Historic Ghosts Reappear
by Roger Wiegand
constantly reading and comparing current
economic fundamentals and market action with
similar historic experiences in the U.S. Today
we discuss key points with eerie similarities to
other troubled times. This discussion will get
you thinking. As someone once said, “History
never repeats exactly but certainly rhymes.”
What we envision today as the result of these
comparisons creates such a fright your hair will
stand on end.
“There can never be any certainty that a debt
crisis will not spiral out of control. Risks
therefore, must increase until the financial
pressure becomes intolerable and the financial
authorities move to inject massive amounts of
liquidity, reduce interest rates and bail out
the large awaiting bankrupts that are about to
collapse.” -The Bank Credit Analyst, September,
1982 from Golden Insights compiled by James U.
That Bank Credit Analyst quote could easily be
from last week’s newspaper not 1982. Let’s
review a list of old era key points and see if
you can determine the dates. The following data
was experienced in another economic disruption.
The economy fell down after a prolonged and
serious war. There seemed to be a series of
never ending recessions and depressions despite
a pattern of industrial growth, innovation, and
Foreign capital was pouring into the U.S as Wall
Street’s investment bankers and trading houses
were booming. Expansion was amazing.
There transpired a physical shock to the land
which proved horridly damaging and expensive
beyond initial comprehension.
Financial pressures were growing on the national
and private treasuries of most Americans.
Demands became such that those in the private
sector found themselves being “crowded out” by
big government seizing credit.
Global capital demands were so extreme against
the banks and other sources of credit and
liquidity supply that analysts were very
seriously concerned about the outcome.
The initial shock nearly paralyzed Wall Street
and liquidity dried-up to the extent
governments, banks and brokers were running
everywhere in a serious panicky strain seeking
liquidity and credit to cover debts and repay
failing valuations. Shares tumbled, and fear
escalated as leverage produced increasing
After some serious damage, the turbulence
subsided and optimism returned. However, robust
buying did not return except from those in
privileged positions with extraordinary capital
Demands on gold had been fierce and even higher
demands for this precious metal were expected.
No one could see the end or measure the depth of
The American president was deeply disturbed
about the financial system, out of control
growth, the numbers and types of immigrants
flooding into the nation and very poor living
conditions for the masses. The president and
others looked at Wall Street not with respect
but great fear. Since the war, capitalists were
judged to be “looters and self-dealing
This president was very aggressive and took
immediate steps to rein-in the companies and
provide more advantage to labor. Lawsuits were
filed against major industries and companies
with some of them being arbitrarily resolved.
This president “sued nearly 40 corporations
under the Sherman Anti-Trust Act.” This
president “In a Memorial Day speech at
Indianapolis, railed that the ‘predatory man of
wealth’ was the primary threat to private
property in the United States.” Later this
president was judged to be a prime instigator
creating the subsequent crash.
Liquidity strains expanded over the world
spreading deeply into Europe setting-off sales
of shares and other securities, coupled with a
bitter angry rising of new regulations.
Events of this example were not as prolonged as
our current debacle but nevertheless they were
nasty enough to threaten the very foundations of
stock trading and the entire financial system of
the United States. What was prolonged were the
economic, social and corporate abuses over
When Did This Happen?
This disaster was in the making from the early
1870’s after the US Civil War until the final
fiscal explosion known as the “The Panic of
1907.” The president was Theodore Roosevelt. The
contributing physical event was the San
Francisco Earthquake and fires. In hindsight, we
see the U.S. was in a prolonged
recession-depression from 1873 to 1893. From
1898 to 1906, the rebound and excesses provided
a set-up for the Panic of 1907.
Notice Similarities In These Events With Our
Those ideas reported above were in the book the
“Panic of 1907,” by Robert F. Bruner and Sean D.
Carr. We would encourage everyone with a stake
in our global economy to read this book and
think about current conditions. This book
details several more similarities to the extent
it seems most severely, negative economic events
all end the same.
People’s actions and psychological feelings form
the basis of human reaction. People react nearly
identically under similar circumstances. Then,
obviously, the outcome remains the same or is at
the very least quite similar.
With the advent of speedy computers we think
current conditions are further compressed into a
pressure cooker about to explode. Computer
acceleration enables a trade in Asia in the
night to be felt within seconds throughout the
world. We have seen this numerous times with
Sunday evening Asia copper trading followed by
vastly changed prices on the open in London and
in New York the following day.
Global finance is an interconnected daisy chain
of creditors and debtors. If one key link let’s
go the entire chain can be at risk. Remember
Long Term Capital? This event was a freaky
non-expected mess that originated from
over-leveraged massive hedge fund trading as
Russians bonds collapsed. Who would have
expected that one?
The next key point relating to the LTC debacle
is the extent further unpredictable fallout can
subsequently cascade from other parts of our
system. Despite the fact we know US bankers and
their henchmen in congress joined together to
allow trillions in derivatives to go bad, they
still have not addressed the majority of these
problems. We are still exposed.
All types of very nasty financial derivative
instruments remain in lurking piles in back
rooms of banks throughout the world. If all that
junk had been put on the table and marked to
market at once, an immediate global collapse
would have been inevitable.
