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June 14, 2006

Crashing the Dow
by Alex Wallenwein

The "Told'Ya So" Economy

"TYS" is something you can say only so many times before it gets boring.

Since about July of last year, public events and the economy have taken so many turns that confirm what the Euro vs Dollar Monitor has been writing about for the least three years that it's no longer fun to point them out.

But yet, the field of what can be written about, market wise, is so chock full of "told ya so's" that they virtually preempt the subject.

Readers who have been following the Monitor and who can remember that far back can probably verify this for themselves. Yet, this article is not about bragging rights. It is about something else that has come true that hasn't been pointed out sufficiently. (Of course, nothing ever really "comes true." If it wasn't already true before, it doesn't just suddenly "become" so. Instead, things just begin happening in the way that the truth has been pointing to, all along.)

Some commentators on gold and international events have been theorizing for years that "the powers" are planning a cataclysmic event that will allow them to finally take over and control every aspect of our lives in the US. Much of that has been, not the stuff of predictions, but simply a matter of history: It's been happening all around us, for along, long time, except we weren't really "hip" to it. We saw these things as simply "the signs of the times"and considered them as part of the normal development of public life.

This article will remain cryptic on what these "things" are because the purpose is not to prove it is correct. The purpose is to point out and focus like a laser beam on what is happening right now that has all the earmarks of an immediate set-up for this mysterious "cataclysmic event" we are alluding to.

As the title implies, the "event" is the current and on-going crashing of the equities markets here in the US. As a result, other equities around the world are caught up in the process.

It is important to note that "crashing" here does not mean "the markets are crashing." Rather, it means that the markets are being crashed. There is an undeniable, palpable element of deliberate action, a "pattern of purposeful decomposition" if you want to make it sound academic. This can no longer be overlooked. It cannot be ignored any longer because it jumps right at your crotch. It's like a low-blow into your portfolio, if you are a Dow - or other equities - investor.

We who write about the economy from a free-market/precious metals perspective may enjoy poking fun at characters like Alan Greedspun and Chopper-Bernie,. We may imply that they are in some way "stupid" or otherwise inept. But we know they are not. We know that they have at least the minimum amount of functional intelligence that is demanded by their job description (see, here I go again). In other words, they must be presumed to know what they are doing. It would be utterly foolish to delude ourselves into believing that their intelligence is of a lesser kind than ours.

What lends itself to such good-natured and light-hearted (I wish!) criticism from us is that their actions and decisions, if viewed from a vantage point of "what's good for the economy?" - simply don't make sense.

The true reason for their apparent incompetence is, however, that keeping the economy healthy forever is decidedly not their plan.

Canamexica?

Before we get to the rather blunt and disillusioning conclusion, however, we need to establish one more fact. And that fact is: the white house, an entire cadre of Republican and Democrat politicians, and some very powerful financial houses, are preparing to "unite" the United States with Canada and Mexico.

This is no longer the stuff of hypotheses and predictions. It is happening- and it is happening very much out in the open.

It is very well known, although painstakingly ignored as a topic in the mainstream media, that Bush wants to establish the "Free Trade Area of the Americas" (FTAA). Stepping stones on the way there were the North American Free Trade Agreement (NAFTA) his daddy pushed through congress, and Clinton helped lay the groundwork for the FTAA. "CAFTA" (Central American Free Trade Agreement) was to be another stepping stone.

What is also well known (and, in contrast to the above, well publicized) is that Bush wants to extend "temporary" guest worker privileges (i.e., legal status) to illegal aliens. In other words, he wants to deal with the problem of an invasion of law breakers by simply changing their name to holders of temporary legal status.

Putting two and two together should not strain anyone's arithmetic skills, here.

The European Union forms the model for "peaceful" regional integration. The idea is to "sacrifice" national sovereignty (which is nothing other than the power of a people to determine how much freedom they should have) for "freer" trade. Free trade, in turn, is inevitably followed by closer and closer "cooperation" (meaning an increasingly centralized regulatory framework and therefore power structure) eventually leading to political "union" (i.e., bureaucratically enforced uniformity).

An professional national administrator's nirvana - and a self-respecting, freedom-loving citizen's ghoulish nightmare.

One big aspect of such a regional regulatory behemoth is the free flow of not only goods, but labor as well. You all know what that means.

