I have some good news for you my fellow gold bugs. The head tyrant, the high priest of the religion of economic degeneracy called United States Predator Capitalism, is about to leave. Yes, Mr. Magoo has finally had enough and will leave his sanctuary on January 31st, 2006. It could be Mr. Magoo, like Mr. Ridge, late of the incompetent Homeland Security Department, senses the ship is going down and wishes to flee. Mr. Magoo could feel he needs to jump ship before the iceberg hits. After all, no one is criticizing Mr. Ridge for the lack of response to the hurricanes, even though he created the systems which failed during Katrina and Rita. Mr. Magoo, a rat to be sure, but a smart rat at that, may very well have decided he needs to evacuate before the economic hurricane hits. Mr. Magoo's motto is "when the going gets tough, the smart get going."

All of which leads me to wonder what Mr. Magoo knows about the current state of the United States economy the rest of us have missed. For sure, the signs are there for anyone to see of severe economic distress. Even the downstream press, downstream from anything resembling integrity, has begun to put info out that causes even a dedicated doomer like myself to take pause.

They do this, not out of any sense of public duty, but rather out of a sense of impending wrath loosed upon them by a very angry populace. I sense the powers that be are truly afraid they have pushed the people too far and have unleashed a backlash they cannot handle. The American motto should be not "bread and circuses", but "circuses and cheap energy." The powers that be are rightly concerned the current rise in energy prices will be taken out on them by an enraged populace. One of the major reasons for the coming winter of discontent will be the fact high heating oil prices will lead to economic stagnation at best. At worst, in the areas of the country where heating oil is used a lot, the result will be the middle class will be broke and angry.

The poor will just freeze to death. Something like the senior citizens left to drown in the nursing homes in Louisiana. I think Mr. Magoo senses the rage of the people and has decided to get out of Dodge before the cattle stampede through it like in the John Wayne movie. The American people are in a state of anger that I have not seen in my lifetime. Mr. Magoo has decided to get out while the going is good; while he can escape being linked with the results of his reign of economic terror. Mr. Magoo sees the economic hurricane coming. Even some of his recent public pronouncements have sounded remarkably doomer for a man in his position. When the economy goes down he realizes the FED will be blamed. And guess who is the FED head?

You have to understand one thing about Mr. Magoo. He is a survivor. Yes he has a lust for power, an arrogance that defies description and is directly responsible for the several economic bubbles, stock, money creation and real estate, that will implode, but he is cunning. It is this cunning that sends the most potent signal I can think of hard times are looming.

When he raised interest rates Mr. Magoo decided that the explosive rise in energy prices is more dangerous than a slowing economy. I also personally believe Mr. Magoo seriously underestimates the economic damage from the hurricanes and the effect, the economic effect, from the people losing faith in the political system. It is one the ironies of economics that political situations can create a profound economic crisis. Mr. Magoo realizes this, if only since his first economic crisis, the stock market crash of 1987, was created by a political event.

Way back at the beginning of his tenure, Mr. Magoo was faced with a 20% drop in the stock market in one day. To this day, many people do not understand what truly happened. The best analysis of that I ever heard came from a stock market trader who had been a young man in 1929. He felt the reason for the stock market crash of 1987 was President Reagan being damaged politically by the Iran Contra scandal. Once the psychology changed he felt the many negatives in the stock market were seen by everyone without using rose colored glasses. Likewise, my view is Mr. Magoo senses another stock market crash coming from the political crisis created by the lack of hurricane response.

Mr. Magoo no doubt had pre warning of the collapse in consumer sentiment released the other day. He must realize the energy prices are not going to go down anytime soon. He also must realize that raising interest rates like he did is an insane policy in the current environment. Hurricane Katrina alone is expected to cost 70 billion dollars in insured losses, along with 100 billion in uninsured. He must have seen the hundreds of thousands of new jobless claims. He must realize the massive damage Rita did to the Gulf of Mexico oil and natural gas production, along with the refinery and pipeline damage. He knows this; yet he raised interest rates. Why? Being a pundit here at www.gold-eagle.com I will tell you. Mr. Magoo not only senses he needs to get out of Dodge, he senses Dodge is about to burnt to the ground, economically speaking. The only thing which could possibly put the fear of God into a man like Mr. Magoo, enough to avoid taking the obvious steps needed for the domestic economy, is his fear for the global economy. Or rather, his terror of what the global economy will do to his precious fiat funny money Federal Reserve Note.

I see several things very clearly in the USA economic situation, many of which have been going on for all of Mr. Magoo's tenure. The high debt, the explosive growth of derivatives, the stock market crashes, the Long Term Capital bond crisis and many too numerous to mention have all come and gone. What has remained, like the mold covering the houses in New Orleans, is the residue of high deficits, high federal debt, staggering foreign trade deficits, the loss of over 30% of the value of the US fiat dollar since 2001 and the corruption of the very economy Mr. Magoo was put in charge of. Mr. Magoo, like Caesar Nero before him, led to the very corruption of the system that created him, put him into power and showered him with glory and praise.

