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THE INTERNATIONAL FORECASTERSATURDAY, MAY 9, 2009

050909 (3)_IFP. O. Box 510518, Punta Gorda, FL 33951-0518

An international financial, economic, political and social commentary.

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WEDNESDAY, MAY 13, 2009SATURDAY, MAY 16, 2009



US MARKETSOn Friday the dollar completely broke down, with the USDX collapsing to about

82.5, as monetizations by the Fed became a stark reality. A world stock market collapsecould be imminent as a source of dollar support. We wonder how low they will let thedollar go before they collapse the stock markets to chase people back into UStreasuries, which have also broken down, with treasury interest rates on the rise despitevarious Fed purchases of treasuries in the hundreds of billions. So much for the bogusstress tests as things turn much uglier than anticipated by the boneheads in GoldmanSachs South who are attempting to resurrect the Goldilocks Matrix. The suckers rally issimply the loading and winding of a catapult meant to throw the dollar upward as thestock market spring unwinds at the moment chosen by the PPT, which moment has

already been telegraphed to Illuminist insiders for their continued looting of the sheopleand for the filthy aggrandizement of their growing mountain of ill-gotten gains. The stockmarket shorts are being set up in the dark pools of liquidity beyond the purview ofregulators as this article is being written, so if you plug yourself back into the podelectrodes of the Goldilocks Matrix again, you are in for a major shock.

Stock market rallies aimed at sucking in sheople-dupes based on bogus hedonicfinancial statistics, fairytale financial statements, fascistic injections of monopoly moneyinto the economy and false Goldilocks news spin will continue on as a source of insidertrading profits and as a ready source of capital to boost the dying dollar. As the world'sstock markets collapse in sympathy with the US stock markets as the PPT withdraws itssupport globally, stocks around the world will be sold off, and the proceeds will bechanneled into the perceived safe-haven of US treasuries. This boosts the dollar

because sales proceeds from the liquidation of foreign stocks that are denominated inforeign currencies are exchanged for dollars in order to purchase US treasuries, therebycreating a dramatic demand for dollars. Sell into this current stock market strength andget out of the stock markets, or prepare to get vaporized by an Illuminist laser beam thatis being focused on the sheople for a nice roasting so the elitists can enjoy some moremutton chops while they watch the dollar anti-gravity machine perform its magic for theirentertainment and profit. Also, a dollar boost provides some assistance for carrying outJOB ONE at the Fed, which is gold suppression, so you can take a stock decline to thebank based on that principle alone.

The Consumers Confidence Index, the lowest since records began in 1967 cameoff the bottom in March, just barely. The market has rallied 30% off its bottom, just as itdid in 1933, and we are told by Wall Street and Washington that the recession is over.

Housing starts are off 80.4% from three years ago. We forecast 75% would have beensufficient, but in a depression things are different. The question is how long will startsbump along the bottom with as 12.2-month inventory? Healthy markets have a 5-monthoverhang - not to mention used home inventory. Prices are off 20% or more and themedian may eventually fall 40%. Buying in this atmosphere is foolhardy at best. Thenagain, a fool and his money are soon parted.

Job losses result in foreclosure 15% of the time and if the monthly average of570,000 in the first quarter falls to 325,000, almost 3 million jobs will be lost by yearendand another 450,000 foreclosures and an unemployment rate of 11%. Experts say

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another 7.8 million jobs will be lost by the end of 2009, and industrial production will fallanother 17%. This would cause the loss of 5.1 million more jobs as opposed to 2 million.

Industrial production was off 12.8% yoy, as capacity utilization fell to 69.3%, thelowest since records began in 1967. At the same time the amount of excess capacityutilization is unprecedented. Never mind lost jobs, the economy has to create 125,000

jobs a month just to absorb new entrants into the labor market. It will be at least six

years before employment will grow again under the best of circumstances. We arealready in a depression as bad as in the 1930s.

The elitists continue to throw money at the problem and after 75 years of going tothe well, the debt structure is unsustainable. That is with many years of inflation. We allknow as professionals what has to happen as a result of these policies. Then to add tothe madness some economists have suggested negative interest rates. The act of theFed lending money and paying you to borrow the funds. This supposedly would increaseeconomic activity. The theory is for the Fed to increase inflation, which would make cashtrash and force people to spend. There is a problem with that theory other than it wontwork and that is people can buy gold and silver with their depreciating dollars. Even ifthey do not go up theyll hold their value, something the dollar wont do under thosecircumstances. All current problems can be traced to low interest rates and

unsustainable levels of borrowing and spending. This theory in the long run increasesthe problem and causes further monetization. Such ideas as usual emanate fromHarvard, that seat of illuminist intellectual power, the August hub of learning, whichbestowed a masters degree on that idiot George W. Bush. Am I happy I choseNortheastern instead.

The negative interest policy has been put forward by former White House ChiefEconomist and Harvard professor of economics Gregory Mankiw. He wants to targetinterest rates at a negative 3%. You could borrow $100.00 from the Fed and pay back$97.00. Gregory believes zero interest rates are not working and he is right. Does hereally believe negative rates of 3% would work better? We dont think so. Thepsychology of spending has been dead-ended just as the lust for real estate. It will takesometime to build a new spending foundation and a new spending psychology. We

forecast this would happen and the only way this can be offset is by massive injectionsof more money and credit to offset these very negative factors. This month hyperinflationbegins. Two or three years from now, perhaps sooner, the plug will be pulled onhyperinflation voluntarily or involuntarily. Supposedly this tax on money will force peopleto spend. Again we say people do not have too. All they have to do is buy gold and silverrelated assets. Mr. Mankiw isnt going to tell you that.

Commercial bank loans are off 2.2% over the past six months. Banks are loadedwith cash that continues to pile up over at the Fed that now pays them for the privilege ofdepositing their cash there. We are told banks have excess reserves of some $862billion, up $91 billion in just this past month. Over the past eight years that averagereserve was $1.6 billion. Why are the banks not lending? Well tell you why, because ofall the bad or worthless assets they have on their balance sheets that is why. Negative

interest rates, zero interest rates and massive money and credit expansion areimpoverishing wealth producers, keeping them from taking risks and driving them intogold and silver. Is our President really taking on the transnational elitist conglomeratesand their tax havens? These are paying about 2% in taxation by parking their profitsabroad. American companies might decide as a result of legislation to domicile in othercountries. This would cost some taxation and the further loss of American jobs.

The truth of the matter is that such legislation could be used as a bargaining toolin other legislation, such as universal health insurance. There is $700 billion in offshore

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corporate accounts that could be used to assist the US economy and bring in $200billion in taxes.

Then again he may do what was done four years ago under the ruse of creating jobs. The transnationals bought back $350 billion at 5-1/4% taxation, whereas normaltaxation was 3.3%. America is already one of the most heavily taxed nations worldwidein the corporate area.

The GM management virtually destroyed the company along with the laborunions and now they want a 1 for 100 reverse stock split. That is why we went short GMlong ago.

The pending home sales numbers indicated a 3.2% increase from February toMarch. These are contracts signed. Cancellation rates are about 30% and have been fortwo years. That increase will be adjusted downward next month. The inventory ofexisting homes continues to mount with foreclosures making up 60% to 75% of sales byspeculators.

Bruce Bent, the inventor of money market funds and the proprietor of theReserve Primary Fund, was charged with lying about the stability of the fund last year.He was investing in toxic garbage. This again should tell you how safe money marketfunds are. Both Ken Lewis and Paulson are lying about the threats over Bank of America

and Merrill Lynch. Bernanke then lied before Congress. We see no outrage. No chargesof perjury, only more of the same criminal corruption. As you can see at Harvard and theIvy League schools they have courses in lying. Well eventually get them into court oncriminal charges, if the mob doesnt get them first.

In recent years, never mind through more than a thousand years of history,tactics such as those being used today by Americas Federal Reserve have been afailure. Those at the Fed are well aware of that. It should be noted in the late 1980s andagain in 2001-03, that it was possible to use stimulus, and other money and creditmeasures to resuscitate the economy. The troubles this time is different. They are farbeyond fixing. We have seen the same thing happen in Japan since 1991. They inflatedand inflated, incurred massive debt and even zero interest rates and they could notresurrect their economy. The only thing that kept them afloat was unlimited access with

low tariffs to US markets.It wasnt easy in the 1970s. We were already 13 years in the brokerage

business, so we lived and were part of those years as well. We saw loose monetarypolicy in the early 1960s when we began collecting gold and silver coins. We saw thepreparation in the early 1970s, which led to the debacle that culminated in the collapseand purging of the economy in the early 1980s. There were a number of recoveries inthe years since the war but this time it is really very different.

The stimulus package of only a year ago was ineffective and it increasedgovernment borrowing requirements as you saw recently. The Treasury had to have theFed monetize bond purchases.

