Wednesday, April 29, 2015

China And Russia’s Plans For World Domination And Skyrocketing Gold

Bill Gross Tweet Shorting German 10-Year Bunds

A week later, Janus' Gross' trade shorting German Bunds has already paid off big.

Biggest Inventory Build In History Prevents Total Collapse Of The US Economy
In other words, if US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.
Our take:
The Fed continues to jawbone about "normalizing interest rates", i.e. raising interest rates to normal levels (historically 5-6%), from current near-zero levels.

FAT CHANCE is my retort.  There is no way in Hades Janet Yellen will raise rates for the following reasons:
1) the economy is weakening, effectively into another recession, irrespective of whether the technical definition of a recession is negative GDP growth for two consecutive quarters.  One could argue the US has been in a recession since 2008, even if it officially ended in June, 2009.

In any case, central banks don't raise interest rates when an economy sinks into recession because it further stagnates economic output.  At least if they don't wish for the pitchforks to come out, and if congress wants to get re-elected.  For those who argue the Fed is independent, you need to wake up.

2) Debt levels, whether national government. state, local, and household levels, have never been higher.  Imagine interest rates on mortgages, student, auto, student, credit card debt rising.  Servicing that debt becomes more problematic.  Austerity measures kick in, households hunker down, and the economy would further sink.
Of course, the Fed would probably monetize more debt, plunging us further into debt.
In fact, as Austrian school of economists have purported, Keynesian economists will always choose the debt monetization route in a pinch, solving nothing and merely extending the debt rabbit hole.
Which leads to my next forecast:  the Fed will re-institute QE in a reversal of policy stance of tapering.  As the saying goes:  QE to infinity!
Few are pointing to more QE, but history shows bankrupt governments and central planners always choose MOAR DEBT, as long as they are in power.  Spend today, worry about tomorrow later.
3) With a weakening economy, and a soaring dollar (at least relative to other fiat foreign currencies), US exports are getting clobbered (due to US exports being more expensive in other weaker foreign currencies).  This will kick in beggar-thy-neighbor currency devaluation wars, as Japan's Abe is committing financial hara-kiri by destroying the yen, and the EU is turning on the Euro QE spigot.  Hence, the Fed will debase the dollar in a misguided attempt to make exports more competitive.  The upshot is a sovereign central bank cannot weaken a currency by raising rates.  Weakening a currency requires more printing and lowering rates.

The take away is more volatility, more money printing, more spending, more geopolitical strife, and more social unrest domestically.
How does that affect holders of gold and silver?  With real (i.e. inflation-adjusted) interest rates negative, keep accumulating physical precious metals.
Despite Fed rhetoric of raising rates either in June or October, the bond yield curve is handicapping a 2016 timeframe.  I'm in the camp the Fed will NEVER be able to raise rates intentionally, because it would further stagnate the economy.
But I am acknowledging that the bond vigilantes will at some point emerge and force market rates higher as the participants realize the US government is insolvent and a high credit risk.  Its IOU's will never be repaid, and we will have our own Greek default moment.  Obviously, this points to the US Treasury bubble bursting, bringing down everything with it, including a stock market bubble.  Bond market collapse = soaring bond yields (i.e. interest rates) = equities collapse.
Everything collapses in a liquidity bidless meltdown, except of course, gold and silver, the only sound money which has held its value for 6000 years.
The overarching question becomes when this will happen.  Only God knows.  Betting against the stock market is a foolish endeavor, as equities could melt up in a world of competitive currency devaluations.  In other words, investing in companies can be a very good hedge against currency debasement.  The problem is it works well when it works well--until it stops working when hyperinflation outstrips rising markets.  Kinda like leveraging up works extremely well in a rising real estate market, but it is disastrous when the music stops (see 2008 financial crisis).

Meanwhile, happy stacking!

5 Minute Speech that Got Judge Napolitano Fired from Fox News

Tuesday, April 28, 2015

The First Rule Of Holes

It's Official: Being Poor Makes People Unhappy

Two choices: legislation redistributing wealth, or revolution distributing poverty

The $18bn arms race helping to fuel Middle East conflict

The rapidly escalating arms race from the "civilized" world to the middle east is reaching unsettling proportions.

The “War on Cash” Migrates to Switzerland

Boston Fed Admits There Is No Exit, Suggests QE Become "Normal Monetary Policy"

QE to infinity, bitchez!

The Real War on the Middle Class

Gold surges: World's 'biggest pawnbroker' makes deal

Even though analysts assess the gold swap from Venezuela to Citicorp as the reason for gold's recent surge, I believe it will be bearish mid-term for gold.  Now Citi has the physical gold to rehypothecate to manipulate prices lower via the paper COMEX exchange.  This should give accumulators more opportunities to buy the dip in gold prices.  Have some dry powder.

As an aside, the late Hugo Chavez must be rolling over in his grave.  He worked hard to become the first leader to repatriate his country's sovereign gold, and now his successors are pawning it away.

