Will the New Bubble End as Badly as the Last One Did?

Federal Reserve Chairman Ben Bernanke has done it.  He has succeeded in creating a new housing bubble.  By driving mortgage rates down to the lowest level in 100 years and recklessly printing money with wild abandon, Bernanke has been able to get housing prices to rebound a bit.  In fact, in some of the more prosperous areas of the country you would be tempted to think that it is 2005 all over again.  If you can believe it, in some areas of the country builders are actually holding lotteries to see who will get the chance to buy their homes.  Wow - that sounds great, right?  Unfortunately, this "housing recovery" is not based on solid economic fundamentals.  As you will see below, this is a recovery that is being led by investors.  They are paying cash for cheap properties that they believe will appreciate rapidly in the coming years.  Meanwhile, the homeownership rate in the United States continues to decline.  It is now the lowest that it has been since 1995.  There are a couple of reasons for this.  Number one, there has not been a jobs recovery in the United States.  The percentage of working age Americans with a job has not rebounded at all and is still about the exact same place where it was at the end of the last recession.  Secondly, crippling levels of student loan debt continue to drive down the percentage of young people that are buying homes.  So no, this is not a real housing recovery.  It is an investor-led recovery that is mostly limited to the more prosperous areas of the country.  For example, the median sale price of a home in Washington D.C. just hit a new all-time record high.  But this bubble will not last, and when this new housing bubble does burst, will it end as badly as the last one did?

Federal Reserve Chairman Ben Bernanke has stated over and over that one of his main goals is to "support the housing market" (i.e. get housing prices to go up).  It took a while, but it looks like he is finally getting his wish.  According to USA Today, U.S. home prices have been rising at the fastest rate in nearly seven years...

U.S. home prices in the USA's 20 biggest cities rose 9.3% in the 12 months ending in February. It was the biggest annual growth rates in almost seven years, a closely watched housing index out Tuesday said.

In particular, home prices have been rising most rapidly in cities that experienced a boom during the last housing bubble...

Year over year, Phoenix continued to stand out with a gain of 23%, followed by San Francisco at almost 19% and Las Vegas at nearly 18%, the S&P/Case-Shiller index showed. Most of the cities seeing the biggest gains also fell hardest during the crash.

But is this really a reason for celebration?  Instead of addressing the fundamental problems in our economy that caused the last housing crash, Bernanke has been seemingly obsessed with reinflating the housing bubble.  As a recent article by Edward Pinto explained, the housing market is being greatly manipulated by the government and by the Fed...

While a housing recovery of sorts has developed, it is by no means a normal one. The government continues to go to extraordinary lengths to prop up sales by guaranteeing nearly 90% of new mortgage debt, financing half of all home purchase mortgages to buyers with zero equity at closing, driving mortgage interest rates to the lowest level in 100 years, and turning the Fed into the world's largest buyer of new mortgage debt.

Thus, with real incomes essentially stagnant, this is a market recovery largely driven by low interest rates and plentiful government financing. This is eerily familiar to the previous government policy-induced boom that went bust in 2006, and from which the country is still struggling to recover. Creating over a trillion dollars in additional home value out of thin air does sound like a variant of dropping money out of helicopters.

And the Obama administration has been pushing very hard to get lenders to give mortgages to those with "weaker credit".  In other words, the government is once again trying to get the banks to give home loans to people that cannot afford them.  The following is from the Washington Post...

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

We are repeating so many of the same mistakes that we made the last time.

But surely things will turn out differently this time, right?

I wouldn't count on it.

Right now, an increasingly large percentage of homes are being purchased as investments.  The following is from a recent Washington Times article...

Much of the pickup in sales and prices has been powered by investors who, convinced that the market is bottoming, are scooping up bountiful supplies of distressed and foreclosed properties at bargain prices and often paying with cash.

With investors targeting lower-priced homes that they intend to purchase and rent out, they have been crowding out many first-time buyers who are having difficulty getting mortgage loans and are at a disadvantage when competing with well-heeled buyers. Cash sales to investors now account for about one-third of all home sales, according to the National Association of Realtors.

