ABOVE & BEYOND THE WAR

Apr 09, 2003

QUOTES OF THE WEEK ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

"Morgan Stanley has revised downward the current economic growth of Asia by 10%, as a result of the feared SARS epidemic."

-STEVE MARS, BusinessReform.com (see below)

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"Don't chase war rallies. We're still on the dark side of the bubble, so further weakness may show up. We may even be back in a recession...maybe we never left." -JANE BRYANT QUINN, Newsweek, 4-14-03 "Coping in a War Economy"

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"Demand for gold exceeds supply by 50%. And as long as that remains true, this bull run is not over. If I am right, you can be assured of two things. One, this current correction in spot gold prices and in gold stocks is just that - a correction and not a downturn. And two, the best way to profit is to buy when everyone else is selling - that would be now."

-James Boric, SIMPLE SUPPLY AND DEMAND, 4-7-03

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"Why then are the markets putting so much faith in the monetarists view versus the Austrians view of the future? To put it bluntly, it best represents their business needs. Whether it is logical or rational has taken a back seat to hope and business need. No Wall Street firm is going to increase its sales of stocks and bonds by warning of the potential for continued economic contraction. So, for the most part, it is not discussed."

-ROGER ARNOLD, MyHomeLender.com (see below)

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"The war is Iraq is about history pushing to have the great debate we have put off for so long, to all our hurt. Whether it be caused by cowardice, stupidity, "spiritual warfare," or all of the above, the modern world is a collective stomach full of massive indigestion, periodically belching, but as yet unable to throw up all the turmoil and confusion within it. We desperately need a release and a convulsion, and may God grant us in His mercy this "gift" out of the current conflict. We need to put on the table and talk about a host of core issues which until this point largely have been controlled and "finessed" by the powers that be and the rhetoric which guarantees confusion because it plays to media ratings and the current climate of political correctness. Here are 12 important issues ..."

-DENNIS PEACOCKE, The Bottom Line, April 2003 (FULL STORY

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"Strong Market in Place...For [coin] dealers, demand continues to vastly outstrip supply of coins...today's collector/investor demand for U.S. rare coins is very healthy and powerful."

-CERTIFIED COIN DEALER NEWSLETTER, April 4, 2003

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"The price of gold fell again yesterday...dipping down to $322. Gold buyers are getting discouraged, which is what happens in the early days of a bull market. Two years ago, an ounce of gold sold for only $255. Even at today's price, gold is still up nearly 30% from its low 2 years ago. Is the bull market in gold already over? We cannot say. But never in the history of the world has a paper currency outlived gold. Maybe this is a New Era...but not likely."

-BILL BONNER, Daily Reckoning, 4-8-03

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"For the past eight weeks, the precious metals complex has been sinking. However, this decline must be seen within the context of a larger bull market dating back to 1999. My chart studies indicate that the recent pullback is ending -- and that the bull is about to snort again, probably soon after the Allies declare victory in Iraq. Longer term, the outlook for gold is favorable because the Federal Reserve is desperately pumping cash into the banking system in an effort to stave off recession and deflation. This policy has already weakened the dollar, and will continue to do so. As the dollar softens against other currencies, global investors who doubt the inflation-fighting resolve of the U.S. government will shift a portion of their assets into gold."

-RICHARD BAND, Profitable Investing, CBS 4-9-03

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"I believe one of the next great moves of God is going to be through believers in the workplace."

-BILLY GRAHAM, Billy Graham Evangelistic Assoc. (see below)

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ "Freedom is a hot topic right now, but sadly most people are fuzzy on the real meaning of it. To me, true freedom means being restrained from doing wrong, but being left alone to do what is right. In America today "freedom" means just being left alone to do whatever you want. However, the truth is an absolute, not relative. The Bible speaks of a "perfect law of liberty" in James 1:25, which conforms to God's laws and restrains lawlessness. Only a godly culture can establish true freedom, because true liberty and freedom is born from within."