The monetary and fiscal stimulus used in the last eight months should soon startto show up in the form of inflation. Do not forget the move to stop inflation began five

years ago and it still hasnt been effective.We are told that there will be no increases in Social Security and Medicare for

the next two years. All government funds are being used to bail out Illuminists on WallStreet, banks and insurance companies.

The number of mortgage applications rose 2% in the week ending May 1, theMortgage Bankers Association said Wednesday, with borrowers seeking both morerefinance and home-purchase loans.

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The MBA's seasonally adjusted composite index of mortgage applications rose to979.7 from 960.6 a week earlier. The refinance index was up 1.2% while the purchaseindex increased 5%.

The purchase-index number adds to signs of housing market stabilization, as lowmortgage rates and falling home prices have energized bargain hunters. The NationalAssociation of Realtors said this week its index of pending home sales, a measure of

signed contracts for sales which have yet to close, rose 3% in March.The refinance share of mortgage activity decreased to 74.4% of total applications

from 75.3 percent the previous week. The adjustable-rate mortgage share of activityremained unchanged at 2.1% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages increased to4.79% from 4.62%, with points increasing to 1.17 from 1.14 (including the originationfee) for 80 percent loan-to-value ratio loans. A point is 1% of the loan amount, chargedas prepaid interest.

The survey covers approximately 50 percent of all U.S. retail residentialmortgage applications and includes responses from mortgage bankers, commerciallenders and thrifts.

Wells Fargo & Co. told employees on Monday it will no longer contribute to their

traditional pension plan, effectively cutting the total compensation of its workers lessthan two weeks after announcing record first-quarter profit.

The San Francisco bank is combining its existing program with that of WachoviaCorp., the Charlotte, N.C., bank it acquired in December, and freezing both companies'cash balance plans, a type of defined benefit plan.

"We must manage expenses prudently to help Wells Fargo continue our longtrack record of profitable growth so have decided to have one team member retirementplan for the combined company," spokesman Chris Hammond said in a statement."These decisions were difficult and we are confident that we're taking the right steps toensure the long-term strength of our company."

He said the bank will maintain the dollar-for-dollar match for its 401(k) plan, up to6 percent of pay.

At least three of the nation's 19 largest banks have passed government stresstests of their financial strength.

American Express Co., JPMorgan Chase & Co. and Bank of New York MellonCorp. will not be asked to raise more capital when federal officials announce the testresults Thursday afternoon, according to people briefed on the results. The peoplerequested anonymity because they were not authorized to discuss the results.The stress tests were designed to see how the large banks and finance companieswould fare if the economy worsens. Analysts expect about half the companies will beasked to raise capital.

Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. all will be asked toraise money, sources have told The Associated Press.Spokesmen for New York-based American Express and JPMorgan would not comment.

A Bank of New York Mellon representative did not immediately respond torequests for comment Wednesday afternoon.

Bank of America stock rose Wednesday after reports that the Charlotte, N.C.-based company would need to raise $34 billion in additional capital. The New YorkTimes and Wall Street Journal reported the figure. The Times quoted a bank executive,while the Journal cited unnamed people familiar with the situation.

The stress tests are a centerpiece of the Obama administration's plan to stabilizethe financial industry. They measure how much the banks would be hurt ifunemployment rose to 10.3 percent and home prices dropped an additional 22 percent.

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The government wants the firms to have enough money to keep lending even if theeconomy gets much worse. Officials have said none of the banks will be allowed to fold.

Signs of an economic recovery aren't showing up in the latest bankruptcystatistics.

Phoenix-area bankruptcy filings jumped 91 percent in April compared with a yearearlier, pushing above 2,000 a month for the first time since bankruptcy laws were

changed in late 2005.MetLife Inc., the biggest U.S. life insurer, said net unrealized losses on corporate

debt holdings increased 9.9 percent to $15.4 billion in the first quarter as borrowersstruggled to repay loans.

The loss, disclosed by the New York-based insurer in a regulatory filing today,compares with $14 billion at the end of 2008 and $8.22 billion at the end of September.Unrealized losses, which arent subtracted from earnings, are calculated as thedifference between a holdings market value and what the company says the investmentis worth.

Bank of America Corp. is likely to convert preferred stock into common shares,and traders betting on a potential swap should use options, Barclays Plc said.

Regulators have concluded Bank of America needs about $34 billion in capital to

withstand a weaker economy, according to a person with knowledge of U.S. stress testsof lenders. The company may be able to accomplish that by exchanging preferredshares for common stock.

Citigroup Inc. announced a plan in February to convert as much as $52.5 billionin preferred stock to replenish capital, creating an arbitrage opportunity for investors whobought those shares and shorted the banks common equity. The New York-based bankreduced profits for Third Point LLCs Daniel Loeb and other investors after delaying theswap. Venu Krishna, a Barclays analyst, said trading options is safer than shorting Bankof Americas common shares.

Given the experience of Citi preferred holders who hedged themselves with thecommon, we believe a more optimal choice is to sell combos (i.e. buy puts and sell callsat the same strike) as a hedge, Krishna wrote in a report yesterday.

Hedge funds and speculators rushed to buy preferreds and shorted Citigroupstock to profit from the difference in prices between the two securities. Gains forinvestors in the strategy were eroded by delays in completing the transaction and asurge in the costs to borrow the common shares sold short.

Half a century prompted companies to lower expenses by squeezing more fromremaining staff.

Productivity, a measure of employee output per hour, rose at a 0.8 percentannual rate, more than forecast, after a 0.6 percent decline in the fourth quarter, theLabor Department said today. Labor costs increased 3.3 percent after climbing 5.7percent at the end of 2008.

DuPont Co., the third-biggest U.S. chemical maker, plans to cut an additional2,000 jobs as global demand remains weak.

Claims for state unemployment benefits fell sharply last week, the fourth declinein five weeks, providing further evidence that the pace of layoffs has slowed after monthsof steep job cuts.

Still, the total number of unemployed drawing jobless benefits hit its 14th-straightrecord high and now stands at over 6.3 million, an indication that even if layoffs havetapered off, there's little evidence that new jobs are being created.

Initial claims for state jobless benefits tumbled 34,000 to 601,000 in the weekended May 2, the Labor Department said in a weekly report Thursday. That's the lowestlevel since late January.

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Wall Street economists had expected a 4,000 rise, according to a Dow JonesNewswires survey. The prior week's level was revised higher.The four-week average - which aims to smooth volatility - slid for a fourth-straight week,by 14,750 to 623,500, the lowest since mid-February.

The US has lost over 5 million jobs since the recession started in late 2007, withover 2 million of those losses occurring in the first three months of 2009 alone, pushing

the unemployment rate to a 25-year high of 8.5%.The current global crisis is vastly worse than the 1930s because financial

systems and economies worldwide have become more interdependent, Black Swanauthor Nassim Nicholas Taleb said. This is the most difficult period of humanity thatwere going through today because governments have no control, Taleb, 49, told aconference in Singapore today. Navigating the world is much harder than in the 1930s.

Europes central banks are $40bn poorer than they might have been after theyfollowed a British move taken 10 years ago on Thursday to shrink the Bank of Englandsgold reserves, analysis by the Financial Times has shown.Londons announcement onMay 7 1999 that it would sell a large share of the Banks gold reserves in favour ofassets offering a return, such as government bonds, was the high water mark of so-called anti-gold sentiment among European central banks.

http://www.ft.com/cms/s/0/433a92b4-3a67-11de-8a2d-00144feabdc0.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058&nclick_check=1 - #Many of these banks, such as those in France, Spain, the Netherlands andPortugal, decided later in 1999 to follow Britain and sell off their reserves. At that time,gold was worth around $280 an ounce, less than a third of its current level of more than$900.

European banks sold about 3,800 tonnes of gold, reaping about $56bn,according to calculations from official sales data and bullion prices.Taking into account the likely returns from the investments in bonds, the banks havegained another $12bn. But because todays gold prices are far higher, they are about$40bn poorer than if they had kept their reserves.

The biggest loser is the Swiss National Bank which sold 1,550 tonnes over the

decade and at todays gold prices is $19bn poorer, followed by the Bank of England,which is $5bn poorer.

The UK Treasury on Wednesday defended its decision to sell gold as a way todiversify reserves and cut risk. As a result of the programme, a one-off reduction in riskof approximately 30 per cent was achieved, it said. The Swiss National Bank declined tocomment other than to say that it did not plan to sell more gold.However, central bankers are confident that over the long run their move out of gold andinto bonds will pay off and reduce the volatility of their portfolios, people familiar withtheir thinking said. Analysts also argue that because some banks had more than 90 percent of their assets in gold, some disposals were warranted.

