The Coming Economic Depression

New readers take note: This is a long running series of Articles that begins here

Hurricane Ivan wrought a great deal of destruction to the American south. The spate of disastrous weather is unprecedented and the damage will prove to be as well. Much of the damage we hear about are homes and buildings that are damaged or destroyed. Flooding is also a major problem in some areas. Many counties have been hit twice and even three times by the weathers assault on the south and Florida in particular.

Eqecat, a firm that serves the insurance industry says that the combined insurance losses of all four hurricanes could be between $15-20 billion dollars in Florida alone. Keep in mind that these are not total losses but only insured losses. For example those that did not have comprehensive coverage on their Auto's and had their cars destroyed or damaged by these storms will not get insurance money and thus are not counted. This includes those who have limited property damage coverage on homes, Boats, businesses etc. I am not an insurance expert but these estimates seem a little on the low side. I say this because estimates after Ivan were estimated at between 6 and 20 billion dollars and now we have roughly the same estimates for all hurricanes including Jeanne which some claim was the worst of them all. Granted these are all really just guesstimates by professionals and since this firm services the insurance industry it is wise to remember that it would not want to rattle the markets with estimates of lets say up to $50 billion total insured losses by making such an estimate public. Questions would be raised as to whether or not the insurance industry could afford to pay all insured losses. Also of note, the Insurance Information Institute has estimated claims of 21.7 Billion. In any event, this is going to be a difficult time for adjustor's and from a purely statistical perspective, because they will have to determine which damage came from which Hurricane. So even after all is said and done a couple of years from now, it will all be pretty much guess work except for the cumulative insured totals actually paid. I have not been to these states and am relegated to seeing the damage only on TV news clips and Internet pictures. Hardy scientific, but this much can be counted on, the economic devastation these four hurricanes have wrought is very significant and will have a negative economic effect though probably not on the cheerleaders on Wall Street, who are probably buying up stocks of famous hardware store chains, and predicting a boom in home building. The real issue when it comes to rebuilding will be two fold from a practical perspective. Will the insurance money actually paid out to the insured cover the actual costs of rebuilding, given the significant price increases in materials anticipated or will it be just enough pay off the first and second mortgages? This may be the unwritten story as we move into 2005.

There does seem to be a callous attitude when many economists look at the devastation in Florida as they seem to only look at the potential profit, increased economic activity and profits that can be made from these tragedies. This is part and parcel of what is wrong with this nation. Everything is reduced to economic spin and profiteering. There are many dimensions to the this recent spate of successive 'meteorological Divine chastisement incidents' other than money and how to make it (or steal it). Unfortunately, this seems to be the only thing our media, and Wall Street are interested in; the devils paper, also known as money.

In addition to the enormous property damage inflicted by these monster storms there is another troubling development transpiring that being in the oil sector. Hurricane Ivan hit the oil rigs in the Gulf of Mexico pretty hard and has significantly slowed production. Many rigs were adrift. Rather than paraphrasing their report here is a section from it.

Preliminary assessments of major damage reported by industry indicate the following:

5 Mobile Offshore Drilling Units (MODU) were adrift. All have been located. One MODU was reported to be leaning about 3 degrees. Companies are in the process of reoccupying these facilities to assess the damage onsite.

1 Platform rig derrick was seen leaning over the edge of the SPAR on which it was installed.

13 Pipelines leaks were reported – 1 resulted in a fire which is now burned out.

These outages are having an important effect on oil refining in the US and this fact is one of the reasons that Oil has shot up to over $50 a barrel in New York, an all time record. This coupled with unrest in the Nigerian oil industry is driving prices higher. There is little margin for error in the oil industry and the fact that wells and refineries must run at capacity just to keep prices below $45 a barrel without disruptions should tell you something. Sadly the oil industry seems to have a vested interest in not building more refineries. In fact in California, Shell is planning the closure of one important facility and it has sparked a great deal of controversy. Documents show that this refinery, located in Bakersfield is one of Shells most profitable in California. Advocacy groups are charging that Shell is closing this refinery, not for any reason stated by the company, but simply to drive up prices. More on this can be found here.

It appears (and I could be wrong) that there is a strong profit motive in keeping some of these facilities idle and thus driving up the prices consumers must pay. The President recently authorized the release of some of our strategic reserves just 6 weeks before the Presidential elections. No doubt the specter of people paying $2.70 for 'regular' at the pump to get to the polls on election day may have startled the Bush administration and an artificial and temporary increase in the supply was in its own best interest.

