GOLD BULL II -Aug 5th news...

Drowning in Debt? -Paul J. Lim, USN&WR
Americans' love affair with plastic may have a messy ending if interest rates rise
By Paul J. Limm, U.S. News & World Report
Aug. 2, 2005

Household finances, like the economy, tend to run in cycles. Usually, when times are good, families assume things will be good forever, so they spend more and save less. When times get tough--as they did in the mid-'70s, early '80s, and early '90s--consumers tighten their belts, saving more and borrowing less.

But in the most recent downturn, starting with the bear market of 2000 and the recession of 2001, belts didn't get tightened. In fact, they were loosened.

Household debt rose from 96 percent of personal disposable income (consumers' take-home, spendable cash) in 2000 to 111 percent in 2003 to 113 percent at the end of 2004." Just the fact that it's growing isn't necessarily a problem," says Scott Fullwiler, an economics professor at Wartburg College in Waverly, Iowa. "My concern is that as a percentage of disposable income, it's at an all-time high."

At the same time, the savings rate--that's savings (not including home equity or investment gains) as a percentage of disposable income--has plummeted. It fell to 0.6 percent in May, down from as high as 3.4 percent in 2001 and 7.9 percent in the early 1990s.

Americans are saving less partly because they are spending more, often because it has been so cheap to borrow money to do so.

As the Federal Reserve Board scrambled to pump life back into the economy at the start of this decade, interest rates tumbled to historic lows. Borrowing to buy cars, furniture, and homes became a bargain.

But, as always, there comes a time of reckoning. Consumer debt of all sorts--from home mortgages to credit card balances--has shot up. In 2000, average household credit card balances stood at $7,842, according to Cardweb.com. That figure rose to $8,940 by 2002 and $9,312 last year. "There is an explosion in household debt taking place, and it's a serious problem," says Robert Parks, an economist and finance professor at Pace University's Lubin School of Business.

Households have to worry about inflation, too, says Cheryl Burbano, a planner with American Express Financial Advisors near Tampa."You're seeing key expenses rising, whether it's gasoline prices or the cost of health insurance," she says.

Of course, for individual households, the final debt blow may come out of the blue, as it did for Tracy Moore. As this decade began, the 37-year-old Southfield, Mich., resident had more than $20,000 in credit card debt but was unfazed. Then, shortly after the Sept. 11, 2001, terrorist attacks, Moore was laid off from her job as an event planner for an advertising firm. Within about a year, her credit card debt had ballooned to $40,000, and she had no choice but to file for bankruptcy.

"When you're forced to live without a credit card, you understand what it means to live beyond your means," says Moore. "But I'm an intelligent person. There's no reason I shouldn't have understood what it meant a long time ago."

[Ed. Note: The Commerce Department reported Tuesday that the personal savings rate fell to 0%, the lowest since a consumer spending binge in October 2001 and the second-lowest since the Great Depression.]

FULL STORY

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ONE NATION UNDER DEBT: U.S. debt explosion = dollar disintegraton by 2010 By Craig R. Smith, WorldNetDaily

Caution: Debt Crisis Ahead - Craig R. Smith...Gold is the monetary anti-drug because it does not feed the credit habit -- it is a 100% pure asset!

8-1-05 -- Home Bubbles Don't Deflate, They Burst - Gilbert, Bloomberg

Iran has nukes now – Let's quit fooling ourselves -Dr. Jerome Corsi
August 2, 2005
WorldNetDaily.com

The Washington Post is running today an "undisclosed sources" article designed to surface a supposedly new "National Intelligence Estimate" that says Iran is 10 years away from having an atomic bomb. Here we go again. The leftist mainstream media has launched its own pre-emptive attack against the Bush administration, hot on the case of making sure we don't get tough with Iran.

Last month, I traveled to Israel where I addressed the Knesset about the nuclear weapons threat represented by Iran. I told the Knesset that Iran's nuclear program was a "clear and present danger," and I stressed that the time was short. Iran has everything it needs right now to build an atomic bomb.

While in Israel, I had discussions with intelligence officials in the Israeli Defense Forces and with the Ministry of Defense. These discussions confirmed my worst fears.

