first majestic silver

Left Outside the Bunker

January 11, 2002

The Great American Economic finish line was 12-31-01. For many, many economic entities the dying will come quickly now that the new year has started. The American economy is like one of Bin Laden's Arab fighters who didn't make it into the Tora Bora caves in time. All that is left to do is the DNA testing for identification. Far from the expected spring recovery, the mainstream pundits, economists and politicians will stand with mouth agape at the breadth and speed of the unfolding collapse. It's only fair to call it the April Fool's recovery since it is officially predicted to start on April First. I'm afraid the current economic landscape resembles the moon more than the garden of Eden. For instance, Best Buy, a consumer electronics retailer will close 10 stores out of 79. Believe me, this is just the beginning. Ford will be laying off thousands also.

The following represents my personal opinion on the state of the various sectors of the current American economy. As such, you may either use it for toilet paper or frame it depending on whether you agree with my views. GOLD-EAGLE.com readers have probably noticed I rarely use the ever present term "may" when I write what I think. This is a personal pet peeve of mine, as I tend to choke when I read the wishy, washy, it may or may not happen type of writing common in the mainstream whore press and even on the Internet. I call the shots the way I see them. If I'm right, then I'm right. If I'm wrong, then I'm wrong. At least the reader knows where I stand on the issues. I'm not worried about being sued if I'm wrong and my life goes on whatever happens. This is merely my honest, candid opinion of where the American economy will go over the next few months. Honestly, even if I get drunk and stand on my head I couldn't do any worse than the mainstream whores. They lie to you, manipulate and deceive you for their own purposes. I merely tell you what I think and you can do with it what you will. Here it comes. Bombs away.

The stock market will be briefly disposed of. It's under a delusion and not aware of current economic reality. This delusion will continue until the precise moment current economic reality overwhelms the lying pundits, CNBC bulls and the other vested interests of FIRE. FIRE stands for financial, insurance and real estate industries. One day the fire will deep fry the corrupt elite. Until that day, the fantasy and illusion will continue unabated.

Jobs will continue to wither away all through 2002. The company line is that services and real estate are immune to the devastation unleashed upon manufacturing, hospitality and retail. Oh, really? Air traffic collapsed 12% between Thanksgiving and New Year's 2001 versus 2000. Entire sectors, hotels, motels, tourism, restaurants, have been devastated due to the 9-11 war crime. In the context of terrorists with exploding shoes, a government too stupid to fire the incompetent screeners because of politically correct lunacy and a economy in recession, exactly why will the hospitality industry recover by spring or summer? I guess if you don't ask these kinds of questions, then the bull's case makes sense.

Red China, now inducted into the role as global deflator, despite its barbarism, imperialism and corruption, will destroy the manufacturing jobs of every other country in the world over the next few years. Nobody can possibly compete with them; this fact will further American manufacturing job losses. Mr. Magoo is powerless in the face of the Red Chinese whirlpool. How can interest rate policy have any effect on these kinds of structural economic realities on a global basis? They can't and once Wall Street figures that out, well it won't be pretty.

You would think the dismal Christmas retail situation would have had more effect on people's perceptions. You would think the reality of flat to negative sales, combined with the reality of horrible earnings would have more of an impact. Not in the current American economic deluded state of mind, it won't. Here's the brutal reality that will play itself out in retail land over the first quarter of 2002. Sit down and brace yourself, because I assure you dear reader you will never, never read the following in any mainstream media source.

The retail illusion has now given way to the retail reality. How bad was the Christmas retail season you ask? Up here in Oregon, we had Christmas cards stacked at the checkout stands at Fred Meyer on Saturday, December 23rd at 70% off. So, what are they supposed to do with them now? What are all the retail stores that didn't sell all their merchandise and didn't make any money going to do now? What will they do when nobody comes into their stores during the first quarter of 2002? Let's see, January is for buying towels and sheets, February is for chocolate and lingerie and March/April is for eggs, chocolate bunnies and spring clothes. Sure looks like the making of an April First recovery to me!

