Again the drive to privatize water distribution and resources in Latin America is gaining momentum. Although transnational water companies have suffered setbacks in Puerto Rico, Bolivia and Uruguay, they continue to lay plans to appropriate (steal) the region’s hydrological resources – rivers, aquifers, wells and aqueduct systems. The crooks now call privatization decentralization, civil society participation and sustainable development. They had better make up euphemistic labels to hid what they have done in the past.

            Due to the dreadful experiences of the past, at the hands of transnational elitist corporations, last April 400 participants from Mexico and countries throughout the hemisphere met in Mexico City at the First People’s Workshop in the Defense of Water. They discussed methods toward consolidating and furthering the defense of water as a human right for everyone.

            In Latin America their politicians as usual are selling people out. There is no reason to bring in outside capital and control. Get a loan and tax your own citizens to pay for construction and distribution.

            There is nothing risky or expensive in pumping and distributing water once it has been located. International conglomerates would like you to believe the opposite to pad the bottom line. In fact, these transnationals collude with each other and divide global markets. 

            The main reason these corporate water companies are able to access foreign markets is because of political corruption, incapacity and lack of investment in infrastructure, but also via the promotion of ridiculously cheap water, which results in waste and the lack of real cost for water.

            It’s easy to say get a loan but these countries are already up to their eyeballs in debt and cannot service what they are committed for. Thus, multilateral banks require dismantlement of the state and restrict public investment. Fellow elitists are waiting in the wings to be called in by the bankers to privatize utilities. Once in place the price of water, electricity, gas and garbage collection skyrocket. The same has happened in the gold mining industry. If you want a loan to develop your mine you have to sell production forward ostensibly to protect the banks’ loan when in fact it is to suppress the gold price because the bank sells or leases the gold immediately for future delivery.

            In many countries national governments have transferred title to municipal governments dumping upon them systems that haven’t been maintained for decades - that are obsolete. Political corruption has played its part as well plus uncontrolled urbanization.

            Mexico City is a good example. They threw water management onto the municipalities who contracted their water management to transnationals like France-based Vivendi. The breaking of water management into small units, urban and rural, allows transnationals to easily pick off these locations one at a time piecemeal.

            Cancun first contracted with Enron’s subsidiary Azurix. That was followed by a scandalous bankruptcy. Then another scandalous bankruptcy at Ondeo, a subsidiary of the French Suez corporation, which financed its purchase with a loan from the Mexican Public Works and Services National Bank (Banobras). The investments have not been forthcoming; therefore, residual water is being discharged into the Caribbean.

            Saltillo used the Spanish company, Aguas de Barcelona, and in the first two years rates rose 32% to 68% in direct violation of the contract.

            Aquascalientes used Vivendi and now the rates are the highest in Mexico. Vivendi has sucked out the money and done nothing for the system and their aquifer is on the verge of collapse. The city is about to rescind the contract.

            Those cities, towns and provinces, etc. that get World Bank loans as a condition of the loans have to facilitate capital participation by private entities. This is part of the elitist scam. Africa just had debts forgiven by the IMF and as a condition of forgiveness they have to privatize their utilities. Private ownership is a cash cow for these connected elitist transnationals.

            The recent Law of National Waters, passed by Congress in 2004, was a substantial step toward the privatization of the infrastructure and supply of drinking water. This means Americans you are next on the list to get screwed. Don’t let this happen in your community. If you don’t you’ll be very sorry.

            We have been told by someone who has spoken to the CFTC, regarding market manipulation, that even if he were correct, the neocons would do nothing about it. That sounds like government in a third world country.

            We are a long ways away from the end of troubles at Delphi, which has $2 billion in debt and $25 billion in credit derivatives, bet against that debt. Talk about madness, someone has to get hurt.