Israeli intelligence estimates are that once Iran begins enriching uranium again, the red flashing light should go off. Once the mullahs reach the "point of no return," they can produce bombs on a constant basis – not just one or two, but a steady stream of atomic weapons.

The "point of no return" is defined as the moment when Iran has everything it needs to make a bomb, such that even a military attack couldn't stop them. That point is imminent, here right now, not 10 years away.

The Iranian Shahab-3 missile is also ready to go, with tested solid-fuel capability that could reliably hit Tel Aviv with an atomic bomb any day now. Hezbollah sleeper cells are in place in American cities waiting for the delivery from Tehran of an improvised nuclear device. We do not have the luxury of 10 years to deal with this problem, despite what some disgruntled source within the U.S. intelligence establishment may want the Washington Post to think. The Atomic 9-11 plot is in full swing as you are reading these words. The attack could happen any day.

FULL STORY

San Diegans Vote to Keep The Cross, ACLU fights -CRS
"Symbols come down little by little, just like they did in Nazi Germany in the 1930s."
By Craig R. Smith
Worldnetdaily.com
Aug. 1, 2005

"Extremism in the defense of liberty is not vice...moderation in the pursuit of justice is no virtue."
-Barry Goldwater, Acceptance speech, 1964

A troubling sign in the city of San Diego surfaced last week that's becoming the norm instead of an exception: Low voter turnout in municipal elections based on apathy.

Last week, by a margin of 76 to 24 percent, San Diego voters passed 'Proposition A' to protect the cross high atop the Mt. Soledad National War Memorial. A special election was called to elect a new mayor and to find the people's will on the possible removal of the cross from the memorial.

I'm thankful Prop A passed, but what troubles me is that less than 28% of the registered voters went to the polls to exercise their precious right to vote!

We're talking about a city which currently has no mayor and faces the possibility of losing a fifty-year old War Memorial icon, simply because one outspoken Atheist hates the cross! Amazing!

Why such a low turnout? Some say it's because this was a special election and if a candidate didn't get over 50% of the vote they'd be forced to have a run off in November anyway. Others say they're just too busy with the kids, the job, the gym, etc.

As I watched the election results, it struck me that 72% of San Diegans apparently don't give a rip who will govern this city -- or whether the cross stays or goes. Have they given up hope that their vote will have any real impact? Or, is it possible we're looking at a larger trend around the country of political apathy?

Low voter turnout is not a new phenomenon that's just hitting San Diego. For years voter turnout has been dropping in almost every city election across the land. I see it as a sign that voters have an attitude that nothing's going to change, so why waste the time.

Part of the problem is that our nation has become polluted with politicians instead of statesmen.

Politicians often say one thing and do another once elected, such as promising to protect the U.S./Mexico border and then allowing millions of illegals to welcome themselves to our land of plenty. Or making campaign promises of 'no new taxes' -- then telling us they have 'no choice' but to raise taxes -- instead of cutting expenses. Their slogans sound so good, yet provide so little. They even promise to keep us safe from terrorism, yet refuse profiling which would stop them in their tracks.

Then, I thought about the vote to save the cross on the War Memorial, which was dedicated to the sacrifice our service men and women have made for their country. This three-story high cross has been seen for miles in every direction for 50 years now without bothering a soul. Yet suddenly it offends one Atheist and his liberal ACLU-backed attorney and the fight is on.

The passage of 'Prop A' allows the city to turn the memorial over to the Federal Government to make it a National Park. So now, instead of forcing the cash-strapped city of San Diego to fight the ACLU, the fight will now be with the Federal Government.

What's interesting is that support for Prop A was lead by a Jewish man, Phil Thalheimer -- hardly a man who views the cross as an expression of his personal faith.

According to Mr. Thalheimer, "As a Jew the cross reminds me that when you have this type of religious intolerance, it leads to what my family experienced." (His parents are Holocaust survivors.) "Symbols come down little by little just like they did in Nazi Germany in the 1930s. And where does it stop? The answer is that it doesn't."

Now the fight over the separation of godly symbols from our culture will continue in the courts. It seems no matter how many times the voters have spoken on an issue, a liberal judge still has the ability to overturn the will of the people on the basis that it is "unconstitutional" in his/her opinion.

