Obama’s Devious Plan to Crush Gasoline Prices

In an election year reminiscent of George H. W. Bush’s 1992, recent polls reveal President Obama’s sudden drop in approval ratings can be directly tied to the economy, but more precisely, to gasoline prices.

Three polls conducted in March show the President dropping sharply among those who approve of his performance, with the NY Times/CBS News poll registering the lowest and most dismal 41 percent approval rating. Sign-up for my 100% FREE Alerts

Details of the three surveys strongly suggest that Americans, though still upset about the lack of well-paying jobs, are most angry about rising gas prices—which have risen to levels hovering $4.00 in many states.

Republican consultant Mike Murphy told Bloomberg News that on top of a stalled U.S. economy and disappointing jobs picture, gas prices are destroying an already-tight family budget.

“I think the President suffers from a lack of public confidence in his economic leadership,” Murphy stated in an email. “Any bad economic news, in this case soaring gas prices, triggers a fast decline in his numbers. He lacks any reserve of support on economic issues to fall back on. This is a definite sign of political vulnerability.”

Not unlike the Operation Desert Storm of 1990, oil prices are expected to rise sharply if the U.S. executes a military strike on Iran, which would then not surprisingly lead to even greater economic woes for a troubled U.S. economy.  Some have even suggested that a spike in the price of oil to the $150 – $200 per barrel level this year could finish the U.S. economy, leading to a dollar crisis.

Economists strongly believe that escalating gasoline prices pushed the U.S. economy into recession in 1991, torpedoing any chance of a second term for George H. W. Bush.  Undoubtedly, the politically battered Obama doesn’t intend to make the same mistake.

—Obama’s plan to crush gasoline prices in time for the Fourth-of-July weekend

On Mar. 24, not-for-profit International Movement for a Just World reported that preliminary U.S. government data show a 25 percent jump in oil imports from Saudi Arabia, “the highest level since mid-2008.”

“The White House has been scrambling for options to bring down gasoline prices — at a seasonal record high — during an election year, after concerns over an Iranian supply disruption launched benchmark Brent crude to over $120 a barrel not seen since the record price run of 2008,” according to the article’s authors Matthew Robinson and Jonathan Sau.

“Washington has urged ally Saudi Arabia to cover potential shortages when new U.S. and European Union sanctions are expected to reduce Iranian oil exports from July,” Robinson and Sau added.  “The Obama administration has considered releasing strategic oil inventories, potentially as part of a bilateral deal with Britain.”

How much oil the U.S. ultimately intends to stockpile cannot be known, yet.  But, so far, the number of barrels in play appears to be rather significant, which, ironically, makes a strong case for U.S. stockpiling contributing to the recent rally in WTIC above the $105 level, a level that could be unwound at more fortuitous time for the President.

Robert Fitzwilson, founder of boutique investment firm The Portola Group told King World News on Tuesday that, quietly, the U.S. is importing millions of barrels of oil in addition to its regular shipments from Saudi Arabia.

Fitzwilson speculates that the additional imported barrels could be used in the event that the Strait of Hormuz is closed during a military strike on Iran, or could be used to prepare for sanctions imposed on Iran to fully shut out the nation’s three-million barrels per day of production come the July 1 deadline for Iran’s customers to make other arrangements.

“Saudi Arabia is suddenly sending 22 million barrels to the United States.  Why did they do that?” Fitzwilson asked rhetorically.

“Are they trying to get paid for it before there is some sort of eruption in the Middle-East?  Is the U.S. stockpiling oil ahead of war?”

Maybe not.

Contrary to a growing consensus, war with Iran, if it actually happens, may not be executed until after the U.S. elections.  With the Fed expected to formally announce additional purchases of Treasuries and Agency debt in the coming months, a double-whammy response to the oil price from further dollar debasement and a war with Iran would usher a new president in as fast as President Bill Clinton was swept into the presidency in 1992.

A scenario, the one proffered by commodities guru Jim Rogers, of a relatively calm 2012 commodities market, with economic Armageddon reaching the U.S. in 2013, would make much more sense for a sitting president than an obvious $6 gasoline kiss of death during an election year.

“This is an election year in the United States, and a lot of politicians want to be re-elected,” Rogers told Opalesque Radio on Mar. 22.

“You should worry about 2013, you should be very worried about 2014, but this year, more or less, is not going to be so bad,” he added.