            We are seeing record home building financed by a wall of money from the Fed, some two million new units a year in the midst of a rising inventory of unsold homes. Most of these dwellings are upscale and oversized, and most are being built in hot markets. This puts the construction industry at risk as well as the banking system as the GSE’s Fannie Mae and Freddie Mac have been told to lighten up on their lending. Banks probably will end up in serious financial trouble, as did the S&L’s in the 1980s. Our bubble economy has become acutely susceptible to any slowdown or interruption in credit creation or system liquidity. That is why we publish those statistics every week. That is also why we believe any new chairman of the Fed cannot change the course. Liquidity has to increase on a net bases of 12% or the system collapses. Guess what, it is going to collapse anyway. All the elitists are doing is buying time. The more money and credit infused into the system, the more inflation and the lower the dollar goes and the higher gold and silver goes. Subscribers, you are looking at a classic credit bubble. We like to compare this monstrosity to 1994-95. Yet, the debt exposure was nothing like today. Oil was $18.40 a barrel and natural gas was $1.69. If we had gone through a solid deep recession in 1989-95, we wouldn’t be facing depression today. The comparisons are stark. Today oil is over $60.00 and gas is over $13.00, and we are buried in debt. There is no way out. From 1990 through 1994, our current account deficit rose $325 billion. Over the past five years, it has swelled to $2.5 trillion, and will soon pass $800 billion annually. This is the key defining issue because it affects our ability to borrow over $3 billion a day and it dictates higher interest rates. It also affects the value of the dollar in a negative way.

            The current weakness in the economy is not an interlude; it is the beginning of a painful correction. The inflation you see is not transitory. It will be with us for at least the next 1 1/2 years and perhaps a lot longer dependant on how the Fed reacts. The Fed cannot stop it. If they do they will totally lose control. This is inflating to the bitter end. Our deficits and debt are simply unsustainable and sooner or later the dysfunction will end. 

Markets are turning hyper-volatile. The Dow goes up 130 points in a day and falls 130 points the next day. Gold is even volatile, up $6.00 and down $6.00. In 15 minutes the 10-year Treasury’s rose from a yield of 4.50% to 4.42% and ended the day at 4.38%. These are signs of instability. Markets will get more and more volatile and unpredictable as we go forward.

In typical neocon fashion our government has reneged on the $15,000 bonus promised to National Guard and Reserves reups. What can you expect from lying, thieving crooks.

            Robin Raphel, the State Department’s coordinator for Iraq assistance, said, “the invasion’s timing was driven by ‘clear political pressure’, as well as the need to quickly deploy the US troops that had been amassed by the Iraq border.” It was as well clearly amateur hour.

            Raphel, a 28-year veteran of the State Department’s foreign service and a former assistant secretary of state said that veteran diplomats who were sent to Iraq early in 2003 shared a view that “we were not prepared.” We should have waited 6 months and built an international coalition. The decisions were ideologically based. They were not based on analytical, historical understanding.

            Government veterans who were sent to Iraq a part of the US mission also were convinced that “we cannot remake other countries in our image in terms of democracy or capitalism or things like that” said, David Dunford, a State Department Middle East specialist who was put in charge of the Iraq foreign ministry in early 2003. The bottom line is just about everything the neocons did was wrong or motivated by politics or money. The theft as you know is over $20 billion, which is colossal.

            There is no question that we have reached a critical turning point in the decline of healthcare in the US, one almost certain to expand the already appalling figure of 45 million people lacking health coverage nationwide. It is not a breaching of the social contract that is existed between companies and workers, such as GM slashing worker health insurance by $5.6 billion and for retirees and their families by about 41 billion a year. It certainly is a reflection of how health care costs are out of control. Our system is clearly breaking down and government and corporations have to come up with answers and quickly or they could have a terrible backlash. 

            Corporations talk of health care in terms of competitiveness and cost. Yes, costs are out of control and the doctors and the hospitals are to blame along with the tremendous cost of illegal alien care. As far as the corporations, such as GM are concerned, they are responsible for their own woes and those of their workers because they, like many other transnationals, have promoted free trade and globalization. That is part of the problem as well.