There was a time in this country when judges and politicians had a sincere and deep respect for the only true Judge on ALL issues in this world -- GOD. The Bible was our plumb line for right and wrong, black and white. The Ten commandments were considered America's moral standard, pure and simple. But the day we started allowing liberal judges and politicians to remove symbols of God from our society is the day the decay began. How quickly we've forgotten Who it was that blessed us to begin with.

So, the next time you hear of a low voter turnout in a local election, ask yourself how many repressed world citizens would give their eye teeth for the right to vote. Sadly, we may soon have more in common with them then you think -- unless we use our right to vote.

Perhaps its high time the people of faith become even more "extreme," in the words of Barry Goldwater.

Craig Smith WorldNetDaily Archives

How Cafta Passed House by 2 Votes -Edmund Andrews, NYT
By EDMUND L. ANDREWS
The New York Times
July 29, 2005

WASHINGTON, July 28 - It was just before midnight on Wednesday when Representative Robin Hayes capitulated.

Mr. Hayes, a Republican whose district in North Carolina has lost thousands of textile jobs in the last four years, had defied President Bush and House Republican leaders by voting against the Central American Free Trade Agreement, or Cafta.

But the House speaker, J. Dennis Hastert, told him they needed his vote anyway. If he switched from "nay" to "aye," Mr. Hayes recounted, Mr. Hastert promised to push for whatever steps he felt were necessary to restrict imports of Chinese clothing, which has been flooding into the United States in recent months.

As it turned out, the switch by Mr. Hayes was decisive. Within a few minutes, the House approved the trade pact by the paper-thin margin of two votes, 217 to 215. The pact would eliminate most trade barriers between the United States and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.

The cliffhanger House vote was one of the most wrenching in Congress this year, and it highlighted the messy compromises that were necessary to overcome deep antagonism in many quarters toward trade-opening agreements.

The restrictions Mr. Hastert promised could come soon. Within the next 10 days, the Bush administration is expected to rule on whether to impose import quotas on Chinese sweaters, wool trousers, bras and other goods.

Mr. Hastert "said to me, 'If you vote with me, we'll do everything we need to do in your district to help with jobs,' " Mr. Hayes recalled.

Democrats charged Republicans with buying votes and forcing members to vote against their consciences.

But Bush administration officials said the ultimate goal was one of high principle: an opening of the United States to greater competition and engagement with poorer countries in its own backyard, a liberation from trade barriers that would benefit Americans as well as their neighbors.

"This became much bigger than Cafta, because it became a political issue," said Rob Portman, the United States trade representative. "It was important to our position as the global leader on trade, so we had to fight back, and to fight back meant being very aggressive, explaining why it was good."

Trade agreements have almost always been difficult to pass, because any reduction in barriers provokes intense opposition from unions and industries that would face new competition.

But the Central American trade pact became a litmus test for both parties, a precedent for both the opportunities and dangers of freer international trade.

In economic terms, the Central American trade pact will have a negligible impact on the United States. About 80 percent of the exports from those countries to the United States were already duty-free, and the total trade volumes are tiny: American exports to the six countries - about $17 billion a year - are about equal to the annual global exports of New Jersey.

Supporters of the trade pact said it was the principles at stake, a reaffirmation and an expansion of the much bigger North American Free Trade Agreement of 1994 that linked the United States, Mexico and Canada.

Like Nafta, the Central American free trade pact will eliminate most barriers to trade in goods and services and most barriers to investment. It will give American companies tough new legal rights to enforce patents and copyrights in other member countries, and it may give some pharmaceutical companies even greater protection against generic drugs in Central America than they have in the United States.

But labor unions and their Democratic allies charge that the pact offers strong backing to corporations while offering little additional protection to low-wage workers in Central America. As a result, they contend, it will encourage American companies to shift more jobs to those countries.

Whatever the economic merits, the vote on Wednesday night made it clear that the political appeal of the trade agreement was low. Only 15 Democrats supported the measure.

And despite intense pressure from President Bush and House Republican leaders, 27 Republicans voted against the deal; many others badly wanted to do so.

The biggest opposition among Republicans came from textile producing states in the south, sugar-producing states like Louisiana and Idaho and old-line manufacturing states like Ohio and Pennsylvania.

