AlkalizeForHealth
"The doctor of the future will give no medicine, but will interest his patients in the care of the human frame, in diet and in the cause and prevention of disease."
- Thomas Edison
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Cancer is a
political problem more than it is a medical problem.
I.O.U.S.A.
Will your house do the NASDAQ meltdown?
Holding
officials accountable for housing bubble
Bush
administration prevented states from fighting predatory lending.
At the end of 2006, there were
$2.4 trillion of mortgage backed securities outstanding in the
U.S., up from $738 billion in 2000.
2.4 million American borrowers may lose their homes. "In order to
pave the way for a sounder future, many of the sacrifices that were
avoided in the past may have to be made in the present."
"Mortgage
Meltdown" - watch this 44 minute video plus extended
interviews free on the Internet.
Produced by Australian tv.
The United States has gone from
being the world's largest creditor to world's largest debtor in one
generation.
"The Federal Reserve and the
Federal government have betrayed the American people. They've robbed
savers by destroying yields in the money market. They've issued debt
that will either destroy America's credit rating when the government
defaults, or take Americans generations to pay back..." - analyst
Dan Denning
35% of U.S. treasury debt has a
maturity of less than one year. This makes the federal deficit very
sensitive to increases in interest rates.
“I place economy among the
first and most important republican virtues, and public debt as the
greatest of the dangers to be feared. To preserve our independence,
we must not let our rulers load us with perpetual debt." - Thomas
Jefferson, 1816
According to the Bank of
International Settlements, there are $415 trillion in derivatives
outstanding. This is 8 times the GDP of the global economy.
91% of these derivatives are
"over the counter". Unlike exchange traded derivatives where
exchange rules ensure the liquidity of trading parties, over the
counter derivatives have no backing beyond the capital of the banks
that issued them. The many thousands of companies, pension funds,
etc. who have purchased derivatives from banks could find themselves
in trouble if the banks default.
Standard & Poor recently
lowered the JP Morgan Chase bank credit rating from AA- to A+. This
bank has a derivatives portfolio greater than $33 trillion. The bank
has risked 8 times its capital. A relatively small loss in this
derivative portfolio would bankrupt this giant bank.
Other banks with derivatives
risk exposure in excess of their capital include HSBC, Citibank,
Bank of America, and Wachovia. The American banking system has
become a house of cards.
If one of these banks defaults
on its derivative portfolio, the resulting chain reaction could
bring down the entire global economy.
AAA assets are selling at a 20%
discount. AA assets are discounted 50%. Sub-prime assets have lost 80% of
their value, and no one is willing to buy them. Institutions holding these
assets are taking huge losses. -
FT.com
With the collapse of bond
insurance companies Ambac, MBIA, CIFG, and FGIC hundreds of
thousands of bond issues are about to lose their triple A rating.
Investors in mortgage bonds can require banks to buy them back at
full value if there was fraud in the origination process (eg. loan
application documents, appraisals).
U.S. government obligations
presently out-run expected revenues by $60 trillion
dollars.
- Bill Bonner
Watch the
Time-Bomb
debt documentary on DVD.
The U.S. trade deficit with
other countries will approach $800 billion in 2007.
“In 2007, the United
States imported $331 billion worth of crude oil at an
average price of $64.25 per barrel. If the U.S. imports
crude oil in 2008 at an average price of about $95 per
barrel, the annual import bill could jump by about $150
billion or more, to $580-600 billion."
- Byron King
"The United States can be
likened to Rome before the fall of the empire. Its financial
condition is worse than advertised. It has a broken business model.
It faces deficits in its budgets, its balance of payments, its
savings - and its leadership." -- David Walker, Comptroller General
of the United States
Economic
Catch 22:
If deflation sets in, the debt burden remains while other prices
fall. The effort to sell assets to reduce debt causes prices to fall
further, making the debt burden still greater. The Federal Reserve
will do whatever it can to prevent deflation. The job is difficult
because excessive debt makes the economy inherently unstable.
Already the situation in
America is rising prices combined with a contracting economy. This
is called "stagflation", and may be the best the Fed can accomplish.
The contraction of the U.S. economy is being concealed by rising
debt and
misleading numbers coming from the government regarding
inflation and economic performance. If you calculate inflation today
the same way it was calculated in 1980, then U.S. inflation in 2007
is about 10%.
