A survey conducted by UC Berkley says outsourcing will take 14.1 million US jobs over the next 10 years and ship them overseas. That means hundreds of thousands of American families will have to endure heartache and unemployment. Three hundred thousand call center jobs will end up in India and the Philippines. Incidentally, none of these 14.1 million jobs include estimates for outsourced jobs to what is called near shore in countries like Mexico. When the government and foundations are asked about outsourcing, they deny they have statistics and called any such activity economic efficiency. It is believed that in three years that information technology exports to the US from India alone will be $50 billion. What do our 200,000 graduate engineers do each year, move them to Bangalore and work for $8,000 a year? India handles 85% of US outsourced IT work. We are going to lose eight million jobs paying over $60,000 a year. We are going to lose 15% of our jobs and the public still does not get it. Our President demands outsourcing and our Congress does whatever the elitists tell them to do. Three thousand and two hundred manufacturing jobs are transferred overseas every 24 hours resulting in a net loss of 1.2 million jobs per year. The countries handling personnel data have endemic identity theft and reams of valuable information are there for the taking.
While all this is going on our government allows India, China, Japan, etc. to flood our country with cheap goods. If we do not stop all of this we will not have jobs and we will not have money to buy anything.
California Governor Arnold Schwarzenegger is in deep trouble as is George W. Bush. Both have seen their approval ratings drop to about 40. Arnold’s biggest problem is he has alienated just about everyone in the state over the past 19 months. Portrayed as heartless he has shelved a proposal to privatize the state pension fund, which would have cut off death and disability payments for police and firefighters. Teachers are pounding the governor because of his opposition to restore $2 billion funding for schools. He refused to do so after he promised he would California is 43rd in per-pupil spending. About the only thing Arnold has going for himself is that the voters gave the legislature lower approval ratings then Arnold and the Democrats are still in disarray.
Our government tells us inflation is 3%. Yet inflation is at a 25-month high and inflation is in a cyclical up trend. The Economic Cycle Research Institute’s Future Inflation Gauge, which is designed to anticipate cyclical swings in the rate of inflation, rose to 119.7 in April from 118.8 in March. It is just like as we mentioned earlier, new jobs for April were really 17,000 not 274,000. The numbers in employment, as well as in inflation, are a total fraud. By distorting statistics and via the use of the Working Group on Financial Markets, and the operations of the FED in the repo pool, the government is manipulating every market in the world worth distorting. Of course, the employment news and further bogus inflation data sent gold down last Friday $3.70 and sent the euro tumbling 1.21 to 128.37. These actions continue to cause long-term damage to all markets except gold and silver, which hold their own in spite of the efforts of the elitist cartel.
The Chicago Fed President Michael Moskow told lawmakers and regulators that they need to be sensitive to potential problems at the US Pension Benefit Guaranty Fund. He cited the Federal S&L Insurance Corp. that was undermined by the S&L crisis in the mid to late 1980s. He said the PBGC, Pension Benefit Guarantee Corp was in a deep hole already and unless we make changes to the law that hole will get deeper every day. The current PBGC deficit is $23 billion and they are talking about $80 to $90 billion. It was characterized as a time bomb. We see PBGC losses of $500 billion to $1 trillion when all is said and done.
Another scandal, as a former Bear Stearns municipal bond banker and a former member of an Illinois board that approves hospital construction has been charged with 28 counts of extortion and fraud.
The UN has asked a federal court to force oil-for-food investigator Robert Parton to return documents subpoenaed by congressional committees, saying their disclosure might endanger lives. If they went to Congress there are probably already hundreds of copies leaked.
Looking at the inventory figures we think there is a good chance the first quarter GDP will be revised from 3.1% to 2.8%.
Since being designated junk, the yield on GM and Ford’s 30-year bonds are now 11.7% and 10.2% respectively. Next year when they borrow some $200 billion they will face interest rates higher and pay 13 to 14% for funding. They cannot survive doing that.
The one-worlders plod relentlessly onward. It was announced at the spring meeting of the IMF/World Bank in Washington, DC that a number of countries will be used to test a $1.00 tax on airline tickets. This is the beginning of a tax base for funding for the UN so that it can implement the “New World Social Order” so it can redistribute wealth from the haves to the have nots. This is the beginning of global taxation.