FULL STORY

Rewarding Terror -Rachel Ehrenfeld and Paul E. Vallely
FrontPageMagazine.com
August 2, 2005

The latest terror attacks in London found the West shocked to realize that Islamist terrorists have established a worldwide support system. This, however, should not have surprised any student of terrorism.

Israel, which since the first Hamas attack on April 13, 1994, has suffered hundreds of suicide bombings in which more than 1200 of its citizens and foreign nationals were murdered, and thousands maimed and wounded, has identified the terrorists' international financial and tactical support links. Yet Israel received little sympathy and even less assistance from the international community in its efforts to stop these terrorists. Even now, as law enforcement agencies are busy tracking and exposing Islamist terrorist cells, and world leaders are condemning terrorism, Israel is conspicuously absent from everybody's list as a country victimized by terrorism.

This "oversight" is consistent with the fact that Israel is being pushed to surrender to Islamist terrorism and reward Palestinian Jihadists who are committed to the destruction of the Jewish state, and even to provide them with the necessary gun-power to achieve their aim. Has anybody suggested providing more explosives to the al Qaeda cells in Britain? How can anyone distinguish between the victims that were murdered in cold blood aboard the London Tube and busses and the victims that were murdered on board busses in Tel Aviv or a pizzeria in Jerusalem?

Only the 9/11 attacks on America utilized different suicide mass-murder tactics than all the other Islamist attacks in Britain, Spain, Russia, Egypt, Morocco, Turkey, Italy, Afghanistan, Pakistan, India, Indonesia, the Philippines, Thailand, Argentina, Kenya, Tanzania, Iraq, and Saudi Arabia. In each of these countries, the methods were similar, if not identical, to the suicidal bombings in Israel. Only the scope was sometimes different.

US Secretary of State Condoleezza Rice's and Jacques Chirac�s demands that Israel supply ammunition to the PA, which has consistently refused to disarm and denounce violence against Israel, will simply add more fuel to the fire, and will lead directly to more death and destruction.

After the London attacks, the Western world leaders at the G8 meeting in Scotland, stated jointly that "We are united in our resolve to confront and defeat this terrorism that is not an attack on one nation, but on all nations and on civilized people everywhere." At the very same time, the Palestinian president Mahmoud Abbas joined Syria's president Bashir Assad in Damascus to celebrate the London bombings along with other leaders of U.S. - designated terrorist organizations including Hamas, Islamic Jihad, and the Popular Front for the Liberation of Palestine. Not one world leader condemned that meeting.

The more time elapses since the first Hamas suicide bombing in Israel, which was excused away by Hamas and accepted by most of the international community as a reaction to Israeli oppression and occupation, the more suicide bombings became an existential threat in the West. Yet, instead of supporting and encouraging Israel in its fight against these Islamic terrorist organizations and conditioning future assistance and territorial independence upon the Palestinians fulfillment of ALL the agreements they have repeatedly violated, the U.S. and its European allies are pressuring Israel to provide these terror organizations with a new base of operations- the Gaza Strip � and to provide them with the weaponry which they can then use to attack Israel and the West.

As long as the Saudis continue to fund madrassas where Jihad and martyrdom are praised, and Iran continues to fund, harbor and train Jihadists, Shiites and Sunnis alike through its Syrian/Hezbollah connection and their support of Islamic Jihad and Hamas in the West Bank and Gaza as well as other Islamist groups in Europe, the Middle East and Southeast Asia, the Islamists commitment to Jihad, the only commitment they have been known to fulfill, will continue.

Their overall united objective is to destroy Israel and Democratic free societies, while using supposed oppression by Israel, America and its allies to justify their continuing violence. To solve the Israeli/Palestinian situation, a broader and stronger Middle East Policy must be adopted and executed by the United States and Israel that takes out of play those nation states that continue to support and fund terrorism and radical Islam.

Giving Palestinian Islamist terrorists a territory in and from which they can operate freely would only contribute directly to the escalation of terrorist attacks, suicidal or otherwise, around the world. With this in mind, the U.S. should reconsider its pressure on Israel to appease terrorism.

http://www.frontpagemag.com

LET'S GO: LIBEL -The New Yorker, 8-8-05 Edition ...When the first plane crashed into the World Trade Center, Rachel Ehrenfeld was sitting at her desk in her apartment in midtown. "I was on the phone with my editor in Brussels, finishing an op-ed about terror financing for the European edition of the Wall Street Journal," she said the other day. "I ran up to the roof to see what was going on, then I came back downstairs and did a new lead. It ran the next day."