You are not allowed to keep anyone out anymore.

The closest analogy would be your state government changing its criminal code to call a burglar simply a "visitor" and declaring that he shall from now on have unlimited and equal access to your home - on a strictly temporary basis, of course.

What? You don't like it when people come into your house and steal your stuff? You must be anti-social. You must be a "crimophobe" (someone with an irrational and unjustified fear of legitimate criminal activity). Okay, I admit: That word is not in the dictionary. Neither is the definition.

Not yet. But the day will come.

Meanwhile, you will be a tenant in your own home!

Such is the face of the new and improved socialist international. In case you need a hint: It's communism - under yet another misleading name. This article should be entitled "Playing Games With Names: The Shenanigans of the New Left" - of which Bush and the neocons are decidedly an integral part.

But, back to Chopper Bernie and his ilk.

Choker-Bernie

Chopper Bernie doesn't deserve his name. He should be called "Choker" Bernie, because he is choking the living crap out of the US equities markets. He is now playing his newly asigned role as "Bernie, the Strangler" - and he is filling it rather well.

High rates in an environment of deteriorating economic fundamentals are deadly for the stock markets. You don't need to see a chart at this point to know what is happening, but here is one, anyway:

The Dow chart is still well within its three-year uptrend (blue-ish lines), but it has seriously broken down from its steep ascent since October 2005. There is only very minor support around 10,750. Another week like last week, and it will have broken below its 3-year uptrend entirely.

US treasuries, on the other hand are currently rising because investors' knee-jerk reaction is to run into debt paper when the stock indexes tumble. Unfortunately, they are running smack dead into ...

The Inflation-Wall

Treasuries provide "safe haven"only if inflation is low. But we are now being told it is running "uncomfortably" high. Inflation eats the gain-cushion treasuries are supposed to provide. When investors remember this (they know this, of course. It's just that in the heat of the moment, they apparently forgot), they will bail.

So, when they remember, where will they run to? The only thing rising on a sustained basis these days are commodities.

Real things.

That is bad for paper currencies - which are fake things. And that is good for precious metals, a sub-class of the family of "real things" - and the most liquid sub-class with the best store-of-value properties, to boot.

And that, my dear Watson, is bad for those who issue these fake things. So it must be stopped.

What better and more convenient way to stop it is there than to engineer a real-life, economic catastrophe as a pretext?

The "Canamexica" issue pointed out above has ensured that about 70-80 percent of Americans are currently way up on their hind legs, snorting and pawing the air with their front hooves like a bunch of crazed wild mustangs. They are pawing at their government's obvious efforts at depriving them control of their sovereign home.

Americans simply want the illegal invasion stopped.

Those who propose this unholy three-way merger (shall we call it a hostile take-over?) of the three North American nation-states are scared. Scared to death. Their entire, carefully planned time line is in danger of getting cut short. Americans are about to rip the reigns out of their hands. The only way to avoid losing their power is for the drivers to run this magnificent stagecoach into a ditch and blame the accident on the passengers - the People.

That is what we are witnessing.

That, and the fact that two countries whose economies and legal systems are as disparate as those of the United States and Mexico must be "equalized" before the hostile takeover can actually happen. That equalization process was supposed to be far more gradual than this, but hey, can't always have it your way, can you?

In these perpe-traitor's minds, it's better to run the entire stage coach into the ditch where the future 'recipients' of its riches are already lying in wait. The coach's passengers will be numbed and dazed from the impact. Before they can react ...

... they will become easy prey.

Before they can come to their sense, their financial belongings will be robbed, their bank accounts raped, and their 401Ks emptied.

Then, they will have to walk the rest of the way on foot - barefoot - just like those who robbed them. That's social justice. Equal opportunity for everyone - communist style. Or, should we call it ...

Social Justice - Nazi-Style?

I said earlier that Bush and cohorts are part and parcel of the "new Left." That was no exaggeration. It is no secret anymore that his father helped finance the German Nazi party's ascendancy. By the radical left, he is therefore often labeled a "Nazi."

The radical Left is closer to the truth than it realizes.

To the Left, the word "Nazi," of course, carries a noxious connotation of abhorrent, super-extreme "right-wing" politics. No wonder the Left is so confused - because Nazis always were and still are - socialists. The very name of the party proves the point: Its full name was the "National Socialist Workers' Party." "Nazi" is just the German-pronounced abbreviation of that. People today largely forgot that (like they forgot what "right" and "wrong" mean).