Thus the recent spate of Hurricanes and the economic fallout from them will deeply affect the US economy in the coming months and years.

Profits and America's largest corporations (excluding drugs and oil) seem to be becoming mutually exclusive terms, generally speaking.

Auto sales are sagging at America's big Automakers. The commerce Department reported that car sales are down for the year on an annualized bases down to 5.2 million cars from 5.5 million last year. Ford posted a 7% decline in auto sales in August, Chrysler reported a 6% decline as compared to last years August figures, GM reports a 7% decline compared to the same period. The auto industry is certainly having some problems. Much of the downturn is attributable to rising Gasoline prices. People who were big on keeping up with the Jones' and making a major SUV or Luxury car purchase are holding off, realizing that higher gas prices may be around for a while.

These declining figures are very telling as the big three are offering some very enticing incentives to get people into new cars. One could ordinarily say that these declines are partially due to the generally perceived poorer quality of American Auto's. Yet, even Honda has posted declining sales figures for August.

These figures do not tell of recovery but of recession. Plain and simple. People are not buying cars like they used to. I frankly shun new cars for several reasons.

The auto industry will eventually go through some major convulsions. In every US auto made, over $1300 of the price goes to pension and health care benefits for Auto Workers. That is more than it costs for steel. The big-three are at a competitive disadvantage to their Japanese Counterparts whose workers are also in the US because they do not have the number of retirees and their family members. What is the same cost per car/benefits ratio for Honda? $107. Now perhaps one can better understand why the big three want to cut costs, as America health care costs continue their rocket propelled ascent and pension assets continue their rapid decent into the netherworld.

This has the potential to become a serious crisis. The city of San Diego may very well have to declare bankruptcy in the not too distant future and yes you can spell that Chapter 11. Why? Well, two basic reasons. The first appears to be accounting irregularities and the other ballooning pension liabilities. The City sent out a notice stating that there was a more than $1 billion dollar shortfall in its retirement system. Needless to say their credit rating dropped, the SEC is investigating and lawyers have been retained. The report on investigation can be found here . How could one of the richest cities in the nation get into such a fix? I will quote from three paragraphs in the report and make a very brief comment:

The City of San Diego has developed an expensive retirement system for its municipal workers that it has failed to fully fund under the actuarial principal that pension liabilities generated today should be funded today, not passed off onto future generations of taxpayers. This situation evolved in piecemeal fashion through trade-offs between City management and its municipal unions, in each instance reflecting the short-term time horizon of the City’s budgetary process. - Page 10

As a result of its historically strong anti-tax attitudes, San Diego is a low-revenue city. Like other local governments in California, San Diego’s budget is affected from time to time by reductions in funds received from the State. The costs of providing public safety and maintaining quality of life increase with the costs of providing its workforce with a compensation package competitive with that of other communities. San Diego is also a city with strong municipal unions. These factors have repeatedly combined to place the City’s budget under significant strain.- Page 10

Many of the measures used to shift City liabilities to SDCERS into the future applied the dangerous and widely misused concept of “surplus earnings.” Surplus earnings are defined under the Municipal Code as the realized returns on SDCERS assets above the rate projected by its actuary as necessary to pay its future liabilities when due. The view that whenever cash returns exceed the long-term actuarial benchmark the result is “free money” violates another actuarial principal. Returns on assets are projected as averages over decades. It is assumed that returns will fluctuate over time, with strong returns in some years offsetting weak returns in others. When, instead, above-average returns are defined as “surplus” and siphoned off for other uses, the result may be the depletion of the system’s financial strength.- Page 10

While glancing over the report one finds that 'smoke and mirrors' accounting is still alive and well in America. What was done in San Diego does not appear to be illegal, just a lot of very sloppy work, rosy assumptions and the inability of its political leadership to deal with fiscal reality. The city was warned repeatedly. One trustee for the fund, Diane Shipone called the the City's fund a 'municipal Enron'. Nobody listened. She warned wrote opinion pieces in the local press and spoke to any who would listen to her warnings, but she was largely ignored. This is seems to be the story in most of these major financial scandals; ignore the warnings, attack the messengers, deny there is a problem and keep on spending money you don't really have.

