Servias Ministries Blog

$100 Oil/Currency War

We may soon see $100 oil based on the decline of the Dollar.  Global commodities are pushing up prices in terms of U.S. Dollars.  Bernanke and his cohorts want to see inflation but the rest of us have been experiencing inflation in our everyday lives.  See: http://www.bloomberg.com/news/2010-10-15/opec-members-seek-100-a-barrel-oil-as-sliding-dollar-cuts-real-revenue.html  The US desperately needs a cheaper currency, but so do other countries.  There is a race to the bottom and gold & silver will reap the benefits.  The average person will be the loser due to the depreciation of savings.

No increase for Social Security Recipients

Once again, the “cooked” statistics have slapped our seniors in the face.  The measurement of inflation has been diluted by non-essential products and services that it has indicated to us there was no inflation over the last 12 months.  I wonder what country they live in?  We received notice of an increase in our health insurance premium, just like clockwork.  SGS places September’s consumer inflation level at 8.5% which is certainly a more realistic number.  See http://www.shadowstats.com  If the government used these numbers, the increase in Social Security would cause the agency to run out of money sooner than currently projected.    How can our seniors survive on the same check as last year?  What little savings they have, they receive virtually no interest.  There came a famine in the land!

Looming Energy Crisis

Within 48 months, I project the energy crisis revelation will go mainstream.  At that point, the gas guzzlers will become worthless.  We are hoping to have a Prius in the garage by the end of the month.  Once the mainstream media figures out the global production has peaked and in decline, fuel efficient cars will be in short supply and the discounts will evaporate.  Am I willing to give up roominess for geographic flexibility?  Yes.  I expect higher prices or a deeper recession.  Either way, we are reducing our relative energy expense and exposure.

Banks’ Impact

To add insult to injury, the banks are pleading for mercy in their mortgage-backed security crisis.  The problem is that someone is going to lose wealth at the end of the day.  Will it be the banks, the pension funds and other investors, and/or the US taxpayers?  The music has stopped and the party is over.  I expect we will be hearing cries to Heaven before long.  We’re in a multi-front crisis.

At 9:06 AM October 13th, I was sitting at my home office desk on the phone with an associate.  Suddenly, the entire house (including the floor) shook!  An earthquake!  The United States Geological Survey was quick to post the epicenter located near Norman, Oklahoma, home to the OU Sooner football team:

The International Headquarters of Servias Ministries had just experienced a major earthquake, 5.1 on the Richter Scale.  Was this the end?  This isn’t California, ya know.  Should I run outside before aftershocks arrive?  Do I have enough food and water stored for such an event?  Now where did I place that emergency plan?

My assistant who works about 4 miles northwest of me immediately called to check the damage.  Her dogs were pacing and whining.  Uh oh!  Suddenly, I couldn’t focus on the business at hand.  Was I in shock?  My wife (conveniently out of town… did she know what was coming and failed to alert me) called to check on me.  I wonder why she asked about the status of my life insurance policy?

What about the headquarters infrastructure damage?  Was my electricity still on? Check.  Was my server farm still operational?  Check.  Telecommunications? Check.

What will be the economic impact of this quake with such a fragile economy?  Only time will tell.  Damage assessments are already being reported by various state and local agencies.

Whew!  It looks like we dodged a bullet!   Below is a picture of the devastation near the epicenter of the “Quake of 2010”:

By the way, even though the local Oklahoma Geological Survey originally measured the quake at 5.1, the USGS subsequently downgraded it to a 4.3 but we still made “the list”.  See http://earthquake.usgs.gov/earthquakes/recenteqsus/Quakes/quakes_big.php

Wall Street and the various policing agencies are becoming increasingly exposed to the chopping block.  As the media continues to focus and dissect the underlying issues in the mortgage-backed securities bailout, I suspect there are many banksters having sleepless nights:

This article posted late today confirms my point about all mortgage loans, current or delinquent: http://finance.yahoo.com/news/Foreclosure-Fraud-Its-Worse-cnbc-130283304.html?x=0&sec=topStories&pos=4&asset=&ccode= 

Unbelievable!