On a more insidious note, bankrupt oil-exporting countries have been forced to sell their family jewels at discounted prices, whether these assets are drilling rigs or gold bullion.  There is destructive price suppression in the energy markets as well as the precious metals mining markets.  Extraction companies and state governments are either going out of business or panic selling their treasured assets in order to keep the lights on.

Death Of The Middle Class: Homeownership Rate Drops To 29 Year Low As Average Rent Hits Record High

Orioles VP Angelos Makes Profound Statement Following Baltimore Protests

Wednesday, April 22, 2015

Unreal. The Fed believes its own insolvency “would not create serious problems.

The Bankster War on Cash; JPMorganChase Begins to Prohibit the Storage of Cash in Its Safety Deposit Boxes

Hungary, Greece, Cyprus to Restart Food Trade With Russia Despite Sanctions

The Mystery Of China's Gold Holdings Is Coming To An End

While The War In Gold And Silver Continues To Rage, Here Is A Surprising Development

This Is Part Of The Insidious Master Plan To Control Humanity

Sunday, April 19, 2015

Direct Evidence For The Supercycle

One of the take-aways is as Chinese industrial production peaked in 2007, as did foreign purchases of US Treasury assets.

My personal opinion is that supercycles tends to be more axiomatic.  For example, one's cholesterol levels and blood pressure may fluctuate from minute to minute, so the snap shots may appear to be white noise.  However, if one were to consume large amounts of saturated fats over years and decades, the "supercycle" trend of elevated cholesterol and blood pressure becomes more deterministic.

Investment supercycles 100% predictable in their occurrence--even if their timing and durations are not.

What Bernanke's New Employer Had To Say About Him Just 2 Years Ago

And so the predictable revolving door between Washington and Wall Street continues.

Jade helm ? National guard in Ontario California

Yes, I happened to be here yesterday at the Ontario Mills complex during this military "training exercise."

Saturday, April 18, 2015

$5,000 SILVER?

Citigroup's Gold "Expert" Demands A Cash Ban

Buiter is a shill for central bankers.  And that's being kind.

FDIC Plots a Bank Heist Involving YOUR Accounts

FBI Uncovers Al-Qaeda Plot To Just Sit Back And Enjoy Collapse Of United States

This satire is hilarious, but disturbing because there is an element of truth to it.,35788/

The Collapse Of The Petrodollar: Oil Exporters Are Dumping US Assets At A Record Pace

No Matter Who Wins the White House, the New Boss Will Be the Same as the Old Boss
“What the government is good at is collecting taxes, taking away your freedoms and killing people. It’s not good at much else.”—Author Tom Clancy

Friday, April 17, 2015

"We're All Frogs In Boiling Water" Santelli Says After Lacy Hunt Warns "This Is Far From Over

debt is an increase in current consumption in exchange for a decline in future spending and we are not going to solve this problem by taking on more and more debt.

Monday, April 13, 2015

Central Bank Gold Buying Soars To Near A 50-Year High

5 Of The Most Astonishing Charts Of 2015

Are These The "Everyday Americans" Hillary Clinton Is Running For?

For various reasons, I hope Hillary Clinton wins the Presidency next year.  If the cleansing and reset processes have to occur, it might as well happen on her watch.  Perhaps she will blame all her predecessors just like the current President has.  The thing is, they may have a point, but they will have certainly contributed as well to the fiscal train wrecks.

Wells Fargo workers to protest company as 'unreasonable' sales quotas continue

Next time your bank abuses you with fees, don't take it out on your bank teller.  They are probably in worse financial shape than you are, and in many cases, it wasn't their fault.  They were following orders.  Blame it on their executives and cronies on Wall Street.

In a nutshell, this sums up what's wrong with the US economy, despite the shiny veneer.
“Nothing has changed,” said Michael Lewis, 46, who works as a financial crime specialist at Wells Fargo in Chandler, Arizona. Lewis has worked for the bank for three years and is one of the people who handle calls disputing charges and fees accrued by the bank’s customers.

“Basically, what I do all day is look at people’s bank statements,” he said. “I have kind of an unique experience knowing how America spends its money and knowing how broke everyone is.”

Cognitive Dissonance

I will let readers formulate their own cognitive dissonance on fiat currencies.   And why they haven't taken action to prepare for what is becoming increasingly apparent.

Gold-Backed SDR "Is Quite Likely To Happen", LSE's Lord Desai Warns


Friday, April 10, 2015

America’s Hidden Credit Card Bill

One Last Look At The Real Economy Before It Implodes - Part 4

One Last Look At The Real Economy Before It Implodes - Part 3

Paul Craig Roberts – As Greece Pivots, Putin Unleashing Ultimate Move To Crush The EU And NATO

Roberts doesn't go further, but if the scenario he paints becomes true (he's been prescient up until now), then USDollar hegemony is toast, which would roil global capital markets.  Everybody suffers short-term, but the global debt overhang would be repudiated.  A necessary reset will have winners and losers.  May the most competitive nations win.