-CRAIG R. SMITH, 11-01, Reply to Rediscovering Gold book review

MARKET NEWS DIGEST

Stocks lose way on Wall St. - CBS.MarketWatch
Profit, economic worries offset encouraging war news
By Susan Lerner, April 8, 2003

NEW YORK (CBS.MW) -- Uncertainty about the postwar economy and corporate earnings held stocks in check Tuesday, overshadowing reports that Saddam Hussein may have been killed in a bombing overnight.

The Dow Jones Industrials ended the day down 1.49 points at 8298.92 while the Nasdaq dropped 6.57 points, or 0.5 percent, to 1,382.94 and the S&P 500 fell 1.64 points, or 0.2 percent, to 878.29.

Treasury notes and bonds finished higher as did gold and crude futures.

The war in Iraq, concern over severe acute respiratory syndrome (SARS), the economy and terrorism are all converging to leave lots of uncertainty in the minds of investors, said Robert Spina, a senior vice president at Morgan Stanley.

Companies across a broad range of sectors warned that results would come in below expectations. RF Micro Devices, Mead Westvaco, MotherWorks, Arch Coal, See Beyond and Nautilus were among those issuing negative pre-announcements.

"With uncertainty comes selling," Kolano said. "Before we were using war as an excuse but now with the end definitely in sight we're starting to wonder what will happen with business spending and the economy, especially given the negative pre-announcement we're seeing."

http://www.cbs.marketwatch.com

More job searchers just quit looking - USA Today
By Barbara Hagenbaugh, April 6, 2003

WASHINGTON — Frustrated workers are calling it quits.

The number of working-age Americans who dropped out of the labor force — meaning they aren't working and gave up on finding work — rose for the sixth straight month in March, further proof the labor market is stagnant at best.

The proportion of people 16 and older who are in the labor force — looking for work or working — is at its lowest in nearly a decade, the Labor Department said Friday. A fifth of the 8.4 million people who are unemployed have been out of work 27 weeks or longer.

Allison Levine of Los Angeles has stopped hunting. The 32- year-old lost her marketing job in December 2000 and has been living with her parents for two years. She's tutoring kids and helping at a friend's wine education company to earn money. "I've just become disheartened," Levine says. One job she applied for had 2,000 applicants.

After having a baby in December, Amy Garner, 33, quit her job as a computer support specialist to find part-time work. But she's come up empty, and now Garner and her husband are considering selling their home in Richmond, Va.

"In the past, when I'd look for a job I'd get lots of calls and interviews," she says. "Now I'm not getting any calls."

With the outlook for the economy uncertain, CEOs have been reluctant to hire new workers.

A weak job market threatens consumer spending, which accounts for 70% of U.S. economic activity and has been holding up the economy for years. Workers who are nervous about losing their jobs may hold back on spending.

Contributing: Jim Hopkins
http://www.usatoday.com

Federal Reserve Considers Emergency Plan - AP
By MARTIN CRUTSINGER, AP ECONOMICS WRITER

WASHINGTON -- Confronting new fears of recession, the Federal Reserve is refining an emergency economic rescue plan that includes further interest rate cuts and billions of dollars in extra cash for the banking system.

The Fed's effort would be aimed at pulling the country out of a nosedive that has seen 465,000 jobs evaporate in just the past two months, raising fears among economists that the weak recovery from the 2001 recession is in danger of stalling out altogether.

"Clearly, the Fed is in uncharted territory," said economist David Jones. "I think they will try some experimental moves."

One key element hasn't been used successfully in a half- century.

Based on comments by Federal Reserve Chairman Alan Greenspan and other Fed officials, the central bank is expected to move beyond its traditional buying and selling of short-term

Treasury securities held by banks to the direct purchase of longer-term securities in an effort to influence long-term interest rates.

