Tuesday, March 31, 2015

Former Fed Governor Admits Market Controlling The Fed Is A "Very Dangerous Development"

"The markets think they have Yellen's number," that she will never allow markets to go down, Warsh warns "that is a very dangerous development."

We must stop QE, Warsh chides, as the inflation goals are close enough to a comfort zone and arguing for QE because of lowflation is poor thinking "because our gauges are not even that good."

Dollar strength is The Fed's doing, he adds, since they have been telling everyone to do what we have been doing... and adds "The Fed talking about the dollar tells me they are more concerned about the dollar's impact on earnings."

What worries Warsh the most, however, is "The Fed's policies changing based on what happens on the ticker... The Fed should be thinking 3 to 4 years ahead."

Finally, he crushes the memes of all the malinvestment deniers... "people in the real economy who dont have big balance sheets have been suffering from wage pressures and stagnation..."

"We tried negative real rates in the mid 70s and the early 2000s and both ended badly."

Is Russia back in the game?

NATO's (essentially, the US') attempts to isolate Russia with economic sanctions hasn't really materialized.  If anything, it's emboldened China's resolve to increase its strategic and trade ties with Russia.

One factor could be Russia's low debt-to-GDP ratio of 13%.  The US, on the other hand, has a debt-to-GDP ratio of 102%.
“There is surely something odd about the world’s greatest power being the world’s greatest debtor,” - Lawrence Summers, former US Treasury Secretary


How Much Loan Debt is From Grad Students? More Than You Think

The largest changes taking place in student borrowing are happening among graduate students, Delisle says, who now owe $57,600 on average.
"When you combine that with unlimited borrowing at the grad level and then only make people pay for 10 years based on a small share of their income, it becomes clear, somewhat obvious to people who are borrowing to pay for school, they are really just borrowing money that will be forgiven," Delisle says.

Looking at the debt levels of law school students, for example, there was no significant change in the average amount of debt students graduated with between 2004 ($88,634) and 2008 ($90,052). But by 2012, the average spiked to $140,616, and the average monthly payment shot up from $760 in 2008 to $1,187 in 2012.

Every young person should see the Fed’s startling numbers on student debt

40 million Americans are now in debt because of their university education, and on average borrowers have four loans with a total balance of $29,000.

Monday, March 30, 2015

Every young person should see the Fed’s startling numbers on student debt


Foreclosure to Home Free, as 5-Year Clock Expires

This is an example of a moral hazard our ponzi financial system has created.  Savers and investors are destroyed by zero interest rate policy (or negative interest rate policy), while welchers are enabled.


Exclusive: TSA’s Secret Behavior Checklist to Spot Terrorists

One former Behavior Detection Officer manager, who asked not to be identified, said that SPOT indicators are used by law enforcement to justify pulling aside anyone officers find suspicious, rather than acting as an actual checklist for specific indicators. “The SPOT sheet was designed in such a way that virtually every passenger will exhibit multiple ‘behaviors’ that can be assigned a SPOT sheet value,” the former manager said.

The signs of deception and fear “are ridiculous,” the source continued. “These are just ‘catch all’ behaviors to justify BDO interaction with a passenger. A license to harass.”
The observations of a TSA screener or a Behavior Detection Officer shouldn’t be the basis for referring someone to law enforcement. “The program is flawed and unnecessarily delays and harasses travelers. Taxpayer dollars would be better spent funding real police at TSA checkpoints,” the former manager said.

A second former Behavior Detection Officer manager, who also asked not to be identified, told The Intercept that the program suffers from lack of science and simple inconsistency, with every airport training its officers differently. “The SPOT program is bullshit,” the manager told The Intercept. “Complete bullshit.”

Saturday, March 28, 2015

Finally The "Very Serious People" Get It: QE Will "Permanently Impair Living Standards For Generations To Come"

When "very serious people" (even if it is those who once ran now defunct Bear Steanrs) announce it, with a 6 year delay, they make the Financial Times.

On the other hand, when Zero Hedge said precisely this 6 years ago, it was cast as a tin-foil clad group of conspirators who see the worst in every situation.