The proportion of European reserves held as gold remains extremely large evenafter years of sales, at an average of about 60 per cent, compared with the world

average of 10.5 per cent.After 10 years of steady sales, Europes gold sales are set to slow to their lowest

levels since 1999, while central banks outside Europe have already become net buyersof gold. The US, the worlds biggest holder of gold, decided not to follow Europes move.Germany and Italy are the only two big European central banks which did not follow theUK, mostly because of domestic disputes about what to do with the proceeds.

Consumers enticed by warmer weather and glimmers of hope for the economybought a few more items in April, helping discounter Wal-Mart Stores and many mallclothing chains post better results for the month than expected.

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Business in many areas remains weak, however, and analysts expect a slowrecovery as unemployment remains high and other economic woes persist.

Among merchants that reported sales Thursday, mall-based clothing storesincluding Gap, American Eagle and Wet Seal posted smaller declines than analysts hadforecast. The Children's Place, T.J. Maxx owner TJX Cos. Inc. and The Buckle sawbigger gains than expected.

But warehouse store operator Costco Wholesale Corp. reported a deeper-than-expected same-store sales drop, hurt by the closing of its stores on Easter.

China has given its clearest warning to date that emergency monetary stimulusby Western governments risks setting off worldwide inflation and undermining globalbond markets.

"A policy mistake made by some major central bank may bring inflation risks tothe whole world," said the People's Central Bank in its quarterly report.

"As more and more economies are adopting unconventional monetary policies,such as quantitative easing (QE), major currencies' devaluation risks may rise," it said.

The bank fears a "big consolidation" in the bondmarkets, clearly anxious that interest yields will surge as western states try to exit theirQE experiment.

Simon Derrick, currency chief at the Bank of New York Mellon, said the report isthe latest sign that China is losing patience with the US and aims to diversify part its$1.95 trillion (1.3 trillion) foreign reserves away from US Treasuries and other dollarsecurities.

"There is a significant shift taking place in China. They are concerned about thestability of the global financial system so they are not going to sell US bonds theyalready have. But they are still accumulating $40bn of fresh reserves each month, andthey are going to be much more careful where they invest it," hesaid.

Hans Redeker, head of currencies at BNP Paribas, said China is switching intohard assets. "They want to buy production rights to raw materials and gain access toresources such as oil, water, and metals. They know they can't keep buying bonds," he

said Premier Wen Jiabao left no doubt at the Communist Party summit in March thatChina is irked by Washington's response to the credit crunch, suspecting that the US isengaging in a stealth default on its debt by driving down the dollar. "We have lent amassive amount of capital to the United States, and of course we are concerned aboutthe security of our assets. To speak truthfully, I do indeed have some worries," he said.

Days later, the central bank chief wrote a paper suggesting a world currencybased on Special Drawing Rights issued by the International Monetary Fund.Some economists say China is suffering from "cognitive dissonance" by anguishing somuch over its reserves, accumulated as a result of its own policy of holding down theyuan to promote exports.

Quantitative easing by the US Federal Reserve and fellow central banks mayhave saved China as well, since the country's growth strategy is built on selling goods to

the West.China's fears of imported inflation may reflect its concerns about over-heating.

The M2 money supply rose 25pc in March on a year earlier, and there has beenexplosive credit growth since the government relaxed loan restraints. There areconcerns that the stimulus is leaking into a new asset bubble rather than promoting jobgrowth. The Shanghai bourse is up over 50pc since November.

Falling home prices have forced the government to ask Congress for a taxpayersubsidy to prop up a program that lets senior citizens take out reverse mortgages.

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The White House says in budget details that the Federal Housing Administrationneeds a $798 million subsidy next year, the first in its 75-year history. The money isneeded for a program that lets seniors tap the equity in their homes.

The FHA's main program for borrowers with weak credit will not need a taxpayerrescue, despite rising defaults.

There will be no rapid economic and financial recovery anytime soon. Job

formation is a long way from beginning as layoffs continue to abound. The pay rates forthose who can find jobs are deplorable. At the bottom end of the job food chain theuneducated have to contend with competition from illegal aliens and at the middle andupper ends workers have to contend with free trade, globalization, offshoring andoutsourcing. At the same time the fiscal deficit for 9/30/09 could be as high as $2.5trillion, which is unfathomable. Worse yet, the President tells us this situation will persistfor years to come.

What we will have to do eventually is purge the system whether the elitists like itor not. We need higher interest rates to encourage saving to provide funding for theeconomy. Companies that are bankrupt should be allowed to fail with no exception.Funds have to be available to rebuild our capital foundation. All government agencies atevery level have to cut spending at least by 35% to balance budgets without increasing

taxes. Inflation should be under 2% and that is accomplished by not allowing the Fed torecklessly increase money and credit. Tariff barriers on goods and services should beerected to raise revenue for the federal government and to protect what is left ofAmerican jobs. Tariffs will force US corporations to return home to manufacture or tooffer services. Over the last 200 years in similar situations these methods have beenemployed and they have worked.

What the Fed and the Treasury are doing wont work and it could be disastrous.Keynesianism always has been and will continue to be a disaster.

The lies at the Fed get bigger and bigger. Mr. Bernanke as well as Mr. Geithnersay that there will be a reassuring picture of a banking system able to withstandwhatever stresses the recession may inflict on it once handful of institutions add to theircapital base.

Challenger job cut announcements total 132,600 in April, up 47.3% yoy.The Senate has approved widening of the FDICs credit line at Treasury to $100

billion from $30 billion. It also approved an increase in the FDICs credit limit to $500billion. The insurance funds reserves have been depleted by bank failures over thecourse of the subprime collapse.

The number of borrowers who are underwater on their mortgages were 30% atthe end of the first quarter, up from 17.6% in the fourth quarter and 14.3% yoy. Thissurge in underwater borrowers will cause fewer homeowners to qualify. In additioninterest rates are rising. Home sales are still falling off a cliff.

Even though consumer confidence perked up somewhat this past month, as didexports worldwide, world trade is off some 35%. Consumption is showing a fall intonegative territory and we do not see a change anytime soon. Deeply in debt consumers

simply cannot launch a recovery in the face of rising unemployment. The days of being amall rat are over. People will have to find other ways to entertain themselves. No moreshop until you drop. Life on borrowed money is coming to an end. The future will be likethe 1940s and 1950s, days when you counted every penny.

The quest to get bigger and bigger by companies is over. They can no longerborrow the funds to do so. What lenders want is to lend on collateral that is falling invalue? Banks are definitely exacerbating the financial and economic collapse. OurPresident tells business and individuals to pile on more debt. The fact is they cannot.Our government via lenders, FHA, Fannie and Freddie is again writing subprime loans,

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the loans that started the economy downhill. Debt is now close to 175% of GDP. Thespending psychology, like the housing psychology, has been broken and it will takeyears to fix.

Behind all these problems is the privately owned Federal Reserve, which refusesto relinquish information on bank bailouts claiming it is a state secret. They wont tell uswho has borrowed and how much because of stigma as well. That readers is some $2

trillion we are talking about. This is the same Fed that made disastrous decisions thatcaused todays problems. What the Fed is doing is bailing out fellow elitists. They aresubsidizing failure and we get to pay for it. There is no such thing as too big to fail.

The US government should let its weakest banks fail, argues economist NourielRoubini, whose pessimistic forecasts have earned him the moniker Dr. Doom.

Roubini and fellow New York University economist Matthew Richardson, writingin the Financial Times, ask the question: Why keep insolvent banks afloat?

Their answer: We believe there is no convincing answer; we should instead findways to manage the systemic risk of bank failures.

The bank stress tests could have facilitated this process, the duo explain.The problem is, the tests, which measure how viable banks are under adverse

economic conditions, have no failed category, even if as many as 10 are reported to

need additional capital, they write.Given that the economic environment already reflects the tests worst-case

scenario, the stress test results will not be credibly interpreted as a sign of bank health,they maintain.

So investors will conclude that banks requiring extra capital have, in fact, failed,the economists write.

As a result, these institutions will not be able to raise outside capital and willimmediately require government help.

Roubini and Richardson have plenty of allies.Investor Jim Rogers told CNBC that ailing banks are ruining the U.S. economy,

the U.S. government, the U.S. central bank and the U.S. dollar."The world outside Idaho got a little bit smaller Wednesday, as four F-15SG

fighter jets flown from St. Louis by the Royal Singapore Air Force landed betweenrainstorms at Mountain Home Air Force Base.

Greeted by a cheering crowd of more than 100 military personnel from bothSingapore and the U.S., the four jets are the first of as many as 10 that will call theairbase home for at least the next 20 years.

More than 300 active-duty and support personnel will make up the 428th FighterSquadron and train alongside American pilots as part of a partnership between the twocountries - though they will not fly on missions.