Iran's Khamenei says neither rejects, accepts nuclear deal, details key

The Housing Market: Media-Promoted Fairytales vs. Reality

HSBC's Long List of Troubles Just Got Even Longer

It is indeed very interesting that other bullion banks haven't been indicted for manipulating commodities prices, including the precious metals complex.  Not to name names, but HSBC must be the only guilty party.  Surely, no US-based bullion banks are involved in the rigging of markets.
Precious metals: U.S. investigators have ordered HSBC to provide documents on its precious-metals dealings as part of criminal and regulatory probes into the markets. It’s also been named in several class actions alleging the bank conspired to manipulate gold and silver prices.

Thursday, April 9, 2015

Bank Deposits No Longer Guaranteed By Austrian Government

FEDERAL RESERVE statistical release

According to the Federal Reserve Bank's balance sheet, as of April 1, 2015, it has total liabilities of   $ 4,424,144,000,000 and total capital of $ 57,656,000,000.  Hence, its leverage ratio is 76.73.  It is massively over-leveraged and on the brink of insolvency should interest rates (i.e. bond yields) rise even slightly higher.

Just for grins, Lehman Brothers' leverage ratio was 30 before it collapsed.

American Cops Just Killed More People in March than the UK Did in the Entire 20th Century

Kick Open the Doorway to Liberty: What Are We Waiting For?

Tuesday, April 7, 2015

America's Poor Spend 60% Of Their Income On Food & Housing Proving CPI Is Meaningless
For many Americans, the rise in food and housing prices is a tough squeeze. That’s because—even in an era with low overall inflation—low-income Americans spend a disproportionate share of their money on food and housing.

New data from the Labor Department show the extent of the discrepancy. The bottom 10% of Americans, by income, devote 42% of their spending to housing and an additional 17% to food–nearly 60% of their total spending, according to the Consumer Expenditures Survey. By contrast, the wealthiest 10% of Americans dedicate only 31% of their spending to housing and 11% to food–closer to 40% of total spending…

Hedge Fund Legend Julian Robertson Warns Of A "Complete Explosion" Unless Fed Contains "Boiling, Bubble" Market

David Stockman – Yes, Western Governments Do Plan To Steal Money As The Financial System Collapses

Saturday, April 4, 2015

Shanghai Gold Exchange Reports 45.719 Tonnes of Gold Withdrawn for Week Ending March 27

According to Ed Steer and Ted Butler, JPMorgan and the big silver shorts slapped on the biggest short positions in COMEX silver since he can remember.  Meanwhile, they gobbled up all the available silver eagle and silver Canadian maple leaf coins.

We will see if this will lead to higher prices Sunday evening in Asian trading.

Friday, April 3, 2015

How Many People Will Have To Migrate Out Of California When All The Water Disappears?

China’s SWIFT Alternative and the Death of the Dollar

These States Will Take Your License for Not Paying Student Loans

Man Who First Predicted Greek Bank Deposits Would Be Stolen Issues More Shocking Predictions For 2015

One by one, the dominoes are falling.

Americans Not In The Labor Force Soar To Record 93.2 Million As Participation Rate Drops To February 1978 Levels

Thursday, April 2, 2015

We’re Now Heading Into The Next Round Of Global Crisis And Total Chaos But There’s A Nightmarish Twist

The new Asian bank and a new world order

Israel applies to join China-backed AIIB investment bank

America's loss of face on the economic world stage is now complete.  Two of America's biggest allies:  the UK and now Israel have defied Washington's orders and have applied to become founding members of the Chinese-led Asian Infrastructure Investment Bank.

China And The US: The AIIB Fiasco & America's Colossal Loss Of Face

China pins hopes on China-Mongolia-Russia economic corridor — diplomat

It appears US-led economic sanctions have not isolated Russia.  By contrast, they have emboldened Russia's trading partners to form tighter ties amongst themselves.

If anything, the sanctions have isolated the US in a classic case of unintended blowback, as one country after another (including in the EU) abandons trade sanctions, and in fact, become founding members of China's Asian Infrastructure Investment Bank.

Merkel’s ‘Anti-Russian Front’ Falls Apart – German Newspaper

One has to wonder why Angela Merkel is so loyal to US-led economic sanctions against Russia--even against a sea of non-compliance from other Euro zone countries.  After all, economic sanctions against Russia have impaired exports for said EU countries.

Perhaps Merkel recalls her discovery that the CIA was spying on her.  Maybe Obama has Merkel's dirty laundry.

Wednesday, April 1, 2015

Clueless In The Middle East

For First Time In History, California Governor Orders Mandatory Water Cuts Amid "Unprecedented, Dangerous Situation"

5 Truly Crazy Assertions in the Jamie Dimon Cover Story in Barron’s

"Wall Street Chief Economists" Explained For Dummies

Iceland To Take Back The Power To Create Money

Bankers may soon declare Iceland a rogue state and drop nukes on them.  Governments, instead of corrupt commercial banks being in charge of issuing their own money--what a concept.

Yanis Varoufakis: “Greece Will Adopt the Bitcoin If Eurogroup Doesn’t Give Us a Deal”

Global finance just went bizarre with Greece's Finance Minister planning to adopt Bitcoin.  But then again, negative interest rates on sovereign bonds aren't exactly standard protocol.  John Maynard Keynes is rolling over in his grave.