And as we have seen in the past, an investor-led boom can turn into an investor-led bust very rapidly.

If this truly was a real housing recovery, the percentage of Americans that own a home would be going up.

Instead, it is going down.

As I mentioned above, the U.S. Census Bureau is reporting that the homeownership rate in the United States is now the lowest that it has been since 1995.

In particular, homeownership among college-educated young people is way down.  They can't afford to buy homes due to crippling levels of student loan debt...

For the average homeowner, the worst news is that these overleveraged and defaulting young borrowers no longer qualify for other kinds of loans — particularly home loans. In 2005, nearly nine percent of 25- to 30-year-olds with student debt were granted a mortgage. By late last year, that percentage, as an annual rate, was down to just above four percent.

The most precipitous drop was among those who owe $100,000 or more. New mortgages among these more deeply indebted borrowers have declined 10 percentage points, from above 16 percent in 2005 to a little more than 6 percent today.

"These are the people you'd expect to buy big houses," said student loan expert Heather Jarvis. "They owe a lot because they have a lot of education. They have been through professional and graduate schools, but their payments are so significant, they have trouble getting a mortgage. They have mortgage-sized loans already."

And the truth is that there simply are not enough good jobs in this country to support a housing recovery.  In a previous article, I used the government's own statistics to prove that there has not been a jobs recovery.  If we were having a jobs recovery, the percentage of working age Americans with a job would be going up.  Sadly, that is not happening...

And as I mentioned above, the "housing recovery" is mostly happening in the prosperous areas of the country.

In other areas of the United States, the devastating results of the last housing crash are still clearly apparent.

For example, the city of Dayton, Ohio is dealing with an estimated 7,000 abandoned properties.

As I wrote about the other day, there are approximately 70,000 abandoned buildings in Detroit, Michigan.

And all over the nation there are still "ghost towns" that were created when builders abruptly abandoned housing developments during the last recession.  You can see some pictures of some of these ghost towns right here.

So the truth is that this is an isolated housing recovery that is being led by investors and that is being fueled by very reckless behavior by the Federal Reserve.  It is not based on economic reality whatsoever.

In the end, will the collapse of this new housing bubble be as bad as the collapse of the last one was?

The Next Economic Depression Has Started in Europe

The next Great Depression is already happening - it just hasn't reached the United States yet.  Things in Europe just continue to get worse and worse, and yet most people in the United States still don't get it.  All the time I have people ask me when the "economic collapse" is going to happen.  Well, for ages I have been warning that the next major wave of the ongoing economic collapse would begin in Europe, and that is exactly what is happening.  In fact, both Greece and Spain already have levels of unemployment that are greater than anything the U.S. experienced during the Great Depression of the 1930s.  Pay close attention to what is happening over there, because it is coming here too.  You see, the truth is that Europe is a lot like the United States.  We are both drowning in unprecedented levels of debt, and we both have overleveraged banking systems that resemble a house of cards.  The reason why the U.S. does not look like Europe yet is because we have thrown all caution to the wind.  The Federal Reserve is printing money as if there is no tomorrow and the U.S. government is savagely destroying the future that our children and our grandchildren were supposed to have by stealing more than 100 million dollars from them every single hour of every single day.  We have gone "all in" on kicking the can down the road even though it means destroying the future of America.  But the alternative scares the living daylights out of our politicians.  When nations such as Greece, Spain, Portugal and Italy tried to slow down the rate at which their debts were rising, the results were absolutely devastating.  A full-blown economic depression is raging across southern Europe and it is rapidly spreading into northern Europe.  Eventually it will spread to the rest of the globe as well.

The following are 20 signs that the next Great Depression has already started in Europe...

#1 The unemployment rate in France has surged to 10.6 percent, and the number of jobless claims in that country recently set a new all-time record.

#2 Unemployment in the eurozone as a whole is sitting at an all-time record of 12 percent.