U.S. Air Force representatives haven't allowed interviews yet with theSingaporean pilots and crews. But Lt. Col. Keith Gibson, the training squadron's U.S.commander, said U.S. officials have high hopes for the program.

"The base is very excited to work with the RSAF because this partnership

provides important combat readiness training for our Singapore partners, and fulfills theneed to train as a team in a multi-national force structure," Gibson said.

As many as 2,000 active-duty personnel from Singapore may live and work onthe base over the life of the program. The squadron will be officially activated at a May18 ceremony at the base.

The Federal Reserves program to kick- start consumer loans may not be helpingsmall businesses get credit, a group overseeing the U.S. financial bailout said. TheCongressional Oversight Panel, in a report released today, also said the Term Asset-Backed Securities Loan Facility may not be well-designed to meet its purpose in part

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because of less-than-expected demand. The Bush administration created the TALF lastyear using $20 billion from the Troubled Asset Relief Program to restart the market forsecurities backed by loans used by consumers and small firms for purchases such ascars, equipment, real estate and education. Treasury Secretary Timothy Geithner hasexpanded the effort and made it a central part of the Obama administrations marketrescue plans. The program can provide more funds to the lenders for lending, but

asset-backed securities have never been the source of significant funding for smallbusinesses, the panel wrote. Earlier this week, the Fed said investor requests for loansunder the program rose to $10.6 billion from last month, signaling greater investorinterest in the TALF.

Federal regulators plan to disclose today the results of stress tests designed toshow which U.S. banks will require additional capital if the recession worsens.

The review of 19 companies has so far found that Bank of America Corp., WellsFargo & Co. and Citigroup Inc. are among those that need capital, while JPMorganChase & Co. and Goldman Sachs Group Inc. are among those that dont, according topeople familiar with the decisions.

Bank of America Corp. $34 Billion Wells Fargo & Co. $15 Billion GMAC LLC$11.5 Billion Citigroup Inc. $5 Billion Morgan Stanley $1 Billion - $2 Billion.

American Express Co. No Additional Funds Bank of New York Mellon Corp. NoAdditional Funds BB&T Corp. No Additional Funds Capital One Financial Corp. NoAdditional Funds Goldman Sachs Group Inc. No Additional Funds JPMorgan Chase &Co. No Additional Funds MetLife Inc. No Additional Funds State Street Corp. NoAdditional Funds - Fifth Third Bancorp Not Yet Available KeyCorp Not Yet AvailablePNC Financial Services Group Inc. Not Yet Available Regions Financial Corp. Not YetAvailable SunTrust Banks Inc. Not Yet Available U.S. Bancorp Not Yet Available.

Got assets you cant value? Call Larry Fink.Thats what Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary

Timothy Geithner have done, as have many heads of banks and insurance companies,including Robert Willumstad, former chief executive officer of American InternationalGroup Inc., and current AIG CEO Edward Liddy.

Fink, 56, is CEO of BlackRock Inc., the U.S.s biggest publicly traded assetmanagement firm, with $1.3 trillion under management for clients that include FordMotor Co. and Microsoft Corp. BlackRock, like many other money managers, has takensome hits in the credit crisis. It also loaded up on Lehman Brothers Holdings Inc. stock,for example, buying shares last June at $28 only three months before Lehman declaredbankruptcy. One BlackRock fund that rushed in to buy distressed debt in September2007 saw its value plunge 25 percent during the following 12 months.

More recently, mirroring results at rival firms, BlackRocks first quarter profits fell65 percent to $84 million after stock and bond market declines hurt its fees.

Fink has a way of making good money in bad times. A decade ago, he created asubsidiary called BlackRock Solutions, looking to capitalize on ever-more-sophisticatedrisk-management analytics that the firm was running for clients, including mortgage giant

Freddie Mac, that needed help in assessing stressed portfolios or in deciding whether aninvestment made sense.

Fannie Mae, operating under a federal conservatorship since September, askedthe U.S. Treasury for a $19 billion capital investment as a seventh straight quarterly lossdrove the mortgage-finance companys net worth below zero.

A wider first-quarter net loss of $23.2 billion, or $4.09 a share, pushed thecompany to request its second draw from a $200 billion funding commitment from thegovernment, Washington- based Fannie Mae said in a filing today with the Securitiesand Exchange Commission. The company took $15.2 billion in April.

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Morgan Stanley raised $7.5 billion selling stock and debt, 50 percent more than itannounced yesterday, to cover a $1.8 billion capital shortfall and repay governmentbailout funds.

The bank raised $3.5 billion by selling 146 million shares at $24 apiece, 12percent below yesterdays closing price. The New York-based company also sold $4billion in debt in its first transaction not guaranteed by the U.S. Federal Deposit

Insurance Corp. since that backing became available last year.Options traders are increasing wagers that the Standard & Poors 500 Indexs 34

percent rally in the past two months is coming to an end.Futures on the Chicago Board Options Exchange Volatility Index are priced

above the gauges level of 33.44, according to data compiled by Bloomberg. The so-called VIX, which measures the cost of using the options as protection against marketdeclines, has dropped 16 percent this year in CBOE trading.

Dealers are charging more for insurance after better-than- estimated corporateprofits at companies ranging from American Express Co. to Ford Motor Co. andeconomic reports on home sales and durable goods sent the S&P 500 to its steepesteight-week rally since 1938. Now, the so-called term structure shows higher prices forVIX futures for the next six months.

JPMorgan Chase & Co., the biggest U.S. bank by market value, says it may becharged with violating federal securities laws for selling fixed-income financing thathelped push Alabamas most populous county to the brink of bankruptcy.

The potential sanctions by the U.S. Securities and Exchange Commission,disclosed yesterday in two sentences of a 162-page quarterly regulatory filing, relate to aseries of bond and interest-rate swap sales in 2002 and 2003 for sewers in JeffersonCounty, which covers about 1,125 square miles including Birmingham, the state capitalwith more than 240,000 residents.

Until recently, the little-known Securities Investor Protection Corp. was flyinghigh, confident its $1.7 billion fund was more than enough to insure investors againstbrokerage failures and fraud for years to come.

For a decade, the agency did not raise how much it charged brokerage

companies for insurance: only $150 a year to insure every account for up to $500,000whether it was Merrill Lynch, a small-time broker, or admitted Ponzi scheme operatorBernard Madoff.

Then came the financial collapse of 2008, which included Madoff's $65 billionswindle. The cost of the claims in the Madoff case is expected to be in the hundreds ofmillions of dollars - and could wipe out the fund's assets. SIPC officials, who for yearshave said the fund could withstand the most severe economic shocks, now acknowledgethat it is in danger of dropping far below adequate levels.

As a result, they have dramatically raised insurance rates on brokerage firms,increasing the annual fee from $150 to 0.25 percent of each brokerage's net operatingrevenues, which could cost millions of dollars a year at some firms. The agency, createdby Congress but privately run, also has a $1 billion line of credit with the Treasury

Department that it might have to tap for the first time in its history.Consumer borrowing plunged in March at the fastest pace in 18 years as

Americans put away credit cards and hoarded cash.The Federal Reserve said yesterday that consumer borrowing dropped 5.2

percent, the biggest decline since an 8.1 percent fall in December 1990.In dollar terms, consumer borrowing plunged by $11.1 billion - the largest amount onrecord since 1943, and more than three times the $3.5 billion drop economists hadexpected.

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The borrowing category that includes credit cards dropped 6.8 percent in Marchafter a 12.1 percent plunge in February. The category that includes auto loans fell 4.2percent after rising by 1.2 percent in February.

The Commerce Department last week said that the personal savings rate edgedup to 4.2 percent in March, marking the first time in a decade the savings rate has beenabove 4 percent for three straight months.

Consumer spending, which accounts for about 70 percent of total US economicactivity, fell 0.2 percent in March, ending an otherwise strong quarter. Consumerspending grew at an annualized rate of 2.2 percent in the first quarter, according togovernment data.

US wholesale inventories fell for a seventh straight month in March as salesreturned to negative territory after posting a small gain in February, a government reportreleased Friday showed.

Wholesale inventories fell 1.6% in March to a seasonally adjusted $411.7 billion,after falling a revised 1.7% during February, the Commerce Department's report said.The Department in a report released last month had estimated February inventories fell1.5%. The February drop in inventories is the largest on record.The March drop in inventories is more than the 1.2% decline analysts had expected and

indicates wholesalers are drawing down inventories as shipments to retailers remainweak.

Sales of U.S. wholesalers dropped 2.4% in March to a seasonally adjusted$310.9 billion after a downwardly revised 0.2% increase in February, the data showed.Originally, February sales were estimated to have gained 0.6%.