Also, Fed officials have indicated they are prepared in the event of an unexpected shock to the system to lend massive amounts of money directly to commercial banks to make sure that financial markets do not freeze up.

And as a third policy option, Fed officials have indicated they would explicitly state that if the federal funds rate is moved below its current 41-year low of 1.25 percent, it is likely to stay at the lower level as long as needed to get the economy on its feet - which would help investors' worries about a sudden jump in interest rates down the road.

http://www.ap.org

SARS shanghais international business - BusinessReform
by Steve Marr, April 8th, 2003

Severe Acute Respiratory Syndrome (SARS) broke out in Hong Kong, China, then in the U.S., Canada and other countries.

A pneumonia-like illness, most cases are in China, but fear of the spread of the disease is impacting the business climate in Asia and around the world.

Originally, the Chinese government denied the disease existed, and dragged its feet in public response, even to the point of putting out false news releases denying any problem. Now, what was a small local outbreak of SARS threatens and impedes the global economy.

President Bush has authorized a quarantine of victims in America, a practice being implemented in Canada as well. Hopefully, a no-nonsense approach in treating the 80 cases of SARS reported in the U.S. should halt the spread of the contagion here.

Of 2,300 cases worldwide, 80 have died, creating an international fear not seen in recent memory. Show rooms

in major Chinese cities are empty of customers, real estate sales are slowing and business meetings are curtailed or being cancelled.

Morgan Stanley has revised downward the current economic growth of Asia by 10%, as a result of the feared SARS epidemic.

The consequences could have been better minimized if the Chinese government had been open about the sickness at the onset of SARS; but then openness is not ordinarily a trait of the Chinese government.

Now fear of it has spread via the media to every place else. W arnings could have been issued and precautions better taken if the Chinese had been forthright. It makes you wonder: how many are sick or have died as a result their negligence?

http://www.businessreform.com

Nevada vs. the Federal Reserve? - Insight
April 4, 2003 By Kelly Patricia O Meara

As Insight reports this week, there currently are 60 different forms of currency in circulation throughout the United States, and the reasons for issuing this alternative money are as numerous as the currencies themselves.

While many have begun using new forms of currency to keep the money within their community, there are others, such as Bernard von NotHaus, founder of the National Organization for the Repeal of the Federal Reserve, who are intent on using it to publicize the populist claim that the Federal Reserve is illegitimate. Now it appears that even some states are beginning to question whether the Fed is constitutional.

A bill recently submitted to the Nevada Assembly Committee on Constitutional Amendments directs the issuance of Nevada silver coins. The act, now under consideration, states in part that:

- The purported delegation by the Congress of the power to issue money to the Federal Reserve Bank, a privately owned corporation, is a violation of the terms of the U.S. Constitution;

- The failure of the Congress to discharge its obligations to issue all the money pursuant to Section 8 of Article I of the Constitution absolves the state of Nevada from its constitutional obligation not to issue money;

- The state of Nevada shall issue into circulation coins of the state of Nevada in the amount of $50 million. The coins must contain 1 ounce of fine silver, must be alloyed to 90 percent fineness and must bear the Great Seal of the state of Nevada on one side and the words, "Contains One Troy Ounce Fine Silver," "Twenty Dollars," "Nevada Legal Tender" and the year of issue on the other side. The coins so issued are legal tender for all debts, public and private, in Nevada.

- If the Nevada Legislature determines that the U.S. Congress is fulfilling its constitutional obligation to issue money by requiring the Federal Reserve "to retire its circulating notes and causing the issuance of sufficient notes of the United States and other currency to meet the needs of the commerce of the United States and Nevada, the State Treasurer shall retire the coins authorized by this section as they are received into the State Treasury."