#3 Two years ago, Portugal's unemployment rate was about 12 percent.  Today, it is about 17 percent.

#4 The unemployment rate in Spain has set a new all-time record of 27 percent.  Even during the Great Depression of the 1930s the United States never had unemployment that high.

#5 The unemployment rate among those under the age of 25 in Spain is an astounding 57.2 percent.

#6 The unemployment rate in Greece has set a new all-time record of 27.2 percent.  Even during the Great Depression of the 1930s the United States never had unemployment that high.

#7 The unemployment rate among those under the age of 25 in Greece is a whopping 59.3 percent.

#8 French car sales in March were 16 percent lower than they were one year earlier.

#9 German car sales in March were 17 percent lower than they were one year earlier.

#10 In the Netherlands, consumer debt is now up to about 250 percent of available income.

#11 Industrial production in Italy has fallen by an astounding 25 percent over the past five years.

#12 The number of Spanish firms filing for bankruptcy is 45 percent higher than it was a year ago.

#13 Since 2007, the value of non-performing loans in Europe has increased by 150 percent.

#14 Bank withdrawals in Cyprus during the month of March were double what they were in February even though the banks were closed for half the month.

#15 Due to an absolutely crippling housing crash, there are approximately 3 million vacant homes in Spain today.

#16 Things have gotten so bad in Spain that entire apartment buildings are being overwhelmed by squatters...

A 285-unit apartment complex in Parla, less than half an hour’s drive from Madrid, should be an ideal target for investors seeking cheap property in Spain. Unfortunately, two thirds of the building generates zero revenue because it’s overrun by squatters.

“This is happening all over the country,” said Jose Maria Fraile, the town’s mayor, who estimates only 100 apartments in the block built for the council have rental contracts, and not all of those tenants are paying either. “People lost their jobs, they can’t pay mortgages or rent so they lost their homes and this has produced a tide of squatters.”

#17 As I wrote about the other day, child hunger has become so rampant in Greece that teachers are reporting that hungry children are begging their classmates for food.

#18 The debt to GDP ratio in Italy is now up to 136 percent.

#19 25 percent of all banking assets in the UK are in banks that are leveraged at least 40 to 1.

#20 German banking giant Deutsche Bank has more than 55 trillion euros (which is more than 72 trillion dollars) of exposure to derivatives.  But the GDP of Germany for an entire year is only about 2.7 trillion euros.

Yes, U.S. stocks have been doing great so far this year, but the truth is that the stock market has become completely and totally divorced from economic reality.  When it does catch up with the economic fundamentals, it will probably happen very rapidly like we saw back in 2008.

Our politicians can try to kick the can down the road for as long as they can, but at some point the consequences of our foolish decisions will hunt us down and overtake us.  The following is what Peter Schiff had to say about this coming crisis the other day...

"The crisis is imminent," Schiff said.  "I don't think Obama is going to finish his second term without the bottom dropping out. And stock market investors are oblivious to the problems."

"We're broke, Schiff added.  "We owe trillions. Look at our budget deficit; look at the debt to GDP ratio, the unfunded liabilities. If we were in the Eurozone, they would kick us out."

Schiff points out that the market gains experienced recently, with the Dow first topping 14,000 on its way to setting record highs, are giving investors a false sense of security.

"It's not that the stock market is gaining value... it's that our money is losing value. And so if you have a debased currency... a devalued currency, the price of everything goes up. Stocks are no exception," he said.

"The Fed knows that the U.S. economy is not recovering," he noted. "It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode."

So please don't think that we are any different from Europe.

If the United States government started only spending the money that it brings in, we would descend into an economic depression tomorrow.

The only way that we can continue to live out the economic fantasy that we see all around us is by financially abusing our children and our grandchildren.

The U.S. economy has become a miserable junkie that is completely and totally addicted to reckless money printing and gigantic mountains of debt.

If we stop printing money and going into unprecedented amounts of debt we are finished.

If we continue printing money and going into unprecedented amounts of debt we are finished.

Either way, this is all going to end very, very badly.