As expectations for record gasoline prices slated for this summer abound, President Obama, not only wants to continue talking about high energy prices during the campaign year, so he says, but he may also want to control the dialogue of gasoline prices with the American people all the way up to the Fourth-of-July weekend, at which time he simultaneously floods the oil market with the U.S. oil stockpile and makes peaceful overtures with Iran.

The Rogers scenario of a relatively quiet commodities market for 2012 just makes more political sense, assuming, of course, a Nassim Taleb Black Swan doesn’t spoil the plan.

Unlike the relatively thin gold market, whereby naked short selling can push the price of gold down during lulls in overseas trading, the oil market is much too big and deep for JP Morgan’s manipulation tactics to have any meaningful effect on the price.

Instead, that’s where the quiet stockpiling of oil can be then dump to trigger stop-loss orders in the futures pits, squashing the oil price with the physical commodity in conjunction with an orchestrated temporary cooling of tensions in the Middle East.  Gasoline prices will follow the oil price down.

Then . . . the coast will be clear for the disaster of 2013. Sign-up for my 100% FREE Alerts

Peter Schiff on Gold and Treasury Downgrade

For those of you who have followed Peter Schiff through the years, you already know of his long-term prediction for U.S. Treasuries to eventually reach “junk” status.  Friday’s Standard and Poor’s downgrade of U.S. Treasuries to AA+ (with a negative outlook) from AAA was the first step in what could be a successive chain of downgrading events to come for U.S. debt from the credit rating agencies.

As Treasury Secretary Tim Geither jumps up and down at the injustice of S&P’s downgrade, the Wall Street Journal chimes in with its propaganda piece entitled, U.S. Debt Remains ‘Gold Standard’ to do its part in the Soviet-style disinformation campaign perpetrated to prolong the 40-year fraud of the U.S. dollar.

Euro Pacific Capital CEO Schiff, on the other hand, just tells it like it is—an apparent genetic characteristic inherited from his father, Irwin Schiff, a prominent figure in the protest of the U.S. tax code and author of The Biggest Con: How the Government is Fleecing You.

“The dollar used to be the safe haven, Treasuries used to be the safe haven, well if you are downgrading U.S. Treasuries, obviously they are not the safe haven anymore,” Schiff told King World News (KWN).

“For those people who believed foolishly that Treasuries were the safe haven, S&P is finally saying they’re not,” he continued.  “In fact they (Treasuries) are on negative watch for a reason.  I think S&P is going to downgrade again … by then, I’m sure Moody’s and Fitch will have also downgraded U.S. Treasuries.”

As equities markets in Asia, Europe and the U.S. plunge in anticipation and eventual announcement of the unprecedented downgrade of U.S. Treasury debt (post Civil War), further ratings downgrades across the debt markets will follow, as in municipal and corporate debt, according to Reuters Insider, which stated on Monday, “Announcements should be expected this morning about effects to corporations from S&P’s downgrade of U.S. credit rating, David Beers, head of S&P’s sovereign ratings.”

The street-smart Schiff also pegged Moody’s for not coming clean on its outlook for U.S. Treasuries, knowing that the kept team-player Warren Buffett holds a significant share of Moody’s through his Berkshire Hathaway fund, and was probably the biggest beneficiary on the planet of Uncle Sam’s largesse in the rescue of AIG during the meltdown of March 2009.  How could Buffett then downgrade U.S. debt after thanking Uncle for his assistance in a New York Times Op-Ed piece?

“Well he [Buffett] owns a big chunk of Moody’s, doesn’t he?” Schiff asked rhetorically.  “Moody’s hasn’t lowered their [U.S. Treasuries] rating, so somebody is mistaken, it’s either Moody’s or S&P.  It stands to reason that Buffett would say his competitor was mistaken rather than himself.”

In contrast to legendary commodities trader, Jim Rogers—who doesn’t bother following the very same rating agencies who failed to warn of an impeding debt collapse in 2008—the significance of S&P’s downgrade, as well as the abstention to follow suit from the other two rating agencies, Moody’s and Fitch, shouldn’t be understated, according to Schiff.  He believes Moody’s and Fitch have given politicians a debating point to continue debasing the dollar.

“I think that this is a real wake up call, this is kind of an ‘Emperor has no clothes’ moment,” said Schiff.  “If we get downgraded and interest rates don’t spike up, that’s just going to embolden our politicians to say, ‘Hey, It doesn’t matter what our credit rating is.  Let’s just run up the debt even more because we can borrow just as cheaply with a AA+ as we can with AAA.  Hey, why not really go for broke?’”

