INDUSTRY INSIGHTS

(June 23^rd 2009)  The "Palestinian State" and North Korea: Solutions for two problems. Plus, stock market predictions. By, Andrew Molchan

(Look for Andy's current June 2009 stock market and economic forecasts at the end of this June 23^rd posting)

(June 23^rd 2009) I, Andrew Molchan, am one of the world's best military grand strategists. I'm not boasting and I have no ego problem. The above statement is a simple historical fact, and the truth. The "ego problems" for the last 45 years have all been with the power elite who refused to accept the evidence of my military analysis being correct.

PROOF. In 1964 I predicted the defeat in Vietnam. In 1975 I predicted the form that the 9/11-type attack would take. In 1981 I predicted the break-up of the USSR.  In 2003 I predicted that the Iraq War would end with the US eventually crawl. I stated in dozen of published articles that the Iraq War ninth crusade would end basically like the first eight Crusades, with the Western power (the USA) eventually crawling away in the night (which is what is happening.) Five years ago I correctly outlined Osama bin Ladens grand formula for winning. Osama's strategy has been working, and will continue to work.  It's a concept that the Pentagon, CIA, NSA, et al, still DO NOT understand because they never wanted to understand.

THE OTHER SIDE OF THE COIN. The FACT is that the US Generals at the Pentagon have NOT clearly won any significant shooting war in the last 64 years! This is a fact. It's been 64 years of military failure. They lost in Korea (what we have is certainly not a win.) The US lost in Vietnam. With Iraq, at the end of the day Iraq will prove to have been a budget-busting counter productive failure. The US military is losing in Afghanistan, and will continue to lose - so on and so forth.

CELEBRATION. In the year 2045 the US Pentagon will be able to celebrate 100 years of never having clearly won any significant shooting war anywhere in the world. Since 1945 the German Army has been a role model for the Pentagon. In 1972, the German Army and Navy, despite having massive armies from Africa to the suburbs of Moscow, despite have hundreds of warships all over the North and South Atlantic, despite fourteen million military casualties, despite all of that, in 1972 the German Army and Navy had 100 years of never having won a war.

CALIFICATION. As I've said for 40 years in my written and published articles, I'm NOT anti-war, and I'm not against killing people. What I am very much against is losing. 

Most of America has become a society that is NOT interested in the real truth, but only the politically correct truth. After studying and analyzing 2,000 years of grand strategy, what I found is that the general rule is this: the closer you come to the top of any power pyramid, the more incorrect the analysis becomes. The other side of that rule is: no person can get close to the top of the power pyramid, WITHOUT telling the power elite what they want to hear.

THE UNLEARNED LESSON FROM AMERICA'S COLD WAR VICTORY.  The US vs. USSR war was NOT about guns and bombs, it was not a shooting war, it was a war if ideas. Nuclear weapons kept it from becoming a shooting war (thank God) and the superior ideas of the USA eventually won. The so-called "war on terror" is also a war of ideas. Imbecilic President Bush thought it was a war against some kind of bandit gang that was jealous of the America's life style. If Bush had ever opened up the Koran and read any part of it he would have quickly seen that Mohammed hated what America loves - massive debts at every level.

SOLUTIONS FOR PALISTINE. As I've been point out in my columns for years, and in letters to Congress, BOTH Israel and the West Bank Palestinians have dysfunctional political systems. Israel has too many political parties for a clear majority for any one party. That means the main central Israeli parties in order to have enough votes to govern must make a political alliances with either the left-wing Marxists communists, or with the right-wing "Black Hats."  The Marxist communists want Israel to be a shining example for Marxist communism. In other words, they're a century behind the times. The "Black Hats" are first cousins to America's ultra radical evangelical Christians. The evangelical Christians think that a nuclear war in the Holly Land is just wonderful because in their Devil inspired delusions, that would bring the second coming of Christ.

PRESIDENT OBAMA'S CRITCES ARE CORRECT, PRETTY WORDS DO NOT DO ANYTHING. President Obama gave his interesting speech in Egypt. One of the things that he did right was to point out the many beliefs are shared by both Christianity and Islam. Taking about the many beliefs and morals that the two religions have in common is the correct road for a US President. Another factor President Obama did right was to never use the word "terrorist" which has been propagandized to the point where it's become counterproductive for effective thinking. He also correctly called the current, 1970's like apartheid situation of the West Bank intolerable. However, President Obama ended his speech by basically telling the Israelis and Palestinians to make peace, (Daa!)  President Obama throwing the so-called peace process back into the incapable hands of the local Israelis and Palestinians is the same failed, spineless cop-out that every US President has used for the last quarter-century. President Obama needs to learn is that both the Israelis and Palestinians are emotionally and mentally unable to solve this problem.

PALESTINIAN SOLUTIONS. Any Israeli Prime Minister who might try to make real peace would either be voted out of office, or killed by other Jews. The same would happen to any Muslim politician in the West Bank.

THE START. The USA, EU, Russian and the Middle East powers must agree on borders for the West Bank. The great powers must say, "On this date, at noon, the State of Palestinian is created. This is a map of its borders. The same day, the countries in the UN will vote to recognize the State of Palestine as an independent country. All Israeli troops and police will leave, and security will be taken over by NATO troops until security is good enough to hand over to local Palestinian police. The Border to Jordan will be open, and the State of Palestine will deal with issues involving Israel as two independent states with the active mediation of the great powers. This will be the first step for an eventually area wide common EU like market."

GAZA? Gaza is too small and removed from the West Bank to be viable. For the time being it should become an administrative part of Egypt, with an open border to Egypt. The long-term solution is an area wide common market type zone that includes Gaza, Israel, the West Bank, Lebanon and Jordan. Hopefully that common market could expand to eventually include Egypt, Syria, Iraq, Saudi Arabia and hopefully Iran.

A LITTLE RECOGNIZED CORE GRAND STARTEGY PROBLEM WITH THE WEST BANK. A core problem is the Jewish mind-set of Israel being a great power, and the "rightful ruler" of everything around Israel. Some would say that a person is not truly Jewish without believing that Israel should be a great ruling power. The reality is that Israel NEVER was a great political and/or military power. It was a religious power, but never a secular military power. Israel never was the Egypt of Khufu, the builder of the great pyramid, or of Ramses II. Israel never was the Persia of Cyrus the Great. Israel never was the Greece of Alexander the Great, and it never was the Roman Empire.

SUCCESSFUL PROGAGANDA. Modern Israel never was "America's greatest ally." How many troops did Israel send to Korea to help the US Army? Answer - none. How many Israeli troops to help in Vietnam? Answer - none. How many to help in Iraq and Afghanistan? None. A few weeks ago President Obama asked the Israeli government to please stop the illegal land grab building in the West Bank. The Israeli government told President Obama to take his request and to shove it. A week later Netanyahu came out with a plan that was a combination of apartheid, and old Soviet Eastern Europe slave state. Anyone with two live brain cells to rub together saw it for what it was. Perhaps the next time Mr. Obama goes to Israel he should clarify the real-world, de facto, Israeli-American relationship of the last 30 years?  Mr. Obama could wear a jockey outfit and stand by the front door of Prime Minister Netanyahu's home.

HOW ABOUT "AMERICA FIRST" RATHER THAN "ISRAEL FIRST" FOR A WHILE? Israel has been a great military power because it has a giant Pit Bull Dog on a leash - the US military. That's been true for the last 30 years. However, A few people in the USA have finally come to realize that America MUST get the West Bank monkey off of its back. Whenever America talks about "justice" and "morality" most of the people in the world are snickering. The US cannot talk about "morality" while simultaneously paying for apartheid and slave state status in the West Bank.

SUCCESSFUL PROPGANDA. Israel has a lavishly financed and highly successful propaganda program in the USA. The propaganda program operates through over three-dozen so-called charities. Many false ideas and beliefs have been successfully implanted into America's current culture and media mindset. One of the highly successful propaganda ploys is the belief that anything LESS than 100% support for any Israeli position is really anti-America.  A good 95% of the America press believes that Israeli's national interests are 100% the same as America's national interests. Thusly, if you are less than 100% pro everything Israeli than that means you're a traitor to America. I do NOT apologize for putting the interests of America first. I am an American citizen who wishes the best for the American people, and I'm NOT apologizing for being pro-American.