JP Morgan Makes Money with Illegal Immigrants That Go on Food Stamps

Recently uncovered documents prove that the Obama administration has been working with the Mexican government to increase the number of illegal immigrants on food stamps, and when more illegal immigrants go on food stamps JP Morgan makes more money.  As you will read about below, JP Morgan has made at least 560 million dollars processing Electronic Benefits Transfer cards.  Each month, JP Morgan makes between $.31 and $2.30 for every single person on food stamps (and that does not even include things like ATM fees, etc).  So JP Morgan has a vested interest in seeing poverty grow and the number of people on food stamps increase.  Meanwhile, the Obama administration has been aggressively seeking to expand participation in the food stamp program.  Under Obama, the number of people on food stamps has grown from 32 million to more than 47 million.  And even though poverty in America is absolutely exploding, that apparently is not good enough for the Obama administration. 

It has now come out that the U.S. Department of Agriculture has provided the Mexican government with literature that actively encourages illegal immigrants to enroll in food stamps.  One flyer contains the following statement in Spanish: "You need not divulge information regarding your immigration status in seeking this benefit for your children."  The bold and the underlining are in the original document in case you were wondering.  Overall, federal spending on food stamps increased from 18 billion dollars in 2000 to 85 billion dollars in 2012, and at this point one out of every five U.S. households in now enrolled in the food stamp program.  When people illegally or fraudulently enroll in the food stamp program, it makes it harder for those that desperately need the help to be able to get it.

It is certainly a good thing to help fellow Americans that are suffering.  It is a crying shame that more than a million public school students in America are homeless.  That should not be happening in the "wealthiest nation on earth".

But today we have a system that has turned poverty into big business.  According to an article posted on Breitbart, JP Morgan has made at least 560 million dollars (and probably much more) processing EBT cards...

A new report by the Government Accountability Institute finds that JP Morgan has made at least $560,492,596 since 2004 processing the Electronic Benefits Transfer (EBT) cards of 18 of the 24 states it has under contract for the food stamp program.

A Daily Beast article provided some more specifics about the monster profits that JP Morgan is making...

Just how lucrative JP Morgan’s EBT state contracts are is hard to say, because total national data on EBT contracts are not reported. But thanks to a combination of public-records requests and contracts that are available online, here’s what we do know: 18 of the 24 states JP Morgan handles have been contracted to pay the bank up to $560,492,596.02 since 2004. Since 2007, Florida has been contracted to pay JP Morgan $90,351,202.22. Pennsylvania’s seven-year contract totaled $112,541,823.27. New York’s seven-year contract totaled $126,394,917.

These contracts are transactional contracts, meaning they are amendable based on changes in program participation. Each month, the three companies that administer EBT receive a small fee that can range from $.31 to $2.30 (or higher depending upon the number of welfare services on an EBT card and state contractual requirements) for each SNAP recipient.

So the more people that are out of work and that need to turn to the government for food, the bigger profits that JP Morgan makes.

What makes all of this even more insulting is that many of the jobs that JP Morgan could be providing to Americans to help alleviate this poverty are being shipped overseas instead.  As I noted in a previous article, many EBT card customer service calls are being routed to call centers in India by JP Morgan.

So why doesn't anyone do anything about this?

Well, it turns out that JP Morgan has the politicians that oversee the food stamp program in their back pocket.  The following is from a recent Money Morning article...

And the bank has taken steps to make sure the SNAP program remains a growing source of revenue. JPMorgan's political donations to the members of House and Senate agricultural committees, the ones with legislative responsibility for the program, soared from just over $82,000 in 2002 to nearly $333,000 as of 2010.

What a wonderful system we have, eh?

And surely JP Morgan just loves the fact that the Obama administration is actively encouraging illegal immigrants to apply for food stamps.

What you are about to read should absolutely shock you.  At a time when the U.S. government is absolutely drowning in debt, the Obama administration is making it abundantly clear to illegal immigrants that their immigration status will not be checked when they apply for food stamps.  The following is from a recent Judicial Watch press release...