What is "it"? This:
The long-term consequences of global QE are likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.
In this case, it was said this week by Guggenheim's Chairman of Investments and Global Chief Investment Officer, Scott Minerd. We are happy that increasingly more "serious people" come to the same conclusion which we posited first a 6 years ago.

The Best "Democracy" Money Can Buy: For Every Dollar Spent Influencing US Politics, Corporations Get $760 Back


True Story – U.S. Military Lost Equipment from $750 Million Program, Some Ended up on eBay and Craigslist


Paul Craig Roberts – The United States Is Broke And Europe Looks To China As Insane U.S. Policymakers Push For War


Friday, March 27, 2015

Janet Yellen Comments on Cash

Say what?  First, former Fed Chairman Alan Greenspan confesses in 2014:
Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.
Then, today, current Fed Chairwoman Janet Yellen declares this:
"cash is not a very convenient store of value"
Don't believe it?  Here is an interview on CNBC.  The theater of high finance is getting more absurd by the day.

If this doesn't catalyze citizens to load up on precious metals, then they don't have a pulse.


China may replace US Caterpillar as partner of Russian locomotive manufacturer

US-led trade sanctions against Russia are having unintended consequences on American companies and the economy.  Blowback is a bitch.  I wonder how "patriotic" Caterpillar feels right now.


Andrew Maguire – Letter Exposes HSBC Vault Closures As War In Gold Continues To Rage

Understand the difference between cash settlement of paper contracts and physical possession. 


Another Oligarch Preaches to the Peasants – Charlie Munger Says “Prepare for Harder World”


DEA agents had 'sex parties' with prostitutes, watchdog says


It's Official: Americans Spent All Their "Gas Savings" On Obamacare


Thursday, March 26, 2015

CNBC: The Verdict Is In, and America's 401(k) Accounts Are a Crashing Failure


The Employee Benefit Research Institute estimates the median amount in U.S. 401(k) accounts is a paltry $18,433 and almost 40 percent of workers have less than $10,000 in those instruments.
"In America, when we had disability and defined benefit plans, you actually had an equality of retirement period. Now the rich can retire and workers have to work until they die," Teresa Ghilarducci, a labor economist at the New School for Social Research, told CNBC.

Obama continues to be humiliated by the rising anti-dollar alliance


The Saker interviews Paul Craig Roberts


Cops can confiscate your cash without charging you with a crime


Crimea's Growth Fastest in 20 Years Thanks to Russia, Sanctions - Minister

This may be Russian propaganda, but Crimea appears to be prospering after Russian annexation.  But hey, war solves everything, according to NATO.


Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action

The mainstream press may call it a black swan, but some of us predicted the House of Saud succumbing to a difficult transition with the passing of the King.  If Saudi Arabia collapses, goodbye cheap oil, accompanied by many geopolitical fissures in the middle east.

In any case, paper assets are collapsing while hard assets are climbing as this goes to print in overnight trading.  Time for the Fed and Plunge Protection Team to shift into overdrive.

The problem, of course, is market manipulation (or "interventionism") works--until it stops working.  Rigged markets never end well.


Update:  Sure enough, the PPT steps in this morning to save the day.  With the help of the ECB.

Legendary Pierre Lassonde’s Shocking Predictions For Gold And Silver


Monday, March 23, 2015

Pentagon loses track of $500 million in weapons, equipment given to Yemen

Awesome.  First, the US funds Assad's rebels, who later turn out to be ISIS, a radical Islamic group so brutal that Iran fights them and al-Qaeda rebels denounce them.  Now the US is "inadvertently" providing al-Qaeda terrorists with $500 million of arms in Yemen.


Sunday, March 22, 2015

Washington Blinks: Will Seek Partnership With China-Led Development Bank

Washington caves.

So essentially this is just the old “if you can’t beat ‘em, join ‘em” strategy disguised as an attempt to bring the AIIB into the fold of US-dominated multinational institutions.

But make no mistake, this is at best an example of Washington cutting its losses and at worst an outright surrender, as no one should pretend that the AIIB, which is starting with $50 billion in capital, will remain subservient to the AD...

