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Subject:  Russell Napier's Crystal Ball Date:  9/21/2008  1:34 PM
Author:  Hukphinn Number:  259 of 5166

I was surfing the GG website this morning and decided to finally read Alex Dumortier's interview with Russell Napier. The interview was posted on May 1, 2008. Calling Napier's comments prescient is a remarkable understatement:

RN: (Chuckles.) I was hoping you were going to ask me that question about America. Can I tell you what the most underreported phenomenon happening in America is?

AD: Certainly.

RN: It's the fact that most U.S. financial markets are now completely rigged by governments. Americans are living in a land in which they don't realize that their currency is completely determined by governments, i.e., foreign governments are propping up the dollar to hold down their own currency. You can't describe the dollar as a fully freely-floating currency because of that.

Two, foreign governments are piling into your federal debt market and they own over 40% of that, subsidizing your federal debt market. Three, the U.S. government is piling into your mortgage market: more and more of the stuff is getting securitized and ending up with Freddie [Mac ] (NYSE: FRE) and Fannie [Mae ] (NYSE: FNM) and the Federal Home Loan Banks -- more and more of that is being propped up by the government. The most under-reported thing in the world is the nationalization of U.S. financial markets.

AD: Interesting - that's not a take I've heard very often.

RN: If you want to find markets which are free from government intervention, you've got to get out of the U.S.. That's in complete contradiction with the way in which most people would say the U.S. works. This upcoming recession will be just another leap upwards in the socialization of the U.S.'s problems; the key asset of choice to nationalize will be all this bad debt, which will probably end up with the government one way or another. It's happening already.

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