Judicial Watch today released documents detailing how the U.S. Department of Agriculture (USDA) is working with the Mexican government to promote participation by illegal aliens in the U.S. food stamp program.

The promotion of the food stamp program, now known as “SNAP” (Supplemental Nutrition Assistance Program), includes a Spanish-language flyer provided to the Mexican Embassy by the USDAwith a statement advising Mexicans in the U.S. that they do not need to declare their immigration status in order to receive financial assistance.  Emphasized in bold and underlined, the statement reads, “You need not divulge information regarding your immigration status in seeking this benefit for your children.”

The documents came in response to a Freedom of Information Act (FOIA) request made to USDA on July 20, 2012.  The FOIA request sought: “Any and all records of communication relating to the Supplemental Nutrition Assistance Program (SNAP) to Mexican Americans, Mexican nationals, and migrant communities, including but not limited to, communications with the Mexican government.”

The documents obtained by Judicial Watch show that USDA officials are working closely with their counterparts at the Mexican Embassy to widely broaden the SNAP program in the Mexican immigrant community, with no effort to restrict aid to, identify, or apprehend illegal immigrants who may be on the food stamp rolls.

So who pays for all of this?

You do of course.

The Obama administration is doing all that it can to promote illegal immigration, and big banks such as JP Morgan just make bigger profits the more illegal immigration that we see, but it is you and I that end up with the bill.  This was put beautifully in a recent article by Mike Adams of NaturalNews...

Nearly $75 billion of taxpayer money is spent each year on federal food stamps, and it turns out some of that is alarmingly being handed out to illegal immigrants -- people who contribute nothing to the federal tax base in America but who seem to be experts on collecting social welfare benefits of all kinds. If you are working for a living, you are buying food for illegals who are being actively recruited by Obama and the democratic party so that they will vote more democrats into office.

When we reward illegal immigration, what happens?

That's right - we are just going to get even more illegal immigration.

According to WND, we have already started seeing a huge increase in illegal immigrants coming across the border since Congress began debating the amnesty bill...

Illegal border crossings have doubled, and possibly even tripled, since the latest congressional push began toward comprehensive immigration reform.

In reporting first published by Townhall.com’s Katie Pavlich, border patrol agents in the Tucson/Nogales sector claim illegals are coming here in much higher numbers in just the past few months.

“We’ve seen the number of illegal aliens double, maybe even triple since amnesty talk started happening,” an unnamed border agent said to Townhall. The data from Customs and Border Protection cited in the report shows 504 illegals were detected crossing in that sector between Feb. 5 and March 1. Only 189 were caught on camera, and just 174 of the 504 were apprehended. Of those spotted on camera, 32 were carrying huge packs believed to contain drugs and several were heavily armed.

If that bill is passed, it is being projected that it will bring 33 million more people into this country...

The pending Senate immigration bill would bring a minimum of 33 million people into the country during its first decade of operation, according to an analysis by NumbersUSA, a group that wants to slow the current immigration rate.

By 2024, the inflow would include an estimated 9.2 million illegal immigrants, plus 2.5 million illegals who arrived as children — dubbed ‘Dreamers’ — plus roughly 3.4 million company-sponsored employees with university degrees, said the unreleased analysis.

The majority of the inflow, or roughly 17 million people, would consist of family members of illegals, recent immigrants and of company-sponsored workers, according to the NumbersUSA analysis provided to The Daily Caller.

We have made legal immigration a complete and total nightmare while leaving the back door completely wide open at the same time.

We greatly punish those who are trying to do things legally while at the same time we are greatly rewarding those that are cheating the system.

What kind of sense does that make?

Shouldn't we insist that everyone come in through the front door?

Those that are coming over our borders illegally know what the score is...

Linda Vickers, who owns a ranch in Brooks County, which is Ground Zero for the immigration debate, pins the blame directly on talk of 'amnesty' and a 'path to citizenship' for people who entered the U.S. illegally.

She recalls one man being arrested on her ranch not long ago.

