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Wednesday
November 19th
2014

AUDIO PODCAST

DOUG CASEY on FINANCIAL REPRESSION

Doug Casey

 

SPECIAL GUEST: Doug Casey is the founder and chairman of Casey Research. He has been a featured guest on hundreds of radio and TV shows, including David Letterman, Merv Griffin, Charlie Rose, Phil Donahue, Regis Philbin, Maury Povich, NBC News, and CNN; has been the topic of numerous features in periodicals such as Time, Forbes, People, and the Washington Post; and is a regular keynote speaker at FreedomFest, the world's largest gathering of free minds.

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A WORLD TOUR OF FINANCIAL REPRESSION

with

 

Best-selling author, world-renowned speculator, and libertarian philosopher. Doug is widely respected as one of the preeminent authorities on “rational speculation,” especially in the high-potential natural resource sector. Doug literally wrote the book on profiting from periods of economic turmoil: his book Crisis Investing spent multiple weeks as #1 on the New York Times bestseller list and became the best-selling financial book of 1980 with 438,640 copies sold; surpassing big-caliber names, like Free to Choose by Milton Friedman, The Real War by Richard Nixon, and Cosmos by Carl Sagan. Then Doug broke the record with his next book, Strategic Investing, by receiving the largest advance ever paid for a financial book at the time. Interestingly enough, Doug’s book The International Man was the most sold book in the history of Rhodesia. and his most recent releases Totally Incorrect (2012) and Right on the Money (2013) continue the tradition of challenging statism and advocating liberty and free markets.

Published 11-19-14

PODCAST - AUDIO ONLY - 31 Minutes

Doug Casey has garnered a well-earned reputation for his erudite (and often controversial) insights into politics, economics, and investment markets. He doesn't hold back as he speaks from his ranch in the back provinces of Argentina.

Doug sees the world in the "eye of a gigantic financial hurricane". It entered the hurricane in 2007-2008 and will likely see the next stage in 2015. Here are just some of Doug's views and statements from this fascinating and exclusive interview with Gordon T Long.

REALISTICALLY SEES WAR AHEAD

"The US is being provocative with its military bases in 125 countries around the world and is provoking the Russians in the Ukraine." The US is now a country in a continuous state of war. "The US military is out of control."

"AMERICA DOESN'T EXIST ANYMORE!"

"America has turned into a police state". It is the most dangerous entity in the world today and has become hated globally because of its militarism.

"THE REAL RISK TO INVESTORS IS 'POLITICAL'"

US Investors must urgently diversify their assets abroad while it is still possible. More restrictive regulatory policies lie ahead.

US STANDARD OF LIVING & RESPECT IN THE WORLD HAS FALLEN

Today the US is more taxed and regulated than ever before, which limits its abilities to solve its problems.

"MODERN CURRENCIES ARE FLOATING ABSTRACTIONS"

Developed economies' currencies "are turning into toilet paper".

"JAPAN IS A GIANT ACCIDENT WAITING TO HAPPEN!"

"If you are looking for a oneway street, perhaps the best speculation in the world today would to be short Japanese government bonds denominated in Yen". The demographics in Japan are the worst in the world.

"THE EU WILL CEASE TO EXIST"

Its really a horrible conglomeration of countries which should be simply a free trade area with the government in Brussels making it impossible. It is totally dysfunctional and will breakup.

RECOMMENDATIONS

  • "Hold onto your hat" - Things are going to get real interesting starting in 2015,
  • Doug sees turmoil coming whichwe haven't seen since the start of the Industrial Revolution or the French Revolution,
  • Hold gold and silver. Some should be in coins in your possession.

 

 

 

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Monday
November 10th
2014

AUDIO PODCAST

MICHAEL PENTO on FINANCIAL REPRESSION

Michael Pento

 

SPECIAL GUEST: Mr. Michael Pento is the President of Pento Portfolio Strategies and serves as Senior Market Analyst for Baltimore-based research firm Agora Financial. Pento Portfolio Strategies provides strategic advice and research for institutional clients. Agora Financial publishes award-winning newsletters, critically acclaimed feature documentaries and international best-selling books.