Smart investors, however, have been buying gold and selling stocks for many years now, as they knew this day would come—and will repeat, a la Greece, not withstanding Treasury Secretary Geithner’s firm conviction only weeks ago that there was “no risk” of a U.S. downgrade.

And as gold prints new highs above $1,700 in the wake of the calamity of sovereign debt woes from both sides of the Atlantic, how can the WSJ’s headline, U.S. Debt Remains ‘Gold Standard’, make any sense when U.S. Treasuries are denominated in U.S. dollars?

Ah, lest we forget: Fed Chairman testified to Congress that gold is not money, though the U.S. Treasury claims to hold 8,130 tons of the yellow metal for reasons of tradition.

Gold Market: Anonymous London Trader eyes $1,680

The anonymous London gold trader is back with King World News (KWN) to offer his latest thoughts perched with a bird’s-eye view of the gold market.

Confirming the report from Goldmoney’s James Turk, who said that the gold shorts have been under tremendous pressure to cover above $1,600, the anonymous London trader told KWN he sees a lot of shorts unwinding positions above the $1,680 level.  If the gold price can maintain a move above $1,680 at the close, the short squeeze will be on in earnest, according to the anonymous trader.

“The action is very positive,” the trader told Eric King.  “If there is a pit (Comex) close above $1,680, gold will race to $1,705 because of all of the buy stops above $1,680.  There are a tremendous number of shorts in the gold market and a significant number of them will capitulate and close out their shorts above that level.”

As early as two months ago, Goldmoney’s Turk issued the same warning to traders who are not positioned to ride the gold (and silver) market higher in the event of a short squeeze, which Turk said is very likely.

As today’s market action shows the Dow falling hard to 11,650, while gold advances to $1,678, the Dow-to-gold ratio has dropped below the important 7-1 level within the first 90 minutes of New York trading.  If the trend continues, it could indicate traders have lost faith in a U.S. recovery and the prospects of a profitable “risk-on” trade.

On that point, Marc Faber told CNBC on Tuesday that equities have kicked off a fresh bear market, while Barton Biggs, on the other hand, said that yesterday was the day to beginning buying equities for the next 7%-9% rally higher.

According to the London trader, the Faber thesis for the future trend in stocks will show up in the gold and silver market—if the gold price can be sustained above $1,680, and above $42 for silver.

The London trader continues, “The same guys who are shorting gold have been shorting silver.  And if we get the covering in gold above $1,680, silver should move $2.50 higher on short covering as well, which at that time should be roughly the $45 level.”

Moreover, the trader said the strong buyers, who typically accumulate at the best prices for the two precious metals during the seasonally soft summer period, have not yet bought, waiting instead for the pullback.  But, those buyers may have to chase prices higher, creating even more trouble for the shorts, which then may begin a virtuous cycle of higher prices, similar to the massive precious metals rally during the April run-up.

Adding to the drama in the gold market is tomorrow release of the U.S. jobs report.  Another horrendous report on top of June’s (released on the first Friday of July) nasty surprise could trigger the next wave of short covering, according to the London trader.

“The physical buyers in gold have not been chasing the market at this point,” the trader said.  “They have been waiting for their usual summer gift, and it hasn’t come.  Usually they are filled by now, so we are going to see those guys come in shortly, possibly after non-farm payrolls.  They (the physical buyers) have moved their levels way up now and they are going to start chasing price at some point.”

So far today, gold briefly pierced $1,680 to trade as high as $1,682.15 on the Comex before it was slapped back to $1,675.

“Remember, $1,680 is the key here,” the trader said.

Marc Faber: Bear Market is Starting

Here comes the bear market, Marc Faber, the editor and publisher of The Gloom Boom and Doom Report, told CNBC Europe Tuesday.

“The bear market is starting. When you compare equities to bonds and cash I don’t think equities are very positive,” said Faber.

Faber, who last month said the Dow had already reached its high for the year, cites the rallying bond market for his outlook for equities.

At the close of Tuesday’s trading, the 10-year Treasury reached 2.6%, and the 30-year cracked below 4% for the first time since the 700-point decline in the Dow of December 2008.

“The Treasury market is telling you that the economy is in recession,” said Faber. “So if the bond market is telling you that the economies of the Western world are weakening, but at the same time the stock market is still relatively high, I think the stock market is vulnerable.”