"The Border Patrol agent was loading one man up, and he told the officer in Spanish, 'Obama's gonna let me go'."

Border Patrol agents report that immigrants are crossing the border, and in some cases surrendering while asking, “Where do I go for my amnesty?”

We are already becoming a poverty-stricken nation.  We simply can't afford to feed millions upon millions of illegal immigrants as well.

As I write this, the U.S. national debt is $16,758,107,082,298.63.

We now have a debt to GDP ratio of about 105 percent.

In the United States today, the amount of money that is deposited in our banks is about 9.3 trillion dollars.  If we took every penny of that and used it to pay off the national debt, we would still owe more than 7 trillion dollars.

We are stealing more than 100 million dollars from future generations of Americans every single hour of every single day to pay our bills, and yet everyone seems to think that this is "normal" somehow.

The truth is that what we are doing is absolutely criminal, and we should all be ashamed.

In the end, it should be apparent to everyone that our system is failing.  Our government is corrupt, our big banks are consumed with greed and most average Americans are so addicted to entertainment that they have absolutely no idea what is going on.

What would those that bled and died for this country think about what we have become today?

Unprecedented Shortages of Ammo, Physical Gold and Silver

All over the United States we are witnessing unprecedented shortages of ammunition, physical gold and physical silver.  Recent events have helped fuel a "buying frenzy" that threatens to spiral out of control.  Gun shops all over the nation are reporting that they have never seen it this bad, and in many cases any ammo that they are able to get is being sold even before it hits the shelves.  The ammo shortage has already become so severe that police departments all over America are saying that they are being told that it is going to take six months to a year to get their orders.  In fact, many police departments have begun to trade and barter with one another to get the ammo that they need.  Meanwhile, the takedown of paper gold and paper silver has unleashed an avalanche of "panic buying" of physical gold and physical silver all over the planet.  In the United States, some dealers are charging premiums of more than 25 percent over the spot price for gold and silver and they are getting it.  People are paying these prices even though they are being told that delivery will not happen for a month or two in many cases.  Some dealers are feverishly taking as many orders as they can, and they are just hoping that they will be able to get the physical gold and silver to eventually fill those orders.  Personally, I have never seen anything like this.  If things are this tight now, what is going to happen when the next major financial crisis strikes and people really begin to panic?

The shortages and rationing of ammunition at gun shops all over America just seem to keep getting worse.  The following is from an article by a gun owner down in Texas named Brad Meyer...

If you’d like to see a normally sullen sales clerk chortle with derisive pleasure, just walk into just about any gun range, sporting goods store or mass merchandiser and try and buy a couple boxes of .22 ammunition.

Gun enthusiasts are up in arms about a nationwide shortage of ammunition. Handgun ammo in general is particularly difficult to find – and when you do find it, there are restrictions on the amount you can buy and how much you’re going to be paying for it.

While the list of hard to find ammo is long, .22 long rifle and 9mm handgun ammunition are particularly difficult to find in quantity. And the few places that have it are charging a premium rate and usually limiting purchases to one box, per person, per day.

Many gun owners try to find ammunition by going on the Internet, but things have gotten so tight that now any ammo that becomes available online is often gone within seconds...

There are websites where people across the country post links to where ammunition is available – and it sells out within seconds. Not minutes or hours – seconds.

Unfortunately, all of this demand is also driving up prices.  Just check out what Meyer says is happening to the price of standard .22 ammo...

The demand is driving up the cost of ammunition. Six months ago, standard .22 ammo – the most common type of bullet produced in the world – could be had in bulk for around five cents apiece. It is now going for 50 cents or more on some websites – and people are paying it.

But this shortage is not just affecting private citizens.  According to Newmax, police departments all over the nation are dealing with ammo shortages unlike anything that they have ever seen before...

Sheriff Anthony DeMeo of Nye County, Nev., was told his department’s regular order of 50,000 rounds could take up to a year to arrive.