Airlines are another story all together with United still in bankruptcy struggling to come up with and exit plan and US Airways recently filing for Bankruptcy. US airways warned on the 28^th of September that if the Judge does not impose a temporary pay cut on its union workers, it may be forced to liquidate. These are the major airlines that have already filed. There is American Airlines that has already stated that it is seeking a new line of credit. It is the world's largest and trouble here will definitely send some shock waves through the economy. American Airlines is now considering charging for food and raising fares. Competition from budget carriers and rising fuel costs are seriously undermining the carriers profitability. Delta has had to go to on board snacks rather than meals on its flights because of a dispute with its caterer. The food service provider is obviously worried that Delta will go bankrupt and they won't get paid for services previously rendered. Delta, not wanting angry passengers, is giving its passengers vouchers. It seems that a Delta Chapter 11 filing is a real possibility and those doing business with them are protecting themselves. You see, airlines cannot remain profitable with fuel prices hovering around $45-50 dollars a barrel. They must either cut costs, raise fares or both. This is one reason why it is important to watch negotiations with Labor, in particular the pilots.

Other earthquakes are also rumbling underneath the economy that could effect profits namely two issues, one covered in last months update; pensions and the other has been covered quite a bit in previous updates and will be looked at again further down this page, namely Fannie Mae.

Corporate Profits are far from spectacular as Dr. Kurt Richebächer pointed out in a recent article. He says that corporate profits peaked in 1997 Non financial sector profits stood at 426.2 billion compared to 504.5 Billion in 1997. The article goes on to describe trends in Corporate profits.

There is a similar drastic divergence in profit performance within the manufacturing sector. Profits of the producers of consumer durables and capital goods have generally collapsed into persistent losses. In 1998, they earned a collective net profit of $83.4 billion, accounting for more than 50% of total manufacturing profits. By 2000, this had shrunk to $60 billion. But in 2003, a year of recovery, they ran a collective net loss of $3.5 billion. It is most important to realize this extreme divergence in the U.S. economy's profit performance because it is symptomatic of the marked, structural distortion that has been going on in the U.S. economy. Most remarkable, certainly, is the persistent savage profit deflation of the producers of high-tech equipment, unquestionably due to fierce competition. It is needless to say that persistent losses are prone to choke new investment. - Kurt Richebächer

The thing to watch for in this authors opinion, is the real booked profitability of America's corporations as this will tell if we enter a brand new phase of the great economic shakeout and restructuring that began in 2001.

When the central banks announce major gold sales that usually means that the price of Gold is higher than they would like and they will attempt to draw the price down by having another 'gold sale parade'. These loud and uncharacteristically public events (as far as Central bankers go) are designed pretty much to do what Saudi pronouncements of oil production increases are designed to do. Namely, effect the price of the commodity today on the promise of some actions that may or may not be actually taken at a later date.

These announcements are not at all unusual. What remains to be seen is how the German Central Bank and others in Europe decide and what they actually sell. The Germans see gold as a hedge against an unpredictable dollar and know that having the precious metal in reserve is a good bet in uncertain economic times. Thus the recent announcements seem to have a different flavor about them than previous announcements. There is caution in the wind and this caution is leading the worlds Central bankers to hold onto their gold and keep an eye on an increasingly debt ridden US dollar. As many of you may have guessed, I and many people like me have ceased to listen to the dribble coming out of official statements and media commentators. I watch what these rich men of the earth actually do, rather than what they and their paid mouthpieces say.

The weekend this article gets published on the web, the G7 finance ministers will be meeting. The dollar is going to be a key issue in the G7 Summit. Some are discussing a dollar devaluation of about 20%. Doubtlessly, the state of the US dollar and its gargantuan twin deficits will be on the agenda. The key thing to watch for is any sign that China is considering unpegging its currency from the dollar. This would bring the Dollar down against Asian Currencies and assist the US Corporations that still use US labor and are under US laws and are competing in Asian Markets. Yet this is unlikely to happen. China has its own problems right now and is not likely to cripple its own economy with a more flexible currency. I do not look for any major movement in the dollar just yet, though many technical experts have been warning of a serious drop in the near term.

[Note: A new development took place as I was proofing this article. That is that China has agreed to move steadily towards a more flexible currency. This could assist America in its twin deficits but could be bad news for the Dollar. The Chinese have given no time table and when they actually beginning to make concrete moves in this direction is anybody's guess.]