Faber’s usual castigation of politicians for the handling of the crisis also included a few mild snipes at analysts who predict a surprise rebound in the U.S. economy slated for the second half.

“The politicians are all useless individuals. Nobody is reducing the problems in the US or Europe, just putting on a band aid and postponing the problems endlessly,” he said.

“Some analysts think that there’s a chance economic data will surprise on the upside but I think, if anything, it will be on the downside,” Faber added.

He also expects corporate earnings and guidance will disappoint the Street.

But topping his list of lurking problems for the U.S. and Europe is not sovereign debt issues or corporate profits; it’s China.  Faber believes China is vulnerable to a slowdown from the nation’s largest buyers of its goods, which, he said, “is a much bigger risk for the global economy than the U.S. because the U.S. is no longer a major commodities buyer.”

If China’s industrial production slows, the bright spots in the global economy coming from resources-rich Australia and Canada as well as oil producers of the Middle East will fade as well, according to Faber.

“If commodity prices are falling, then commodity producers will buy fewer goods from China,” he pointed out. “This is something that the world central bankers can’t deal with.”

As far as the outlook for the euro, Faber didn’t expect the euro to survive, let alone to trade above 1.40 to the dollar.

“What surprises me more is actually the strength of the euro and that it has not collapsed yet,” he said, but believes that the PIIGS will eventually by “chucked out” if the euro is to maintain its present secondary reserve status to the dollar.

“I would have chucked out Greece three years ago, straight away, and it would have been much cheaper,” Faber said.

Faber has turned very bearish on equities, bonds, and currencies—in real terms—and recommends accumulating gold to weather the storm.  Personally, he will add to his own gold position if the price drops $150.

U.S. Budget Deal is Gold Bullish, says Peter Schiff

As the economic data continues to point to a rollover in the U.S. economy, with the latest ISM data for July moving down sharply in step with equally horrible employment and GDP prints, Euro Pacific Capital’s Peter Schiff said that in light of the further evidence of a declining economy, Washington won’t make the bold moves needed to bite the bullet on spending and arrest the gold price.

Washington’s announcement on Sunday that a deal was reached, which includes $900 billion in spending cuts over 10 years, the authorization for raising the debt ceiling by $2.1 trillion by 2013, and a promise to seek additional cuts of $1.5 trillion through a bipartisan, bicameral congressional committee won’t change the course of gold’s ascent in the least, according to Schiff.

On Sunday, Schiff wrote of four possible scenarios coming out of Washington on dealing with the $1.6 trillion projected deficit and the effect it most likely would have on the gold price.  In fact, Schiff has said in the past that today’s projected deficit is much too optimistic, and any proposed spending cuts will become diluted on a deficit-to-GDP percentage basis.

Under Schiff’s four scenarios, he predicted the scenario that Washington has always chosen when faced with a sick economy and a consumer dependent on transfer payments from the public coffers, that, for this year, has reached 20% of total income.  That scenario is: “they will raise the debt ceiling and make spending cuts which sound substantial, but which only mange to slow the accumulation of new debt.”

“The plans on the table suggest cutting a couple trillion in cumulative spending over the next decade,” Schiff continued. “In other words, they propose cuts that only reduce deficits by about 10%-20%; they do nothing to reduce actual debt levels. So if these talks are successful, then instead of a $1.5 trillion deficit each year, perhaps we only suffer a $1.2 trillion deficit. Meanwhile, the debt continues growing. This is ‘success’ in Washington.”

So, the deal, if passed by both Congressional bodies, “is bullish for precious metals. It means more of the same – more spending, more debt, and necessarily more money-printing,” he stated.

After dropping to $1,608 in overseas trading, gold has retraced the post-announcement decline and actually advanced past Friday’s close to reach above $1,630 per ounce in late morning trading in New York, thanks to bargain hunters and a miserable ISM number.  So, the gold pundits who predicted steep declines in the gold price on an announced deal have so far been dead wrong.

Schiff, who’s predicted the rapid decline of the U.S. and the dollar in his book “Crash Proof – How to Profit from the Upcoming Economic Collapse,” hasn’t backed off from his prediction of a U.S. collapse of more than three years ago.    In fact, since his call for a grand bull market in gold in 2000, Schiff has gained a tremendous following as more and more investors seek an investment professional who’ll tells the truth as sees it and offer ways to protect from Washington’s profligacy.