“This is the first time ever I’ve heard that there’s a problem with a law-enforcement agency getting ammo for their agency,” DeMeo told The Las Vegas Sun.

These departments are not alone. Law enforcement agencies in Oklahoma, Wisconsin, Arizona, and Georgia are among many that are having to limit how much they give their officers due to the shortage.

Could you imagine waiting for "up to a year" to get more ammunition?

A recent article posted on CNSNews had some more examples of police departments that are reporting that there is a massive wait to get more ammo...

Chief Pryor of Rollingwood, Texas says of the shortage:

"We started making phone calls and realized there is a waiting list up to a year.  We have to limit the amount of times we go and train because we want to keep an adequate stock."

"Nobody can get us ammunition at this point," says Sgt. Jason LaCross of the Bozeman, Montana police department.

LaCross says that manufacturers are so far behind that they won't even give him a quote for an order.

"We have no estimated time on when it will even be available," LaCross says.

This is insane.

What in the world could be causing such an ammo crunch?

Well, certainly the demand for guns and ammo has been trending up in recent years - especially since Barack Obama was elected.

But that doesn't fully account for the shortages that we are witnessing at the moment.

So what is going on?

Well, some people believe that the federal government is responsible.  It has been reported that they have signed contracts to purchase "up to" 1.6 billion rounds of ammunition.  According to Forbes, this amount of ammunition would be enough to fight a "hot war" in America for 20 years...

The Denver Post, on February 15^th, ran an Associated Press article entitled Homeland Security aims to buy 1.6b rounds of ammo, so far to little notice.  It confirmed that the Department of Homeland Security has issued an open purchase order for 1.6 billion rounds of ammunition.  As reported elsewhere, some of this purchase order is for hollow-point rounds, forbidden by international law for use in war, along with a frightening amount specialized for snipers. Also reported elsewhere, at the height of the Iraq War the Army was expending less than 6 million rounds a month.  Therefore 1.6 billion rounds would be enough to sustain a hot war for 20+ years.  In America.

Could this be a way that the Obama administration is trying to restrict the amount of ammo that gets into the hands of private citizens?

That is what some people are suggesting.

According to talk radio show host Michael Savage, the ammo contracts that the federal government has signed give them priority over all other purchasers...

What Homeland Security is doing here is they’re issuing a contract to buy up to that amount of ammo if they want it…

It’s a way to control the amount of market that’s available on the commercial market at any time.

If they go to the ammo manufacturers and say give me 50 million rounds, give me another 30 million rounds… if they periodically do this in increments, they’re going to control how much ammo is available on the commercial market.

As part of their contract it stipulates in there that when the government calls and says give us another quantity, that everything they make has to go to the government priority one before any of it goes to the commercial market.

So, if  they get nervous, all they have to do is use that contract that they have in place… and they just say ‘give us some more.’

So whenever the government wants to tighten the supply of ammunition, all they have to do is invoke their contracts and order more for themselves.

Meanwhile, Obama appears to be doing other things to restrict the amount of ammo that gets into the hands of private gun owners.

For example, there are reports that the Obama administration plans to use executive orders to greatly restrict the importation of ammo from overseas.

So if anything, the shortage of ammunition is only going to get worse, not better.

Meanwhile, the "panic buying" of physical gold and physical silver that we have seen lately has really run down inventories.

According to Reuters, demand has become so intense that the U.S. Mint has suspended sales of gold coins for the first time since 2009...

The U.S. Mint said it has suspended sales of its one-tenth ounce American Eagle gold bullion coins as surging demand after bullion's plunge to two-year lows depleted the government's inventory. This marks the first time it has stopped selling gold product since November 2009, dealers said.

At the same time, precious metals dealers all over the country are scrambling to meet the voracious demand that they have been seeing this month.  The following is an excerpt from a letter that the CEO of Texas Precious Metals recently sent out to his customers...