Rachel Ehrenfeld, Director of American Center for Democracy (www.public-integrity.org), and author of Funding Evil; How terrorism is Financed and How to Stop It. Paul E Vallely, Major General, US Army Ret and Senior Military Analyst Fox News Channel and Co-author of Endgame -Blueprint for Victory in War on Terror.

Related Story
Operation Divest Terror -SATC...7-8-05 -- Private-sector offensive aims to shut down 'business' of extremists... The goal of "Operation Divest Terror" is to help investors identify U.S. companies whose business activities provide revenues, equipment and technology and political cover to governments sponsoring terrorism and send them a message this is a bad business decision.

A Golden Solution To The China Syndrome? -Richard Lehmann
http://www.silverbearcafe.com
July 29, 2005

Put yourself in China's shoes. Your economy is heavily dependent for its economic growth and well being on exports to the United States, long its least-favorite country. It has to accept payment for its exports in U.S. dollars,a currency over which it has no control other than to cause it to depreciate by trading out of the dollars it holds and into another currency.

(Note: This is something the U.S. is trying to get China to do to itself by revaluing the yuan.) To add insult to injury, it has accumulated a staggering $700 billion of such dollar reserves and sees no other investment option besides the U.S. Treasury market.

Hence, they not only supply cheap goods to this least-favored country, they then lend it back the proceeds of their labor lending which makes them vulnerable to a freezing of these reserves by the U.S. should serious enough policy differences arise, a la Iran. Welcome, China, to the World Trade Organization, or should I say, "Welcome to the Hotel California."

Fairly recent history offers two examples of countries who have dealt with this problem with mixed success. In the 1970s, when OPEC managed to take control of the oil market and more than double prices, their foreign reserves quickly built up as they had not yet figured out how to spend these vast sums. Their solution was to invest in CDs with large international banks, thereby providing the funds necessary for oil-importing countries to fund their higher oil import bills. This dubious arrangement lead to an international banking crisis, as the debtor nations defaulted nearly causing some major international banks to fail.

The 1980s saw a replay of the reserve problem, only this time the country with the excess reserves was Japan. Their attempt to diversify out of dollars led to an organized spending spree involving the purchase of hotel properties, signature office buildings and golf courses. The problem with this strategy was that it was premised on the notion that property values overseas were cheap in comparison to those in Japan. The flaw in that thinking was that it was the Japanese values that were out of line, not those in the rest of the world. Bottom line, the Japanese overpaid. As for their infatuation with buying and building golf courses around the world, leave this to a psychologist to explain.

The recent purchase attempt of Unocal (nyse: UCL - news - people ) by CNOOC (nyse: CEO - news - people ), the state-controlled China oil company, exemplifies an attempt to pursue yet a different route for diversifying out of dollars. China appears to be trying to spend its foreign reserves to buy entire U.S. companies. From a Chinese strategic point of view, this is definitely the right policy: Buy the means of producing the raw materials you need or alternatively, buy the companies that have the technology and distribution channels for the products you produce or want to produce.

For the United States, however, this strategy is a serious threat that goes beyond trade rivalry. Let no one kid himself. International trade and capitalism is a form of warfare where domination is the objective. A country such as China is playing a different game from most WTO members�they are mercantilists. That means they are not interested in creating a level playing field and letting private enterprises compete. They want state involvement to a much greater degree than is practiced in the U.S. This means direct ownership of key enterprises, setting economic priorities, controlling foreign ownership participation, rule-making that favors national enterprises and using commerce to achieve foreign policy ends.

The U.S. has allowed foreign ownership of domestic companies except in cases involving national security. This usually means protecting against foreign control of sensitive technology, defense companies or vital sources of supply. Even excluding these types of companies, China could make major inroads in dominating key industries in this country.