Expect $85 Silver, says Legendary Market Technician

As Asia continues to report soaring CPI statistics, with Vietnam’s 22% inflation rate as the most recent evidence of the Fed’s QE2 “liquidity” rippling through the world’s economies, legendary technician Louis Yamada told King World News (KWN) the precious metals are set to takeoff again as a result of Bernanke’s monetary actions.

Yamada’s fame as the market technician with a track record of “getting it right,” began as director and head of technical research at Smith Barney (now of Citigroup (NYSE: C)).  After being voted as the leading market technician in 2001-2004, she went off to found her own research group, Louis Yamada Technical Research Advisors, in 2005.

“Gold continues to be in an uptrend in our work,” Yamada told KWN.  “You had a little bit of a consolidation, seasonality would suggest a rise into the fall. The primary support level remains at $1,475 … Our next target is $2,000, and we did a gold special in our last piece that suggested from a very long-term perspective … we could see $5,200 on gold.”

Yamada is the latest of a raft of highly credible analysts, money managers and bullion dealers coming out during the past two weeks to tell KWN and other news organizations of the imminent explosion in the price of precious metals.  James Turk, Jim Sinclair, John Taylor, Ben Davies, John Embry, Peter Schiff, and Jim Rogers (who announced he is adding insult to injury to the U.S. dollar fiasco by shorting U.S. Treasuries) have all advised to go long the anti-dollar trade.

The lone hold-out of considerable import to the precious metals market is Marc Faber, the favorite go-to guy for the most steamy of quotes and anti-establishment rhetoric of all hard money advocates.  His forecast for this summer is for the monetary metals to succumb to the 30-year track record of weakness and relatively thin volume.

As gold makes new highs above $1,600 and silver makes its way past $40 amid a fierce “250 million ounces of silver in 1 minute” smack down attempt by the cartel last week, according to Precious Metal Stock Review’s Warren Bevan, the majority of our favorite talking heads, so far, have it right, and Marc Faber has it wrong.  But the summer isn’t over yet, and Faber hasn’t budged from his forecast for the metals.

Yamada, who, incidentally, didn’t offer a time frame for her targets for the gold and silver price, said her next target for silver is for a double “over time” from the $40 print.

“We hit part of our silver targets at $50, (expect) $65, even $80, $85 over time,” speculated Yamada in the KWN interview.  “We had an 88% rally in a very short period of time from January and a one third retracement, 34% down, so that was pretty normal. We saw some support at $33 and would loved to have seen it go sideways a little bit longer to be honest with you,” noting considerable dollar weakness in light of the  sovereign debt crisis with the PIIGS of Europe has revealed the dollar’s diminished status as the world’s safe haven currency.

“I think that one of the observations that one has to take into consideration is that with each of the Euro financial crises and our own financial crisis in 2008 to 2009, the dollar has rallied less!” she said.

“In other words you had a rally in 2009 that carried 25%,” Yamada explained.  “Then, in early 2010, the rally was only 19%.  And the second one in 2010 was only 7%.  And this time, you haven’t even seen 7% with the crisis that has evolved.  So that suggests to us that it (the dollar) is becoming less and less considered a really safe haven.”

While the systemic problems with the euro and dollar come fully into focus, we should be mindful of U.S. Treasury Secretary Tim Geithner’s recent comment on Meet the Press of July 10, when he said, for a lot of people, “it’s going to feel very hard, harder than anything they’ve experienced in their lifetimes now, for a long time to come.”  Bloomberg reported that Geithner may step down from the head of the Treasury.

As of 12:36 in New York, gold trades at $1,612.79 and silver at $40.05.

Look who’s predicting $1,900 gold by October

Predictions of lofty prices coming from regular hard-money advocates and gold bugs are certainly not hard to find.  Predictions of $2,000, $5,000, $10,000 and $100,000 targets for the top in the gold market are numerous.  But when a mainstream money manager of the highest esteem projects a major move higher in Wall Street’s most despised asset—gold, traders should sit up and take notice.

Speaking with Bloomberg on Wednesday, FX Concept’s founder, John Taylor, the man who pioneered the analysis of foreign exchange cycles, expects the gold price to soar to $1,900 by October, or a 20% rally from today’s price within a time frame of between 11 to 14 weeks.