Plus, in the U.S. since 2006
- truck and rail tonnage is declining
- sales tax revenues to governments are declining
- imports are declining
- car sales are declining
- help-wanted advertising is declining
The most benign way out of
America's predicament is for there to be such a surge of creativity
and growth in the U.S. economy that the ability to pay off its debts
is vastly increased. |
The alternative may be brutal, involving inflation, devaluation of the
currency, and foreclosures.
This may be the end of the US dollar as
world reserve currency. Increasingly, commodities such as oil and gold will
be priced in other currencies.
The Fed is not a public institution. It
is a private bank acting in the interests of its
shareholders. Despite
attempts by Congress, the Fed has never been audited.
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Wait a few seconds for the debt clock to load. 
Debt came down during the depression in the 1930's due to defaults. It was not repaid. The lenders lost the money. Banks and businesses closed. Unemployment soared. Real estate values plummeted as people lost their homes. Alkalize For Health notes that interest on debt is not a cost of doing business. Rather, it is a cost of financing. A business without debt may succeed where an identical business with debt may fail, due to the burden of interest charges. Debt destabilizes the economy. Debt accelerates growth during good times and accelerates bankruptcy during recessions. Therefore, for a more stable economy, Alkalize For Health recommends that interest expense on all forms of debt no longer be tax deductible when calculating income taxes. (Total
U.S. Debt chart courtesy of The Daily Reckoning.)
For example, in Canada the interest on mortgage payments
is not tax deductible. Instead, when a home is sold the capital gain is tax
free. This encourages home ownership and allows people to move to another
house without worrying about taxes. Home ownership is rewarded, but debt is
not. Contrast this with the United States which encourages home ownership by
making mortgage interest payments tax deductible. This encourages debt and
penalizes home owners who have paid off their mortgage. America's Empire of Debt "The Federal government's gross debt - the accumulation of its annual deficits - was about $7 trillion last September [2003], which works out to about $24,000 for every man, woman and child in the country. But that number excludes items like the gap between the government's Social Security and Medicare commitments and the money put aside to pay for them. If these items are factored in, the burden for every American rises to well over $100,000." - David M. Walker,
Comptroller General of the United States. *** The U.S. Federal Reserve totals the Federal government debt at over $10 trillion. The extra trillions come from government sponsored agencies whose debt is ultimately the responsibility of the Federal government. For example, mortgage giants Fannie Mae and Freddie Mac hold $3.5 trillion in mortgages. With rising interest rates, the value of these mortgages and the solvency of these two agencies is questionable. The Pension Benefit Guarantee Corporation (PBGC) insures pension funds totaling $1.5 trillion. These pension funds are presently $450 billion underfunded, and the situation may get much worse depending on what happens to the economy. |
Neither a borrower nor a lender be;
For loan oft loseth both itself and friend.
And borrowing dulls the edge of husbandry.
- William Shakespeare The World Loses Confidence in America The U.S. dollar has fallen in value more than 40% during the past few years relative to the Eurodollar. The decline continues and international investors who hold $4.6 trillion in U.S. treasury bills, corporate bonds and stocks are starting to panic. The massive U.S. Federal deficit
and the equally massive U.S. trade deficit both conspire toward even lower value for the U.S. dollar. "And never forget: When foreign investors are selling, they're not just selling the currency. They're selling all the investments they bought with the currency — stocks, bonds, private businesses, real estate, and more." - Dr. Martin Weiss, November 8, 2004. Average Americans "don't connect the dots between the dollar's decline overseas and a declining purchasing power of the dollar at home ... between the threat to the dollar and the threat to the entire economy ... between the dire threat to the economy and an equally dire threat to the fabric of society." - Dr. Martin Weiss, February 9, 2004. *** Update July 6, 2004. From the end of 2000 to the first quarter of 2004, private household debt rose by $2.52 trillion, or 36%. Most of this came from mortgage refinancing with people increasing the size of their new mortgage in response to rising property values and lower interest rates. The spending this has enabled is what has kept the U.S. economy from entering a deep recession.
***
Update 2007.
The stimulus provided by the mortgage bubble has ended.
The following chart shows why the bust will extend to 2011:
In the United States, stock markets generally follow housing prices, with a one year time lag.