            Consolidation of some kind is inevitable. Presently one-third of all health care spending is now squandered on bureaucratic overhead. A single payer or some such system would end that. We might also end the looting of corporations by their officers who take out hundreds of millions of dollars while their companies slide into or already are in bankruptcy.

            Bill Gates has been long euros for some time and he stated late last week that he is pulling further out of the dollar and investing further in euros. In fact, he is even short the dollar. He cited many of the same reasons we have, “It is a bit scary, and we’re in uncharted territory when the world’s reserve currency has so much debt.”

            Worldwide Moody’s credit ratings saw 1.62 upgrades for every downgrade in the third quarter – an improvement from 1.53 in the second quarter and 1.44 in the first quarter. North America was 1.09; Europe, the Middle East and Africa 1.97; 4.50 in the Asia-Pacific region and 6.33 in Latin America. US credit has more issuers on review for downgrade or have negative outlooks. That is not good.

            An historical reminder: Paul Wolfowitz, the deputy secretary of defense, was so eager to see the US launch a preemptive strike against Iraq in 2002 that he ordered the CIA to investigate the past works of Hans Blix, the chief UN weapons inspector who in February 2002, was asked to lead a team of UN weapons inspectors into Iraq to search for WMD.

            This unusual move shows how far the Bush neocons were willing to go to invade Iraq. The manipulation and exaggeration of intelligence and the besmirching of Blix’s good name was in vane because intelligence found nothing and Wolfowitz hit the roof. Then the lies just multiplied from there to justify war.

            When Porter Goss took over the CIA last year his job was to purge all of the good guys. Many left, but his tenure has been a terrible failure. All those undercover operatives with the clandestine services are unhappy and many have resigned or taken early retirement. Some have requested reassignment. The directorate’s second in command has quit. He told Senators he had lost confidence in Goss’s leadership. Senators are going to invite Goss to a hearing to explain why the CIA is bleeding talent in a time of war, and to answer charges that the agency is adrift.

            Goss was stripped of his leadership role by his subservience to a new director of national intelligence. Then again, you can never be popular after having conducted a purge. You cannot run a spy agency with a continual political aversion to operational risk. He takes his orders from Cheney and Rumsfeld and that is not the way to run the agency. George Tenet attempted to appease the neocons and got the shaft in return.

Very few people seem to grasp the true nature of this menace, which is in the process of destroying our country. People don’t understand this connection, nor do they understand that the neocons are leftist Trotskyites in fascist disguise. They are not republicans, conservatives, or right-wingers. They may be deceiving those people, but they are not of them. This is the same internationalism that financed Levin, Trotsky, Stalin, Hitler and Mussolini. The above is extraordinarily important. It is the secret that few understand. This is the policy actually being conducted by neocons today. That is war, after war, after war in an effort to destroy the economy of the US and force Americans to accept world government. Fortunately, the neocons have failed in Iraq and that could inhibit the opportunity of warfare against other states. The invasions were to establish an imperial occupation, control oil, stop oil from being sold in euros, to cover up economic failure and to outflank Russia and China. These wars were intended to be the first of many wars – permanent warfare. In this guise control over the populace could be perpetuated. We do not dream these scenarios up. They were spelled out in July 1996, in the paper, “A Clean Break” delivered to then Israeli PM Benjamin Netanyahu. The authors were Richard Perle, Douglas Feith, David Wurmser, Meyrav Wurmser and Charles Fairbanks. It spelled out a scheme to spread war from Iraq to Syria, Lebanon, and Iran and on the Saudi Arabic and eventually Egypt. The chaos, destruction and corruption in Iraq is by design. The goal is civil war between Shiites, Sunnis and Kurds, which will end with the balkanization of the country.

