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Wednesday, October 03, 2007

An Open Letter from The Founders Of The Country

Founding Fathers

Sam Adams, James Madison, Ben Franklin, George Washington, Thomas Jefferson, Patrick Henry, & John Adams

In 1776, the founders risked their "lives, fortunes, and sacred honor" to set up a free and prosperous nation. They warned us that it was our responsibility to keep it that way. But we didn't listen to their wise advice.

As a service to America, they have come out of retirement to issue a final warning

An Open Letter To The American People

We the Founders

Warned you of the dangers of excessive taxation. Now you labor nearly six months of the year to pay taxes at all levels as your economy suffocates under this cruel burden.

Warned you of the dangers of foreign entanglements. Now thousands of men and women suffer and die in foreign lands while your government plans a military draft.

Warned you of the dangers of government spending. Now your growing national debt stands at 8 trillion dollars and your babies are debt slaves from the day they are born.

Warned you of the dangers of a private Central Bank(The Fed) and a debt-based monetary system. Now you drown in credit card debt as you lose your homes to foreclosure.

Warned you to obey the Constitution because power corrupts. Now a secretive government can spy on you and detain you at will under the guise of "National Security".

Warned you of the dangers of political parties. Now you have two powerful parties that conspire against the people, plundering you while they pretend to oppose each other.

Warned you to keep your nation sovereign and independent. Now you submit to the U.N. and NAFTA authority as your borders are deliberately left open to endless illegal immigration.

Warned you to be distrustful of government. But you believed the sugarcoated falsehoods of ambitious politicians and now you no longer know who to trust or what to believe.

Warned you of the importance of an honest, independent, and unbiased press. Now your centralized "Mainstream Media" is full of propaganda, distortions, and omissions.

Warned you that the price of liberty was eternal vigilance. But while you were distracted by ballgames and TV shows, government stole your liberty and bankrupted your children.

For these reasons, WE THE FOUNDERS support

Ron Paul

We advise you to support his presidential candidacy with your time, fortune, and sacred honor.


  • At 11:56 AM, Blogger Agent Orange said…


    Posted by Ambrose Evans-Pritchard on 02 Oct 2007 at 14:32

    Start to take profits right now. Trim any American, British, and European equity that is highly geared to the credit cycle. Layer out of high-risk plays over the next ten days or so, until you reach a defensive level of exposure.

    This is no time for bullish behaviour

    Do not ride this deranged speculative bull into late October. The balance of risk and reward are just too far out of kilter. Do not under any circumstances join the mad scramble for emerging market stocks. Cut positions in Latin America, Eastern Europe, Asia, and China.

    As Alan Greenspan said this week about the Shanghai market, “If you ever wanted to get a definition of a bubble in the works, that’s it.” He also said that US house prices were going to fall “a lot further than people think”. Bet against him if you dare. The relief rally since the Federal Reserve slashed rates half a point to 4.75pc is a moral hazard bet, based entirely on assumptions that Ben Bernanke will debauch the monetary system to boost asset prices.

    This is a fatal misreading of the intentions of the Fed, and of Ben Bernanke’s austere moral character and economic ideology. It ignores the nature of the crisis that has ripped through the credit system over the last two months.

    The belief in perpetual rate cuts assumes that Bernanke – and the monetary hawks in Dallas, Richmond, and St Louis – can possibly countenance the moral hazard of further stimulus when the Dow is rocketing to all time-highs. This rally is inherently self-defeating. It must short-circuit.

    “The equity markets are pricing in a 'Bernanke Put’,” said Rob McAdie, head of credit at Barclays Capital and a man with a front row seat at the credit crunch.

    “They are betting that the Fed will cut again and again, but they are not factoring in the effect that this credit squeeze is having on the financial system. Cheap money is now history. There are not going to be any more of the big leveraged buy-out deals for a long time because the CLO market that financed them is effectively closed,” he said.

    “Banks are not willing to lend to each other beyond a week. The current situation is more systemic than the crisis in 1998. It effects far more institutions and will have a much greater impact on the global economy.”

    Yet the markets are indeed betting on a 1998 replay, a reliquified surge into the stratosphere for two more years. Beware. There was no US property collapse then, and the world was still in a benign cycle of falling inflation.

    Today feels more like January 2001, when the S&P 500 rallied for two weeks on the Fed’s emergency cut, only to tank by 19pc over the next two months as it became clear why the Fed had taken drastic action – and what this meant for profits. Wall Street fell a lot further thereafter, taking two years to stabilize. The S&P 500 halved in the end.

    Or if you like parallels, try October 1987, when the US dollar was falling in the same disorderly fashion we have seen since August this year.

    It is fundamentally worse this time: the global dollar index has hit record lows; and the US is no longer a net creditor. It now has external liabilities reaching 35pc of GDP, putting it within a few percentage points of a compound debt crisis.

    We will find out from the TICs data in November whether China’s central bank was responsible for the $48bn fall in official foreign of US Treasuries in July. But if China wasn't, somebody was. Who? Why?

    The pattern leaves the US reliant on short-term funding to cover its trade deficit. This is a well-trodden path to crisis, as Latin America can attest.

    The Fed is boxed in by the dollar, and by lingering inflation. Oil has jumped back up to $82. Copper is over $8,000 a tonne again. Wheat has risen 70pc in a year. Gold has kissed $750, the ultimate reproach.

    In the first eight months of 2007, the US consumer price index rose at an annual rate of 3.7pc. It may nudge higher in November and December as base effects kick in. A headline rate of 4pc is not impossible. Does Bernanke want that on his resume? He believes in inflation targeting, after all.

    The 10-year “break-even inflation rate” as reflected by the US bond markets jumped from 2.27pc to 2.37pc after the rate cut. The yield on 10-year Treasuries has risen from 4.48pc to 4.56pc. Watch those bond vigilantes.

    The `China effect’ of falling manufactured prices has gone into reverse. China’s inflation is now 5.6pc, thanks to their dollar-peg policy.

    My own view is that inflation will subside as the global economy tips over, but with a lag. It will set off a few alarms first, enough to seriously crimp the Fed.

    By the way, while I did not expect the Fed to cut a half point in September, I don’t not share the view that this was a reckless bail-out. It was entirely necessary, given the heart attack in the commercial paper markets – which have contracted $368bn in seven weeks, and are still contracting; and above all, given the speed with which the US housing market is collapsing.

    Robert Schiller is now warning that prices call fall 50pc in some areas. It is already well under way. (Interestingly, auctions of foreclosed buy-to-let properties in the UK are selling at 40pc discounts already – buy-to-let is Britain’s subprime)

    Yes, the Fed made a grievous error of keeping rates at 1pc until June 2004 – unforgivable in hindsight. It then fell asleep, claiming the subprime crunch was “contained” when it had in reality become systemic. But given the mess we now face, the September rate cut was fully justified.

    So batten down the hatches until the storm passes. By all means keep very long-term investments or isolated `rifle-shot’ plays that buck the market.

    Will it take a 25pc correction in New York, Frankfurt, and London to flush out the excesses? Or more? Japan’s Nikkei fell 81pc over fourteen years from a peak of 39,000 in December 1989 to a nadir of 7,600 in May 2003. Land prices in Tokyo fell by four fifths. House prices fell by over half.

    True, Tokyo delayed recovery with a bad mix of policies in the 1990s. But are the bubbles in America, Britain, Australia, Canada, Ireland, Spain, Greece, Latvia, Romania, Kazakhstan, the Gulf, Argentina, and above all China, really that different from Japan’s errors in the late 1980s?


    p.s. In Britain and most of Europe the letters "pc" mean "percent"


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