Fannie Mae may or may not... restate earnings. The derivatives bubble is slowly beginning to show some real cracks in the foundation and Fannie is probably the worlds largest risk intermediary (it's really a glorified government sponsored hedge Fund) Accounting shenanigans at Fannie are no surprise to anyone who has watched the entire financial system institute what can only be described as 'creative accounting' rules to better facilitate America's new klepto-economics. wheather or not any laws were actually broken is a matter for the lawyers to decide. The real problem with Fannie is a lack of diligent oversight, laws that are not designed to be followed but only provide in effect, 'suggestive guidelines' for behavior. But it does look like some of their activities pushed the edge. You see, Auntie Fannie had a cookie jar. Yes this cookie jar was made up of a reserve of funds that were improperly deferred, the amount was $200 million. Why did they not expense these funds properly? They wanted to give maximum bonuses to the executives for the year, and take cookies from the jar that they shouldn't have.

In addition, Fannie Mae used other accounting procedures that were not in keeping with GAAP. What Fannie did was somewhat complicated and an explanation would take more than this article will allow. An excellent article on this and other problems with Fannie Mae can be found at the Prudent Bear site in an article called the Trial And Tribulations of Risk Intermediation Folly, by Doug Noland. Now the SEC is investigating. But let is keep this in mind, the SEC is really a toothless wolf, he can only gum you to death, they have no real criminal prosecution ability, only civil actions can be initiated by the SEC. This is a long story but suffice it to say that Wall Street's influence on federal law enforcement is probably more significant than the President's in a purely de-facto sense. Yes the toothless fox guards the hen-house and those executives know that no matter how many games they play with the balance sheet or how much money they steal, they will not go jail.

Fannie refused to follow-up with concerns raised in 2003 by a former Fannie Mae Accountant, Roger Barnes. Just like the situation in San Diego, someone tried to warn the politicians. Fannie apparently did take some of the advice of the accountant but not all. Fannie has about $1 Trillion in assets. What has been the effect of these accounting irregularities? Well Fitch Credit agency has downgraded Fannie Mae and this could mean is that Fannie May could be forced to curtail its mortgage underwriting, especially for low and middle income families. This is unwelcome news for the average American, not good news for the economy as a whole as mortgages are the primary engine of the US economy today. Fannie has an enormous effect on derivatives which, by the way, increased 4.5 trillion dollars to $81 trillion in the second quarter of 2004, according to the US Comptroller Of The Currency.

What all of this means and this is not a politically correct topic but knowledgeable people are suggesting that Fannie Mae appears to be (now) in some sort of receivership and this fact is being kept from the public to keep the market from tanking in an election year. Let us keep in mind that defaults in FHA housing are growing, from 5.3% to 5.95% for single family homes.

Since this is the last update before the November elections I want to spend discuss a few things about them. Anyone who has spent anytime on this site knows that neither the Democratic nor Republican parties or their candidates are of any practical value as far as I am concerned. They are parties that represent the most despotic interests that reside in America. Neither has the interests of average working Americans at heart, though they may claim to at election time.

Let us take a brief look at some of the policies the candidates say they stand for on major economic issues.

One of the things that Kerry has over Bush is to expand health care coverage for average Americans. This is really good news as some 30 million Americans do not have any coverage and that number is expected got grow significantly. The bad news is that no one know how he is going to pay for them, I mean pay for them in reality instead of just on campaign embossed 81/5 x11 paper. His plan is projected to cost $650 billion over the next 10 years, he says that he can pay for it using the PAYGO rules and increasing taxes on the rich. Children of families making less than $55,000 a year would be eligible for health care, as would singles making under $18,000 a year. He would also provide tax credits to business and workers between Jobs. Kerry's plan is comprehensive and, if implemented, could assists a lot of people. His plan also purports to assist in reigning in high health care costs.

When it comes to taxes there is nothing new here. The Democrats want to raise taxes on the so-called rich (with lots of loopholes for their friends and campaign donors, of course). Yet Kerry's plan also wants to change corporate tax policy to encourage large corporations to cease sending large plants and jobs overseas. He wants to make it more expensive for corporations to do business overseas. He believes that the changes he is proposing could raise a $110 billion over the next ten years. Critics charge that the incentives are too small to give corporate hiring practices a nudge in any direction and that any credit that a corporation may receive would only be taken for hiring they already plan to do.

Kerry also plans to crate a trust fund to fund renewable energy called the Energy Security and Conservation Trust. The plan sounds good as it wants to reduce dependence on fossil fuels and focus on renewable energy. Now as usual with any such plan the money usually gets funneled to campaign donors and not much really changes, but the plan is an ambitious one and one that could work if it isn't corrupted, like everything else Washington gets its hands on.