            While this is taking place the neocons are trying to convince and threaten the nations of the world to back an Iran invasion. They have representatives meeting with leaders all over the world trying to prove that Iran has been secretly pursuing a nuclear weapons program and must be stopped. That means that the US must execute a preemptive strike against Iran as they did against Iraq. The main messenger is Dr. Robert Joseph, protégé of Richard Perle. These crazies are promoting the integration of mini-nukes in a preventive strike at scores of targets inside Iran, all ostensibly secret nuclear weapons’ facilities and related sites. Such aggression would cause all-out nuclear war and it would make the US the number one enemy of Islam for centuries to come. In addition, it would usher in a dark age with oil over $200 a barrel.

            Perpetual war for perpetual peace and permanent revolution are substitution labels for long-standing Illuminist imperialism. Wars cause drafts and people are forced by the government to fight in wars. This takes young people out of circulation and off the streets, effectively killing revolution. This allows imperial power by the elite and the end of the sovereign nation-state. We will be told the only way to save peace is to have war and create a new Roman empire with our legions.

            The National Biometrics Security Project will open a center in Morgantown, West Virginia in December when human subjects will be tested on biometric equipment like iris, fingerprint and voice scans. This is what government has in store for us. They will be used to access airports, tunnels and medical records.

            Our President, who never tells the truth about anything, last week sought to spread panic by telling us 200,000 people will die from the Avian Flu pandemic, and the death rate could be as high as two million. The hoax was then used to justify the immediate purchase of 80 million does of Tamiflu, a worthless drug that does not treat the Avian Flu and only decreases the number of days one is sick and can contribute to the virus having more lethal mutations. Thus, the government placed an order for 20 million doses at a cost of $100 a dose for $2 billion. Ten years ago the drug was developed by Gilead, which gave Roche the exclusive rights to market and sell Tamiflu. Defense Secretary Rumsfeld was Chairman of Gilead in 1997 and he holds a major stock position in the company. Criminal Washington and the neocons march on.

            Despite proof of CIA involvement in the murders of at least four prisoners in Iraq and Afghanistan, CIA employees now appear likely to escape criminal charges. Federal prosecutors simply refuse to bring criminal charges. Now a days this is normal in our Capital.

            Stephen Roach, Morgan Stanley’s economist, reports that the Pension Benefit Guaranty Corp. estimates that the funding gap for single-employer pension plans is $450 billion and another $150 billion for multi-employer plans. There is an additional $1.5 trillion gap for state and local government plans. We would think that if the Dow falls back to 7,286 and interest rates rise 2% effecting bond prices that this $2.1 trillion in shortfalls could easily double.

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GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS

            The longer gold is unnaturally suppressed by the elitist gold cabal, the higher the price will rise and the greater the profits for those who have the brains and the guts to participate. Gold’s move from $251.00 to its present level is still a secret due to a virtual blackout by the media. CNBC flashes gold prices from 6:00 a.m. to 9:30 a.m. and then discontinues them for the day as if gold ceased to exist during the remainder of the trading day. All the fundamentals of this bull market in gold get stronger every day - two ongoing wars and occupations and invasion of Syria and Iran eminent. Current account and fiscal deficits are out of control. Personal debt is the highest in history. We are facing recession, higher interest rates and a fall in housing prices as well as stocks and bonds. A pension bomb ready to explode. Declining gold production and continual major physical buying. M3 and Fed credit rising at a 12% annualized rate of well over $1 trillion annually. An out of control trade deficit. Sir Alan Greenspan’s retirement. Last and most important is that the cabal of central banks will soon run out of gold for sale. These reasons for higher gold prices are absolutely overwhelming. The Fed, George and the neocons, the Treasury and everyone in Congress knows exactly what is going on with gold and silver and they do not want to know about it. The CFTC and the SEC are deeply knowledgeable and complicit in the conspiracy to suppress gold and silver prices. Almost everyone is paid off one way or the other and we hear a few lone voices like Ron Paul, other than that it is a bunch of purchased political crooks.