Such dominance by a country that is fundamentally hostile to U.S. interests will not be tolerated by the U.S. government. We already see this with the protests over the CNOOC tender for Unocal, the acquisition of which is, at best, peripheral to U.S. interests. That protest, however, should be a clear signal to China that acquisition of U.S. operating companies is a non-starter that can only lead to further strained relations.

How then can China reduce its subordination to U.S. interests and use its dollar reserves to strengthen its role in world affairs? I believe China will eventually find gold as a partial solution to its foreign-exchange problem. While an immediate reaction may be to think this is nonsense, a closer examination may provide some food for thought. Gold was the world reserve standard for centuries until former President Richard Nixon closed the "gold window" on Aug. 15, 1971. What he did, in effect, was end the exchangeability of gold for dollars at the fixed rate of $35 per ounce. In effect, the U.S. stopped being a sponsor of gold under a system whereby it set the price and became the buyer and seller of last resort.

The change was necessitated by the fact that foreign holdings of dollars had gotten well beyond the U.S. reserves for gold. Even a steep rise in the pegged gold price would not have solved the problem for long and would have rewarded Russia and South Africa, two countries not then in favor with Washington. Also, the U.S. stood to gain tremendously from the new world order in which the U.S. dollar became the world�s reserve currency by default. It would be no exaggeration to say that Nixon�s action was one of the keys to America's subsequent world economic dominance.

When America abandoned gold, no one was inclined to step in and continue the gold standard. And since gold earned no interest, nations around the world began to systematically reduce or eliminate their gold holdings. Time has shown that such gold holdings would, through subsequent appreciation, have served quite well as an alternative to U.S. Treasurys. However, in today's world of multibillion-dollar reserves, the gold market is too illiquid to serve its former role.

To revive gold's role as a reserve currency, it again would need a sponsor, a buyer and seller of last resort who dictated the support price. That price could increase each year, per government policy, by a set amount. China, with its $700 billion in reserves has the clout to assume this role. Keep in mind that gold is still a scarce resource that has not kept up in supply with the growth of world economic activity. It is insufficient in quantity to serve as the main world reserve currency unless its price was vastly higher. It could, however, be a close second or third. More importantly, like the De Beers diamond cartel, it can be extremely profitable for its sponsor.

Dominating the gold market would offer a number of benefits to China. It offers a viable alternative to buying more U.S. Treasury debt. It allows them to set the rate of return on their gold investment, much as De Beers sets the price of diamonds. However, their control of prices would be even stronger since a net buyer role is much stronger than the De Beers role as a seller. In fact, once China let its newly assumed role in gold become known, a worldwide gold rush would commence, driving prices well above current levels. China will not be able to take control until well into this initial rush. Over time, other nations would join China in again holding gold as a way to reduce their dollar exposure.

Holding large gold reserves can serve China's domestic economic policy, as well. China does not want to see its citizens investing abroad. Allowing Chinese citizens to buy gold would help satisfy domestic saving and investment desires while also giving the government a means of regulating the money supply. Gold has a long history with individual Chinese as a way to hide and preserve wealth, a way made no less attractive by the mistrust that is always present with an autocratic central government.

The ultimate attraction of such a policy for China is that it allows them to reduce their vulnerability to the United States. Even more so, it allows them to play a dominant role in international affairs, clearly a high priority with current Chinese leadership. While it is not in the U.S. interest to strengthen China�s role in world affairs, it is a better alternative than letting pressures build inside China's government over a perceived, if not actual, threat to their sovereignty. Also, other solutions to the dollar reserve problem may be dreamed up that prove to be far more dangerous to the current international order. Forecasts are for China's reserves to grow to $1 trillion dollars by June 2006. Such an accumulation only puts more pressure on the Chinese to find an alternative solution.

http://www.silverbearcafe.com

Richard Lehmann is editor of Forbes/Lehmann Income Securities Investor. Read more analysis and information from Lehmann, or subscribe to Income Securities Investor.

Renowned Fund Mgr Predicts Global Economic Collapse -Al Martin
www.almartinraw.com
July 29, 2005

Julian Robertson formerly ran Tiger Management, the world's largest hedge fund.