Taylor sees gold as the ultimate safe haven asset while the developed nations deal with crushing debt loads; but he singles out the euro as the more likely currency in the U.S. dollar/euro cross to devalue against the other on the way down against gold during the next leg down in the global debt crisis, which he said could begin “within three or fours weeks time from now.”

Taylor also sees the euro dropping to $1.15 against the dollar during the next down leg.  And, if correct, then, he expects the gold price in euros to achieve 1,650 euros per ounce by October, which calculates to a nearly 50% jump in euro terms.  And it gets worse for the euro.  By next year, the euro is going to par with the dollar, he said.

When asked why the euro has held up so well up til now, Taylor quipped, “because the dollar is so weak.”  But as the euro zone flounders in the handling of Greece’s sovereigns, it will eventually become apparent that “the euro has to be restructured, and not just a little restructuring, but very, very significantly restructured to make it work,” he said.

But after the fireworks of new highs in gold in every currency, he expects the rally to turn ugly, as the second leg of the global debt crisis takes every asset down in a heap, including gold.  And how far will the gold price drop as the U.S. and Europe plunge back into a deeper recession?  Taylor believes gold will touch $1,100, a target which may seem incomprehensible during the gold mania, but will be the result, he said, of institutions and hedge funds scrambling to get liquid to meet redemptions.

Hold your Gold! Persian “Gray Swan” lurks

With so many threats to an already tipsy global currency regime lurking within the balance sheets of every sovereign nation of meaningful size outside of China, another potentially catastrophic event could take investors by surprise—including, of course, a Black Swan Event—but also an event, which Nassim Taleb refers to in his book, “The Black Swan,” as a gray swan, an event which could have been  foreseen.

Buried under the ever-growing tantalizing news stories of critical budget meetings in Europe and the U.S., gazillion-dollar hedge fund managers predicting fiscal Armageddon by 2012, 2013 or 2014, clarion calls for a renewed gold standard by marquee writers in the financial business, and a verbal sparing in Congress between a champion of free money and his villain at the Fed, lies an equally threatening event to the markets:  War.

But not just any war, whereby a bunch of Western counties pick on a “dictator” or a “terrorist” political party harboring other “terrorist” in a part of the world where few in a U.S. high school class can point to on a world map, but the real biggy—with Iran.

Attack Iran?  How’s $200+ oil (for openers) for a dying U.S. economy to digest?  How would the already-bogus budget deficit projections fair as the U.S. economy collapses into, not a Depression, but a comma?  The double-whammy of deficits soaring as GDP plunges would bring Greece to the U.S. much sooner than 2014.

Can the Fed call on the autonomous and clandestine Exchange Stability Fund (ESF) to fix that?  The $600 billion of currency swaps released by the Fed a  couple of years ago to come to the aid of Europe, as the scheduled ticking time bomb was set to explode in the counties comprising the PIIGS, will turn out to be mere token gesture of support.  The $5+ trillion stimulus already injected into bank balance sheets, as well as into the coffers of Keynesian government spending, will be laughed at as “soooo 2011.”

Giving the story about proposed plans for an attack on Iran was given legs to run wild on the Net thanks to our friends at zerohedge.com, who recently posted a news story from news source Al Jazeera about a former CIA agent assigned to the Middle East who paints a rather frightening scenario he sees coming into focus for September.

According to an Al Jazeera report, former CIA agent Robert Baer told KPFK Los Angeles that hardline Israeli Prime Minister Benjamin Netanyahu is “likely to ignite a war with Iran in the very near future.”

“ . . . there is a warning order inside the Pentagon to prepare for war,” said Baer. “There is almost ‘near certainty’ that Netanyahu is planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict.”

Never mind sending floating flotillas to the Palestinian people, start planning on sending them to the U.S. if this story is not a COINTELPRO operation by a former spook.   If true, the 44 million people presently on food stamps in the U.S. will be considered the early birds to the come wave of additional public trough money if Washington goes along with Netanyahu on this Armageddon plan.

No doubt, reports from the likes of a Robert Baer a decade ago indicated that Iran had equally ambitious plans to Iraq’s escape from U.S. dollar hegemony through the sale of its oil in other currencies besides the dollar.  How else, then, did Iran achieve the enviable Axis-of-Evil member status?  Was it because of Iran’s “nuclear weapons” program?  Did George Bush mistakenly confuse Iran for Iraq when he said Iraq was hiding “weapons of mass destruction?”

Here’s the link to the original October 2000 Reuters piece regarding a UN approval of Iraq’s “request” to accept the euro as payment for Iraqi oil.