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Mr. Pento is a well-established specialist in the Austrian School of economics and a regular guest on CNBC, Bloomberg, FOX Business News and other national media outlets. His market analysis can also be read in most major financial publications, including the Wall Street Journal. He also acts as a Financial Columnist for Forbes, Contributor to thestreet.com and is a blogger at the Huffington Post. Prior to starting Pento Portfolio Strategies and joining Agora Financial, Mr. Pento served as a senior economist and vice president of the managed products division of another financial firm. There, he also led an external sales division that marketed their managed products to outside broker-dealers and registered investment advisors. Additionally, Mr. Pento has worked for an investment advisory firm where he helped create ETFs and UITs that were sold throughout Wall Street. Earlier in his career Mr. Pento spent two years on the floor of the New York Stock Exchange. He has carried series 7, 63, 65, 55 and Life and Health Insurance Licenses. Mr. Pento graduated from Rowan University in 1991.

Published 11-17-14

PODCAST - 19 Minutes

Michael Pento speaks out strongly by saying: "We cannot allow the whims of a small group of unelected people to depreciate the value of currencies without any accountability whatsoever. Who gave Mr Bernanke and Ms Yellen the authority to do all these QEs? Who voted them into power? Why do we believe deflation is a bane on the American populous? Why do we want real incomes to fall and prices to go up? We cannot allow these people to to destroy the American middle class and American consumer!"

FINANCIAL REPRESSION

"Any attempt by government to make sure debt service payments remain serviceable."

That is the key. "Whether it is to force people into the bond market, whether it is to keep interest rates artificially low - whatever they need to do to make sure they don't have to use the tax base to pay their debt and deficits. They utilize artificial methods to make sure they can make debt service payments."

JAPAN IS MICHAEL PENTO'S FAVORITE EXAMPLE

"In Japan they have been able to take the entire JGB market and monopolize the whole entire thing! There is nothing that occurs there unless the government is a buyer. There are days on end where there is no trading because their 10 year note is .005%."

"Japan is an insolvent nation that has taken its interest rates down to levels where there is no private market for their debt - it is a ticking time bomb ..... The danger here is the Yen can unravel here and become intractable."

"If interest rates go up just 1% the nation is completely insolvent. The Yen could unravel very quickly and cause the economy of Japan to collapse, which would be massively disruptive to all economies and markets across the globe."

FREE MARKET SYSTEM HAS BEEN COMPLETELY VANQUISHED

"No one knows what the prices are of anything any longer! Capitalism has been annulled, cancelled and abrogated by government and central banks (which are one and same thing)".

WHERE WE ARE HEADED

  1. A complete breakdown in central bank credibility lies ahead,
  2. A complete collapse of the financial system will occur when interest raters normalize. The Fed won't initiate this normalization but rather the free market will,
  3. A resulting global economic collapse will wipe out tax bases and therefore debts and deficits will skyrocket
  4. Because of this threat, more QE, more financial repression and further market intrusions lie ahead.
 

 

 

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Friday
November 14th
2014

AUDIO PODCAST

TIM PRICE on FINANCIAL REPRESSION

Tim Price

 

SPECIAL GUEST: Tim Price is Director of Investment at PFP Wealth Management in the UK, an independent asset management and financial planning practice. He was formerly Chief Investment Officer – Global Strategies at Union Bancaire Privée in London, and previously Chief Investment Officer at private bank Ansbacher & Co.

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Tim has 18 years’ experience of both institutional and private client wealth management. A graduate of Oxford University, his focus is absolute return investing using multiple asset classes, including so-called alternative investments. Working with his prior employers he has been shortlisted for five successive years in the Private Asset Managers Awards program and is a previous winner in the category of Defensive Investment Performance. He was also shortlisted in the inaugural Spear’s Wealth Management Awards 2007 in the category of Asset Manager of the Year. An outspoken and sometimes irreverent commentator on financial markets and the asset management industry, Tim is also a regular columnist for Money Week magazine and maintains a weblog, The Price of Everything (http://thepriceofeverything.typepad.com/) and edits Price Value International.