Nevada is the first of the 50 states to consider taking such steps against the Federal Reserve, and one has to wonder which, if any state, will be next. At a minimum, it's not good news for a Federal Reserve that has made printing money and manipulating the amount of money and credit in circulation into an art form, especially on its 90th anniversary. http://www.insightmag.com

COMMENTARY

LOOKING BEYOND THE WAR- Craig R. Smith, CEO, SATC
April 9, 2003

[A sample question from the new Savage Truth CD -- featuring Craig R. Smith and Michael Savage ...

SAVAGE: Craig, now that we are at war, how's it going to effect the economy, stocks, the dollar and gold?

CRAIG SMITH: Mike, that's a very big question. The end of the Iraqi war appears to be in sight now, thankfully. But taxpayers will now have to pay the bill -- an estimated cost of $100B to as much as $300B, including the clean up and rebuilding of Iraq. That's a lot of money, about $2,500 per family! And another burden upon our already weakened economy.

So, the financial markets will remain very volatile, given the uncertainty factor, the continuing terrorist threat and the possibility of chemical/biological warfare cannot be ruled out.

Stocks keep trying to rally, but will soon fall back, in my view, based on lacking corporate earnings and high price-to- earning ratios -- even after 3 1/2 years of falling stock prices!

The dollar is perhaps our greatest wild card right now, with the Euro challenging it as the world's top currency.

Then there's the inflationary threat from Greenspan's FED and the fact that they're printing money like crazy to make sure the U.S. does not slip into a deeper recession or worse.

Gold, on the other hand, is doing just what it's supposed to in the early stages of a new bull market. The war premium has already been factored out and the next phase should bring gold back over $350 this year -- a fact that even CBNC's Lawrence Kudlow now agrees with.

As usual, higher quality gold coins are holding steady, despite the war, and like gold, are poised for tremendous growth in 2003...which is all covered in my free magazine, The New Gold Rush! Read Introduction

FULL STORY: NEW EDUCATIONAL FEATURE LAUNCHES ON SAVAGE NATION

THE UNTOLD STORY OF GOLD - Dr. Fred Goldstein, SATC
November 1999 (excerpt, Rediscovering Gold in the 21st Century)

Throughout this millennium, civilization has had a tremendous appetite for gold. As a symbol of beauty and wealth, it has been desired by the New World explorers as well as the new "Eurodollar" bankers. Whether hunting for lost treasures or exploring new frontiers, mankind has made the ultimate sacrifice in its pursuit of the yellow metal.

Given the rich history of gold, I marvel at the countless articles written in 1999 discussing its diminished role as a monetary asset. While nations once waged wars to get their share of the precious metal, recently central bankers of Belgium, Netherlands and Australia have sold their gold at astonishingly low prices. It was truly astounding that Australia would sell millions of ounces of gold, driving the price down and diminishing the value of their in ground gold reserves in order to invest the proceeds into fixed income assets. Leave it to politicians and bankers to violate two fundamental economic rules; VALUE AND TIMING.

Even more damaging to the gold price over the last few years has been the practice of gold loans by the large bullion banks. It had been a common practice for these banks (having large positions of gold) to loan the metal to gold mining companies at low interest rates. The mining companies could repay the loans at the time of their production. Rather than speculation, this is referred as hedging in the industry. An analogy would be a farmer who harvests corn in September, but sells the May contract when the prices are high so that he is guaranteed a nice profit for his future harvest. The bankers were making interest on a non-working asset (gold) and they decided to expand their gold loans. Large brokerage companies and hedge funds were now taking advantage of low interest gold loans at 1-2%. Here is where the hedging ended and the speculation began.

MURPHY'S LAW

About two years ago, Mr. Bill Murphy (a.k.a. Midas@www.lemetropolecafe.com), a former professional football player and long time commodities specialist, formed the Gold Anti-Trust Action Committee (GATA) to look into allegations of collusion and manipulation in the gold markets.

