Weiss On Memorial Day
posted on
May 25, 2009 04:54AM
Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.
This just could be the week that gold breaks the $1000 mark again. In the mix, we have about $100 billion in shunned U.S. T-Bonds coming up for auction and the "official" bankruptcy announcement of GM. Perhaps we can throw in North Korean nuclear activities for good measure. Martin goes into further detail below.
Regards - VHF
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Memorial Day Disaster
Martin Weiss
May 25, 2009
This would normally be my time for a quiet Memorial Day at home.
But even as we seek calm, investors overseas are doing precisely the opposite.
They’re dumping U.S. assets.
They’re driving those assets down in price.
And they’re threatening to sink our entire economy into a THIRD phase of this crisis.
Remember: The first phase was the debt disaster. The second phase was the collapse in the economy. Now, in the third phase, Treasury bonds and the U.S. dollar are getting hit hard, largely due to foreign selling.
The latest drama began this past Thursday …
The supply of U.S. Treasury bonds dumped on the market was so overwhelming, even the Federal Reserve, with all its massive efforts to buy up bonds, could not stop the avalanche.
By the time most traders left for the weekend Friday afternoon, ALL of the gains in bond prices the Fed had been able to engineer in recent weeks were wiped out — vanquished by market forces beyond the Fed’s control.
Why The U.S. Government Is the Next Victim of the Market’s Revenge!
Look. In each successive phase of this debt crisis, investors have consistently attacked and destroyed the market value of institutions that owned large amounts of toxic assets — Countrywide Financial, Fannie Mae, Citigroup, Bank of America and many others.
The shares of these companies were pummeled; their ability to raise new capital, virtually extinguished.
Now it’s the U.S. government that’s the next victim of the market’s revenge.
Why?
Because the government never was — and never will be — immune to market selling. Like private corporations, it borrows. Like any borrower, it has creditors. And like all creditors, it’s ultimately up to THEM — not up to the borrower — to decide what to do with their money.
But unlike most borrowers, the U.S. government has arrogantly thumbed its nose at its creditors. Without remorse.
“We can do anything we damn please,” was the message from Uncle Sam.
“We can spend our money wantonly. We can bail out our giant corporations to our heart’s content. We can even debase our currency.
“But YOU, our creditors, are stuck with us. No matter what we do, you’ve got to keep loaning us more money, endlessly.”
Our creditors swallowed hard and tolerated this message for a while. But not now.
Now they’re fed up. They can’t take it anymore.
Now, explicitly or implicitly, the U.S. government has assumed the liability for TRILLIONS of dollars of bad mortgages, sour commercial paper, and sick consumer credit.
Now, directly or indirectly, the U.S. government has placed its own credit and credibility in grave jeopardy.
And now, our creditors are raving mad, dumping U.S. bonds and the U.S. dollar.
The Immediate Consequences …
A Unique Convergence of Events
If all of these events can tell you anything, it’s that you now have the kind of opportunity that generations of investors could only dream about.
You have the ability to read the handwriting on the wall; to know in advance what is most likely to happen next.
Treasuries bond prices are already sinking. Interest rates are rising. The dollar is falling. Unemployment is surging. Commercial real estate is collapsing. General Motors is going bankrupt.
This is the recipe for disaster I’ve been warning you about.