GM has $19 billion in cash, of which they will burn $5 billion this year. This position gives GM three years to survival. SUV sales have plummeted and continue to do so and they have been GM’s big money- maker. GMAC, the big moneymaker is facing a declining housing market and declining profits. Plus, they may end up with lots of bad paper. If GM brings in an austerity program at this time we are dubious of the results. It does not make the debt go away. GM and Ford are uncompetitive because foreign manufacturers do not have pensions and health plans. They might be better off doing what UAL did. Go bankrupt and chuck them. Then they could compete. They are doomed otherwise. GM has to raise $60 billion in debt this year. Will anyone buy it at 14%? Will they be shut out of the market? If they are, will they loot the employees’ pension fund of $6.5 billion to stay afloat? The PBGC may preempt GM and move for bankruptcy. The bid by Kirk Kerkorian for GM stock is either guided by the government or he believes the GMAC portion is worth $31.00 a share. The demise of GM is going to be much quicker than people realize and it is going to destabilize both the stock and bond markets. It could be the event that tips the scales and brings on recession.
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GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS
Silver lease rates are above 1% across all terms and one-year leases are over 2%. As lease rates rise, price increases that should have occurred in the spot market are transferred into rising rates. If there is a default, the lender does not get their metal back, and is paid in cash at capped prices.
Another take on higher lease rates is the GM fallout. It will tend to push interest rates higher on all kinds of paper, which could be showing up in lease rates. There could be something going on in derivatives we are not aware of. A big counter-party has problems with one kind of debt, which is causing it to change its position in a different kind of debt. Collateral could have lost its value. We could be looking at something very big. Once silver clears $7.20 it should hit $8.20.
The South African gold mining industry is facing a crisis that could spell its doom at least on a short-term basis. Margins are being squeezed as a result of input costs that are rising above the inflation rate and gold prices received in rand terms due to its strength, rendering the mines uncompetitive with their international, dollar-denominated peers.
While this nightmare proceeds, the Marxist labor unions press for unrealistic wage increases and the government stands by and watches. There isn’t any more fat to be squeezed out and unless the government depreciates the rand’s value, there will be many layoffs and bankruptcies. We are not going to go into the rest of the lurid details but trust us this is a can of worms. It could begin anarchy in South Africa. This bottom line is less gold will be produced and reach the market. That means higher gold prices.
Without going into great detail again on the mining, political and social problems in South Africa, which are overwhelming, you can now anticipate a substantial reduction in gold production beginning in this quarter.
You may even see cutbacks in production at non-South African gold mines as marginal and negative cash flow units are put on standby. These latest developments mean that central banks will have to sell more gold, if they have it, to suppress gold prices. We believe they have less than 5,000 tons left and that won’t last too much longer. Even though statistics are doctored they still look terrible and the only reason the DOW stays up is that it is being supported by the government and the Fed. Even with the lies it is apparent that inflation is rising. Gold and silver stocks are not going up but they have stopped going down.
In India, Akshaya Tritiya is one of the most auspicious days of the Vedic calendar. Gold and gold jewelry brought and worn on this day signify never diminishing good fortune. Last year 15 tons of gold was sold and it is forecast that will increase 20% this year. Optimistically some dealers expect a 40% increase in business.
The Dubai Gold and Commodities Exchange is expected to go live this year. It is expected to trade gold in good volume. It will allow traders to hedge their price risk, manage their inventories properly and predict strategy.
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CHINA
China still puts members of the spiritual group Falun Gong in jail despite never having a lawyer or trial. They have a vast penal system that is separate from the judicial system. There are 300 special prisons holding 300,000 political prisoners, prostitutes, drug users and petty criminals that have never had a day in court. China still is a communist nation where no human rights exist, yet we have no sanctions against this undemocratic regime. Labor re-education camps are still going strong. About 30,000 are political prisoners, the rest have committed misdemeanors or felonies.
The Chinese yuan could be revalued by 5-10% says Goldman Sachs and they say it shouldn’t lead to growth slowdown.
China said it would impose new taxes and restrictions on real estate transactions to curb speculation that’s caused what the government calls a property price bubble.
Homebuyers who sell within two years of purchase will have to pay a tax on the sale price starting June 1, 2005.
The Central Bank says it refuses to bow to external pressure to revalue its currency and blames the US for creating a negative environment for any eventual loosening of the yuan peg.
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International Forecaster May, 2005 (#2)