The U.S. economy now teeters on a precipice. Massive personal, corporate and government debt on the one hand, and rising interest rates
plus disappearing willingness to lend on the other. |
There are a number of factors threatening the U.S. economy at this time: 1. By collectively investing
retirement funds into the stock market, stock prices have been bid up to incredible levels. When baby boomers retire and try to remove this money from the stock market, prices will plummet to unbelievably low levels.
The "baby boom" is anyone born during the years 1946 to 1964. They will
begin to reach age 65 starting in 2011. There is no way all investors can successfully remove their money from the stock market.
If you want to buy stocks, we suggest investing globally. Emerging markets such as China, India and Latin America
have younger populations and their stock markets will be less influenced by
population patterns in developed countries. 2.
According to the Federal Reserve Bank's Flow of Funds Report for the first
quarter of 2007, total American debt is $44 trillion which is
340% of GDP.
This is far above the 1933 level shown in the Total U.S. Debt chart near the top of this
page. As shown in the chart, in 1929 total US debt was
about 140% of GDP. It rose to its
peak of 264% in 1933 due to contraction of GDP. The enormous pile of debt
presently owed by Americans has the potential to cause an economic implosion such as has not been seen since the 1930's. 3. Interest rates tend to move in long 20 to 40 year cycles. Interest rates bottomed
in
2003 and are now rising. The U.S. stock markets will probably go mostly down or sideways during
the long upswing of the interest rate cycle.
Rising interest rates affect stock prices two ways: 1) bonds compete with
stocks for funds and can take money away from the stock market, and 2)
rising interest rates increase borrowing costs and reduce earnings, putting
downward pressure on stock prices. The trend
of rising interest rates may continue for many years. As interest rates rise, debt becomes more expensive. Interest payments on debt increase
the demand for money, which places further upward pressure on interest
rates. How high interest rates go in each cycle depends on the amount of
debt owed at the beginning of the cycle. This is one reason why interest
rates may spike very high before this cycle is over.
Mortgage interest rates are based on the "London
Inter-Bank Offered Rate" (LIBOR). LIBOR is now low, suggesting that this
would be a good time to refinance out of a variable rate mortgage and into a
long-term fixed-rate mortgage if you are able to do so.
4. The value of the U.S. dollar
has declined dramatically relative to other major
currencies. A few years ago the US dollar could buy a Euro for 88 cents. Now
a Euro costs more than $1.50. When the dollar goes down, internationally traded commodities
(oil, copper, etc) go up in price. This means inflation of prices. It also
means that Americans are less wealthy relative to the rest of the world. By
global standards, American have taken a 50% cut in pay, plus all
American assets (including the US stock markets) have fallen in price by
half simply due to the loss of purchasing power of the dollar
compared to other currencies.
5. The U.S. Federal Reserve Bank has worked to dampen the business cycle. All of life is cyclical, and the business cycle serves many useful purposes. For example, recessions cause
debts to get paid off, marginal businesses close freeing up resources for stronger businesses,
all businesses are forced to consolidate and become more efficient, the threat of unemployment causes people to save for a rainy day and become more self-sufficient, and so on. A mild business cycle is healthy for the economy. By interfering with the business cycle, the Federal Reserve Bank has allowed the
build-up of extreme imbalances.
 6.
Keynesian economics calls for governments to stabilize the economy by
borrowing and spending during recessions in order to stimulate the economy,
and paying off the resulting debt during good times. However, U.S.
governments are now saddled with such a pile of debt that added borrowing
during bad times may not be possible. Plus, there is another factor. Look at the chart to the right (courtesy
of Weiss Research). So much U.S. consumption is foreign made goods
that economic stimulus paid for by U.S. taxpayers will probably do more to stimulate the Chinese economy than the American economy.
Sales of Japanese cars in the United States continue to climb, while
American manufacturers go bankrupt. Due to globalization, Keynesian economics on a state, provincial or national level are no longer effective.
7. The world petrochemical supply and demand balance is becoming precarious. Within the next few years (probably
starting in 2011), and possibly coinciding with a very deep recession in the United States,
world petrochemical supply may begin to decline substantially.
 Meanwhile, world consumption of petrochemicals is increasing steadily.
Starting in 2005, global demand for petrochemicals exceeded supply,
resulting in upward pressure on prices. Petrochemical prices will continue
to rise, perhaps dramatically, as the world competes for the limited supply
of petrochemicals. The 1970's oil price shock caused stagflation in the U.S. economy. The coming oil crisis will be much worse than the world experienced in the 1970's and will be permanent, unless the world learns how to live without petrochemicals.