Martin describes Julian Robertson as "One of the greatest of the old-timers. 53 years on the Street. He manages the Robertson group of funds. They used to call him, still do call him `Never Been Wrong' Robertson. He has predicted every economic cycle, every debacle, every bull market, and every bear market." Martin says "Of course, he's a very old man now. But his reputation on the Street is like nothing you could imagine. When the segment of his interview was through, his comments alone took the Dow Jones down 50 points. Just on his comments alone. That's how powerful this man's reputation is."

Robertson said that he's worried about the speculative bubble in housing and the fact that more than 1/4 of all consumer spending is now sustained by that bubble, plus the fact that 20 million citizens could lose their homes in a collapse of the speculative bubble in housing, and that the Fed and, indeed, central banks worldwide would act in concert out of desperation to re-inflate the global economy in the process, creating an inflationary spiral unheralded in the economic history of the planet.

"Where does it end?" Robertson was asked and he said, "Utter global collapse." Not simply economic collapse; complete disintegration of all infrastructure and of all public structures of governments. Utter, utter collapse. That the end is collapse of simply epic proportion.

In 10 years time, he said, whoever is still alive on the planet will be effectively starting again." Bill Murphy of Letropolecafe.com says "As for Robertson's comments as they relate to the gold price, we will most likely see the gold price somewhere between $3,000 and $5,000 US an ounce. Wait until the facts surface about how the central banks squandered 2/3 of all their bank reserves to foster a price manipulation scheme. There will be a frenzy to own the stuff like never seen before." Julian Robertson blamed everything on what he calls 'the Bush-Cheney regime'.

He says "they have now consolidated power and money on the planet to the maximum extent possible. The planet's net liquidity, that is its, net free cash flow. Is now a negative number. The planet is not simply sinking into a sea of red ink; it is already sunk. The people just don't realize it yet."

Robertson says "the Bush-Cheney regime is preparing the nation for transition from democracy into dictatorship because a dictatorship will be necessary to control, in 5 years' time, food and water riots."

He said "the federal government, that part of Patriot II Act, the internal exile, that the government is going to have to build now huge detention compounds on federal lands, probably in the West where the land is available, to potentially house 50 million or more citizens that will be in financial ruin."

Julian Robertson went on to say "Food production will fall. Any further effort to control environmental destruction will be abandoned. Inflation will run into the double and eventually triple digits. People will be carrying around U.S. dollars in wheelbarrows like Germany."

Robertson said there would be "total collapse of public infrastructure. Total collapse of medical care systems. All public pension plans, Social Security will collapse. All corporate pension plans will collapse."

Robertson backed up his comments with statistics in one statement he said "But, 14% of all real estate transactions now being interest-only mortgages, and another 14% of people now, that, when they bought their homes, originated more than 100% of the purchase price in the mortgage and then borrowed further."

He said "The American consumer is effectively now supporting the rest of the planet, consumption rates in all other nations are falling, have fallen to the point that the tax revenues to governments, that the business and industries those nation states are providing is now a net negative number relative to total debt service and public cost, that this exists in virtually every nation state on the planet now."

He said "More importantly, and I am trying to think how we imply this or how we express this to the people, what extraordinary times we are living in and how the destruction of the planet has been engineered by the Bushonian Cabal from 1980 to 1992, and then from 2001 to present, which has effectively destroyed the economic liquidity of the planet."

When Ron Insana the interviewer said "you have sold all of your real estate and you are moving into one of the new super-secure compounds for wealthy Republicans for when the 'barbarians will be at the gate.' Robertson replied, "Ron, those barbarians will be potentially a third of the American population." Robertson ended his comments by saying that "he hopes that he is not alive to see this. The lucky ones are the ones who are my age now."

I would add to Julian Robertson comments, the lucky ones will be the ones who buy gold and silver coins now, at less than $500 an ounce before the price of gold sky rockets to $3000 then $5000 an ounce and the price of silver goes over $100 an ounce in the years ahead as Julian Robertson's predictions, made in his interview on CNBC, unfold.

www.almartinraw.com

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Craig Smith Interviews Bill Murphy, GATA -- Recorded: June 1, 2005 (30:00 trt) ... Bill Murphy, founder of The Gold Anti-Trust Action Committee, explains why gold should be $750 and silver $15 an ounce -- nearly twice current prices -- IF major bullion banks would finally stop their market manipulation!