The inventory-to-sales ratio, a measure of the number of months it would take abusiness to deplete its current inventory, increased slightly to 1.32 from 1.31 inFebruary. The March 2009 figure is above the March 2008 ratio of 1.12.On a year-over-year basis, sales were down 18.1% in March, while inventories weredown 3.5%.

Wholesalers' inventories of durable goods - a category that includes cars,appliances and furniture - fell 2.4% in March, after falling a revised 2.6% in February.

Sales of durable good fell 3.3% in March, on the heels of a revised 1.7% increase inFebruary.

Auto stocks fell 5.0%, while auto sales declined 0.6%. That compares with a7.9% drop in auto stocks in February amid a downwardly revised 3.5% increase in sales.Lumber sales in March fell 3.1%, while furniture sales fell 2.5%.Non-durable goods inventories fell 0.3% in March, following a 0.2% drop the monthbefore. March non-durable goods sales fell 1.6%, after dropping a revised 0.9% inFebruary.

Petroleum stocks rose 7.9% amid a 5.1% decrease in sales. Farm productinventories rose 4.7%, while sales fell 3.9%

The economy has continued destroying employment in April although at asomewhat slower pace than in previous months; Non farm Payrolls declined by 539,000

last month, according to data released by the U.S. Department of LaborAprils decline, despite being a large one, is the lowest of the last four months, as

payrolls fell bu 699 K in March and by 651K in February. The Unemployment rate,however, has increased to 8.9% in April, from 8.5% in March

Euro and Pound have rocketed on Payrolls data. EUR/USD has jumped fromaround 1.3440 to levels right above 1.3500 inutes after NFP datas was released.

Employers are letting up a bit on the mass layoffs they resorted to earlier thisyear to cope with the recession, but the unemployment rate is climbing because manybusinesses remain wary of hiring given all the economic and financial uncertainties.

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The Labor Department on Friday is slated to release a report expected to showthat a net total of 620,000 jobs were lost in April. If analysts are correct, the figure while still big would be an improvement from March's 663,000 job losses and markthe fewest reductions since November.The deepest job cuts of the recession, which started in December 2007 and is now thelongest since World War II, came in January: 741,000 jobs vanished then, the most

since the fall of 1949."I think the worst has passed in terms of losses," said John Silvia, economist at

Wachovia. "But the jobs situation will remain tough."With few places for the out-of-work to land, the unemployment rate is expected to

jump to 8.9 percent, from 8.5 percent in March. If that happens, it would mark thehighest jobless rate since the fall of 1983, when the country was recovering from a severerecession that drove unemployment past 10 percent.

The American economy lost another 539,000 jobs in April and the unemploymentrate leapt to 8.9 percent, the government reported Friday, yet the deterioration wasslightly milder than expected, buoying hopes that better days are approaching.

Fannie Mae, operating under a federal conservatorship since September, askedthe U.S. Treasury for a $19 billion capital investment as a seventh straight quarterly loss

drove the mortgage-finance companys net worth below zero.A wider first-quarter net loss of $23.2 billion, or $4.09 a share, pushed the company torequest its second draw from a $200 billion funding commitment from the government,Washington- based Fannie Mae said in a filing today with the Securities and ExchangeCommission. The company took $15.2 billion March 31.

In the midst of the worst economic contraction in decades, some small businessowners are experiencing an additionaland brutalcash squeeze, this time at thehands of their credit-card processors. The recession and rising business bankruptcieshave prompted giant credit-card companies such as Denver (Colo)-based First Data andAtlanta-based Elavon to demand that some business owners maintain a cash reservewith the processors in order to protect against the possibility that customers may requirerefunds after the merchants have gone belly-up. Most processing agreements give the

transaction giants the right to accumulate those reserves simply by holding back moneythe merchant is supposed to be paid after a credit-card transaction has cleared, oftenwith little or no warning.

Dan Price, chief executive officer and co-founder of Gravity Payments, a cardprocessor in Seattle, says he has seen "dramatically more" cases of reserves beingcreated for small accounts in the past year. He says he has not asked any of his clientsfor reserves but has requested regular financial statements from customers that mightpose a risk. Price says the size of reserves varies greatly, but it is common to require anamount equal to one or two months' worth of transactions.

The ramifications on even a well-established company can be dramatic. "In twoweeks we would have been in bankruptcy," says Angie's List CEO Bill Oesterle, whoseprocessor, Elavon, tried to withhold a reserve of $2.5 million from his $35 million

company. Oesterle was instead able to change processors quickly, and with help fromhis lawyers, got his money back in about three weeks.

When a processor agrees to clear a company's credit-card transactions, theprocessor then becomes responsible for providing customer refunds. When an unhappyconsumer asks their credit-card company for a refund, the credit-card issuer gets thatmoney from the processor. The processor, in turn, pulls the money from the merchant'saccount. If the merchant has gone under, the processor has to eat the loss. Withbusiness bankruptcies on the rise, processors fear dishonest merchants might close upshop and skip town, leaving the processor on the hook for any refunds. "Before

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bankruptcy, some [unscrupulous] merchants will create lots of transactions," saysRichard Speer, CEO of financial consultancy Speer & Associates, based in Alpharetta,Ga. Common triggers for the establishment of a reserve include a sudden surge inactivity and individual transactions that have large dollar amounts.

U.S. Treasury Secretary Timothy Geithner said on Friday the Obamaadministration will provide substantial support to troubled lender GMAC, a vital provider

of financing for buyers of U.S.-made cars."It's likely, again, that GMAC will need to take additional capital from the

government and we'll be prepared to provide that," Geithner said in an interview withReuters Television.

The Treasury and U.S. banking regulators said on Thursday that GMAC needs toraise $11.5 billion to fill a capital hole it could face if the economy were to deterioratefurther.

*****How panic gripped the worlds biggest banksBy Gillian Tett

http://www.ft.com/cms/s/2/e3b972fc-3aa6-11de-8a2d-00144feabdc0.html*****

Green Shoots---Flowers or Weedshttp://www.comstockfunds.com/(X(1)S(qcno4145oa24qn55rnbuwl45))/default.aspx?act=Newsletter.aspx&category=SpecialReport&newsletterid=1455&menugroup=Home&AspxAutoDetectCookieSupport=1

*****Postponing Judgement Dayby Puru Saxenahttp://www.safehaven.com/article-13293.htm

*****Reviewing Ellen Brown's "Web of Debt:" Part IIby Stephen Lendmanhttp://sjlendman.blogspot.com/

*****Leaked Agenda: Bilderberg Group Plans Economic Depressionhttp://www.infowars.com/leaked-agenda-bilderberg-group-plans-economic-depression/

*****Have Americans Lost All Control Over the Federal Government?by Mark R. Crovellihttp://www.lewrockwell.com/crovelli/crovelli29.html

*****WHERE IS OUR MONEYhttp://solari.com/archive/missing_money

*****Cashing In on "Government Sachs"http://www.truthout.org/050609C?n

*****The Phoney Epidemic

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http://www.truthout.org/050609F?n*****

Bigger Than Watergate?http://news.goldseek.com/GoldSeek/1241630296.php

*****Census GPS-tagging your home's front door

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=97208*****

Bank Regulator William K. Black Interviewed by The Young Turkshttp://www.truthout.org/video/050609C?n

*****401(k)s Hit by Withdrawal Freezeshttp://online.wsj.com/article/SB124148012581385199.html

We are going to warn you once and once only, the Dow is at 8500 up over 30% from6600. The Dow before the year is out will test 6600 again and if you think getting out ofretirement plans or cash value insurance policies or annuities is difficult now, it will bemore difficult then. At 4000 on the Dow or lower nobody may get out. A word to the wiseshould be sufficient.