GATA hired Berger and Montague, a prominent anti-trust law firm, and gathered the support of the large gold mining companies. Together they went to the international press and the US Congress to report on the reckless gold loans of the bullion banks. Apparently, the hedge funds and brokerages that borrowed the gold at 1-2%, sold the metal in the futures market and reinvested the proceeds into significantly higher yielding investment vehicles. As long as there was a continuous new supply of gold being loaned and sold, the price would continue dropping. It was then profitable for the funds to cover their short gold positions and buy back the metal at a lower price. If one sells an item high and buys it back low that is a guaranteed profit in the commodities futures market.

GATA and Murphy were dumbfounded as to why the price of gold continued to drop while the prices of basic commodities (e.g. oil) were rising during the early part of the year. The last "outrage" occurred just when gold was rising in May to approximately $290/oz. Out of the blue, the Bank of England announced it was selling half its gold supply. However, before the first sale of 25 tons, the price plummeted $30/oz. The Brits had lost millions of pounds prior to the sale! ...

FULL STORY

WE ARE ALL KEYNESIANS NOW - Roger Arnold, MyHomeLender
April 7, 2003

This is the famous quote attributed to President Richard Nixon when he ended the international gold standard in the early 1970's. What he should have said is that we are all MONETARISTS now; which is clearly what he meant. In other words, it was a vote for and acknowledgment of the benefits of having a fiat currency system over a fixed or quasi-fixed system. The implication being that central banks can control the business cycle through manipulation of currencies and rates.

Given the current equity run this is exactly what the markets believe today as well.

However, the divergence of the worlds financial markets and economies is rarely as wide as they are today. The war rally is causing extended gains in stock and bond markets all over the world while simultaneously causing losses in Treasury and gold markets all over the world.

This is the reversal of the flight to safety that ensued prior to the beginning of the war in Iraq.

Be careful however and makes sure you understand the arguments for and against each view of the future.

The momentum is right now behind the equity run and could cause it to extend even further as markets begin to move from a war rally to war euphoria mode, and then to expectations of renewed economic activity.

There is nothing wrong with a war rally or war euphoria, a reversal, at the margin, of the flight to safety that ensued before the war began. But, the war euphoria is now running headlong into a full blown prediction of an increase in economic activity this year; which according to wall street and the worlds central bankers will be the result of cheap money being made available to the market by the central banks.

This is the principal behind monetarists philosophy. Don't worry, the FED will always be there to mitigate the slow down with cheaper and cheaper money as necessary, until the economy rebounds.

This is the equivalent of the markets predicting that the thin economic ice they are standing on that is actually melting more quickly now, solidifying underneath them and providing the foundation and justification for their preemptive increase in value.

All of this is occurring at the same time most wall street economists now predict that the FED and ECB will have to lower rates further in the US and Europe and Morgan Stanley is now predicting another world wide recession, becoming apparent this year.

So the economists are telling us that the economies of the US, Europe and Japan are likely to continue to slow or contract. Business leaders are telling us they have no substantial plans for expansion and instead are marginally tilted toward further job cuts and internal consolidation. Both of these views validate the Austrian model and concerns.

On the other hand, the monetary and fiscal authorities are saying that rate and tax cuts are not necessary right now and that they will take a wait to see what happens after the war attitude. Wall street is almost unanimously predicting increasing rates of return in equities and economic activity which will then justify the speculative increase in equities ahead of it. Both of these views are supported by monetarist economic theory.

I don't know which philosophy will prove to be most right. I know that so far, over the past three years, the economy has played out exactly as the Austrians have been predicting and exactly not the way the monetarists have been promising.

Why then are the markets putting so much faith in the monetarists view versus the Austrians view of the future? To put it bluntly, it best represents their business needs. Whether it is logical or rational has taken a back seat to hope and business need. No wall street firm is going to increase its sales of stocks and bonds by warning of the potential for continued economic contraction. So, for the most part, it is not discussed.

But, remember, markets are not self validating.