            If you look at any chart on gold it clearly defines a bull market. For lack of a better description it is a thing of beauty. Yet, almost everyone in North America and Europe, who has access, simply ignores the most powerful technical chart in history. Thus, as we have said since late last year, $512 is the next goal. After that it’s $680 and then $850. This bull market will have three or perhaps even four phases. The first phase ends at $850, the second at $1,700 and the third at $3,400. A fourth phase would take place during a revolution and overthrow of our government by the people. Who knows what gold and silver would be worth because American currency could become useless. We have a long way to go and we have lots of money to make.

            We have seen the Indian government and its central bank wilt under pressure from the US Federal Reserve before and it’s happening again. The Indian Reserve Bank has advised the government to slowdown freeing gold imports.

            This would mean the plan to allow more agents to import the metal to meet the tremendous demand for gold could be delayed beyond this fiscal year. The bank is concerned that citizens are hedging against the rupee and they will in turn not buy financial assets. There is no question this is an attempt to suppress gold purchases. What will happen is that Indians will start to question the value and stability of the rupee and even more people will buy gold. This will accelerate gold buying.

            The Marxist ANC, which controls 71% of the South African vote, adopted changes to diamond laws. Anglo America-DeBeers previously slammed the proposed law, now says it was hopeful and it would work with the government. The law proposes a levy on exports and compels companies to first offer diamonds to a state-controlled export center, which cuts out the DeBeers selling group and at best undermines it and its sights and price settings. This could well prove disastrous for diamond prices unless the government agency selling diamonds uses good judgment.

            For gold, silver and commodity owners and buyers the choice of Ben Bernanke was a gift from heaven. We could not have asked for a more pro-gold nominee. Warm up the helicopters meathead.

            In a gritty industrial town of 400,000 in Leicester, England, more gold is sold than anywhere in Europe. That is due to a large Indian population.

            Russian gold production fell 7.2% year-on-year for the first nine months of 2005 to 126.119 tons.

            Dubai will launch a gold futures exchange on November 22, 2005 with South Africa’s Standard Bank among its founding members. They will trade six forward month gold futures. Gold and silver options contracts will be launched early next year. There will be 100 trading members on the DGCX markets on day one. It will operate Monday through Friday, 10 a.m. to 11:30 p.m. local time (06:00 to 19:30 GMT). Seven-day trading will begin in the first quarter of 2006. This will force gold prices higher because the PPT, FED or CFTC won’t manipulate them.

            The Silver Users Association have made it all too clear that a silver ETF, Exchange Traded Fund, would increase silver investment, which would cause a silver shortage. It also makes it plain that central banks have suppressed silver and will continue to do so as long as they can. This bears out our thinking, and in addition we more strongly than ever believe silver is about to take off.

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CHINA

            Last week we covered the story of the disputed gas field’s war between China and Japan and it looks like the situation has escalated.

            China has completed at least one new drilling platform in the East China Sea and may already be tapping into hotly contested natural gas and oil fields. That will escalate the dispute, which could easily end up in a war. Japan’s arrogance and lack of repentance for its atrocities during the 1930s and 40s has China exceptionally mad.

            Of course, Japan has run to the US and demanded they solve the situation. Japan knows China has already hit gas on at least one platform and China has almost finished a pipeline to connect platforms to the mainland. There are five Chinese warships close by as a show of force near the drilling sites, so the Chinese mean business. The next step in the escalation will be Japanese drilling in the area accompanied by their naval muscle. That china has already said will be viewed by Beijing as an invasion of Chinese territory and would be viewed as an act of war.

            The Chinese platforms are within their territory, but Japan argues that China is tapping into energy fields that straddle an area claimed by both China and Japan.

            Japan wants to co-develop the area, but they cannot agree on much. This problem is not going to go away and it could lead to conflict.