*****Senate moves toward easing mortgage termshttp://www.azcentral.com/business/articles/2009/05/06/20090506biz-CongressForeclosures0506.html?source=nletter-business

*****Insider Selling Jumps to Highest Level Since 2007 - The Rats are Leaving theShips:::http://www.bloomberg.com/apps/news?pid=20601213&sid=au8cyqeJFifg&refer=home

*****Democratizing the US Monetary System: Urgency of the American Monetary ActA monetary system which serves the American people

by Richard C. Cookhttp://www.globalresearch.ca/index.php?context=va&aid=13520

*****The Worst Case Scenario (Someone Has to Say It)http://seekingalpha.com/article/134820-the-worst-case-scenario-someone-has-to-say-it

*****Banks That Received Federal Cash Enabled Subprime Lenders, Report Findshttp://www.truthout.org/050709M?n

*****The End of Free Speech?Criminalizing Criticism of IsraelBy PAUL CRAIG ROBERTS

http://www.freedomsphoenix.com/Find-Freedom.htm?At=0056433&From=News*****

Global Crisis Vastly Worse Than 1930s, Taleb Sayshttp://www.freedomsphoenix.com/Find-Freedom.htm?At=0056416&From=News

*****Betting on a Global Crapshoothttp://www.truthout.org/050709R?n

*****Government Could Destroy Records in Hundreds of Guantanamo Cases

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http://www.truthout.org/050709T?n*****

House bypasses governors veto to claim Oklahomas sovereigntyhttp://www.newsok.com/house-bypasses-governors-veto-to-claim-oklahomas-sovereignty/article/3366762

*****

Ron Paul's Influence Growshttp://www.thenewamerican.com/usnews/election/1089

*****CFR Pushes Law of the Sea Treaty (LOST)http://www.thenewamerican.com/usnews/foreign-policy/1084

*****Congressman: 'Hate crimes' would 'break' ConstitutionCriminalizing thought called 'unprecedented in federal law'

http://www.wnd.com/index.php?fa=PAGE.view&pageId=97460*****

Rockefeller wants to shut down the Internet

http://www.brasschecktv.com/page/613.html*****

20090108 Steve QuayleFavoriteand Alex Joneshttp://www.viddler.com/explore/endgamenow/videos/198/

*****Under Restructuring, GM To Build More Cars Overseashttp://www.washingtonpost.com/wp-dyn/content/article/2009/05/07/AR2009050704336.html

*****

Fed DreadThe New York Fed is the most powerful financial institution you've never heard of. Lookwho's running it.http://www.slate.com/id/2217811/

*****Feingold Bill Gives ALLUS Water To The Feds!http://www.freedomsphoenix.com/Find-Freedom.htm?At=0056631&From=News

*****

Some Republicans still don't understand why mainstream America is soup set with theirParty.

Now that Sen. Arlen Specter has defected to the Democrat Party, many prominentRepublicans are openly recruiting liberal Republicans to run against Specter.

And at the top of their list is Tom Ridge.

Ridge is the turncoat Republican whose vote was crucial in passing the semi-auto ban in1994.

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After having opposed a similar ban in 1991, then-Rep. Tom Ridge flip-flopped andteamed up with Charles Schumer (D-NY) to pass the semi-auto gun and magazine ban.The gun ban passed narrowly, 216 to 214,thanks to Tom Ridge.

Later, as Governor of Pennsylvania, Ridge signed one of the most restrictive gun control

laws in the State's history -- the infamous Act 17, which registered and taxed long gunbuyers and placed other restrictions on Keystone State gun owners.

As the head of the Department of Homeland Security, Tom Ridge opposed arming pilots.He asked, sarcastically, if pilots carry guns, then should we also arm railroad engineersand bus drivers? As DHS Director, Ridge should have led the charge to arm pilots andpeople in other positions that fell under the agency's purview.

Instead, he just repeated the same tired old anti-gun line that we hear every time a statepasses a concealed carry handgun law.

Guess who else opposed the armed pilots program? Pennsylvania's "Benedict" Arlen

Specter, who was one of only two Republican Senators to vote against the bill.

The last thing we need is another elitist in Congress who does not trust law-abidingcitizens with firearms. And yet, wishy-washy RepublicanSenators like Utah's Orrin Hatch and South Carolina's Lindsey Graham are toutingRidge over Specter. In other words, let's replace one turncoat with another.

There is a better option. His name is Pat Toomey, a Gun Owners of America "A" ratedpro-gunner who served in the U.S. House of Representatives for three terms, beforehonoring a self-imposed term limit and retiring in 2004.

Those who are pushing anti-gunner Tom Ridge claim that Pat Toomey is unelectable

because he's "too conservative" for Pennsylvania.

But that's what self-appointed experts said before Toomey got elected term after term ina largely Democrat district in the eastern part of Pennsylvania. And that's what they saidbefore he accrued a gigantic lead in the polls over a sitting Senator this year, forcingSpecter to jump parties.

It was Pat Toomey who forced Specter to jump to the Democrat Party. Toomey -- whowas backed by Gun Owners of America Political Victory Fund -- was leading Specter inpolls by an overwhelming margin.

That's also what they said about Ronald Reagan -- who was supposedly too

conservative to win a national election. (By the way, Reagan also won Pennsylvania.)

Bottom line: We need to put these squishy politicians on alert. Their internal partypolitics is their business. But when party leaders start pushing noted gun banners --using the money contributed by millions of gun owners around the country -- we're notgoing to remain silent.

Texas Senator John Cornyn is the head of the National Republican SenatorialCommittee. Michael Steele heads the Republican National Committee. The decision to

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support an anti-gunner over a defender of the Second Amendment rests largely in theirhands.

ACTION: Please urge Senator John Cornyn and Chairman Michael Steele not tointerfere in Pennsylvania's primary. There is already a pro-gun, electable conservativerunning in the primary who deserves their support.

You can contact NRSC's Sen. Cornyn at [email protected] or by phone at (202) 675-6000.

You can contact RNC Chairman Michael Steele at [email protected] or by phone at(202) 863-8700.

COMMODITIESThe DOE reports crude oil inventories rose 167,000 barrels, gas fell 167,000

barrels and distillates rose 2.43 m/b.

GOLD, SILVER, PLATINUM AND PALLADIUMThe Royal Mint, established in the 13th century, used 75 percent more gold in

the first quarter amid a surge in demand for bullion to diversify investments.The U.K. mint made 28,496 ounces of gold coins in the quarter, compared with

16,317 ounces a year earlier, according to data obtained by Bloomberg News under aFreedom of Information Act request. Production last year rose 30 percent to 53,089ounces, the data show.

Demand for gold and exchange-traded funds linked to the metal accelerated asequities collapsed and governments spent trillions of dollars to combat recessions. TheAustrian mint, Muenze Oesterreich AG, sold a record 1.5 million ounces of gold lastyear, while the U.S. Mints sales of 1-ounce American Eagle gold coins more thanquadrupled in January to 92,000.

People are worried about their savings and banks, and a lot of people realize itsa safe-haven asset, said Mark OByrne, managing director of brokerage Gold and Silver

Investments Ltd. in Dublin. Very few people are selling.Investment in the SPDR Gold Trust, the biggest ETF backed by bullion, has

expanded to 1,104.45 metric tons, overtaking Switzerland as the worlds sixth-largestgold holding. Gold has advanced for eight consecutive years, the longest winning streaksince at least 1948, according to data compiled by Bloomberg.

The Royal Mint is now based in Llantrisant, Wales. Its 2009 Gold ProofSovereign coin, made from 22-carat gold and weighing 7.99 grams (0.26 ounce) sells for299 pounds ($450), according to the government agencys Web site. Gold for immediatedelivery averaged $904.18 an ounce this year, compared with $872.25 an ounce lastyear.

The Mints use of silver declined 10 percent to 74,793 ounces in the first quarter,the data show. Production last year fell 14 percent to 240,759 ounces. The metal fell 23

percent last year in London.Wednesday saw June gold rise $8.80 to $911.00 as silver rose $0.29 to $13.71.

Outside contracts were similar. Open interest in gold rose 2,520 contracts to 334,360, assilver OI rose 604 to 81,050. The ETF-GLD tells us their inventory has been unchangedfor eight business days. If you believe that we have a tooth fairy wed like to introduceyou too. The ECB says, gold and gold receivables last week fell 12 million euros, or 0.54tons. One bank sold and another bought. The Tocom is closed for the week. The HUIrose 15.68 to 335.62. AEM rose 4.42%, or up $2.04 to $48.24; GG rose 5.79%, or up

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$1.66 to $30.33; SSRI rose 6.62%, or up $1.26 to $20.29 and MFN rose 2.74%, or up$0.22 to $8.24.

Richard Russell has discovered, as we did a few months ago, that gold is in agiant long-term reverse head and shoulders bottom pattern. The right shoulder is beingcompleted and gold could catapult upward at any time, solidly breaking through $1,025.This will have huge implications for the world monetary situation. It is tragic for most

Americans, including most of our Congress.The market climbed again with the Dow up 101 to 8512; S&P rose 141 and

Nasdaq 30 Dow points. We detect some weakness. The 2-year was 0.96%; the 10s3.16%; the 1-month Libor 0.40% and the 3-month 0.99%.

The yen rose .0070 to $.9832; the euro rose .0039 to $1.1349; the pound rose.0061 to $1.5129; the Swiss franc was up .0027 to $1.3307; the Canadian dollar rose.0063 to $.8568 and the dollar index, USDX, fell .18 to 83.97.

Oil rose $2.15 to $56.34; gas rose $0.02 to $1.63 and natural gas rose $0.16 to$3.98. Copper rose $0.29 to $2.19; platinum rose $3.10 to $1,141 and palladium rose$5.85 to $228.05. The CRB index rose 5.64 to 237.48.