FULL STORY
MyHomeLender.com

LIBERATE AMERICA NEXT!- Roger Fredinburg, NewsWithViews.com
April 7, 2003

It simply amazes me to watch our military in action as they cut through Iraqi defenses like a hot razor through melted butter. 'Liberate the Iraqi people' is the mantra and everyone joining in the chant seems driven to free these poor down trodden 3rd world troglodytes.

Certainly we agree that Saddam is a murderer, tyrant and a sociopath. Saddam is a psychotic mad man who really does need to be exterminated.

Let's look a bit deeper into the Iraqi culture and make a few comparisons.

The Iraqi's don't pay any direct taxes, have minimum restrictions on starting businesses, free medical care from cradle to grave, no property taxes, no sales taxes, minimal zoning and planning laws, free college education with daily meals provided in the campus cafeteria. Iraqi's are encouraged to own guns, have virtually no crime, no homeless (the Bedouin's choose their nomadic lifestyle), Iraqi's are free to travel, write, create, make art and worship their God.

The state funds it all with natural resource development. I could go on but I think the picture is clear. So where's the tyranny?

The one area where there is no freedom is in the political arena where absolute faith and loyalty to Saddam's regime is required, or else. The brutality is well recorded, the torture, murders, rapes and violent resolutions. No jury of peers, no objective judges, sheer punishment without regard for justice.

Bottom line, the Iraqi people are controlled by fear.

I used to laugh at the Libertarians. Liberty I thought came with due diligence and a strong adherence to common principles and historically established community standards. I think I am right, but the Libertarian message is looking better to me all the time.

I just want my freedom back. I don't want to overthrow the government, start a civil war, protest in the streets or terrorize my fellow Americans. I just want my freedom back!

I am proud of our President and his efforts to free the Iraqi people. I pray we succeed and open the door for democratic forms of government to spread to the rest of the world, especially the Middle East and Northern Africa.

I am haunted however by that age-old adage "be careful what you ask for…you might just get it".

I am praying for our success, our President, the troops and their families, the innocent Iraqis and for the leaders of this war effort.

But, I would ask you to consider what freedom is, and what it isn't. Let your congressman/woman and President Bush hear our call to liberate America too, liberate America next..

Otherwise what's the point?

FULL STORY

[Listen to Roger Fredinberg live M-F 10-1am ET on RadioAmerica ... Roger's site ]

HIS PRESENCE IN THE WORKPLACE - Billy Graham Center, NC
April 8, 2003, The Billy Graham Training Center

ASHEVILLE, N.C. (ANS) -- Nearly 300 pastors, marketplace business leaders, and workplace ministers made an unprecedented commitment Thursday to collaborate in affirming the Western marketplace as a platform for the Gospel.

These segments of the faith-based community descended upon the Billy Graham Training Center at The Cove in the mountains of Western North Carolina for a three-day conference designed to create an action plan to bring God’s presence into the workplace. Billy Graham says, “I believe one of the next great moves of God is going to be through believers in the workplace.”

Christian representatives from throughout the United States and six other countries affirmed their unified commitment to workplace ministry with an intentional focus on equipping

men and women in all spheres of work and society to understand and experience their work life as a holy calling from God. Mission experts in recent years have focused on “the 10/40 Window” in an effort to bring the Gospel to unreached people groups. This conference focused on the new mission field of “the 9-to-5 Window” in the workplace.

Pastor Ron O’Guinn, director of ALLOFUS Ministries, says, “The new mission fields will be inside the walls of [the workplace].” The Billy Graham Evangelistic Association’s New Ventures in Evangelism Training has identified workplace ministry as one of three top emerging moves of God. The leadership team and advisory council of the conference came from across the United States representing a full spectrum of the faith-based working community.

For information contact: Eva Greene, egreene@thebgtc.org

David Bradshaw is the editor of Swiss America's Market News Digest and Real Money Perspectives. He is the founder of Idea Factory Press... publisher of Rediscovering Gold in the 21st Century... and The Big Picture...Contact at ideaman@swissamerica.com