The physical silver market is, in a word, ugly. There is no telling at this point when mint inventories will return to normal, but you can be sure it will not happen within the next 8 weeks. Most dealers, at this point, are selling their current customer demand forward, meaning they are selling product they do not presently have, expecting to pull from future mint allocations. Consequently, future allocations will face pressure from today's demand. It is not my intent here to comment on the business practices of other companies, but I will say that no one can possibly predict future allocations at the time. The US mint, for example, releases its allocations weekly, and until then, dealers have no insight into allocation levels. Last week, we turned away business in excess of 100,000 ozs of silver because of stock depletion. However, we stand by the notion that it is better to lose a sale than lose a customer by delaying delivery two months (or more).

A similar thing is happening over in Asia.  According to the Financial Times, soaring demand has caused a shortage of gold at the Hong Kong Gold & Silver Exchange Society...

Haywood Cheung, president of the Hong Kong Gold & Silver Exchange Society, said the exchange had effectively run out of most of its holdings as members looked to meet a shortfall in supply amid rampant retail demand for gold products.

“In terms of volume, I haven’t seen this gold rush for over 20 years,” he told the Financial Times on Monday, adding that the exchange only had around twenty 1kg bars, and 100 five-tael bars left in its inventory. “Older members who have been in the business for 50 years haven’t seen such a thing.”

But most disturbing of all is what Jim Sinclair told King World News recently.  Apparently his friend went to get his gold out of a Swiss bank the other day and they refused to give it to him...

A person that I know with significant deposits in one of the primary Swiss banks, in allocated gold, wanted to take out his gold and was just refused on the basis of directives from the central bank....

They told him the amount was in excess of 200,000 Swiss francs and the central bank had instructed them not to do it because it has to do with anti-terrorism and anti-money laundering precautions.

I really wonder whether those are precautions or whether the gold simply isn’t there. Now you tell me that a London delivery has basically failed. It has to raise our suspicions that the lack of physical gold behind the paper gold is literally so severe that we are coming to understand that it is in fact not there.

The gold that people think is stored is not stored, and the inventory of the warehouses for exchanges may not be holding deliverable gold. There has always been speculation about whether or not the physical gold the US claims to store is in fact in those vaults.

The greatest train robbery in history might be all of the gold, and it would only be something like we have described above that would happen right before gold makes historic highs.

There simply is no gold behind the paper. One example is AMRO, a second is your example with Maguire, and a third is my dear friend who was refused his gold on the basis that its value was too high. Remember this friend of mine had his gold in an allocated account in storage at a major Swiss bank. I repeat, there is no gold.

So are we going to see more of this?

Will it soon become evident that there is simply not enough physical gold to cover all of the promises that the banks have made?

Jim Sinclair sure seems to think so.

In another interview, John Embry expressed similar sentiments to King World News...

This gets back to the tip of the iceberg when the Dutch Bank ABN AMRO came out and literally said that if you have allocated gold with us, you can’t have it.

That, to me, is a default, and it gets back to what Jim Sinclair related when one of his friends went to a Swiss bank and couldn’t get his allocated gold.  I mean that’s preposterous.  If it’s allocated it should be there, but it’s clearly not there.  I think this is the beginning of the end of the massive Ponzi scheme in paper gold.  I have been talking about this for some time, and it will have an enormous impact on future gold and silver prices.

When it becomes widely known that all of the people who think they own gold in fact don’t own gold, that it’s been hypothecated and re-hypothecated so many times that there are 100 claims for every single ounce of physical gold, that is when the prices of gold and silver will really go berserk to the upside, and at that point the shorts will have serious problems.”

If those that helped engineer the recent takedown of paper gold and silver were hoping to scare people away from physical gold and silver, then they failed miserably.

All of this is just another example why I encourage people to get prepared while times are still relatively good.

Once disaster strikes, it may be too late to get the things that you need.

Right now there are a whole lot of people out there wishing that they had stocked up on ammo when it was much cheaper and much more readily available.

We are moving into a time when everything that can be shaken will be shaken.  Use the stability provided by the false bubble of economic hope that we are experiencing right now as an opportunity to get prepared.  The next major wave of the economic collapse is rapidly approaching and time is running out.