THE JEWISH "SETTLEMTNS" IN THE WEST BANK? Frankly, I always thought that the West Bank Jewish settlements were (are) a political ploy to be used as a stalling excuse. When the West Bank becomes an independent nation everyone living there will be in that nation. When Great Britain gave up control of India, Burma, Kenya, Nigeria, Jamaica, and so forth. The British citizen who'd built his home on those lands was NO LONGER living on British land. His home was in a new country. When France left Algeria the French citizens who had built homes there were NO LONGER living on French land. When the United States left the Philippines the US citizens who had built homes there were NO LONGER living on US land. The Israeli claim that any Jew who builds a home anywhere, that act of building automatically makes the land under that home a part of Israel. That viewpoint has no basis whatsoever in international law, and is a stalling tactic for Israel. The truth is that Israel wants to keep the West Bank as a vassal territory forever, and the "housing issue" is an excuse towards that end. The slave state status of the West Bank is unsustainable. It's time for Israel to pull a "British Act" by declaring victory, and pretending that all of the changes that are going to happen anyway were really their ideas.

I AM A FRIEND OF ISRAEL. Sometimes your best friend is the person who tells you what you really don't want to hear, but need to hear to survive. The USA in relation to Israel, for the last 30 years, has been a "destructive enabler." The USA is like the "friend" who every day brings a new bottle of Whiskey to an alcoholic. Keeping the West Bank a slave state means a nuclear war in the Middle East. The Muslim world of over one billion people spread over half of the earth's surface would survive the nuclear war. However, Israel, with only five million Jews, and with 90% of them in a land area the size of greater Los Angeles, Israel would NOT survive. It's time for Israel to put the suicidal ego delusions aside and to choose life.

WHAT SHOULD "NEVER AGAIN" MEAN? Most Jewish soldiers take an oath at Masada to never let something like Masada happen again. However, Masada was the last suicidal act in a suicidal war. I am a proven, world class "seer" for military grand strategy. It is crystal clear to me that Israel is on the road to another suicidal war, and another holocaust unless there is real mindset change. For me, "never again" means no more suicidal wars.  Israel needs a courageous President Obama to bring (force if necessary) Israel closer to reality and thus more distant from another suicide.

FAILURE - THE SEQUAL, BUT ONLY BIGGER AND BETTER. Two thousand years ago Israel provoked an "ego war" with the Roman Empire. It was a war that Israel had ZERO chances of winning. Today, Israel is provoking another "ego war" with the Muslim world that Israel also has ZERO chances of winning. Israeli's military grand strategy for the 21^st century is to fight to the last American soldier, and the last American dollar. That strategy is fatally flawed for both America and Israel.

THE UNWANTED TRUTH is that the United States does NOT have the ability to win either an economic war, or a shooting war, against the Muslim world. Even more importantly for USA grand strategy is the fact that there's less then zero benefits to the average American worker from a war with the Muslim world. If the USA wants to fast-track America's financial collapse, and cut the living standard of the average American family by 40% (with a corresponding reduction in government tax revenue), the very best way to do that is expand the shooting war in the Muslim world.

I HAVE A DREAM. My dream for Israel (my ancestral homeland) would be for Israel to be the Hong Kong of the Muslim world, and the banking and creative-finance center of the Middle East. A land of real freedom for everyone, low taxes, expanded universities, a love of innovation, and a land where creative young people from around the world would want to move to.       

CAN PRESIDENT OBAMA BE JESUS CHRIST? In grand strategy historical terms, the situation in Israel today in 2009 is basically what it was two thousand years. Jesus Christ spent most of his adult life trying to persuade has fellow Jews to NOT go crazy over "Israel the ruler of all." Jesus Christ spent his adult life trying to convince Jews that the "Kingdom of Israel" should be in the minds of Jews, and NOT necessary a real land kingdom. As we all know, Jesus failed. The Jews kept spitting in the face of Rome, kept demanding an "Israel the Great," until finally Rome had enough and "solved" the problem by destroying Israel. The Jews were deported to the corners of the Empire. Rome for the remaining 300 years of its existence never again had a "Jewish problem." Today, in 2009, the Middle East and Israel are basically on the same road following the same script. The Muslim world is on an unstoppable road to becoming the new Rome of the Middle East. President Bush's insane war to try and turn back the clock only delayed the unfolding of history for a few years, (at a cost of over 4,500 Americans murdered.)

DOING GOD'S WORK. President Obama would earn an honored place in the history of the world if he could succeed where Jesus Christ failed. A working accommodation in the Middle East is a very tough, and painful job, but it's also an enormous prize for humanity. I believe we should all carry of cross of pain and suffering to make God happy, and to do whatever is need to turn the Holy Land into a true place of milk and honey.

WHAT OTHER NATIONS AND PEOPLE HAVE DONE, CURRENT NATIONS CAN ALSO DO.

The widely promoted propaganda ploy is that Jews and Palestinians can never live as equals, and in peace. The current destructive view is that Israel can ONLY be safe if the West Bank remains a de facto slave state. However, history has dozens of examples that disproves this current toxic viewpoint. In recent history, let's look at France and Germany. From 1870 to 1945 France and Germany fought three horrible wars. Millions of Frenchmen and Germans died under horrible conditions. Hundreds of French and German towns were totally destroyed with great loss of life, including women and children. For three generations both sides sincerely believed that they could NOT live in peace and safety unless the other side was crushed and rendered impotent. However, at the end of the 20^th century France and Germany had a totally open border. A more open border than the US-Canadian border is today. France and Germany share the same currency, same central bank, and have a semi-joined government. Today, you can drive from France to Germany and not even notice that you crossed a border. IT HAS WORKED, AND IT CAN WORK.

KOREA. I spent the Vietnam War on the Korean DMZ. The North Korean commandos almost killed me during two separate attacks. At three different times I had an America soldier die in my arms. While in the DMZ the North Koreans killed 39 Americans in my Division, and wounded 147.  Back in the USA it was always page 24 news because all of Vietnam was already going down the toilet. I used to sleep with a loaded .45 under my pillow because I could never be sure who would walk through the door. The politically correct thing is to say that it was a horrible hardship: we'd run out of heating oil in the middle of winter, the toilet was 90 feet from the chicken coup that was "home" in a country that's as cold as Chicago in January. No TV, no paved roads, no telephones, two radio stations, one in English (the Army station), and one in Russian out of Vladivostok. It would be fashionable to say that I was mentally scared for life, and so forth and so on. However, aside from the murder of the many young Americans (a very sobering and painful experience,) with everything else the truth is that I had a great time. The DMZ in the 1960's was like living in the old West of 1870 with the North Koreans as the Comanches. The truth is that if I hadn't been an only child with a moral obligation to take care of my parents in their old age (and I did take care of them in their old age), I would have never left Asia. I would have moved to Hong Kong and probably married a Chinese woman.

GRAND STRATEGY. The above walk down memory lane does not by itself qualify me as a military grand strategy expert. I've been studying grand strategy for over 40 years, and understanding what I read. True grand strategy is a highly complicated mathematical formula. The American Generals at the Pentagon only have tunnel vision and they don't know understand that the highest level of military grand strategy is about more than tanks, guns, aircraft carries, ICBMs and so forth. In Iraq for example, right from the start in 2002, I said that Osama bin Laden's main objective was America's financial system, and his main weapon would be the Internet. I'm sure that nobody at the Pentagon, if anyone ever read my articles in the first place, had any idea of what I was talking about.

AFTER 59 YEARS OF FAILURE, HERE'S THE "CHANGE IN STRATEGY" THAT'S NEEDED TO FINALLY WIN THE KOREAN WAR. Every time the US threatens North Korea, that plays right into the hands of Kim Jong Il, here after known as "Fat Boy." There are no elections in North Korea. Fat Boy is kept in power by the military. It's the military that has the de facto vote in North Korea, and it's the mindset of the North Korean military that's the objective. The basic equation is this: Fat Boy makes sure that the senior officers are at the top of North Korean society, and the officers return the favor by keeping Fat Boy in power.

A QUESTION TO THE US STATE DEPARTMENT. The US has been threatening and isolating North Korea for over half a century. After a half-century of failure, why are we doing exactly the same kinds of failed threats? What's need is "real change."

EVERYONE LIKES MONEY, EVEN NORTH KOREANS. The North Koreans are Homo sapiens, and Homo sapiens like bright shinny bobbles. They like nice homes, fast cars, large selections of food, big screen TVs, shopping malls, travel, enjoyable restaurants and the sweet life. Guess what, under their uniforms the North Korean army officers are Homo sapiens. This is Fat Boy's military weakness.