Early Thursday markets were slightly stronger. The Dow rose 63 to 8534; S&Pwas up 52; Nasdaq gained 14 and the FTSE gained 166 Dow points. The Nikkei rose

408; the CAC gained 61 and the DAX rose 80. The yen fell .0064; the euro rose .0011and the pound rose .0023. The 2-year was 0.99% and the 10s were 3.24%, a gapingbreakdown. 1-month Libor was 0.40% and the 3-month was 0.97%. Oil rose $1.53 to$57.87 as the result of profit taking in the market and rotation into commodities, the nextday. It certainly wont be the long side of the long bond market or long interest rates. Gasrose $0.04 to $1.67 and natural gas rose $0.02 to $3.91. Gold rose $4.60 to $915.60;silver gained $0.25 to $13.96 and copper was up $0.02 to $2.20. Can it break out?

On Thursday June gold fell $0.50 to $911.30, as July silver rose $0.13 to$13.84. The cartel sat on gold all day long. Mr. Bernanke spoke again and the marketfell again. Mr. Geithner spoke after the close when it was safer. Gold open interest rose7,101 contracts to 341,461, as silver OI gained 427 contracts to 89,447. The HUI fell3.50 to 332.12, as those in the index fell fractions.

For the 4th day in a row the Nasdaq 100, which has led the current rally seemedto be faltering. The Dow fell 102 to 8409; the S&P fell 83 and the Nasdaq fell 254. Theinterest rates are headed relentlessly higher. The 2-year yielded 0.99% and the 10s3.32%.

The yen fell .0069 to $.9899; the euro rose .0022 to $1.3371; the pound fell.0137 to $1.4992; the Swiss franc fell .0002 to $1.1309; the Canadian dollar fell .0049 to$.8519 and the USDX rose 2 to 83.83.

Oil rose $0.03 to $56.37; gas rose $0.01 to $1.67 and natural gas rose $0.28 to$4.15. Copper rose $0.05 to $2.14; platinum rose $9.90 to $1,153 and palladium rose$11.05 to $239.10. The CRB rose 2.05 to 239.53.

Early Friday was up again as the Working Group on Financial Marketsmanipulates the market and specifically financial stocks. These banks are coming to

market with stock for sale to fund their insolvent companies. Now you can understandwhy they doubled in price over the past two months. The buyers are headed to severelosses.

The Dow rose 86 to 8471; S&P rose 83, Nasdaq gained 53 and the FTSEgained 96 Dow points. The Nikkei rose 47 to 9433; the CAC rose 64 and the DAX 118.The 2-year T-bill broke down to yield 1.01%; the 10s were 3.35%; 1-month Libor 0.38%and 3-month 0.96%.

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Oil rose $0.97 to $57.68; gas rose $0.02 to $1.69 and natural gas rose $0.09 to$4.17. Gold rose $1.20 to $916.70; silver fell $0.10 to $13.94 and copper rose $0.02 to$2.18.

On Friday the gold and silver market dueled with the forces of evil again andcame out decently. Spot gold rose $5.00 to $916.00. The June contract was $917.00, up$1.50. Spot silver rose $0.18 to $14.01 and July was off $0.04 to $13.99. The shares

were strong again. The XAU rose 4.61 to 138.29 and the HUI rose 11.23 to 343.34. AEMrose 3.95%, or $1.89 to $49.76; GG rose 4.58%, or $1.43 to $32.63; SSRI rose 0.65%,or $0.13 to $20.06 and MFN rose 3.28%, or $0.27 to $8.50.

Gold and silver were helped by a lower dollar. The yen rose .0063, or to $.9837;the euro rose .0250 to $1.3621; the pound rose .0234 to $1.5216; the Swiss franc rose.0200 to $1.1059; the Canadian dollar rose .0168 to $.8687 and the USDX, dollar index,fell 1.51 to 82.43.

Oil also aided gold and silver rising $2.06 to $58.77, gas rose $0.03 to $1.70and natural gas rose $0.27 to $4.35.

Copper fell $0.01 to $2.15; platinum fell $3.80 to $1,153.00 and palladium rose$2.00 to $243.70. The CRB rose 3.70 to 243.23.

The market and the financials rose again; the Dow rose 165 to 8575; S&P rose

197 and Nasdaq 137 Dow points. This week the former leader Nasdaq showed weakgains and that could be a precursor to a downward break in the market. The 2-yearTreasury yielded 0.97 after hitting a recent high this morning and the 10s were 3.29%after hitting 3.35 at 4:00 a.m. this morning. That will help gold and silver as well.

US wholesale inventories fell for a seventh straight month in March as salesreturned to negative territory after posting a small gain in February, a government reportreleased Friday showed.

Wholesale inventories fell 1.6% in March to a seasonally adjusted $411.7 billion,after falling a revised 1.7% during February, the Commerce Department's report said.The Department in a report released last month had estimated February inventories fell1.5%. The February drop in inventories is the largest on record.The March drop in inventories is more than the 1.2% decline analysts had expected and

indicates wholesalers are drawing down inventories as shipments to retailers remainweak.

Sales of U.S. wholesalers dropped 2.4% in March to a seasonally adjusted$310.9 billion after a downwardly revised 0.2% increase in February, the data showed.Originally, February sales were estimated to have gained 0.6%.

The inventory-to-sales ratio, a measure of the number of months it would take abusiness to deplete its current inventory, increased slightly to 1.32 from 1.31 inFebruary. The March 2009 figure is above the March 2008 ratio of 1.12.On a year-over-year basis, sales were down 18.1% in March, while inventories weredown 3.5%.

Wholesalers' inventories of durable goods - a category that includes cars,appliances and furniture - fell 2.4% in March, after falling a revised 2.6% in February.

Sales of durable good fell 3.3% in March, on the heels of a revised 1.7% increase inFebruary.

Auto stocks fell 5.0%, while auto sales declined 0.6%. That compares with a7.9% drop in auto stocks in February amid a downwardly revised 3.5% increase in sales.Lumber sales in March fell 3.1%, while furniture sales fell 2.5%.Non-durable goods inventories fell 0.3% in March, following a 0.2% drop the monthbefore. March non-durable goods sales fell 1.6%, after dropping a revised 0.9% inFebruary.

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Petroleum stocks rose 7.9% amid a 5.1% decrease in sales. Farm productinventories rose 4.7%, while sales fell 3.9%

The economy has continued destroying employment in April although at asomewhat slower pace than in previous months; Non farm Payrolls declined by 539,000last month, according to data released by the U.S. Department of Labor

Aprils decline, despite being a large one, is the lowest of the last four months, as

payrolls fell bu 699 K in March and by 651K in February. The Unemployment rate,however, has increased to 8.9% in April, from 8.5% in March

Euro and Pound have rocketed on Payrolls data. EUR/USD has jumped fromaround 1.3440 to levels right above 1.3500 inutes after NFP datas was released.

Employers are letting up a bit on the mass layoffs they resorted to earlier thisyear to cope with the recession, but the unemployment rate is climbing because manybusinesses remain wary of hiring given all the economic and financial uncertainties.

The Labor Department on Friday is slated to release a report expected to showthat a net total of 620,000 jobs were lost in April. If analysts are correct, the figure while still big would be an improvement from March's 663,000 job losses and markthe fewest reductions since November.The deepest job cuts of the recession, which started in December 2007 and is now the

longest since World War II, came in January: 741,000 jobs vanished then, the mostsince the fall of 1949.

"I think the worst has passed in terms of losses," said John Silvia, economist atWachovia. "But the jobs situation will remain tough."

With few places for the out-of-work to land, the unemployment rate is expected to jump to 8.9 percent, from 8.5 percent in March. If that happens, it would mark thehighest jobless rate since the fall of 1983, when the country was recovering from a severerecession that drove unemployment past 10 percent.

The American economy lost another 539,000 jobs in April and the unemploymentrate leapt to 8.9 percent, the government reported Friday, yet the deterioration wasslightly milder than expected, buoying hopes that better days are approaching.

Fannie Mae, operating under a federal conservatorship since September, asked

the U.S. Treasury for a $19 billion capital investment as a seventh straight quarterly lossdrove the mortgage-finance companys net worth below zero.

A wider first-quarter net loss of $23.2 billion, or $4.09 a share, pushed thecompany to request its second draw from a $200 billion funding commitment from thegovernment, Washington- based Fannie Mae said in a filing today with the Securitiesand Exchange Commission. The company took $15.2 billion March 31.