China's checkbook diplomacy is coming of age

Are readers starting to see a recurring meme here?  That USDollar hegemony is on its way out?  Do you understand what that will do to your standard of living long-term?  It's not merely a passing of the torch from the US to Chinese financial and diplomatic dominance.

The US will be part of a multi-polar financial axis of power--America won't fall off the geopolitical landscape.  But the reserve currency status of the petrodollar will result in loss of purchasing power and catalyze social turmoil.  Think Americana spring.

The Obama administration and Congress are scrambling for damage control.  They know America's unlimited credit card bill is coming to an end.  They also know our trading partners and closest allies know it.


De-Dollarization Accelerates as Switzerland Quietly Wields a Big Bank Stick by Joining the Chinese Founded AIIB

With the UK, Switzerland, Australia and Japan joining the AIIB, USDollar hegemony will soon be toast.


Saturday, March 21, 2015

America’s Hidden Credit Card Bill


Social Security’s hidden debt is just a small part of the story. Two weeks ago, the Congressional Budget Office released its annual long-term budget outlook. The good news: This year’s deficit — about 3 percent of gross domestic product — is the smallest since 2007 and way down from the peak of almost 10 percent in 2009. The bad: Without action, the deficit will grow “notably larger” starting in about four years, a result of our aging population, rising health costs and the new subsidies for health insurance.

Even worse, the budget office raised what’s called the alternative fiscal scenario, the most realistic projection of fiscal outcomes absent major policy changes. Based on these estimates, I calculate that the “fiscal gap” — a yardstick of total government indebtedness that I’ve worked on with the economists Alan J. Auerbach and Jagadeesh Gokhale — was $210 trillion last year, up from $205 trillion the previous year. Thus $5 trillion was the true deficit.

The fiscal gap — the difference between our government’s projected financial obligations and the present value of all projected future tax and other receipts — is, effectively, our nation’s credit card bill. Eliminating it, would require an immediate, permanent 59 percent increase in federal tax revenue. An immediate, permanent 38 percent cut in federal spending would also suffice. The longer we wait, the worse the pain. If, for example, we do nothing for 20 years, the requisite federal tax increase would be 70 percent, or the requisite spending cut, 43 percent.

The steady derailment of the U.S. financial system


Friday, March 20, 2015

Andrew Maguire – We Are Now Seeing Shocking Behind The Scenes Action In Gold And Silver!

The structure of precious metals markets is transforming from levered, paper trading among insiders in London and New York, to physical exchanges in Asia.

Western buyers of physical bullion are competing with 3 billion peasants in Asia.


Janet Napolitano Takes No "Crap" From Half-Naked Student Protesters

Come on, Jan, are you going to listen to them or not?  Double-speak from the ivory tower elite is reaching epic proportions.


Justice Department rolls out an early form of capital controls in America


Former White House Official Warns Nuclear Threat To The World Has Returned

So these things (geopolitical dangers) are real but there’s a much bigger issue at stake and that is this whole post-war international economic order having been based on the U.S. dollar and U.S. policies that were predicated on the assumption that they served everybody's interests.  What China and Russia are now saying is, 'They don’t serve our interests anymore.'

It’s really apt that the British decided to join the new emerging market BRIC Bank — the new institution that China and Russia are creating to act as a substitute or a new version of a combined World Bank/IMF structure.  It’s the infrastructure bank for emerging markets.  This is another way that they (Russia and China) challenge the supremacy of the United States.

And it was fascinating to see the White House slap-down the British quite forcefully — their closest ally — and say, ‘You shouldn’t have done that.’  This has raised all kinds of questions because the British view is:  'If this institution is going to be funneling big amounts of money into emerging market infrastructure, which clearly needs to be built, then are we smarter to be on the inside where we can keep an eye on what’s going on, or on the outside where we don’t know?'

The American view is, ‘We don’t condone any participation.’  And I think the rest of the world, including America’s allies, are going to say, ‘Well, actually this is better than war, right?  It’s better to work with them in the context of building the world economy, than to stay out of that dialogue and instead intensify the business of sending troops to borders.'