            China could be facing what Japan faced in 1989. The manufacturing juggernaut that is China could be in for some serious problems ahead. No one thought Japan would come unglued, but it did and they have been in a depression ever since kept afloat by the profligacy of the US Federal Reserve. Japan in those days maintained a weak yen, which ended in a real estate bubble. This could repeat itself in China.

            Morgan Stanley tells us there is $350 billion in speculative “hot money” in China based on an appreciation of the yuan. Much of that money is in real estate. In Shanghai real estate prices were up 28% last year and anecdotal evidence suggests up to 40% of new space sits vacant.

            The yuan has appreciated 2.1% since it went off the US dollar peg and into a basket of currencies. Most see a 25% appreciation in the currency; we see a 40% appreciation. That is if they avoid a war with Japan.  If we are correct real estate will be sold and money will move to cash to leverage the yuan gains. If that happens coastal real estate could get hurt badly. The Chinese, like all others, don’t believe it could happen in China. Well, we have news for them. No one or no county is bulletproof. Yes, China’s economy was and is insular, but an internationalized economy is even more vulnerable. A plus that could become a minus is that foreign multinational, transnational conglomerates account for 60% of its exports. No foreign debt is certainly a plus.

            Banks have $800 billion in bad debts. Japan had $1.2 trillion when all was said and done and still has $300 billion and it took 15 years to work off $800 billion in debt.

            The Chinese are overconfident and are still transitioning from a centrally planned economy to a market economy. They still have a hidebound dictatorial communist government and they have yet to have recession or severe economic downturn. The Communist government is even more corrupt than the Bush administration. Both government and the financial system are dysfunctional says Pricewaterhouse Coopers. This is the result of loans to corrupt state run corporations, often run by the military. They churn out cheap inferior products in an effort to keep people employed. The best thing they produce are AK-47s. There still has been no clean up of the banking system. No party members want to take the hit. Loss of face and all that. Japan did the same thing and banks recovered $0.20 on the dollar.

            The level of capital investment, equivalent to half of China’s GDP is not only highly inefficient, but it is unprecedented. This is fundamentally unsustainable. From a financial standpoint the whole thing is frightening. If it doesn’t work the government throws money at it like Washington does. They do have $720 billion in foreign currency reserves. They just spent $60 billion bailing out three of the country’s largest banks. They are pouring $15 billion into a flaccid stock market hoping to give it life like the Fed and the PPT have done in the US.

            Growth is really about 14%, not the 9 1/4% the communists would have you believe. If the economic growth were to fall to 4-6% the Communist Party would have some fierce problems. They could have a revolution on their hands.

            The real problem in China is corruption based on party affiliation. The thefts are colossal, particularly in the banking system. One banker just got 12 years for graft, another disappeared with $100 million in cash and 69 people are charged with stealing $894 million.

            This is why we won’t invest in China. If the banks collapse they’ll be a revolution. Such a failure could bring down the world banking system. China is still a loose cannon so watch out.

            The nine-month fixed asset investment was up 26.1% year-on-year.

            September wholesale prices rose 1.4% year-on-year.

            2006 domestic consumption is expected to grow by 11.7%.

            China needs 7.5% annual GDP growth in the next five years to double income.

            Real growth is probably 13-15%, not the 9.4% we are handed. Industrial output is up 16.5%, M3 is up 17.9% and imports are up 23.5%. Shanghai property values are up 22% and we expect there will be no slowdown in construction in 2006. How long can fixed asset investment growth of 54% of GDP continue? Export growth has slowed from 34% in 2003-04 to 29%, but it is still way above the 19% growth of 2001-03. We expect growth will continue into 2007. After that times will change and get more difficult.

            The 9-months to September industrial firm profits were up 20.1%.

            2005 retail sales are expected to rise 12.8%.

            The biggest cell phone market is now an average of 9 per 100 people. That is up 7.7% from June to September.

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