THE ATTACK. President Obama has to get the South Koreans, Japanese, and hopefully the Chinese on the same sheet of music. Then President Obama goes to Seoul, South Korea, and gives a speech. In that speech he points out the many good things that would happen to the living standards of average North Korean workers when unification arrives. THEN, President Obama promises the North Korean officers that when unification arrives, all North Korean officers will be paid the same as South Korean officers for their rank. If they are retired from the North Korean military after unification, then the North Korean officers will have the same retirement pay and benefits as South Korean officers.

THE GOOD LIFE. President Obama will point out that this means North Korean officers will have good homes, with modern entertainment and TV programs from around the world. They'll have a nice car with AC and a stereo. Their kids will be able to play video games, and go to America universities for advanced degrees. Their wife will have fashionable clothing, modern kitchen appliances and better food to cook. The aged parents of the army officers will have better medical attention, and so forth down the long list.

REPETITION. After President Obama makes his initial speech, the strategy will be a continuous process of bringing up the same message over and over, and in as many different ways as possible to the North Korean officers. Here's an example, at one of the usual meetings on the DMZ between North Korean and American officers. After everyone sets down at the table, the Americans or South Koreans can hand out pictures of a bright red BMW sports car to all of the North Koreans and say, "We'd sincerely like each one of you to have a bright red BMW sports car just like this one - how about it?"

EXAMPLES. The example to keep in mind for Fat Boy Kim is Nicolae Ceausescu of Romania who like Kim, was grooming his son for dynastic dictatorship. It was Ceausescu's hand picked personal bodyguards who shoot him. However, the KGB helped a little. Likewise, President Obama is going to have to convince the Red Chinese that having a starving nation on their door step, (North Korea) that's ruled by a nut case with nuclear weapons, that's NOT good for China. After Kim is gone and the two Koreas are united, the US is going to have to promise China that the US military in Korea will be gone, and the Korean Army will be greatly reduced.   

WEST AND EAST GERMANY. When there was a West and East Germany, the USA did NOT offer the East Germans a lot of money. The America State Department only threatened the East Germans just like the US State Department is threatening North Korea today.  However, THE WEST GERMANS DID offer the East Germans a lot of money. The West Germans kept up the "sales pitch" for years. Eventually there was unification and West Germany kept their promise and gave all East Germans substantial money. This is a strategy that works, and can work with North Korea. A little thought about problem is that the South Koreans who do NOT want to pay for North Korea. South Korea does not have the same attitude as the West German leaders. However, with courage, imagination, and true leadership Mrs. Clinton, and Mr. Obama, can break through all of the old roadblocks and solve both the Korean problem, and the West Bank challenge. This would make Mrs. Clinton a more notable historic person than her husband, and would get both of them Nobel Peace Prizes.

OTHER ISSUES. (JUNE 14^TH 2009) - THE STOCK MARKET

EXPERIENCE AT THINKING. Military grand strategy and financial grand strategy have a lot in common. I write a regular monthly column in AFI Magazine. I've been writing my regular monthly AFI column for 36 years, and before those columns, for four years in other publications.

2008 REVIEW. Starting in late 2007, and running through all of 2008, I told my magazine column readers to take every sock market rally as a sucker rally, and a chance to sell rather than buy. At the beginning of 2008 I recommended ProShare Shorts for the basic markets, S&P, Russell, etc. Starting in the last part of 2008 I had many readers call and/or email, saying, "Thank you, thank you, thank you." They either saved a ton of money by NOT buying into the sucker rallies, and/or also bought the ProShare Shorts I recommended at the beginning of 2008 and made money.

PROOF! On June 8^th 2009 Nobel laureate (economics) Dr. Paul Krugman gave the keynote speech at the annual London School of Economics Robbins memorial lecture. This is an important annual event in the world of professional economics by one of the world's best-known living economists. Dr. Krugman said in his speech that all of his follow Nobel winning economists noticed the raising prices of real estate, but none of them realized that the bubble would be so damaging. Dr. Krugman's direct quote was, "I had no idea it would end so badly." However, Andrew Molchan said in the January 2005 issue of AFI Magazine on page 62, "We are currently in a real estate bubble, and that will end someday." In the August 2005 issue of AFI Magazine on the front cover Andrew said, "Re-financing of home mortgages is a trap waiting for those who think that debt represents green stamps into heaven. The interest might only be 6% and that sounds good, but what's going to happen to your life when you borrow 100% of the bubble equity in your home, spend it on silly toys and overpriced restaurants, and then the real estate bubble breaks and the value of your home goes down by 50%, and stays down for the next decade? Then you'll be paying interest on a $300,000 mortgage when the open market value of the home is only worth $150,000." In the February issue of AFI Magazine on page 30 Andrew wrote. "Massive debt of every kind, and at every level in America has become a mania. Forty percent of all new jobs in America are directly or indirectly connected to the real estate/building bubble. So what happens when the bubble breaks?" What happens is what we have today in 2009.

ANDREW MOLCHAN WAS THREE YEARS OUT IN FRONT OF ALL OF AMERICA'S NOBEL PRIZE WINNING ECONOMISTS. The above quotes are from the year 2005, a roaring boom year. In the spring of 2008 most economist were saying that everything would be "back to normal" by Christmas of 2008. The provable FACT is that Andrew Molchan's economic predictions in 2005 were almost THREE YEARS AHEAD of all of America's Nobel Prize winning economists.

SO WHAT ABOUT NOW, JUNE 2009? As you know, everyone in Washington D.C. is saying that the worst of the recession is in back of us and we are into a "recovery." All of the Kramer clowns on TV are saying that the "recovery" is here so you should, "buy, buy, and buy more!" As of now, June 14^th 2009, the stock market is going up, and the little guys are piling back in.

I'M SURE THAT THE STOCK MARKET SURGE OF APRIL-JULY 2009 IS ONE MORE SUCKER RALLY. Stock might get up into the 9000's, and they might rally thought July. However, in my view this is a bear market rally and a good place to get out of America stocks like Ford, Wal Mart, etc. The higher the Dow goes, and the longer the sucker rally runs, the bigger will be the decline. If you are holding good international stocks in oil, or good Asian stocks, keep them, but get out of America stocks that depend on the American consumer.

DO NOT GET AMNESIA! President Bush in February 2008 signed the "Economic Stimulus Act of 2008." Remember? In October of 2008 there was $700 billion of TARP money. All of the Kramer financial clowns on TV were singing, "Happy Times Are Here Again." Then when it became clear that nothing was happening the bottom fell out in January-March 2009. Basically, be ready for essentially a replay of 2008. By this 2009 Christmas everyone will see that nothing much is happening.   

THE US DOLLAR. Everyone in the press is writing stories about how the US dollar is going down. As my regular readers know, I'm NOT a big fan of the US dollar LONG TERM (i.e. the next five years - plus). However, short term we'll probably see a bounce in the dollar's value. This would be a good time to get out of some of your dollars.

LONG TERM. Long term the US dollar has some profound problems. However, the crises for the dollar will probably not arrive until 2011. (The wild card is a terrorist attack on the USA). As I see it the US dollar long term is in a no-win situation. If the economy actually does pick up and inflation starts, then China, Japan, the EU, etc will dump dollars and prices in the US will increase much faster than wages. When the current "stimulus" flops, and I'm 100% sure it will flop because the grand strategy behind the stimulus is wrong, and when the government in early 2010 starts talking about a third trillion dollar stimulus. Then the world's governments will throw up their hands and say, "If you want to talk to us about buying US Treasure bonds you'd better to talking 8% interest."

THE CORRECT GRAND STARTEGY is almost the exact oppose of the current strategy. What America needs are as many programs as possible to encourage SAVINGS, and wealth creation. For example, all bank accounts should be tax-free. New companies that produce produces that have export potential should be income tax free, and FICA free, for their first five years, etc. None of what's really needed is happening, and means long term the USA is going nowhere.    

SHORTS? Shorts are very risky, but if you feel like gambling you might short gold if it goes over $1,000. You could use the ProShares system. ProShares also has a new fund that shorts Treasury Bonds. As interest rates go up, and the value of the bond goes down, and the "short" gains in value. Without question the long-term interest on US Treasury Bonds is going up as the world loses confidence in the USA, but it's all a question of timing and that becomes very tricky because of the many dynamic factors in the equation.