This is the situation that markets need to get a grip on and I think that leads to all kinds of questions about things that matter to the listeners of your broadcast and that is markets like gold.  For instance, China and Russia have been big accumulators of gold in anticipation of a day when they step forward and say, ‘Our currency is more backed by real gold than the American dollar,’ which is another piece of the same puzzle.  So I think that’ the big picture here.” 

Recent Economic Data Shows the Good Side of Deflation


Shocking Austerity: Greece’s Poor Lost 86% Of Income, But Rich Only 17-20%

Greece needs to exit the EU. They are starving their people. The transition won't be smooth, but it's better longer-term.


"Market Is Hyper Overpriced" Warns Retiring Fed President; "Significiant Correction" Coming


One-sided Trade

The long USDollar trade is getting long in the tooth.

Thursday, March 19, 2015

Gold Demand in Asia Seen Doubling as ANZ Sees Record Prices

My personal opinion is that the price of gold will more than double when the USDollar loses its reserve currency status.  And that it will happen before 2025.


Justice, capitalism and progress: Paul Tudor Jones II at TED2015

“This gap between the 1 percent and the rest of America, and between the US and the rest of the world, cannot and will not persist,” says the investor. “Historically, these kinds of gaps get closed in one of three ways: by revolution, higher taxes or wars. None are on my bucket list.”

Isolating Russia: Washington’s Failed Attempt to Exclude Russia from the SWIFT Bank Clearing System


"Colossal Defeat" For Obama As Australia Joins China's Regional Bank


It’s happening: more US allies join the anti-dollar alliance


Wednesday, March 11, 2015

Venezuela Begins Liquidating Its Gold

Hugo Chavez is rolling in his grave.  After being one of the first to repatriate his country's sovereign gold, Venezuela is now willing to part with the gold at fire-sale prices.  The price suppression by the bullion banks is working, as it is inducing bankrupt countries to keep their lights on a little while longer--even if it means selling the one asset that has intrinsic value.


Here's how much debt every major economy in the world will borrow this year




A Patient Fed Considers Losing Patience

Schiff can be cantankerous, but he's a very astute observer of the Fed's nuanced messaging.  In other words, he's good at calling the Fed's bull$hit campaigns.


Bitcoin Default Swaps: Blythe Masters Joins Bitcoin Startup

To gold bugs, Blythe Masters is the Darth Vader of precious metals.  His circuitous career path is stranger than fiction, with road kill all around her.


Tuesday, March 10, 2015

Legend Who Oversees $170 Billion Issues Dire Warning About Global Financial Markets!


On The 10 Year Anniversary Of Mad Money, An Objective Look At Cramer's Recommendations


Former SEC Director Rips the Red Tape Off His Mouth


Happy 6th Birthday: The Day FASB Folded & "Mark-To-Fantasy" Was Born

The financial elites promoted cooking the accounting books in 2009.  The "economic recovery" has been one big lie, and is a house of cards.


BREAKING NEWS: Andrew Maguire – HSBC Forced To Come Clean On London Gold Vault Closures!

FYI.  HSBC is the custodian for the GLD ETF.  Draw your own conclusions.


Allied Nevada Gold Files For Bankruptcy Protection

Allied Nevada Gold's bankruptcy offers many layers of insight.

I experienced the boom/bust cycles of other commodities and its collateral effects.  With DRAM semiconductors, during the so-called allocation phase when capacity was constrained, prices of memory chips went through the roof.  Shortages were rampant.  Of course, this invited competitors to increase supply capacity, which later produced plummeting prices.   In other words, supply more than caught up with demand within a few months.

Efficiencies during the boom phase yielded faster throughput and fewer defects, resulting in higher production.  The problem was as more fabs came on line, the scales tipped the other way, as supply would exceed demand, which caused the bust in prices and eventually production shutdowns and fab closures.  These volatile conditions caused huge dislocations in the industry, and associated side effects such as unemployment, currency collapses, company write-downs, bankruptcies, etc.

The same is true today in the precious metals industry, although plummeting prices of the underlying metals has nothing to do with market supply and demand, but everything to do with central bank manipulation.  Bullion banks work as agents for said western central banks in their surreptitious price suppression schemes, manipulating prices far below their production costs.  Eventually, mining companies dissolve into bankruptcy, as they attach dollars with every shipment.  This, in turn, results in closure of mines.