*****The Educated InvestorTheodore Butlerhttp://www.24hgold.com/english/news-gold-silver-the-educated-investor.aspx?article=2030667420G10020&redirect=false&contributor=Theodore+Butler

**********

How panic gripped the worlds biggest banksBy Gillian Tetthttp://www.ft.com/cms/s/2/e3b972fc-3aa6-11de-8a2d-00144feabdc0.html

*****

Green Shoots---Flowers or Weeds

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http://www.comstockfunds.com/(X(1)S(qcno4145oa24qn55rnbuwl45))/default.aspx?act=Newsletter.aspx&category=SpecialReport&newsletterid=1455&menugroup=Home&AspxAutoDetectCookieSupport=1

*****Postponing Judgement Dayby Puru Saxena

http://www.safehaven.com/article-13293.htm

DISCOUNT GOLD AND SILVERRiding The Debt TigerIm a long ways from being the first to observe that the total American debt has grown todangerous proportions. But I may have been the first (last July) to note that the totalAmerican debt has now grown so great that it cant be ever be repaid and thereforewont be repaid. (What cant be paid, wont be paid.) In fact, according to myguesstimates, at least 80% and perhaps 90% of existing debt instruments cannotandtherefore will notbe repaid.The May 3rd, New York Timespublished Worries Rise on the Size of U.S. Debt whichwarned The nations debt clock is ticking faster than everand Wall Street is getting

worried. Ooooif even the mighty Wall Street is worried, the problem must be gettingpretty serious, hmm? According to the NYTimes:

Last week, the Treasury Borrowing Advisory Committee, a group of industry officialsthat advises the Treasury on its financing needs, warned about the consequences ofhigher deficits at a time when tax revenues were collapsing by 14 percent in the firsthalf of the fiscal year.

(Im curious. How can tax revenues collapse by 14% if the economy itself hasnt alsocollapsed by 14%?)

Given the outlook for the economy, the cost of restoring a smoothly functioning

financial system and the pending entitlement obligations to retiring baby boomers, thefiscal outlook is one of rapidly increasing debt in the years ahead. . . .such a fiscal pathcould force real rates notably higher at some point in the future.

I presume that by real rates, they mean interest rates after calculating for inflation. I.e.,if the inflation rate were 5% and the nominal interest rate was 3%, then the real interestrate would be minus2%.While the current interest rates will almost certainly rise in the foreseeable future, willthey ever rise to a level that exceeds the real inflation rate?So long as the real interest rate is negative (less than the inflation rate), gov-co shouldnot be too concerned. The inflation rate will be repudiating part of the gov-cos debt.Thus, you can bet that gov-co will seek to keep the inflation rate higher than the interest

rates.But if the real interest rate exceeds the inflation rate and becomes positive, gov-co debtwill begin to increase even faster than borrowing.

In some ways, ballooning deficits should not matter. Deficits are a useful way forgovernments to use public spending to stimulate the economy when private demand isweak. This works as long as a country closes its deficit and pays back its borrowingsafter its economy starts to recover.

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And how often has gov-co closed its deficiet and paid back borrowing when theeconomy started to recover? Almost never.

Then there is the concern that the interest the government must pay on its debtobligations may become unsustainable . . . .

The federales tell us that the total national debt is approaching $12 trillion. At 5%interest per year, a $12 trillion national debt would cost $600 billion per yearabout$2,000 for every U.S. man, woman and child. The fair share of the cost of interest onthe national debt for the average family of four would be about $8,000 per year.But John Williams (shadowstats.com), USA Today (April, 08) and former U.S.Comptroller General David Walker have all agreed that the real national debt is about$55 trillion. If so, at 5% interest, the annual cost to pay only the interest on that nationaldebt would be about $2.75 trillion per year in an economy with a $13 trillion GDP. Thatsabout 21% of the GDP being spent on INTEREST ALONE. On a per capita basis, eachAmericans fair share of the INTEREST on the national debt would be about $9,150.The fair share of the interest on the national debt for a family of four would be about$37,000. Per year. And bear in mind that the obligation to pay $37,000 per year would

continue foreverunless we also began to pay off on the $55 trillion debt-principaloradmitted we were bankrupt and repudiated the entire $55 trillion debt.And then we have the rest of our taxes for actual costs of entitlements, defense,infrastructure, pay-hikes for gov-co employees at the federal and state levels (currentlyestimated to consume about 55% of an American workers income). All this suggeststhat an obligation to pay 21% of our GDP on interest, and 55% on regular taxes mightforce the average American to learn to live on about 24% of his gross income. Here, inthe land of the free, if you earned $100,000 a year, youd have learn to live on $24,000.If you earned $50,000 a year, gov-co would let you keep and spend about $12,000.Can you say riots, boys and girls?

Youre just paying more and more interest and having to borrow more and more

money to pay the interest, said Charles S. Konigsberg, chief budget counsel for theConcord Coalition, which advocates lower deficits.

How long can we continue to borrowmoney to simply pay the intereston money wevealready borrowed? Its like going to a second loan shark to borrow money to pay off thevig owed to first loan shark. Its like using your MasterCard to pay off your Visa to payoff your American Express. And note that were not talking about borrowing moremoney to repay the existing debt were talking about borrowing more money andincurring more interest costs to simply keep current on repaying our existing interestcosts. Who believes that theres one chance in teneven one chance in onehundredthat we can borrow our way out of debt?The truth is this: When any debtor must borrow more money just to repay the interest

(not principle) on his previous debts, that borrower is already (or nearly) bankrupt.Borrowing more to pay the intereston an existing debt is the desperate act of a debtorwho cant payhis existing debts and therefore wont payhis existing debts. That debtormay use his Master Card to make the minimum payment on his Visa Card (or his creditwith China to borrow enough to maintain the illusion of solvency)but that debtor isinsolvent and merely stalling for time, trying to postpone the inevitable day of reckoningwhen everyone will have to face the unpleasant truths: 1) that debtor cantpay his debtsand therefore wont pay his debts; 2) that debtor is bankrupt; 3) that debtors debt

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instruments (promises to pay) are largely worthless; and 4) those holding the debtorsdebt instruments as assets are going to lose their assetsbig time.None of this is news. All of this is fundamental economics thats been known to anyonewho bothered to look for centuries, perhaps millennia.Gov-co has understood for most of my lifetime that its unbridled borrowing could one daycollapse the whole economy, but gov-co didnt care. A day of reckoning might be

inevitable, but so long as that day wasnt today, gov-co continued to borrow. In fact,once gov-co couldnt or wouldnt repay the principal on the existing debt, increasedborrowing was the only waythat a catastrophic day or reckoning might be postponed.Having mounted the debt tiger, gov-co could not (and will not) dare dismount. Gov-cowill ride the debt tiger until gov-co (and the American people) are too exhausted tokeep hanging on and simply fall off. At that point, the tiger will feed. On us.The only question is when does the tiger feed? When will it be feeding time in oureconomic zoo? This month? This year? Five years from now?You have to give gov-co credit. Theyve successfully postponed the day of reckoning(feeding time) for decades. Its not impossible that with a little more soaring rhetoric,they may be able to postpone feeding time for another decade or two. But judging fromthe tigers growls and the general commotion in our economic zoo, it does appear that

feeding time is not only inevitable but near.Now, get this: in light of the NYTimesprevious statement (Youre just paying more andmore interest and having to borrow more and more money to pay the interest, saidCharles S. Konigsberg, chief budget counsel for the Concord Coalition), the NYTimesdeclares in its very next sentence:

Of course, no one is suggesting the United States will have problems paying theintereston its debt.

Ohh, of course!The NYTimesmakes me laugh. Do the authors truly believe that we can keep the truthin abeyance forever by simply refusing to suggest that which is true?

What are the authors thinking of? How can they keep a straight face when they write, 1)Youre just paying more and more interest and having to borrow more and more moneyto pay the interest,; and then in the very next sentencewrite 2) Of course, no one issuggesting the United States will have problems paying the interest on its debt? Bydefinition, if gov-co could repay the interest, gov-co would not need to borrow moremoney to repay the interest. Thus, by admitting that gov-co is already borrowing moneyto repay interest on existing debt, the NYTimes itself implicitly suggests that gov-coalreadycant even pay the interest on the national debt.Nonetheless, the NYTimesreports that of course no one (at least no one in gov-co) willsuggest that the US will have problems paying the interest. Similarly, of course, noone will suggest that using your Master Card to pay off the interest on your Visa is agood sign of bankruptcy. Likewise, of course, no one will suggest that riding the debt

tiger will inevitably lead to national destruction. Of course!But what about paying off the principal? Yes, the U.S. may be able to continue to pay offthe interest on its debt (much like some Master Card holder can continue making theminimum monthly payment on his debt). But has anyone suggested that what cant bepaid, wont be paid and the U.S. can never repaythe principalon its debts?Of course, the $55 trillion principal cant be repaid. Not ever. So now what? Shall themighty United States continue to limp along making minimum monthly payments(interest) forever? How often can the Master Card holder continue to make m

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