We are in a serious mess.  Greed has cornered itself in a box canyon and I expect a shootout soon.  The banks sold trillions of dollars of mortgage-backed securities and failed to “perfect” the title transfers as well as shoddy handling of paperwork.  This is not a new revelation but has been brewing for two years.  In the meantime, banks tried to get HB 3808 passed through Congress knowing that the chickens would come home to roost.  President Obama would not sign this bill into law, especially before the November 2nd elections.  He is the only one who would be on record, as noted below.

American Families versus The Big Banks

You have three direct parties in the MBS issue: the borrower (average American family), the lender (Big Investment Banks), the investor (pension funds, other banks, Federal Reserve[after disclosure of the toxic debt]).  Why do pension funds exist?  For the American family.  Who pays for the Fed’s actions?  The American taxpayer (or family).  Ultimately, this issue is between the Big Banks and the American family.  The problem is that the American family does not seem to be well represented in this issue.  The banks know this.  Congress is charged with the fiduciary duty to represent the welfare of the American family.  The banking industry is the largest contributor to Congressmen re-lection campaigns.  Hmmm.

U.S. Congress versus the American Families

House Bill 3808 was an attempt to make it easier for lenders to bypass the notarization process by allowing “electronic” notarization.  I don’t know about you but when I executed a mortgage on my house, I had a mountain of paperwork to review and had to sign my name more than 10 times on various documents to insure that there where no loopholes for me to get out of my mortgage debt in court.  The mortgage company attorneys made sure of that.  However, when it came time to sell that mortgage paper upstream the banks often bypassed the same pain of paperwork they forced on the borrower.  Since they knew they had cut corners, they wanted Congress to “fix” the problem with a new law- HB 3808.  It is interesting to look at the apparent deception surrounding this law.  When I attempted to find out if my Congressmen voted for the law, this is what I found:

Apr 27, 2010: This bill passed in the House of Representativesby voice vote. A record of each representative’s position was not kept.

Sep 27, 2010: This bill passed in the Senate by Unanimous Consent. A record of each senator’s position was not kept.

Source: http://www.govtrack.us/congress/bill.xpd?bill=h111-3808  See for yourself!  I sent an email to each of my Senators asking their position on this bill.  I suspect I will not receive an answer until after November 2nd.

The Law of Unequal Weights and Measures demands restitution.  Though I don’t condone those who borrowed above their means, the banks were the experts in the mortgage transaction and deceived the borrowers into thinking they could qualify for the loan.  Now that the mainstream media is finally reporting on this travesty, those in power will be forced to do something about it.  Will the American public finally wake up to the exploitation that has been occurring for decades? 

The following interview provides exposure and clarity to the issue at hand:

For the past few years I have been a “watchman on the wall” for the readers of our blogs.  The readers were told to expect gold and silver to move notably higher, warned of a Great Recession, and warned of the financial system’s stress due to toxic mortgages.  As we know those events are now in play.  With the latest reporting of the legal battles erupting all over the country, expect gold and silver prices to become volatile with possible $100 swings in gold within a 24 hour period.  Yesterday, I saw “Wall Street, Money Never Sleeps”.  This movie provides a stark view of the way Wall Street thinks, acts, and responds.  Oliver Stone captured Wall Street’s essence and arrogance when Michael Douglas proclaimed “I used to say ‘greed is good’, but now I must add ‘greed is legal too’”.

Anyone who has ever reviewed an abstract or county courthouse records understands the requirement for “chain of title”.  Property rights in America are based on a well-recorded history of the chain of title.  We buy title insurance to insure that we have clear title to our property so that nobody can come back and legally take our property away due to some failure of proper recording of a deed.  This includes error and omissions of legal descriptions, names, etc.  This is where the ugliness begins.  For an in depth understanding, the following video is a must: http://market-ticker.org/akcs-www?post=168528

Bankers have received a “cease and desist” order to stop foreclosures in several states because of this problem.  What about those of us who have paid our mortgages?  Has the recipient of our interest been collecting it illegally, without a note to back it up?  That is another issue in itself.  If I were to demand the lender to prove his legal position to collect interest in a court, could he?  This sloppy handling of paperwork could work its way up the food chain rapidly if bloodthirsty attorneys began building a class action suit against the perpetrators of the greatest fraud in American history.  Could this be the tipping point I’ve been writing about in the last several months?