However, the impact is far greater and longer in duration relative to other industries--like semiconductors, for example.  Semiconductor fabrication facilities can be built relatively quickly.  With mines, once shut down, it could take many years to re-start them after they've been moth-balled.  Supply won't come on stream overnight.

And with market prices far below production costs, the most chilling effects rest on the explorers, as the incentives to find new mineral fields are removed.  Exploration is a dicey proposition with high failure rates.  Unlike manufacturing industries, the precious metals exploration industry is fraught with risks.  This will ultimately drive precious metals prices much higher in the future. 

Another point to glean from the current toxic environment of investing in mining shares is becoming self-evident.  With the prices of the underlying metals low, the short-term prognosis for the mining industry is precarious--even if the future for the precious metals themselves is still bullish.  Hence, a balanced portfolio should include physical gold and silver.  That's the fear trade, as precious metals still provide the best hedge for financial catastrophe and/or currency debasement.

The greed trade is investing in mining companies, as rising precious metals pricing results in rising shares of mining companies at much higher orders of magnitude.  In other words, when gold and silver prices rise, the mining shares rise even higher.  But the reverse is also true--in the other direction.  Since the peak in prices in 2011, mining shares have plummeted even more, with some even going out of business.

Long-term, some mining companies will flourish, perhaps appreciating over 10-fold.  But that's only if they can survive the current severe downturn.  The herd will be thinned.  When investing in any equities, the investor takes on company risk, industry risk, financial risk, management risk, governance risk, jurisdiction risk, political risk, and with mining shares, many other risks specific to the extraction industries--the suppression of prices being the most obvious.

Hence, a prudent speculator (because let's face it--investing is calculated speculation) should include physical precious metals in their portfolio.  For high beta (high risk/high reward) investors, a small allocation of mining shares may be appropriate.

The next nuanced point is government and central bank intervention in industries certainly causes unintended consequences, most of them negative.  Markets are distorted and price discovery is destroyed, resulting in industry dislocations.  Livelihoods are destroyed.  But the high priests of central planning insist they know what they are doing, despite evidence to the contrary.


Stop Spying on Wikipedia Users


Next Mega-Bailout On Deck: White House Studying "New Bankruptcy Options" For Student-Loan Borrowers

Politicians just don't get it.  Read the paragraph I have emphasized below.

And since there is no such thing as a free lunch, it will be the US taxpayer who will as usual end up footing the bill. Expect college fees to go vertical once deans and administrators understand that they can charge anything and the taxpayer will end up footing the bill.

Monday, March 9, 2015

8 Times Obama Says He Was Way Out of the Loop


Insider Alan Greenspan Warns of Explosive Inflation: “Tinderbox Looking For a Spark”


China Completes SWIFT Alternative, May Launch "De-Dollarization Axis" As Soon As September

Be careful what you wish for, President Obama.  You might just get it.


Why the Fed Will Launch Another Round of QE

I agree with the author that the Fed will continue QE.  I disagree that the process will have benign effects.  The Fed's balance sheet will be bloated beyond comprehension and will further impair our nation's insolvency.


Pearl Harbor: Roosevelt’s 9/11


Saturday, March 7, 2015

The new London gold fix and China


Bullion smuggling outstrips narcotics to feed gold habit


Though the number of arrests made in India has increased, those that get caught are usually only the "carriers" who transport gold for as little as 10,000 rupees. The people behind the smuggling are rarely identified.

In an effort to change that, Mumbai customs offers a reward of up to 50,000 rupees per kg of bullion seized for informers in gold smuggling cases. Cocaine and heroin informers get only up to 40,000 rupees and 20,000 rupees respectively.

Andrew Maguire – Who Smashed Gold Today And Why As HSBC Shocks Clients By Closing All London Gold Vaults!

According to Maguire, the manipulation of the paper gold market is coming to an end soon, as the physical market emerges.  I remain a skeptic, because central banks and their bullion bank agents will whipsaw speculators as long as they continue the illusion of existing physical inventory.  We shall see.


Friday, March 6, 2015