Kerry's policies sound good on paper but his record in Congress leaves much (very much) to be desired. He is wishy-washy and like most congress-critters, speaks one way and does according to the highest campaign donors.

Bush economic record has been largely negative for average Americans. Here are some basic facts. Since Bush has been President America has;

The official unemployment rate remains low only through government statistical chicanery and fraud, an issue covered at length in earlier updates. These realities may not be found in the Bureau of Labor Statistics monthly employment fabrications but can be found in such less well known statistics as mortgage foreclosure rates, the booming business of the repo-man (auto repossession), credit card default rates, the number of people on state and federal unemployment roles, and the number of 'dead' small towns that are becoming a growing part of the American landscape. You see the US Chamber of Commerce thinks it is a good idea to ship your job overseas and it should be no surprise that they are strong supporters of Bush.

This destruction of jobs is taking place in the midst of record amount of fiscal stimulus provided by the ever pliant and obedient Mr. Greenspan. This, is in my opinion a key cornerstone of the Bush Presidency. Shipping American jobs overseas is not a fluke and Bush is not taking unfair criticism for things that are out of his control. This is a conscious and determined policy of this administration.

Tax relief under Bush has been abysmal for most Americans. Now please understand, he has lowered taxes. That is, he has lowered them for his rich friends and corporations. Yet the burden has shifted to those his polices has and is throwing out of work. The Congressional Budget Office has found that households with income between $51,500 and $75,600 saw a substantial tax increase from 18.7% to 19.5%. At the same time those at the top 1% of all households saw taxes fall to 20.1% from 22.2%. Those who are not in the upper 1 percentile and still vote for Bush should donate their brains to science, perhaps one day, in the not too distant future, they can give it to someone who will actually use it.

Bush now wants to ship America's Social Security trust fund to Mexico in an agreement that would allow Mexicans to collect benefits... Well. I won't rant about the Bush economic record, either you are among the growing number of thinking Americans or your brain is still stuck in idle. This plans purpose is clear, to encourage a flood of illegal immigration to drive down wages in America, bankrupt Social Security and reorganize (or destroy) America's pension system. Every single gain Labor has made over the past 50 years is in the cross-hairs of the Bush administration.

Sadly what we have in America is essentially a one party system. There are differences between to the two major party. But economically, these differences amount to whether we will increase the national debt by 30% over the next 4 years or by 70%. The real choice of significantly reducing our debt is not on the table. Another difference is between tax breaks (or disincentives) for large corporations to attempt to stem the tide of the flood of loss of jobs. Neither candidates is against the free trade agreements or has talked about renegotiating them. These agreements are the root cause of the current trend of job relocation out of America. Why are they not talking about this? Because the people who fund both parties enthusiastically support these agreements and want to pay you much, much less for considerably more work at your place of employment. Neither is talking about the serious problems in social security and the the pension fund crisis. How can these issues be skirted by candidates? Simple, the media is owned by the same corporations that fund these two front men and have no intention of asking the tough questions about jobs and pensions because they are the ones destroying both! This election is a sham, a lie, a deceitful trick that will fool 90% of the voting public.

Rather than try to summarize what the third parties stand for I will provide some links for curious people to click over to. This does not constitute any kind of endorsement though I confess to my readers that I will vote and I will vote 3^rd party but I will not tell you which one so do not write me to ask. I do not subscribe the the fact that we should not vote because there is no choice. There is a choice but finding alternatives requires effort and whining about the two mainstream candidates will not change things. For those who say that a person 'throws away his vote' if he does not vote Democrat or Republican, I say this; the only way a man throws his vote away is if he votes for someone he does not want in office. That to me is utter folly. There is a choice, it just takes a little courage to make the mental leap to vote for real change.