WHAT YOU SHOULD NOT BE DOING. At the top of the list is the old  "buy and hold" strategy. If you want to keep even, it's a game of maneuver, maneuver and maneuver. It's a game of being two weeks ahead of everyone else. What that means is that if the news is in the Wall Street Journal, or the Cramer clowns on TV are talking about it - then it's already too late. When the Cramers start talking about buying something that's the time to be selling because that's what the Cramers are selling. Long term the US stock market is going NOWHERE. In the last ten years the US stock market has gone nowhere, and in the next ten years it's going nowhere. The ONLY way to make money is catch the up sides, and then sell before it goes down.

ANDY'S OVERVIEW OF THE CURRENT STOCK MARKET.  When I look out over the current investment world what I see is an economic World War One. In November 2008 to April 2009 we had the period of big movements, of large forces, over the landscape. Now, we are into a long, multi-year period of trench warfare. "Progress" will now be measured in yards. Costs will be enormous, and life in the investment trenches will be miserable. The economic generals will be, (are already) idiots who will only know how to make past failed attacks bigger with resulting bigger failures. Chance and blind luck will play a big part with you winning or losing. Significant success will consist of staying out of the trenches, and out of the main battle zones, but supplying the political-generals with what they need to keep the economic meat grinder going.

EVERYTHING TIES TOGETHER WITH EVERYTHING ELSE IN THE WORLD. Getting back to the West Bank and the USA. The USA desperately needs a win. The USA for economic reasons needs to show the world that it can do something besides waste a lot of money and kill a lot of people. The US moving the West Bank out of the dead-rot mud hole it's been in for 30 years is an ECONOMIC necessity. We need to give the US dollar value in the eyes of the world and the only way to do that is to successful move problems along. The power elite in Washington D.C. does NOT understand the dynamic interconnection of grand strategy but they'd better learn damn fast.     

LOOK FOR MY NEW BOOK, ROME II - The Squeal, coming out later this year. Right now, you can download one of my John Dagon on-line novels. 

(Attached are past comments on past issues.) 

May 12th 2009 EDITORIAL

Unfortunately for America's Working Class, and Income Tax Paying Class, Mr. Obama is NOT the Answer to the USA's Continuing Economic Rot. The USA will see Additional False Dawns, and more Stock Market Sucker Rallies. Here's Some Advice for Saving Yourself.

By Andrew Molchan

(May 12th 2009). The Obama administration is 100 days old, but the picture is already clear. President Obama is NOT trying to reform America and make the American system competitive internationally.

THE VERY FIRST THING THAT PRESIDENT OBAMA DID WAS WRONG. Three days after coming into power President Obama punched through the Leadbetter Act. This gift to Tort lawyers Act makes it possible for employees who have NOT worked for a company for years to charge pay discrimination and sue for a million dollars in punitive damages. When asked about the ACT, speaker of the House, Nancy Pelosi said, "Well, if a company does not want to be sued just don't have any pay discrimination." Ms. Pelosi is a total jerk. She's so far out of it she doesn't have a clue. The minds of the Democrats are on the dark side of the moon. America Tort law has almost nothing to do with justice. It's all about giving the lawyers and excuse to get their fans into a company's assets, and then suck out as much blood as possible. Giving loser crackpots the right to sue a company they worked for ten years ago is a disaster for American business, and is a portent of what the Obama administration is going to be all about.

DISAPOINTED: I had high hopes for Mr. Obama. Mr. Obama being black, that never bothered me. When I was 19 years old I was a member of the NAACP. Why? Because helping the NAACP was the right thing to be doing at that time. In 1960 it wasn't easy or safe for a poor white boy to be in the NAACP, but I've never done what was easy. I really wanted Mr. Obama to be a major "change" agent after years of Napoleon Bush who could only think about how many Muslims he could murder.  

THERE IS SOME HOPE: There is hope on the Middle Eastern front. However, it's going to be easy for President Obama to look real good when he's come after President Bush who on Middle Eastern issues was insane.

I HAD THE BEST ANSWER FOR VICTORY OVER MIDDLE EAST TERRORISM TEN YEARS AGO: I have a world-class record of being correct on mega issues. Forty-four years ago I had the correct strategy for winning in Vietnam, (a strategy never followed). Five years ago I said that America's efforts to turn Iraq into an American puppet colony would fail. However, I always had the right strategy for a decisive win the Middle East. Five years ago I mail a grand strategy outline to the total US Senate. The outline if followed would have produced a big win for the USA in the Middle East while saving a lot of lives and money. My plan was not, and is not wrong, but it is politically incorrect and does NOT fit into America's matrix of lies.

A MAJOR VICTORY OVER  AL QAEDA IS STILL POSSIBLE - ALL MR. OBAMA HAS TO DO IS "CHANGE." My strategy is still the best plan, and the only plan that has any chance of reversing the continuing growth of al Qaeda. An outline of the same plan that I sent to the Senate five years ago can be seen on our website, www.amfire.com under "News Articles" and "Gaza War..." YOU should do something for America. Run out a hard copy of the plan and email it to your Senators and Congressman. Who knows, maybe someday Washington really will change? We'll see in a few weeks with President Obama's Egypt speech.  Here's the bottom line for Mr. Obama, after DECADES OF FAILURE in the Middle East, rather than doing the same old failed things in the same old failed way we have to do something radically new. I had the correct answer years ago. If President Obama has the courage to pick it up than he will have earned his place in history no matter what else happens.

LAW AND PROGRAMS THAT WOULD FUNDAMENTALLY "CHANGE" AMERICA FOR THE BETTER

LETS STOP IN ITS TRACKS THE DOULBE CROSSING OF FEDERAL/GOVERNMENT EMPLOYEES WHO TRIED TO PLAY THE GAME IN AN HONEST AND ETHICAL WAY. The Obama administration is doing a lot of "groundwork" towards doing away with the VA medical program, and related medical programs for Federal/military employees (except Congressmen and Presidents). In other word, the real meaning of "fair and equal" is that a person who was a military officer, or Federal law enforcement officer for 30 years, would end up in ordinary Medicare along with the bums and whores who have been drains on the American economy from before they were born.

WHAT WE NEED IS A "FAIR" RATING OF PEOPLE. We need a version of the "credit score" system but only for national worth. What is each individual worth to America? What has each person contributed, or not contributed, to America? To me, what's "fair" is that those who gave more to American society should get more in return.    

BANKS: Banks are short of funds. The best way to re-finance America's banks is to make all savings accounts up to any amount tax-free. This would bring cash into banks, and there would be no need to nationalize them. President Clinton in particular (con man Clinton), turned bank deposits negative. The government lies about the real inflation rate, and then people with bank deposits pay income tax on their so-called "earnings." Putting money into a bank is a LOSSING MOVE. It's all really simple, make it more profitable to have money in a bank and the money will be there. 

ENERGY: Pass a series of laws that stop the delaying lawsuits, and all of the other non-sense that currently makes it impossible to build new nuclear power plants.  Pass whatever laws are needed to fast tract the building of 200 additional nuclear power plants inside of the USA.  Two hundred new nuclear power plants are the ONLY workable solution to America's energy crises.

ARE WE TOTALLY DESLUSIONAL? President Obama's glittering generality statements about, "creating two million new jobs building clean technology of solar panels and wind turbines," is delusional. The current American system cannot fix the New York City hole in the ground that use to be the World Trade Building, but we're going to build ten million wind turbines. Sure! Aside from that, solar panels will continue to be built by workers in Germany and Eastern Europe, and wind turbines will continue being built by workers in India. Why? Because no American manager in his right mind wants to build a factory in Tort lawyer infested America, regulation crazy America, and Tony Soprano union boss America. With the new tax laws against American corporations that have overseas businesses, the USA now as the highest taxes of any industrialized country in the world.

LET'S GET REAL! The bottom line is that anyone who talks about "increasing America's energy independence" without talking nuclear is one of three things: (1) profoundly stupid, (2) a political or journalistic con man, or (3) both one and two.

LEGAL REFORM: American business has to operate in the world. It's NOT "planet America." The USA will NEVER be able to turn around its production decline without getting the termite Tort lawyers out of the pockets of USA manufacturers. The basic facts are mind staggering. America, with 4.8% of the world's population has 64% of the world's lawyers, and 74% of the world's Tort lawyers! That's crazy. America needs the "everywhere except the USA" law of having the plaintiffs pay for the expenses of the defendants if the plaintiffs lose. Also, lawsuit filling fees for anything over a $5,000 question should go up to $1,000, and should increase by $10 a month for the next 10 years.