Here's what will happen: All the weak stores will die. All the strong stores, say Wal-Mart or Target or Circuit City, will survive. The single shops in the empty malls will die. The malls will die and possibly be rebuilt as apartment complexes in urban infill developments. The stores will die and the jobs will die with them. In my opinion, we will see a permanent 15 to 25% reduction in the retail infrastructure of the United States. The process will begin within a few days. The exhausted stores, weakened by a dismal Christmas season, will start to close. K-Mart will probably be among the first and Gap will soon follow. Best Buy has already beat them, but there will be many others in the next six months.

Unemployment is going to surge in my opinion. The company line is that people will start to buy things in the next few months. Why? The company line is that companies will start to rebuild depleted inventories without any sales or orders to justify it. Why? The company line is that manufacturing will suddenly recover after 17 months of decline. Why? The company line is that companies will invest in new computers and that chip companies will start making and selling computer chips. Why? The list goes on, but you get the idea. I think the American economy will be in depression by Memorial Day.

If all this wasn't bad enough, we haven't talked about real estate. Commercial real estate will have no recovery in 2002. Residential real estate is dependent upon artificial, fantasy values that are very vulnerable to spreading job losses, foreclosures and credit card defaults. I believe 2002 will be the year residential real estate, the great American home equity illusion, will bear its bitter fruit. It's now a fact Fannie Mae, a GSE-government sponsored entity-has a 30 day mortgage late rate of over 11%. Stop and ponder that statement a moment. I assume they mean as of 12-31-01. On January 31st we will have a 11% 60 day overdue and by March 1st a 11% 90 overdue rate. What are they going to do foreclose and dump the houses on the market? Or will they ignore and try to cover it up? It should be real interesting by late spring.

The American consumer, credit card maxed out and home equity drained, will now face the full fury of a structural global depression. The American consumer is expected to save the day with high debt levels, no savings, uncertain employment prospects, declining personal earnings and year end bonuses cut nearly in half. Yep, I sure expect a spending surge the first quarter of 2002. Of course, when the April First recovery doesn't happen they will merely shift it to Labor Day! If at first you don't succeed, merely redefine success, as the office memo says.

And finally, we come to the economic conditions of city, county and state governments. The great Federal beast infesting Sodom on the Potomac has always been a fraud and scam regarding economics. 2002 will be no different. The Federal beast will go into deficit mode for the next several years. Assuming Mr. Magoo is still around, he should have an interesting year trying to keep interest rates from rising. The economic chaos unleashed by virtually all city, county and state governments having to cut spending will be awesome to behold during 2002. Up here in Oregon, the system is expecting to have to cut between $720 million to $850 million from state spending in 2002 and 2003. Most other states are in varying degrees of economic distress.

It's into this kind of economic situation in America that Mr. Bin Laden explicitly states he will target the United States economy. Hey, Binny buddy, the American economy doesn't need to be attacked, it's reeling quite well on its own. Terrorists, we don't need no damn terrorists to destroy our economy: we're Americans and we can do it ourselves thank you!

Taking all these factors into consideration, I don't see how any reasonable person, unless they are a well paid media, political or Wall Street shill, can be optimistic. The United States is right on the edge economically speaking in my opinion. I don't even think Mr. Bin Laden needs to give us much of a push. Exactly what the United States, or the world for that matter, will look like in January 2003 is almost beyond comprehension considering the rate of current events. 2002 will be the year the American system, people, business and governments, lost the capacity to go further into debt. Once this happens, our credit and debt based economic system will implode. The only issue is when and how, and not whether. Take a look at Argentina and behold the face of America's future. Argentina is collapsing into chaos before my eyes and the official press is sugarcoating it. My god, don't these so called experts realize JP Morgan has a 2.6 billion dollar exposure to Enron, a 900 million dollar exposure to Argentina-and that's merely what we know about. Still, our elite economic shills have the $#%^&*% cajones to go on CNBC and talk about why the stock market is the best place to have your money.

The American people are being led by a corrupt banking oligarchy into disaster. All that's left to do is distribute the body bags.

Impending Doom takes all the fun out of decadent living- Iago


Goldschläger and Goldwasser are liqueurs containing pure gold flakes.
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