As confidence diminishes in the U.S. economic structure, the dollar will get hammered.  Hot money moves around the globe at the speed of light.  This sets the stage for extreme volatility in the gold market.  I would expect to wake up some morning and find that gold has jumped $100+ overnight in other markets whereas silver might jump $2 in a single trading session.  At some point, investors will see that they can leverage their investments by investing in gold and silver mining stocks.  Currently, the stocks have been lagging the metal marketwise.  Once John Public figures this out, I expect the stocks to outperform the metal.  Professionals see this as phase three of the bull market in precious metals where big money is made as prices skyrocket.

When do you sell?  I suspect we have a long way to go before the resolution to all of this monetary meltdown is resolved.  Until then, volatility will be the name of the game.

"There hasn’t been an empire in the history of mankind that has given away its wealth and its power base like the United States is currently doing. What are you doing? You’ve got 20% unemployment, you’re trying to bailout out the Chinese, you’re trying to bailout the Indians, you’re trying to bailout the Middle East, and no peace is arising you’ve got wars still everywhere. So what are you doing? Why are you allowing this huge transfer of your wealth to these other countries, who, I promise you, from and international perspective, are laughing."

Manduca does a fine job in explaining the global issues that will fuel the price of gold to much higher levels:

Remember when “flipping” houses was the hottest investment around.  Just go down to Florida and buy a condo, put it back on the market at a higher price and wait.  If you had a good credit score and reasonable cash flow, you could leverage up dramatically thus generate much greater profits.  60 Minutes interviewed a young man who did that in Phoenix.  He had in excess of 10 houses and he had no true prior business expertise.  After a short period of time, he was a millionaire on paper.  All that is history now.  The Federal Government is now subsidizing a broken business model of debt and leverage.  Ben Bernanke is prepared to take interest rates “negative”.  That means you will pay to keep your money in the bank and that is a scary thought.  The longer the government subsidizes the broken business model, the worse the outcome.

We do not have a free market but an interventionist market instead.  When you have this type of market, you can throw out most of your economic assumptions and past comparisons.  The intervention perverts the normal technical analysis of markets.  The Fed and others thought we could borrow our way into perpetual prosperity.  Wrong!  There are now doubts about the fiat currencies’ continued viability.  The issue with fiat currencies is that their problems are serious and complex.  Nobody is certain about the total liabilities tied to these currencies.

We are now moving into the endgame and it is high risk.  The potential of the destruction of currencies is real and the probability is rising rapidly.  The destruction could occur within a few weeks’ time and the Central Banks’ balance sheets could balloon by a factor of 20,30, even 50 times the current size.  At that point, the currency is “toast”.  Interest rates would rise dramatically and bust the bond market where investors would lose billions if not trillions in value.

The subsidy of debt with fiat currency is forcing all fiat currencies downward relative to the price of commodities, specifically gold and silver.  This is why both metals are achieving fresh highs in their prices.  For the gold & silver prices to fall, the central banks would have to get religion and increase interest rates substantially to prop up their currency.  Don’t expect that to happen soon with the sustained unemployment numbers.  If China revalued their currency by 20%, millions of Chinese workers would lose their jobs and their central government will not take the risk.

There are no consistent rules in today’s economy.  The savers are “loaning” banks money at virtually 0%.  Does that mean that their money has no value? Preposterous!  The banks are turning around and loaning that money at 6%.  Whose interest does the government have at heart?  What “public” are they serving?  Someone is living a lie and it may be the entire American structure.

The average investor incorrectly thinks we are a capitalistic country.  In the U.S., we operate as socialism at the top where interest rates dictated and the government intervenes in the markets.  At the bottom, we have fierce competition for jobs.  The socialistic top structure will fail.

The U.S. has sent low paying manufacturing jobs overseas over the last 30 years which converted us to an asset based economy.  Those low paying jobs are now developing into middle class jobs but they are not here in the U.S. but in China and other developing countries.  Our productive capacity continues to decline thus our future value will decline as well.

We don’t know what would have happened in 2008 if there had not intervention in the financial markets.  GE would have probably bit the dust.  Several large banks would have evaporated.  As long as there is intervention by the Fed, we will not go through deflation because their mandate is inflation.  This is the reason you are seeing new highs in gold and silver almost on a daily basis now.