IF IT'S SO GOOD THAN WHY ISN'T IT WORKING? Here's a question for the Obama new age socialists. If the American legal system is so good for manufacturers, then why have manufacturers been running away from America for the last quarter century? The usual excuse from Washington D.C. is "other places have lower wages." That's true, but NOT the total story. The bottom line is that you have to change what you can change. We cannot tell American workers that they are going to get $1 an hour, but we CAN get the scumbag Tort lawyers off of the backs of American manufacturers. Places like Switzerland and Canada are NOT unsafe because they do NOT have an army of Tort lawyers.

LET'S MAKE IT EVEN HARDER TO RUN AN AMERICAN BUSINESS: The latest "better idea" from the Obama gang is to tax corporate overseas income as-earned per year, for companies like: General Electric, Exxon, Cisco Systems, Hewlett Packard, Johnson & Johnson, Procter & Gamble, Google, etc. and so forth. What's going to happen in the real world is that some of these companies will re-incorporate in another country, and move their headquarters out of the USA. This will mean even more jobs lost to Americans, and long-term US tax receipts from these companies will in the long-run decline. What those in Washington sincerely CANNOT comprehend is that the Googles and Hewlett Packards of America really do NOT need the USA. It's not 1949 anymore. It's the USA that needs corporations, NOT the other way around.

WHY DOES A PRODUCTIVE COMPANY WITH WORLD CLASS PRODUCTS NEED THE USA? Do they need a country where corporate taxes are now the highest in the world? Perhaps they need a country where the tax code is over 5,000 pages long and changes by the hour? Perhaps they need a country where the balance of trade is a disaster, and the currency is a crash waiting to happen? Perhaps they need a banking system that has been so "gamed" by the government that it's a train-wreak? Perhaps they need a country where the government bet the farm on real estate - AND LOST? Perhaps they need a government that fights stupid never-end wars in stupid places and for stupid reasons? Perhaps they need a country that has more debt than any country in the history of the world? Perhaps they need a country that has more lawsuits than any other three countries in the world? Perhaps they need a country where the President sincerely thinks that wealth is created by union thugs, welfare whores, lawyers, and dumb government hacks telling creative people what the creative people should be paid?        

CONSUMPTION IS NOT AN ECONOMY: The ONLY way to have a true, real, and lasting economic recovery in for Americans to manufacturer MORE than we consume. That means doing everything possible to make America a more manufacturing friendly country. All over America both large and small business people, who actually work, are asking "What's in it for me?" They're NOT coming up with good answers.

STOP THE GOVERNMENT'S FRAUD: All of the Federal government's economic statistics are doctored. They range from acceptable "puff," to over or under reporting of 50% to 300% with numbers that are fraudulent. The official inflation rate is probably the worst case of fraud, but every other number is also doctored: Employment, GDP, Productivity, and right down the line. America has become a profoundly dishonest country. Anyone who makes their financial decisions based on the US Government's official numbers will probably lose money. An honest step forward would be to pass a law making it a criminal offense to continue the falsification of the government's numbers.

AMERICA NEEDS A REUTRN TO HONESTY. Right now, the Democrats are NOT trying to fix the matrix of lies and dishonesty. The Democrats are trying to breath new life into the matrix of lies, and make all of the old con games work again. Rather than kill the Frankenstein monster of systemic dishonest, the government is trying to make it walk again.

MORTGAGE SOLUTIONS: Pass a Federal law making at minimum 10% down payment for homes mandatory. No more lire-mortgages. A person's income is what they pay tax on, or what they can prove is money in the bank and/or other financial accounts they control, and/or property in their name. Canada has a very healthy banking system and no real estate crises because there's a 20% mandatory down payment on homes.

A CON GAME DEFINITION OF "HOME OWNERSHIP." Right now, home "ownership" in the USA was and still is a propaganda fraud. The majority of so-called "home owners" do NOT really "own" their homes. Ninety percent of the homes of "sub-primes" are really owned by Freddie Mac and Fannie Mae, which are the government. Here's the big picture of what happened with real estate. Easy "lire loans" for bums was a horrible failure. The government (mainly Bill Clinton) with the help of many Republicans disguised public housing as "sub-prime private ownership." The government told the banks to makes loans to any bum, and to then sell the crap loans to the stupid Chinese, Muslims, Europeans, etc. However, real estate, socialist engineering did NOT change basic DNA. The irresponsible, lazy, no talent bums were still bums after they got their $300,000 loan.

HOW STUPID IS IT TO LOAN MONEY TO A PERSON WITH NO FUTURE? As I've pointed out over the years, and in many of my columns, the "sub-prime class" in the USA does NOT have any future tense in their speech or thought patterns. Turn on any "Rap" radio station and listen to the words. There's no future tense. How stupid to do have to be to give a 30 year, $300,000 loan, to a person who has no future tense in their thought patterns, AND no provable income? That's what the American government told USA banks to do - and the American banks complied. The smart US banks sold the crap to the brain dead European banks that had more dollars then they knew what to do with.

PROOF OF WHAT I JUST STATED IS TRUE. The country most like the USA is Canada. The Canadian government never forced Canadian banks to make loans to bums like the US government forced US banks to make so-called "equal and fair" loans to bums. The result is that in 2009 all of the Canadian banks are in OUTSTANDING condition compared to America's banking disaster.

LOANS BASED ON THE ABILITY TO PAY THEM BACK: For many years the government encouraging (and sometimes forced) banks to make loans based on race and/or social class. This was the biggest single reason for the current financial crises. Foreign banks in particular should demand that the US government pass a law making it illegal for US banks to make loans based on anything other than the probability of the loan being repaid. If the US government does not want to pass such a law, then foreign banks should have any money used to buy US mortgages a farewell, goodbye kiss as they send it to the USA because they'll probably never see the money again.

THE SAME OLD FAILURE IN THE SAME OLD WAY! I have just now, today, received word from my sources that the Federal Government is, unbelievably, ONCE AGAIN putting pressure on banks to make loans to bums! The government is trying to keep the return to failed programs a secret from the general public, and America's creditors. The stupidity of Washington D.C. is without limits. Hopefully America's bankers will not go along with the same old mistakes in the same old ways. Hopefully America's bankers will "change," and tell the Obama government to shove it.  

FOREIGN BANKS ARE STILL BRAIN DEAD. If foreign bankers (and foreign governments) had anything in their pants besides loose change they'd be suing dozens of American banks, rating agencies, and the American government itself. This would help the real working people of America, and the people of the world. What the world needs is for somebody to start slapping the jerks in Washington D. C. across the face, and to tell them to "wake-up!" America has to stop trying to solve problems with more lies, more fraud, and more bombs.     

A PROGRAM FOR REAL OWNERSHIP: If we want to promote home ownership then lets have an honest system that's not a word-game fraud. That means: 10% minimum and mandatory down payments. No more Alt-income (un-provable income) mortgages. No more negative amortization (net-am) mortgages. No more principle only mortgages. No more balloon payments. Once a mortgage is 20 years old the interest is no longer tax deductible, and the big one, many restrictions on home equity loans.

DEMAND REAL HOME PROTECTION. All of America needs a Federal law like Florida's home ownership law. The only States that currently protect homes are: Florida, Iowa, Kansas, Oklahoma, South Dakota and Texas. In Florida your home is safe from lawsuits and debt collectors. In Florida you can have a five million dollar home, but if you declare bankruptcy your home is totally safe. If you have a million dollars in medical bills they cannot go after your home. If you have a million dollar civil judgment against you, the lawyers cannot touch your home. The voters in the 44 States that do NOT protect home ownership should be demanding the same laws as Florida. My advice for young people is to NOT live in any State that does not protect your home.

PREDICTION. Lawyer loving President Obama will continue to sweet talk us about protecting American homeowners. However, I can give you a 1000% guaranteed that President Obama will NEVER give home owners real protection by signing a Florida like, Federal home protection Bill. This kind of home protection would be an outstanding campaign issue for the Republican candidate of 2012.  

CREDIT CARDS: Pass a law that creates a national database of all credit cards, and sum-total credit limits on all of the cards in a person's (couples) name. No more cases of people who are on social security, with few assets, running up a combined $250,000 in total credit on 35 different credit cards in their name. I personally know of just such a case. A couple that was in their mid 70's, and had few real assets, except their home which in Florida cannot be touched. They ran up $287.000 in credit card debt on 43 cards. In 2005 banks sent out something like a billion credit card solicitations. My God, let's get some common sense into this sickness.