What could be more left-wing than a "socialist workers' party"? It's just socialism with another flavor, uhum, excuse me, another type of rhetoric.

"Right wing" rhetoric.

Just like Bush's.

Bush talks like a right-winger while he does what he can to subject us to a socialist super-state, without national boundaries - and without a Constitution. Nazis were masters at re-naming things they didn't like. They were master propagandists, on the largest scale known to history until then.

Just like Bush.

Calling legislation that robs citizens of their constitutionally guaranteed rights the "Patriot Act" comes to mind. Or simply declaring that alien law-breakers are now "temporarily" "legal." Or calling the new agency he created after 9-11 the "Department of Homeland Security" while working diligently on robbing Americans of their home land for good, thus making it as insecure as could be.

Orwellian, socialist propaganda. Nothing else

Will a Democrat revolution at the polls this fall change things, then?

If you consider switching from Orwellian socialist propaganda to openly socialist propaganda a "change", then maybe yes.

Can the neo-socialists on both sides of the American party-scape be fought? Can individual Liberty, privacy, and property rights still prevail? Can the alien invasion be stopped? Can we kick the burglars out of our home?

It depends on us and what we do with the US Senators who constantly propose illegal alien lobby-favoring legislation. The House is largely on board with Americans on the immigration issue - but the Senate? The Senate acts morelike a torpedo. Asking US Senators to change their votes and abandon their plans is useless. Relying on that outdated strategy is precisely what got us where we are today. What this country needs is a Senate-Housecleaning.

But, back to gold. What effect will this ongoing "neo-soc" coup-d'etat have on the price of gold?

To answer that question, ask yourself what effect the deliberate choking-to-death of any remainder of the US economy will have on international markets (as in, when the world's largest consumer is pushed into economic turmoil and can no longer buy what the world produces)?

The markets will tumble. Equities will tumble. Fiat currency houses of cards will disintegrate before their issuers eyes. So, their value in relation to gold will - - - you got it.

Currently, of course, gold is tumbling right alongside the Dow and other equities.

That is the plan - but the plan will backfire, big time. The Euro vs Dollar Gold Monitor explains in detail how and why.

Do pictures like this and a $30-plus per day drop in the gold-fiat ration scare you? Are you ready to bail and take your losses like your economic leaders want you to? Are you a good subject? Will you comply? Or can you stand more pain?

If you own and buy physical gold, today's action makes you smile. More gold for less fiat. Yessss!

But, if you trade gold on margin, you are cursing the day you subscribed to that trading software you are running.

If you are into gold stocks and didn't get out in time, you are in a world of hurt. Monitor subscribers who follow our e-mail alerts are not. Following is the advice they received on May 15th, Sunday night, only hours before the drop began in Asia:

• Dear Monitor Subscriber:

  The gold stocks and gold funds are topping while gold keeps rising. The last two times I have observed this, it was a sign for an extended gold slouch (like in late 2004, which presaged the eight month slouch in 2005, and in 2003).

  Proceed with caution! I don't expect an extended drop, but I do see a drop coming. Gold is in overbought territory, the dollar is in serious oversold condition, and the funds/stocks are topping.

  I expect "the powers" to use this opportunity to lean on the gold price for a while, but I don't see this coming drop lasting more than two weeks.

  Please take your usual precation, and as always, whatever you do, don't sell any physical gold.

Wrong on the duration - but fortuitous timing.

At this point it is good to realize that having gold is good. It's better than having none. But, none of it helps much if you have nowhere else to run - and, make no mistake: being an "expat" will be not help. Who will protect your freedom in Panama, for example? Some "expat services" praise Panama as on of the best safe-havens for private money.

Panama is, of course, located in ever-more communist-leaning Central America. Who will protect you there when the United States is no more, when it is subsumed into this unholy trinity that will set the precedent for the forming of the "United States of the Americas" - if you allow this to happen?

No one. So ... what have you got to lose? Are you ready to fight?

Got gold? (It only works if you also got - guts!)

Alex Wallenwein
Editor, Publisher
The Euro vs Dollar Monitor

Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is your golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without it!

Copyright © 2003-2008 Alex Wallenwein

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