Mr. Magoo has destroyed the very system he is a part of. Mr. Magoo is a parasite destroying the host from which he draws his substance. The bankers, the politicians, the Imperial Lords are all parasites sucking the United States dry. It is ending. Mr. Magoo senses that in his senile core. This is why, in my view, he is leaving now.

Here is what I think will happen in economic terms during the last days of Mr. Magoo and beyond. First, the USA is in a profound political crisis, combining a hurricane response which casually left old people to die in nursing homes due to negligence, with Mr. Delay being indicted by a grand jury and Mr. Frist being investigated for inside trading. These political events are having a profound economic effect. It is a fact consumer confidence has collapsed in the USA, to a 15 year low. It is a fact $3 a gallon gasoline, diesel and heating oil prices are here to stay for the foreseeable future. It is a fact the saving rate was negative, repeat negative, yet again. It is a fact we are looking at several hundred billion in damages from the hurricanes. It is a fact the rest of the world is shaking their heads at the USA in amazement at this time. It is a fact the pressure to dump the fiat dollar as the pricing mechanism for oil has been intense and getting even more intense. The economic effect of the world, using the current political and cultural situation in the USA as their guideline, dumping the dollar would simply end economic life as we know it.

It is this fact which I think is driving Mr. Magoo now. He is no longer concerned with the domestic United States economy. Mr. Magoo is simply trying to finish out his final 90 days by avoiding a run on the fiat dollar. If you accept my logic, many of Mr. Magoo's statements and actions recently fall into line. The reason you raise interest rates is to protect the fiat dollar. The reason you chide about the federal debt is to maintain credibility and prevent foreign loss of confidence. And the reason the stock market, incredibly and despite all that has happened since Katrina, has stayed in a narrow band from about 10,300 to 10,700, is Mr. Magoo has been plunge protecting like mad. No way is Mr. Magoo going to allow stock market crashes to bracket his reign of terror. He began with one and now he will do all he can to stave one off until he leaves. In fact, I think that is the judgment I have of Mr. Magoo and his tenure as FED head: he staves off the inevitable collapse. Of course, by doing that he makes it worse. Mr. Magoo takes what would be a normal cyclical correction and turns it into a global systemic collapse. As long as it doesn't happen on his watch Mr. Magoo doesn't care. This, I think, will be Mr. Magoo's epitaph: It didn't happen on my watch. Even though Mr. Magoo has created the conditions, stoked the fires, disabled the fire alarms and got the firemen drunk, he won't be around when the actual fire starts. At least this is what he hopes. We shall see.

I bid you farewell Mr. Magoo. Not a fond farewell to be sure. I say what the British speaker said of Nevile Chamberlain on May 10, 1940: "Just go; in the name of God, go." I do not respect you as a human being, much less as an economist or a Central Banker. You have led the American Republic into the swamp. You have failed. I wonder if it is this sense of failure that burns in your coal black heart these days. The knowledge that whatever people thought of you in the past, history will trash you good. Future generations of Americans will view you Mr. Magoo the same way we now look at the system and people who left those old people to die a miserable death: betrayed, abandoned and then destroyed by an indifferent system. For you see Mr. Magoo, although the whore press and the hack politicians have lionized you, there are some of us here gold bugs who know you for what you really are. You are simply a gold bug traitor who sold out for the applause of the mob. Augustus said he liked the treason and despised the traitor. You will find that out soon enough Mr. Magoo. Do you think your hack politician friends will defend you when the economic system fails? Any more than they did Mr. Brown of FEMA? Are you really that senile Mr. Magoo?

You are a miserable excuse for a human being. Be gone Mr. Magoo! Is it not written the name of the wicked will rot? Yes, Mr. Magoo your legacy will be one of the man who could have done much, but did little. You are the fire alarm that failed to go off. The result will be an economic wildfire burning up what little solvency the USA has left. But I guess that was all part of the plan wasn't it Mr. Magoo? You have done your job well after all. Caesar Augustus may have liked the treason and despised the traitor, but many of us gold bugs despise both. You are a man without honor, or integrity and there is no truth in you Mr. Magoo. You are a lie and a fraud, a sham and a mirage. You are a covering of camouflage to hide the economic gutting of the middle class, the working class, our manufacturing base and the sound money policies of the American Constitution. You are both a traitor and a moral coward Mr. Magoo.

I come not to praise Mr. Magoo, but to expose him for the results of eighteen years of economic treachery, lies and deceit. I tell you Mr. Magoo you will be exposed for what you are, for what you have done and for what will follow you. Go. Go old fool to your bubble bath. Do not for an instant as you splash around think that many of us don't know what you are. What is hidden will be revealed Mr. Magoo. What will you do on that day Mr. Magoo? What will you do old man when your folly and treachery lies exposed to an enraged populace? You will be held responsible for dereliction of duty, the economic version of negligent homicide. Negligent econicide. For it is your lust for power, ever whoring after the spotlight that did you in. Like Icurus you have flown too close to the sun. Now all that is left is not honorable retirement, but a plunge into the ocean. Enjoy your swim, Mr. Magoo.

Doug McIntosh
3 October 2005