When petrochemical supply begins to decline, people, companies and countries
around the world may start to hoard. If this happens, gas pumps may be
empty. (The chart to the right was produced by ExxonMobil in February 2004:)
“We should leave oil before oil leaves us. That
should be our motto.”
- International Energy Agency (IEA) chief economist Fatih Birol,
April 9, 2008
Is the United States economy teetering on the brink of collapse? It is possible, and only time will tell. In our opinion, the above factors add up to a
potential "perfect storm" for the economy. Many people may not survive. It may be like the 1930's only much, much worse.
How can you protect yourself? Here are some suggestions: 1. Interest rates go up and down in response to changes in the supply and demand for money. If lenders start to feel that the money they lend is not going to be repaid, then they will stop lending.
Similarly, a rising inflation rate will make lenders less willing to lend. These will cause interest rates to spike upwards. Adjustable Rate Mortgages and renewals of conventional mortgages may carry interest charges that are unaffordable. To protect yourself from an interest rate spike, you need to become debt free as soon as possible. You may choose to ignore this suggestion, however there are plenty of wealthy people
around the world with lots of cash willing to purchase American assets for pennies on the dollar.
(U.S. Home Sales chart courtesy of The Daily Reckoning.)
 2. How can you live if you are unemployed? Look for ways to diversify your income or live on less income.
Don't expect help from the government. 3. Everyone needs to eat. Plant a garden so at least you have food. If you do not have a yard, why not create some window boxes, or plant something indoors, or grow
sprouts in your kitchen? Each square food of garden is precious. Divide your small garden into square feet and plant something different in each. Lettuce is a good plant to grow. It is highly nutritious and matures faster than most other vegetables. Practice vertical gardening so you can use your wall space. Trees on your boulevard should produce nuts (walnuts, etc.) or other edibles. All vegetation around your home should serve multiple purposes (food, wind break, shade, fuel, mulch, compost, etc.). Learn to maximize the nutritional value of food that you purchase. Money spent on nutritionless
edible substances is money wasted. Plus, store enough dried food in your
home to keep you going for several years. (Remember the story in the Bible
about seven good years followed by seven bad years? Well, the United States
has had more than 60 good years and the bad times may be just beginning.) It is amazing the feeling of security that comes from having a cupboard filled with dried foods,
and they are not expensive. 4. Super-insulate your home (R-40 walls, R-60 roof). A super-insulated home will not allow you to freeze to death in winter even with no supplemental heat. The best insulation may be sprayed-in-place polyurethane foam. Diversify your sources of heat away from petrochemicals. Natural gas supply in North America is already declining (about 50% of homes are heated by natural gas).
Global oil production is also declining (about 50% of homes are heated by oil). For many homes, a ground source heat pump could provide heating and cooling. 5. Actively support and implement measures that will move the economy and your personal situation away from dependence on petrochemicals. Make your home and community self-sufficient for as many of its needs as possible. If you do these things, you can rise above the turmoil of the world and live a life free from fear. Avoiding stress is important for cancer prevention.
Greatness requires a measure of self-sufficiency. The interdependence
fostered by trade is fine up to a point, but to stake one's life on it and
to give up self-sufficiency for the essentials of life makes one vulnerable
and is a sign of weakness. This principle applies to all levels of society
from individuals to nations. Work off your Debt The United States has an enormous number of prisoners. About 25% of the prisoners in the world are in the U.S. Many of these prisoners are being given the opportunity to earn their keep through forced labour. The time may soon come when personal and corporate bankruptcy may be a crime. If you borrow money and do not repay it, you may be given the opportunity to repay your debt by means of forced labour in a prison camp.
Under the Thirteenth Amendment to the
U.S.