Fast forward to today.  OilPrice.com just released an article entitled, “Iran Opens Oil Borse – Harbinger of trouble in New York and London?”  It’s author, John Daly, wrote that the three-decade long U.S.-led sanctions on Iran has been long enough (that is, as long as the dollar was an acceptable exchange for Iranian oil).  Apparently Mahmoud Ahmadinejad, too, wants change he can believe in.  He, too, wants an end to the decades-long dictatorships of North Africa and Middle East.  And the U.S. is the tool of his enslavement.

“Iran is working a program, that, if it succeeds, could help undermine the dollar’s preeminence as the world’s reserve currency more effectively than a Republican filibuster,” stated Daly. “Iran’s sly weapon against the Great Satan’s currency? An oil bourse on Kish Island in the Persian Gulf, which has now begun selling high-grade Iranian crude oil.

Mohsen Qamsari, the Iranian National Oil Company’s deputy director for international affairs Mohsen Qamsari commented, “The commodity stock exchange has been pursuing a mechanism for offering crude oil on the stock exchange for a long time, and it has taken the preliminary steps, to the extent possible.”

He added, “Considering the existing banking problems, foreign customers are not expected to be taking part in the first phase of offering crude oil on the stock exchange, and this will be done on a trial basis. Today Bahregan heavy, high quality, low sulfur crude oil with less sourness will be offered on the stock exchange for the first time. In the first phase, a 600,000 barrel shipment will be offered.”

Let freedom reign.  Sounds like another U.S. serf stepping out of line, doesn’t it?  Well, it gets a little sticky.

“China, the world’s largest buyer of Iranian crude oil, has renewed its annual import pacts for 2011,” continued Daly.  “In 2010, Iran supplied about 12% of China’s total crude imports.”

As far a China is concerned, making nice with the Dalai Lama at the White House is one thing; cutting off oil supplies to its rapidly growing industrialized nation is another.  Wasn’t the straw that broke the back of the Japanese start (some suspect) serious animosity between the U.S. and Japan prior to the attack on Pearl Harbor?  It appears that the same old U.S. playbook is being used to execute yet another war, using Israel as its post-WWII tool, again.

Some (pretty intelligent analysts) say the threat of WWIII isn’t imminent; it’s already begun, and is being rolled out, appropriately, in an easy pain-free installment plan.  But this time, both the U.S. and China import much too much oil whose cheap supply is running out.

It’s a them versus us game being played.  Or, as George Bush put it following the 9-11 attacks, “You’re either with us, or against us.”  And what a great way to get out in front of a dollar collapse.  Blame it on the Axis-of-Evil.

Economist John Williams: Hyperinflation by 2014

Ridiculing Europe’s handling of the financial crisis has become a popular go-to talking point for the dollar bulls.  Yes, there are still some diehard old timers on Wall Street (Art Cashin, not among them) who cannot image their Wall Street careers without the benefit of a credit bubble gravy train.  Those same tired cheerleaders also tell us that a rebound in the U.S. economy is inevitable “because we always bounced back before” in the hopes of sucking the public into the markets one more time in order to make those bonuses.

The U.S. may bounce back in nominal terms, priced in dollars, but not in real terms, argues economist John Williams of www.shadowstats.com.  Williams told listeners of Financial Sense News this weekend he believes the March 2009 collapse is merely a precursor of even more grave consequences for an already battered dollar following the $5+ trillion of stimulus the Fed has injected into the financial system since the start of QEI during the spring of 2009.

“Hyperinflation in the United States will be particularly painful,” said Williams, noting that the U.S. has no backup currency to the dollar in the event of a sudden panic out of the dollar, which he believes will be not later than 2014.  At least in Zimbabwe, he said, commerce continued via a black market settled in U.S. dollars.  But in the U.S., “we don’t have a backup system here,” he said.

Williams acknowledges the hesitancy among central bankers to trigger a run on the U.S. dollar until they’ve diversified enough dollars into other currencies (such as the euro, some of the hard currencies, and gold) to weather the coming collapse.  That is especially true in the case of the Bank of China, which has on numerous occasion complained about U.S. monetary policy and the effects on food and energy prices in the People’s Republic of China.

Moreover, China’s state-sponsored rating agency has already stated that the dollar is systematically being devalued, and has lowered its rating of U.S. Treasury debt.  The Chinese want out of the dollar.