STOCK MARKET INSANTIY: Stocks are supposed to be a way for companies to raise money, expand, create jobs and build products to be exported. However, the American stock market has degenerated down into an insane casino. A step towards a solution is to put a 1/4^th of 1% Federal sales tax on the purchase of all stocks, ESPECIALLY if purchased by a hedge or mutual fund. This will stop hedge funds from the insane buying and selling of the same stock three times in one day. With many "funds" there are no people doing the buying and selling, it's a computer program. Buying and selling the same stock three times in one day is NOT investment. That's insane game playing that does NOTHING for the average American worker.

WHERE WILL STOCKS GO SHORT TERM? Long-term stock trends are much easier to predict than short term ones. In the short term a lot of basically irrelevant factors can move the stock market up or down. That said, and keeping in mind that I'm writing this column on May 12, 2009, my crystal ball sees a summer rally, an Obama hope rally, into the 9,000s. However, this will be another sucker rally and in the fall and winter of 2009-2010, people will start to see that nothing much has improved. The public will say, "We spent two trillion dollars on so-called stimulus and nothing is happening! We took the whole bottle of Viagra and nothing is going up!" Then, the stock market will go down again, possible way down.

INSANE LEVERAGE: Financial institutions made money by leveraging their positions anywhere from 30 to 1, to 50 to 1. Then the gross gambles where "insured" by a house of cards system of "Credit Default Swaps." This Ponzi like insurance-pyramid included most of the major banks, major insurance companies, and many of the world's largest hedge funds, etc. Only a few of them ever had the ability to pay the insurance if required. They re-insured their positions with people who also did NOT have the ability to pay. In 2008 the whole rot house of cards started to fall in on itself. Pass a law making it mandatory that anyone issuing insurance Credit Default Swaps (CDSs) have reserves of at least 10% liquid class A assets under their control. Also, people who sell insurance should be licensed and regulated as insurance companies - no more shadow insurance industry.

A $54 TRILLION DOLLAR CIRCLE OF FRAUD: When I looked into the details of CDSs my mind was staged. I was shocked. At the end of 2008 the world's Credit Default Swaps had balloon to $54 trillion dollars. That's not a misprint, $54 TRILLION. The 2008 Gross World Product (GWP) was 53 trillion. The CDSs were one trillion MORE than the world's GWP. This market was 70% uncontrolled and trillions of dollars worth of CDSs were underwritten by irresponsible hedge funds that were recklessly gambling. Most of the funds never had the assets to pay the insurance if something went wrong. Some insurance companies like giant AIG did NOT have the money! This is one reason why, in last months issue, I suggested that everyone get out of all hedge funds. The hedge fund/CDS bomb is still armed and could still explode. The bottom line is that all of the thousands of hedge funds that were in fact operating like unlicensed insurance companies need to be supervised, audited, and have cash assets to back their insurance, and/or not issue any kind of insurance "swaps" to anyone. 

A NATIONAL SERVICE FEE: What's fair and equal is that if a person lives in the USA, they should at the very least symbolically help pay for the USA. There should be a "A Patriotic National Service Fee," of one average days pay per year, and paid as a "Service Income Tax" by the 55% of the adult American population that current pays no income tax whatsoever. That would only bring in a100 billion dollars, but the symbolic effect on everyone paying the majority of taxes would be very healthy for America. It's hard to have your taxes raised, and raised and raised again knowing that over 50% of the adults in the USA are getting a free and unequal ride on income taxes, but have equal voting rights. If a person cannot pay the National Service Fee, or refuses to pay, they should lose their right to vote. This last part will probably have to wait until after the revolution.

THE ULTIMATE UNWANTED TRUTH is that if the United States is going to have any chance of surviving, as a significant power then voting has to be restricted. "Democracy" has a fatal flaw. (This is why Jesus Christ never had anything good to say about Democracy.) When all of the bums become the majority, and when they see that they can exploit "Democracy" to steal the money of anyone who has money, than that civilization is finished. 

WILL CHINA EVER GET ITS MONEY BACK? America needs a President that understands that a nation MUST in the long run produce MORE than it consumes. The American economy is basically functioning as a giant Ponzi game. The Chinese (and everyone else) should worry about their US Treasure Bonds because the matrix of lies inside of America is not being honestly addressed, and that means America's Treasury Bonds will never be redeemed for like value.

ALL OF THE WORLD'S MAJOR DEPRESSIONS OF THE PAST HAVE PRODUCTED WARS.  The Chinese have already made it clear that they are NOT going to stand around like everyone else in the world while the American government steals their money via hidden inflation and financial games. The Chinese gave America fair products for a fair price and they expect to be paid. The Obama administration is pooping any Chinese threat. The last time Americans laughed at a big Chinese threat was in November of 1950 when the Chinese told General Douglas MacArthur that they would attack if MacArthur went up to the Yalu River. MacArthur's staff laughed and kept pushing towards the Yalu. The Chinese did attack as they warned, and the Chinese army pushed the American army 200 miles south with great lose of America life. (The American Empire has NOT clearly won any significant shooting war in the last 63 years).   

THE VAMPIRE PRINCE OF AMERICA? Everything in a society is connected. The instant popularity of the HBO show "True Blood" is NOT an accident. The current popularity of Vampire everything is not an accident. America is rapidly becoming a vampire economy where blood is being sucked out of everything will any life to support an army of the "living-dead" like General Motor, AIG, Chrysler, Fannie Mae, bum homeowners, Tony Soprano union bosses, spineless bankers, U.S. Treasury Bonds, Tort Lawyers, a failed education system, and a bloated, quickly expanding government that's only interested in buying votes.

GREAT LINES. In the series, "True Blood" there's a great line that says it all about modern America. A person is in a bank trying to get a bank loan for an exorcism, but the banker is hesitating. The black person trying to get the loan immediately accuses the white banker of being prejudice. The banker says, "No, no the bank is not prejudice! Why - just the other day we gave a loan to a vampire-American." That line is a summary of the banking problem in America, too many loans to too many living-dead, blood sucking vampires. 

I WANT TO BE A PROUD AMERICAN: I do not say the above with any joy. It gives me no pleasure to be a citizen of a country that's borrowing money that will never be repaid. There used to be a time when being an America really made a person feel special. Americans used to be citizens of an honest country that spoke the truth, and worked at doing the right thing.

THE SYSTEM IS THE PROBLEM: If a nation, like America, has a legal system, tax system, and regulation system that is NOT competitive worldwide. Then any business trapped inside of that uncompetitive system CANNOT in the long run be worldwide competitive. For example, how could be operate a business inside of Cuba, or North Korea, and be competitive worldwide? This is the core problem with General Motors, and many other big failing American businesses. GM to be successful must be successful worldwide because the auto industry is now worldwide. However, GM's cowardly management trapped itself in both the USA, and in Detroit. Ten years ago I looked at GM, with total labor cost of $36 an hour, and saw death written all over it. Every big American company that needs worldwide business will eventually fail because they are trapped in an America that's full of termite Tort lawyers, the highest corporate taxes in the industrialized world, welfare whores, bums, too many regulations, people who cannot speak English, too many restrictions, too many Tony Soprano union bosses, a majority of voters that pay no income tax and are economically illiterate, and an army of self serving political vampires who's only real talent consists of sucking the money out of productive people to buy the votes of bums.

WASHINGTON D.C.'S INABILITY TO LEARN: The most frightening thing for me is the inability of our government to learn. For example, President Obama's economic programs are NOT new. Lowering the Fed Rate to almost zero, flooding the system with manufactured money, running massive deficits, this was Japan's exact program in the 1990's. In the 1990's most of the world was booming, so Japan had much better world economic conditions than the USA has today. Even with that great advantage, Japans programs of almost zero Fed Rates, plus massive spending - that was A FAILURE. When Japan's real estate bubble burst Japan's national debt was 60% of gross national product, like the USA's national debts was 60% of GNP in 2008. After years of  "stimulus" exactly like the USA has now, the end result was that Japan's national debt went from 60% of GNP to 190% of GNP. The USA will follow the same road and for the same reasons.

THE UNWANTED TRUTH IS THAT THE DEVALUATION OF THE US DOLLAR IS NOW GUARANTEED. With the current President Obama program a run on the US dollar is not an "if" but only a "when." I say the above with great pain and sorrow because it will produce massive suffering for millions of Americans.