Current theory is to continue to reinforce
confidence within the herd. Media and public
relations machines of central bankers, corporate
types, stockbrokers, and others with a vested
interest in prolonging the game are fully
engaged. If the herd panics and runs, we could
see another 1907 all over again of infinitely
The Sheeple are deliberately lied to and kept in
the dark regarding economic reality. If most of
them understood the seriousness of our
predicament, they would empty bank accounts in
massive runs and head for the hills. We think
this could happen anyway; but it is not a
certainty. Just when the end of the world
appears nigh more tricky rabbits jump out of
those Bernanke-Geitner hats. The words “slippery
snakes” seem a good definition.
As long as the herd can be controlled, inflation
rises and debts are inflated away in a more
gradual than abrupt scenario. As long as some
semblance of order and continuity can be
maintained, the manipulators hope they gradually
melt down the dollar with inflation and destroy
debt values within huge piles of loans. This is
why the dollar today is only pennies of its
former real value. These crooks have been
successful in following this “inflate it away”
plan for decades.
Debts can be eliminated or destroyed with
inflation as well as in the old fashioned ways
of repayment or, repudiation. We suggest the
real test comes in the later spring and fall of
2010. The manipulators objective is to hang-on
at all costs finally ending it with a new,
bailout world war in roughly 2012.
Our physical catastrophe was Katrina, the Iraq
war and continuation of expensive treasury
draining for Middle Eastern conflicts.
Eventually, when the world finds a recovery, we
think it happens after a war similar to WW I in
1914-1918 a few years after the Panic of 1907.
Remember the Roaring Twenties” post World War I?
Governments can wail forever about how they can
inject more credit and liquidity into financial
systems to “Spread It Around.” Their larger
problem is one of pushing on a string. Big
credit is no credit if business and consumers
are wrecked and refuse to participate. For now
big banks and investment banks are okay.
Everyone else is out in the wind and a typhoon
is just ahead. Maybe not tomorrow, but its
coming to your house.
In the massive consumer sector, the herd is very
touchy both in economic observation and spending
their hard earned cash. If they smell a rat they
run. And today the herd continues to run
steadily over a cliff. They are not spending.
Those that can are saving. When some real scary
fear arrives next year we’ll see who can pass
the final test.
TARP was a gigantic failure for consumers and a
homerun winner for crooked bankers and
politicians. Banks are recapitalized by
taxpayers again and are still foolishly engaged
in more bad behavior. Why? Simply because they
can; and are permitted to do so. They want the
big bonuses. Notice Goldman Sachs is paying out
even higher bonuses this year than in those hot
years preceding the Lehman mess? The scam
remains in full play.
To make matters worse we have the one-worlders,
many of whom have gained their millions and are
interested in only two things: (1) Prolonging
the game for control and (2) an absolute naked
global power grab. The elitists and one-worlders
are using tools of the UN (money, control and
troops), and the IMF and World Bank. Further
their gang members and the infamous cabal within
the Council on Foreign Relations along with
miscellaneous central bank lackeys led by the
Federal Reserve all live in the same power grab
It was reported the Federal Reserve is now rated
lower in the polls than just about any type of
profession or institution. Abolishment cries are
on the rise to erase this gang. It shall be very
interesting to see where it goes next. Reading
this kind of stuff can cause depression lasting
more than a few days. Don’t get depressed; be a
realist and attack these problems with common
Your defense is to extricate yourself, your
friends and family from the entire system to the
extent possible. It cannot be done entirely but
more so than most imagine.
We just finished the book “The Greatest Trade
Ever” telling about how one very smart guy set
new records for profits shorting housing and
housing credit. This same super successful
trader is now an advocate of gold and says this
is the next bigger opportunity. Our readers and
those visiting Kitco knew this already. This
news merely re-justifies our positions and
signals we are on the correct, longer term
We cannot save the world but we can save
ourselves, our families and our friends. Get
busy or busier with gold and silver. Buy
physical first and then get trading.
We are expecting a mild markets’ move on
technical signals at this date. Could it become
more extreme? Yes, it could but it increasingly
appears we get a mild correction followed by a
new shares rally in precious metals and
mainstream shares. We would be PM shares buyers
on our technical confirmation. We recommended
four new trades this week putting our toe
reluctantly in the water. We’re skittish as the
charts are so toppy.
Financials crashed in fall, 2008 with Lehman.
Recovery began with TARP in May, 2009. During
November, 2009, we’re ending a dead cat bounce
with mild toppy selling later this month.
Precious metals and their shares are still
peaking on this November 18, 2009; for the
shorter term. Next week most trends could
reverse and then later move to rallies. Between
now and then some selling and corrections should
appear. We are at a turning point in most
markets with lots of choppy, sideways trading.
Keep in mind, if you own paid for stuff it will
most likely remain in your hands; not in
somebody else’s. That includes gold and silver.
Do not get tangled-up in daily noise. Keep
studying the larger view and buy precious metals
after each profit-taking correction. Headwinds
are building into an economic hurricane. Take
care of business right now.
My dire prediction might surprise us and arrive
at any time. Selling is mild now. But next
summer could be the larger crash. In the coming
middle, look for more buying on most everything.
Our personal trading year is up over 100%.
Markets are giving and giving.
Personally, I can see unbelievable opportunities
to trade that we would never see again for many
years. Turn these problems into opportunities.
Those on the right side of the trade might get
rich. Those on the other side are just victims.