“They [the Chinese] want to get out of the dollar as quickly as they can,” said Williams.  “No one wants to create a panic.  Everyone wants to get out as whole as possible.”

Williams expects the inevitable fate of the dollar will shock the world. It’s going to zero—in real terms, in purchasing power.

“Gold is the primary hedge against what’s happening here and what going to happen to the purchasing power of the U.S. dollar, which is eventually going to decline to zero,” he warned.

As far as the timing of a dollar collapse, Williams told FSN’s Jim Puplava it could happen at any time.  There are numerous possibilities or surprises lurking that could trigger a panic, precipitated by politicians or a Black Swan event.  But the outside of his timetable for a dollar collapse is 2014; but he gives a better than 50 percent chance of the event happening sooner.

3 Gold Stocks to Watch

Yamana Gold Inc. (NYSE: AUY)

Goldcorp Inc. (NYSE: GG)

Barrick Gold Corp. (NYSE: ABX)

SHOCK Jobs Report; Brzezinski warns of Collapse, U.S. Civil Unrest—got Gold?

“June Jobs Report: The Ugly, the Ugly, and the Ugly”

—Yahoo headline

Another shock from the Labor Department on top of last month’s disaster delivers a severe and final body shot to any hope for recovery.  If last month’s jobs data catastrophe didn’t convince those betting on a U.S. recovery that they’re blowin’ Dixie, not much will.

The headline jobs number came in at more than 18,000, with a consensus expectation of 105,000 from the usual economists.  Looking beyond the headline, however, the bogus Birth-Death adjustment of more than 131,000 only serves as an insult to the intelligence of anyone tracking these data.  It’s just another Orwellian thing.

So, after backing out the phantom job creation from the Birth-Death model, the June loss of more than 100,000 jobs can be added to May’s roughly 100,000 job loss.  That’s a contraction of more than 200,000 for a U.S. economy that needs to show job growth of at least 125,000 per month to break even, after considering population growth.

With the U.S. economy clearly sinking into deeper recession (some say a depression), it appears the social unrest in Europe is coming to a neighborhood near you.  No help from Washington this time.  If federal spending increases to mitigate the plunge, the already ridiculous budget deficit blows up into an Argentina-like collapse.  If taxes are raised, the economy moves into rapid implosion, lowering tax receipts even further and accelerating the debt to GDP ratio beyond any hope of a turnaround.

The U.S. has entered a Kondratiev Winter, a time during the debt super cycle that Russian (Soviet Union) economist Nikolai Kondratiev (1892-1938) warned befalls all economies reliant on ever increasing debt for economic growth.  Kondratiev proposed the theory that Western capitalism moves through a 60-year debt-generated economic cycles of boom to bust.  The Spring of the present super cycle began following the end of WWII in 1945.

It’s a Minsky Moment—a phrase used to reference Hyman Minsky’s (1919-1996) work on the relationship between debt and economic cycles—called the financial instability hypothesis. The Soviet Union-born Minsky, like Kondratiev before him, suggested that the end of the debt super cycle cannot be averted, but instead ultimately leads to one of two alternatives: an outright default, or default through currency debasement, a la QE1 and QE2.

Yet, another Soviet Union-born (Poland), Zbigniew Brzezinski, told MSNBS on Thursday he expects the civil unrest in Europe will come to America as a result of of a U.S. economy no longer able to service its debt.

The former National Security Advisor under President Jimmy Carter predicted “really serious international turmoil” as a result of the United States, Europe and Japan simultaneously drowning in excessive debt. In the past, slowdowns in any one region were made up by at least one of the others.  Today, all three are mired in insurmountable debt burdens, says Brzezinski.

The three regions, comprising 55% of the world’s GDP, yet, represent only 10% of the world’s population, are on their own.  Asking the rest of the world—which, when calculated on a per capita purchasing power parity basis equates to one-eleventh of his Western counterpart’s PPP—to bail out the West isn’t a solution, even if it was mathematically feasible.  Even China, with its nearly $3 trillion, cannot handle the bill.

Therefore, Americans are about to experience the same pain as the Greeks.

“I don’t want to be a prophet of doom — and I don’t think we are approaching doom — but I think we’re going to slide into intensified social conflicts, social hostility, some forms of radicalism, there is just going to be a sense that this is not a just society,” Brzezinski said, adding that a decimated lower middle class is most likely going to be the catalyst for Greece-like civil unrest.