Published 11-14-14

PODCAST - 26 Minutes

FINANCIAL REPRESSION

"Financial Repression is government stealing from savers and the future!"

"The single biggest problem of our times economically, is that for the last 40 years there has been an unsustainable buildup of credit expansion throughout the developed world ... and we have reached the end of the road new. Every policy by governments and their agents (the central banks) is too a) Kick the Can Down the Road and B) to steal from savers to keep this bandwagon rolling!"

THREE ALTERNATIVE APPROACHES TO ATTEMPT A RESOLUTION:

  1. Generate Sufficient Economic Growth to Keep Servicing the Debt,
  2. Repudiation or Debt Default,
  3. An Explicit Policy of State Sanctioned Inflationism.

Approach #1 and #2 or no longer realistically viable, leaving governments with only option #3. The last options has historically always been the option governments of fiat based systems have resorted to throughout the ages because of a lack of "political will and discipline".

Tim believes Japan is presently the 'dress rehearsal' and the rest of the world will be the main event.

A "FOUR LEGGED" INVESTMENT APPROACH

The pragmatic response - Ignore indices and concentrate on value.

“Investors do not make mistakes, or bad mistakes, in buying good stocks at fair prices. They make their serious mistakes by buying poor stocks, particularly the ones that are pushed for various reasons. And sometimes – in fact very frequently – they make mistakes by buying good stocks in the upper reaches of bull markets.”

  -Benjamin Graham

  1. High Quality Debt,
  2. Deep Value Listed Equity,
  3. Uncorrelated Assets and Systematic Trend Following (CTA),
  4. Diversified Real Assets

Tim recalls the words we last heard in the dark days of 2008:

"When you’re a distressed seller of an illiquid asset in a market panic, it’s not even like being in a crowded theater that’s on fire. It’s like being in a crowded theater that’s on fire and the only way you can get out is by persuading somebody outside to swap places with you .”

This is precisely what occurs when the regulatory pressures and un-natural forces of FINANCIAL REPRESSION finally ends

 

 

 

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Monday
November 10th
2014

Dr. THORSTEN POLLEIT on FINANCIAL REPRESSION

Dr Thorsten Polleit

 

SPECIAL GUEST: Thorsten Polleit, PhD is chief economist of the precious-metals firm Degussa and co-founder of the investment boutique Polleit & Riechert Investment Management LLP. He is honorary professor at the Frankfurt School of Finance & Management and associated scholar of the Mises Institute.

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Thorsten Polleit, 47, is Chief Economist of Degussa Goldhandel GmbH (www.degussa-goldhandel.de). From 1998 to 2012, he worked as an economist for ANB AMRO and Barclays Capital in Amsterdam, London and Frankfurt. Thorsten holds a diploma in economics and was awarded a doctorate in economics from the University of Münster in 1996. In September 2014 he was appointed Honorary Professor for economics at the University of Bayreuth (uni-bayreuth.de). Thorsten Polleit is an Adjunct Scholar of the Ludwig von Mises Institute, Auburn, US Alabama (www.mises.org), President of the Ludwig von Mises Institut Deutschland (www.misesde.org) and a founding member of the research network on The Role of Money in the Economy (ROME). Together with Matthias Riechert he founded the investment firm Polleit & Riechert Investment Management LLP (www.polleit-riechert.com). Thorsten Polleit writes frequently for various newspapers magazines and journals. His publication list can be found here.

Published 11-10-14

21 Minutes

When you are as well grounded in the Austrian School of Economics as Prof Dr. Thorsten Polleit, then understanding inflation is only a matter of understanding the countries changing "money stock" and the "quantity of money". As Ludwig von Mises taught - inflation always comes to an end! At some point you cannot inflate any further.

"We live in a world where the quantity of money can be increased at any point in time, in any amount politically desired. It is only a matter of political willingness to increase the stock of money ... the real risk in an unbacked money system is therefore inflation"

Prof Polleit believes there is a "lot of trickery"still to be done to avoid the ultimate catastrophe which he sees coming because of the lack of politically will to address the present economic problems and the government's fear of deflation. As a result, "it can be anticipated that future government policies will take away a large amount of private wealth".