Constitution slavery is illegal except as punishment for a
crime. This return to forced (slave) labour in the American economy
may be a direct consequence of the coming shortage of energy from oil. *** About half of Americans who declare bankruptcy do so as a result of heavy medical expenses. *** April 15, 2005. The Senate and House of Representatives have passed a revision of the Bankruptcy Bill imposing a means test that will force many people to file for bankruptcy protection under Chapter 13, which requires a repayment plan. |
For more information about the US debt see http://mwhodges.home.att.net/
*** The American Society of Civil Engineers' (ASCE) 2001 report on the state of America's infrastructure: 33% of the nation's major roads are substandard, costing American drivers more than $5.8 billion each year and contribute to 13,800 highway fatalities annually. One third of the urban freeways are congested. 29% of bridges are structurally deficient or obsolete. Fixing them will require $10.6 billion annually over the next 20 years. airports are overcongested, resulting in 50,000 flight delays per month. 75% of schools are old and overcrowded to the extent that they are inadequate to meet educational needs. 54,000 drinking water systems are antiquated. Corroded and broken pipes leak about 2.5 trillion gallons of water annually. This wasted water is equal to the annual drinking water requirement of the entire human population on earth. 16,000 wastewater systems are antiquated, overtaxed and near collapse. These systems need an additional $12 billion annually. 2,100 dams are unsafe. An average of 61 dam failures have been reported annually in recent years. inland waterway systems and locks have exceeded their design lives, yet transportation on these systems is expected to double in the next few years. the nation's electrical capacity is growing too slowly compared with rising demand for electricity.
If the purpose of the Iraq war was to get cheap oil, it has been an enormous
failure.
Dismantling the Post
1929 Regulatory Safeguards
After the 1929 market crash several rules were put in
place to prevent it from happening again. These rules, which have worked
well for the past 70 years, are quietly being relaxed and then revoked. Why?
1. The Glass-Steagall Act of 1933 was
repealed in 1999. This act was designed to prevent conflicts of interest
that lead to the sale of unsound securities, such as the present sub-prime
mortgage scam.
2. The Glass-Steagall Act was also
designed to prevent excessive leveraging (debt) used to finance speculative
investments in order to increase their return. Hedge funds that generate
high returns due to their extraordinary leveraging are now imploding as
their speculations turn sour. However, their size threatens the entire
economy. Do you remember the reaction of the Fed when just one hedge fund (Long
Term Capital Management) went broke in 1998? Today there are hundreds of
hedge funds in trouble. 3.
The short selling "uptick rule" of 1938 prevented short sellers from driving
down stock prices. Shares could be sold short only on an uptick. The
Securities and Exchange Commission (SEC) revoked the uptick rule effective
July 6, 2007, opening the markets to the same kind of manipulations and
abuses that contributed to the 1929 crash. Already, market volatility has
increased. |
Is the oncoming collapse of the U.S. economy just an unfortunate accident?
"In politics, nothing happens by accident. If it happens, you can bet it was planned that way."
- Franklin Delano Roosevelt "Our problem-ridden world has been guided by ... hooligans."
- Maharishi Mahesh Yogi, August 2004. Who is REALLY responsible for the U.S. National Debt? 1. The American oil companies for many decades have avoided paying income taxes on profits from importing oil. They do this by means of illegal transfer pricing, aided by corrupt officials in the Internal Revenue Service (IRS). This helps explain why about 50% of the world's wealth is now concentrated in tax havens and low tax jurisdictions. A clean-up of the IRS followed by a proper accounting of oil profits, plus appropriate penalties for late payment of taxes and fines for tax evasion should yield enough money to balance the national budget and pay off most of the national debt. 2. An objective inquiry into vote fraud and corruption in American politics would reveal that most members of congress and the president represent a wealthy elite, not the American people. Therefore, it can be argued that the national debt is the responsibility of this wealthy elite. |
Fort Knox is Empty Fort Knox is not open to public inspection, but in May 2001, the U.S. Mint reclassified 94% of the total U.S. gold stock as being in "Deep Storage". "Deep Storage" means the gold is in the form of mineral deposits deep in the earth.
This suggests that virtually all the physical gold formerly held by the U.S. Treasury Department is gone. It has been loaned to "bullion banks" who sold it on the open market. The gold loans will never be repaid. A portion of the gold was used to depress the market price, and the remainder of the gold was purchased at this depressed price by insiders. The gold is now in private vaults around the world. It is the heist of the century.
U.S. gold reserves have not been
independently audited since 1971. |
If somebody wanted to weaken the United States, the policies in place
starting 1980 have accomplished that goal.
"There is no means of avoiding the
final collapse of a boom brought about by credit expansion. The alternative
is only whether the crisis should come sooner as a result of the voluntary
abandonment of further credit expansion, or later as a final and total
catastrophe of the currency system involved."
- Ludwig von Mises
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