NO EXIT: When the run on the US dollar happens, Mr. Obama will be caught between a rock and a hard place. The government can only defend the dollar by substantially raising interest rates. Or, buy selling the Gold in Fort Know - if there's still any owned by the USA.  In 2010 real state will still be down. Home prices could go down another 20% in 2009-2010, and the crash in commercial real estate has only started. Real unemployment will still be 10% in 2010. Cities and States will be going bankrupt and/or on Federal life-support.  Millions of Americans will only have the cash that's in their pocket. So, the government raising interest rates to defend the dollar would clobber the economy. However, not raising rates will send the price of oil, food, manufactured products, etc, right through the roof.

IT WILL BE A TIME FOR REPUBLICANS. There's going to be a lot of unhappy voters in 2010. If anyone ever wanted to run for Congress on the Republican ticket 2010 is going to be the chance of a lifetime. I'm predicting an 80% chance that the House will have a Republican majority.

AMERICA WILL HAVE WAGE AND PRICE CONTROLS. Mr. Obama's answer to the run on the US dollar will be wag and price controls (as I predicted in 2008). Like President Nixon's wage and price controls, they will break down. The Muslims are not going to sell the US oil at artificially low prices, and China is not going to sell their manufactured goods at artificially low prices. The Washington spoiled-brats are unbelievably childlike in there never ending belief that the real world is just going to give the brats whatever they want, and in some magical way of Democrats dream of "plantation America" will work.

DID YOU EVER NOTICE THAT ALL OF THE COMMUNISTS WORLDWIDE HAVE HAD THE SAME SOLUTION FOR THEIR FAILURE? People point out to communists (i.e. left-wing Democrats) that their programs are NOT working. The answer from the communists worldwide for the last century has always been the same, "Yes, it's not working now, but when we make it bigger it will work."

DEAD: After the last-ditch wage and price controls fail, then the America economy will be totally and profoundly screwed. The DOW stock index will fall below 6.000, possible below 3,000. What's left of millions of people's retirement money will be gone

ANDREW'S PREDICTION FOR THE 2012 PRESIDENTIAL ELECTION. As I said last month, I'm sure that the 2012 election is the Republican's election to lose. My caveat is that the brain-dead Republicans have become highly skilled at losing elections. Suggestions for winning: (1) do NOT pick a combat loser like McCain or Bob Dole. (2) Pick somebody under age 55. (3) Fire all of the advisors that tell candidates, "Don't say anything specific - just stick to the glittering generalities." (4) Have a very specific and bold agenda of real change and take command of the process. Force the Democrats to answer you, move fast, and move boldly. Hammer them with a major new proposal every week. (5) If you really wanted to win - hire me.

AMERICA WILL SURVIVE: After the old, rotten, kingdom-of-debt US economy is destroyed, a significant number of voters will finally check out of hotel delusion and check into hotel reality. America may or may-not suffer a revolution for the changes, but one way or the other America will start to enact all of the points (and more) that I outlined. Long term the Obama/Democratic party plantation welfare dream is unworkable and will fall apart just like the old USSR fell apart. The Obama administration is working a maximum speed to enact all kinds of socialist programs (so-called health care, expanded taxes disguised as cap-and-trade, more benefits for bums, etc.) with the belief that once enacted the programs will be there forever. They are wrong. In the last 30 years thousands of socialist programs around the world have been flushed down the toilet of history, and many of the future flushes will be Mr. Obama's socialist laws. Voting will be restricted to those who are intelligent enough to understand what they are voting for or against. A new America based on production, savings, education, speaking good English, and personal responsibility will rebuild itself.

GENERAL ADVICE

ADVICE FOR YOUNG PEOPLE: My continued advice for young people who have talent, and want to work hard, is to move out of the USA. Right now, April of 2009, the government's debt liability is $515,000 per tax paying US household. In eight years that number will be up over a million dollars per tax paying household. It's like buying stock in a company that owes more than it's total value - why? The grim facts about the USA speak for themselves.

WHERE TO GO? If you have no family ties, move to Australia. If you want to frequently return to the USA to see relatives, then move to western Canada: Vancouver, Edmonton, or Calgary and take our Canadian citizenship. Do NOT move to Mexico because Mexico is definitely on the road to what will be a nasty revolution.

CANADA GOT IT RIGHT. Among all of the daily horror stores about Bank of America, Citigroup, J.P. Morgan, Goldman Sacks, Wells Fargo, AIG, Merrill Lynch, etc. etc. There is nothing about Canadian banks going broke. There's nothing about big numbers of Canadian sub prime mortgage foreclosures. Canadian banks are in excellent condition, and the Canadian economy produces more than it consumes. The Canadian government runs Canadian society for the benefit of working people, not for the benefit of bums. Try this experiment, walk across the bridge from Detroit USA to Windsor Canada, and you'll see two separate worlds. 

ADVICE TO OLD PEOPLE: Anyone nearing 60 years old has to decide to either start taking Social Security at 62, with lower rates, or wait until 65 with higher rates. First of all, Social Security is part of the USA's matrix of lies. Social Security is a classic Ponzi game. The money that comes into Social Security on Money is already gone by Friday. Democrats like Al Gore who talk about the, "Social Security lock box," are in my opinion all Benny Madoffs. 

REWARDING BUMS: Social Security MUST eventually be "means tested."  That "means" that anyone who saved money, acted responsible and paid off their home, and so forth, will NOT get Social Security, and/or greatly reduced payments. The government will tell us that this will make Social Security "fair and equal."

GET ONTO SOCIAL SECURITY WHILE YOU CAN: My advice to older people is to start taking Social Security when you turn 62, (Medicare does not start until 65 years old regardless). There are no guarantees, but perhaps when the government gets around to "means testing" those who are already in the system will do better?

YOUNG VOTERS VERUS OLD VOTERS: One thing is for sure, about 10 years from now, without massive reductions in Social Security, there will be almost open warfare between people under 50 years old and everyone on Social Security. In 2025, to support Social Security at current levels, working people will have to be paying 22% of each paycheck to Social Security, plus Federal and State income tax on top of that. In 2025, if you're work for a company with weekly paychecks, you'll have 40% of your gross salary taken out before you even get your check.

IN THE LONG RUN SOMEBODY HAS TO MAKE SOME PROFIT: I'm a fundamentalist that I look long-term. How can US stocks have a true sustained raise in stock prices without real earnings? For true earnings, we need fundamental changes in America to make America more worldwide competitive. At this point, May 2009, I believe we'll have another sucker rally this summer that will take the Dow into the mid 9,000s. However, long term I thing the Dow will see 5,000 before it once again sees 14,000.

US STOCK ARE THE LONG-MARCH TO NOWHERE: As I've pointed out in past issues, on January 14, of 2,000, the Dow was 11,722. In May 2009, the Dow is around 8,200. Today, in gross numbers, the Dow is 33% lower than it was nine years ago. In addition, from January 2000 to January 2009 the US dollar has lost 38% of its purchasing power, so in purchasing power the DOW today is 42% lower than it was nine years ago!

A BIG HILL TO CLIME: On October 12^th 2007 the Dow was at 14,093. From where the Dow is at now in May, (8,200) it will have to increase by 78% to get back to where it was in 2007. That's a big hill to clime when you companies have one of the highest tax rates in the world on their backs.

THE BIGGEST FINANCIAL BUBBLE IN HISTROY RAISED STOCKS BY LESS THAN ONE POINT A DAY. For 2001 to 2007 the stock market was driven by trillions of dollars worth of borrowed money. There were trillions of dollars worth of insane 30 to 1, and 50 to 1 speculations. There were hundreds of billions of dollars in loans to bums juicing the system. If you were breathing, and could sign an X on a piece of paper, then you could get a $100,000 loan. There were over 6,000 hedge funds that were in many cases managed by people who were intellectual first cousins to Benny Madoff. Because of all the financial manipulations almost every company on the stock exchange was reporting record profits. With all of that total game playing and accounting fraud, the stock market only went from 11,722 in 2000 to 14,093 in 2007. During the greatest financial bubble in the history of the world the Dow from year 2000 to year 2007 only went up an average of 270 points a year. (Less than one point per day!) In non-inflated dollars the Dow's dollar purchasing power value actually went DOWN. In reality, the American Empire was already into a steep decline. The "good times" were an illusion.

