and perhaps 5% worse than that if the USEconomy remains weak. He expects a peak to trough total decline of 25%. Economist Paul Krugman uses a different reasonable measure, a ratio of home prices to rental rates, to arrive at a 25% overall home price decline in the overall correction. Goldman Sachs keeps its simple, stating home prices will fall 15% without a recession, and 30% with a recession. Yale Univeristy professor Robert Shiller expects a shocking 50% home price decline in the formerly hot property zones, like
In year 2005, a very intriguing sequence of events occurred.
THEY CANT KEEP GOLD DOWN
Despite the technical rebound of the USDollar since March, the gold correction refuses to go below 860. Another successful retest occurred in the last couple weeks. The stochastix cyclical index has begun to turn upward from oversold levels. The magic new level is 940 for gold to surpass. Fundamentals support the gold price. Mine output continues to struggle. My ongoing point of gold supply inelasticity bears repeating. Higher gold price has not resulted in higher gold mine output. Thus, the gold price should continue higher. The silver chart is nearly identical. The prevailing story driving the gold price correction in the last few weeks has been that the USFed will actually raise its official FedFunds rate before the end of the year. The Euro Central Bank has wrested leadership and bank power prestige from the hack Americans, who seem hellbent on the destructive cycle of inflation, bust, liquidity provision, corrupt with bond fraud, paper over, consolidate with raids. The bluffs by the EuroCB to hike rates are being taken seriously. But not here! The Europeans cannot hike rates when the southern bloc is awash with housing liquidation and price declines, and assured recession. The Europeans cannot hike rates when the German economy has suffered five consecutive down months in industrial production, and when ZEW economic expectation measures are heading down. The big German banks are due for more bond and credit market losses, just like the American banks, but on a smaller scale.
Neither the USFed nor the EuroCB will hike rates this year. Yet another massive marketing scheme (aka propaganda) has taken place. The gullibility of the
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