On a final election note it is clear that many events will transpire before the election. Dr. Faber has warned us to watch for a pre-election rally. As mentioned earlier the President is releasing oil from the strategic reserves and the National Security Council is looking very hard at 'precautions' to be made during the elections. Alex Jones has an excellent audio file describing how the Texas National Guard will be activated and deployed on election day. My other sources make it clear that this is likely to happen across the nation. While preventing a possible terrorist attack will almost certainly be the stated reason for such an unusual deployment of American troops, this administrations previous national security pronouncements have lacked veracity, and thus I am personally somewhat unnerved by such a militarization during US Presidential elections. When one considers that many reports are coming out of key states where voter registration rosters appear to be in the process of being culled, new registration drives are being deliberately hampered by administrative roadblocks and the Voting Machines in many places are highly suspect, we may see not only a repeat of 2000 election but something much worse. I hope I am wrong but should there be a close election and fraud is suspected it is very likely that the mobilized troops could be used by the President to repress dissent and leave him in power even if he loses. The specter of armed troops removing ballots to be 'counted' at military facilities (with personnel personally picked by Rumsfeld and the President) is one that has come to mind as more than a passing thought. This may sound far fetched, but remember in 2000; in retrospect in appears quite clear that Bush lost not only the popular vote (not disputed) but also the electoral vote and was only allowed to win because he and his cohorts (the most prominent of which later got a seat on the Council on Foreign Relations for her services) pulled legally registered voters from the rolls for election day. Contrary to popular belief, people are not punished for breaking the law when it serves the establishments interests, the are usually rewarded quite handsomely. I think election 2004 will be an exercise, not in how to win an election but how to seal one.... and get away with it. It does not seem likely that people will sit back and let fraud go unchallenged as they largely did after the 2000 fiasco, hence troop deployments may be used to quell 'dissent' as well. This is not so wild a thought as recent election shenanigans bear witness to. Any way this is serious food for thought...

An under reported story revealed, mostly in foreign papers, that Citibank had some of its Japanese offices closed by regulators. Citibank's private banking offices were suspected of failing to prevent money laundering. This action shut Citibank out of a very lucrative business. Unbeknown to most, 'private banking' is often a euphemism for money laundering and tax evasion. Such banking is reserved only for the richest clients and banks usually aren't too curios as to how the money was obtained. Now this is the third time Citibank has run afoul of International Regulators and in Japan, it looks like they will be permanently banned from any more 'private banking' activities. Indeed it also appears, according to a story in the Strait Times, that they are also banned from participating in Japanese Government Bond Auctions. The two events are related as Japanese Ministry officials have confirmed. The Japanese are known for their discretion and surely wanted to keep details of the Citibank's activities under wraps. Yet one item in the news did appear in CRM buyer and sheds a little light, here is an excerpt

“The Securities and Exchange Surveillance Commission said Citibank in Japan violated regulations last year by making misleading statements, and by making loans to some customers conditional on their purchase of bonds. - CRM Buyer

In Europe Citibank apologized for executing an 11 billion dollar bond trade that angered Europeans. Its activities while not technically illegal, did violate an agreement made not to flood the market with gigantic trades. The trades sparked investigations in the UK.

When one considers that this is the Nations largest bank, its activities abroad reflect on America, American finance and, perhaps to a lesser degree, on America's own regulatory agencies. These activities should send alarm bells ringing in Washington, provided the Bank was not acting covertly in the interest of American Policy makers¹.

Finally, I want to strongly impress on all of my readers not to panic or let this series of articles put you in a state of perpetual fear over the dismal news transpiring in the global economy. Prudent precautions should be taken of course but panic decisions are almost always bad ones. Do not make investment decisions based on commentary contained in this series of articles. This pages are purely and exclusively commentary. Use your head and seek professional financial advise before making any important financial decisions. Professional advisers can be found in a couple of the links provided below. Many of you insist on asking for advice in e-mails and I must stress I am not a financial adviser and legally, I cannot give it on any level.

For those of you who have asked and were wondering, The Coming Economic Depression series is largely designed for all audiences. Most of the material on this site is biblically based. I make no apology for my views, beliefs nor the direction of this series has taken. These articles are deliberately secular in nature in the hopes that as many people as possible, both Christian and non-Christian will not fall victim to the financial scams of America's elite. God willing there will be more articles to follow and some minor changes in the tone and direction of this series.

Financial Sense Online An excellent web site dedicated to giving sound financial information as well as investment advice. This site also has one of the best internet radio shows around. Highly recommended!

Peak Oil - One factor that is already beginning to weigh on the US economy in is the fact that oil production world wide is set to permanently decline in the near term. This paper deals with this issue.

Disclaimer: The above article is commentary and is not investment advice. The author is in no way connected to the wall street gang and therefore cannot dispense financial advise within the parameters set forth by Wall Street and the legal profession, nor will the author attempt to do so. This article is not investment advise nor is should it be construed as such. Please do not e-mail me asking for financial advise. I cannot and will not give it on any level.

1It should be noted here that the Yukos affair is one that is still very much an important issue in the global economy. It was noted in my last update that a massive global ring of money laundering was used by elements involved in the Yukos scandal. It stands to reason that these events may have some bearing on this.