WHAT'S GOING TO DRIVE THE STOCK MARKET UP? The American economic house of cards is coming apart. Today, the government is in the process of banning the crazy 40 to 1 casino like speculations. With new regulations the banks might actually have to keep reserves again. Bums off of the street are actually being turned down for loans. Today, almost every company on the NYSE is reporting sales declines, and many are going bankrupt. In the middle of the most insane financial speculation in the world (2000 to 2007), the Dow was only going up by an average of 270 points a year. So, now that all of the crazy speculation and fraud is dying, where is the stock market going? The answer is - nowhere.

WHAT TO DO WITH YOUR MONEY? For my industry, firearms, for some time now I have recommended that one of the best places for firearms industry people to invest is the firearms industry. For the past half-year firearms retailers have sold well OVER a million guns a month. Retailers are expanding their stores. Manufacturers are going after more market share. Ranges are being built. At this time, May 2009, I think firearms manufacturer are the only industry in the USA that's really booming.

KEEP WHAT YOU HAVE: At this point, I think the objective is to not lose money. For that I'd recommend opening an offshore account in something other than US dollars. The Swiss Franc is good. It's the only currency in the world that has some gold backing. For 2009 the Swiss Franc is up 7.5% on the US dollar. Long term the Australian dollar is good. The Canadian dollar is good long term. The second biggest currency in the world is the Euro; it's up over the dollar for 2009.

DO IT NOW. Right after Mr. Obama was elected one of the changes that I predicted were currency restrictions for taking money out of the USA. I would expect those restrictions to be enacted very soon. 

PROTECTION. As I said above, I sincerely believe that a run on the US dollar is only a question of "when" and not ‘if." Putting your money is an overseas account and in another currency gives you an added layer of protection. Foreign bank accounts, and brokerage accounts, can be opened via mail. You have to provide notarized copies of your passport, drivers license, and whatever information the bank might want. You can find a bank by looking on the Internet. Use a big and well establish bank or brokerage house. Warning, the very best banks do NOT want American clients, but keep looking.

LAW SUITS. If you have an account in a large and safe bank that has NO branch offices in the USA, than you have a little extra protection from civil lawsuit judgments. 

KEEP IT LEGAL: It is NOT illegal to have an offshore bank or brokerage account in another currency, but you MUST follow the American law. On your income tax return, Form 1040, Part III is titled "Foreign Accounts and Trusts." You have to check "yes" for a foreign account and give the foreign country where the account is located. The really import form you MUST file is the TD F 90-22, the Report of Foreign Bank and Financial Accounts, known by it's nick name, (FBAR) - Foreign Bank Account Report. It is a felony to not file this report.

FORMS? You can get your FBAR forms by Googling "Federal Forms FBAR," and printing the form off the Internet. In the FBAR you have to list the controllers of the account, where the account is located and the amount of money in the account at its highest point during the last year. If you have an account at Charles Schwab the government has exactly the same information about your account that you are giving them via the FBAR.

KEEP IT LEGAL. The FBAR is NOT part of your tax return. It goes directly to the US Treasury Department's office in Detroit, Michigan. The address will be on the FBAR form you will print out via the Internet. The deadline for the FBAR is June 30^th for the previous year. Some countries pay interest "gross," like US banks do for foreigners who have US bank accounts. That means taxes are not withheld at the point of origin. Some locations withhold taxes. You have to choose what you want, but either way you have to report the interest/earnings as income on your 1040 income tax form. If you check the "yes" box on your 1040 form, and send in your FBAR report, and list your interest/earnings on your tax return, then you are 100% legal.

MORE THAN A BANK ACCOUNT: I would give my highest recommendation to having an overseas bank account in a good, safe bank, and in a major currency like the Swiss Franc, Euro or possible the British Pound. The Euro is at 1.29 as of the writing of this article. Within the next 24 months I would not be surprised to see the Euro at 2 to the dollar. That would be a 54% increase in dollar terms for an "investment" that was literally "money in the bank."

PATRIOTIC? Some people view a foreign bank account as not exactly patriotic, but that's not true. The money belongs to an American, and is earning money overseas. That's a help to our balance of payments. There will be a run on the US dollar someday. After the dollar crises, the people with foreign accounts will bring their money back to America because once converted to dollars it will buy much more. The money will be used to reopen businesses, buy real estate, and so forth. Having foreign accounts is as much of a protection for the government as it is for the individuals. It's basic platoon combat tactics, i.e. spread your self out so one bomb won't destroy everything.

FOREIGN BANK ACCOUNTS ARE A CONVIENT POLITICAL WHIPPING BOY. There's been a lot in the news lately about bank accounts at UBS in Switzerland. Washington D.C. is exploiting an economic side issue The American money in UBS Swiss Bank is probably 1/10,000 of 1% of America's GNP. The core grand strategy mistake with America's economy is that the Fed and Treasury Department think that global Keynesian economics and American Keynesian economics are one and the same. What the American government does NOT understand is that Keynesian economics only works IN A CLOSED SYSTEM. The American economy in 1909, and even 1949, was a closed system. As late as 1969 it was mainly closed. However, in 2009 the American economy is like a bucket with lots of holes in the bottom.  You fill the bucket with water, (TARP, etc.) and in a short time the water is gone. You fill the bucket again, and again, and again with a trillion dollars each time, and in a short while the money is drained away.

WHERE TO SEE THE REAL PROBLEM? Anyone from the government can find the real problem at any Wal Mart. Just go up and down the manufactured product isles at Wal Mart and see where everything is made: China, Mexico, India, South Korea, Nicaragua, Japan, Taiwan, Finland, Germany - everywhere EXCEPT the USA! Then go up to the front of the store and look at the rows and rows of ringing cash registers. THOSE ARE ALL HOLES IN THE BOTTOM OF THE BUCKET. It will NOT make any difference how many trillions of dollars the government dumps in to the buck, it will always drain away UNTIL America is once again made a manufacturing friendly county.   

TIME BOMB: US currency is in wide circulation outside of the USA. The Treasury Department has said that perhaps as much as 70% of all the US $100 bills in existence are outside of America. That's okay so long as the American economy is okay. However, when the run on the US dollar starts, the people all over the world holding US currency will run to have their US dollars converted into their local currency. That will be a disaster for the value of the dollar, and for the American worker.

WHAT WILL THE YEAR 2012 LOOK LIKE? Real estate could still be falling, but at a slow rate. Unemployment will still be a real 9%. Underemployment will be very high. The Stock market will be nowhere. American manufacturing will be leaving America at the fastest rate in history. We could have a run on the US dollar. Overall there will be a significant reduction in living standards for almost everyone (Federal employees included). There will be a lot of profoundly unhappy voters who will be looking for a change.     

CASH: So many people today pay for everything with credit cards. My point is this, in a war or national disaster, if the electrical grid and/or Internet is sabotaged and does down, YOUR CREDIT CARDS ARE USELESS. In January I predicted a terrorist attack inside the USA in the next two years, and I still have that prediction. My point is that a normal family should have about $2500 in cash hidden away in your home. For a normal upper middle class family, $4,000 to $5,000 would not be too much. Under the very worst case scenario, if your passports are up to date (and they always should be), and you have money in a foreign bank. You could leave America with only the clothing on your back (plus your passport) and you'd still be able to give yourself shelter and food.  

YOU CANNOT BUILD ANYTHING WILL LIES: Many Americans today become angry when anyone like myself says anything they don't want to hear. It's like if we all pretend that the delusions are real then in some magical way they will be real. The more fascist or communist a country becomes the more the truth becomes an enemy. I do not like what's happening, and I'm profoundly bothered by a terrorist attack. The massive suffering that the government's cowardly actions, and lack on honesty, have brought on millions of Americans is a deep personal sorrow for me. However, intellectual dishonesty is the core of America's current problems. I'm not going to be part of the problem by being politically correct dishonest. I'm going to be part of the solution by telling people what they don't want to hear, but need to hear. The very first stop in effective problem solving is honesty. American society is going nowhere but DOWN until it starts to challenge the matrix of lies that currently dominates American culture.

If you have a young adult son or daughter, the best gift you could give them would be a subscription to AFI. The record is crystal clear, AFI Magazine is one of only a handful of publications in America with the courage and honesty to tell it like it is.

All the best, Andrew Molchan

P.S Look for Andrew's New Book, Rome II - The Sequel.  Out this fall. Advance orders only $12.

Call 954-467-9994 or email, Andrew@amfire.com