"COLLECTIVE CORRUPTION"

"Presently there is great support to keep alive a failing unbacked "paper money" system ... Many people have become dependent on the unbacked "paper money" system, for example people holding bonds. They have a great interest that the whole monetary architecture does not collapse. So, if the choice is to bring to a halt the printing press and accept the consequences; or to be in favor of the policies to create new money, the majority of the people would opt for the former. This is why you can (and will) impose all these drastic Financial Repression measures."

FINANCIAL REPRESSION

"Financial Repression are policies that try to erode outstanding wealth. For instance governments have bonds outstanding. Through Financial Repression they try to reduce the amount of real debt of these instruments. ... They do this by controlling the interest rate and ramping up inflation so the real return on investor assets declines and inflation 'eats away' investor wealth"

NEGATIVE REAL RATES

"Negative Real Interest Rates is an instrument of the government for eroding real wealth of savers to the benefit of the government and other highly indebted interest rate groups - like the banking industry because their outstanding liabilities are getting reduced in real terms. This is the redistribution of income and wealth on the grandest scale imaginable!"

"The losers are the innocent savers with expectations of inflation being lower than it actually is or will become."

"It must be understood that wealth is being transferred!".

 

 

 

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Monday
Nov 10th,
2014

FOLLOWING JAPAN'S FAILED ECONOMIC MODEL

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

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with Charles Hugh Smith & Gordon T Long

25 Minutes

Charles Hugh Smith and Gordon T Long discuss the failed Japanese Economic Model and what it means for those nations following the Japanese path of QE and then QQE.

It’s not just about Japan as a nation failing— but that it’s critically important to understand that the model Japan followed in the postwar era is failing.  

Japan reached preeminence via an Asian-specific form of Capitalism with these four characteristics:

FOUR FAILED PILLARS – Lessons Learned

1.    Integration of government ministries and private-sector cartels,

2.    Heavy reliance on export sectors for growth and profits,

3.    Domestic savers provide the capital for export expansion,

4.    Defaults and write-offs of bad debt cause loss of face and are thus hidden from public view

 Charles Hugh Smith spells out why all four have failed.

This model will fail in every nation that relies on it.

Japan’s response to the failure of its growth model is not a solution but an additional problem:

-- Expanding fiscal deficits to enable more government spending,

-- Monetizing government debt (Bank of Japan creates money and uses it to buy government bonds)

Is Japan’s economy unique in the world? Yes and No.

YES: It is an island state with a homogeneous populace that is culturally attuned to producing high quality goods, saving money and sacrificing individual interests in favor of the greater good.  That is unique.

NO: But the mercantilism, state-capitalist, debt-dependent model is not unique—it has been copied by other developing nations as the gold standard for rapid development.”

Japan marched down the road that all the other developed economies are presently marching down.

 

 

 

 

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Saturday
November 8th
2014

Dr. CHRIS MARTENSON on FINANCIAL REPRESSION

 

Dr Chris Martenson

 

SPECIAL GUEST: Chris Martenson, PhD (Duke), MBA (Cornell) is an economic researcher and futurist specializing in energy and resource depletion, and co-founder of PeakProsperity.com

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As one of the early econobloggers who forecasted the housing market collapse and stock market correction years in advance, Chris rose to prominence with the launch of his seminal video seminar: The Crash Course which has also been published in book form (Wiley, March 2011). It's a popular and extremely well-regarded distillation of the interconnected forces in the Economy, Energy and the Environment (the "Three Es" as Chris calls them) that are shaping the future, one that will be defined by increasing challenges to growth as we have known it. In addition to the analysis and commentary he writes for his site PeakProsperity.com, Chris' insights are in high demand by the media as well as academic, civic and private organizations around the world, including institutions such as the UN, the UK House of Commons and US State Legislatures.

Published 11-08-14

31 Minutes

Dr. Chris Martenson Talks FINANCIAL REPRESSION in clear and simple language that we can all follow. A professional educator, he makes the complex easy to grasp. Elements of Financial Repression require this skill to make clear the stealth game governments are taking against its citizens in the name of preserving the financial stability of the state.

FINANCIAL REPRESSION

"When governments get into too much debt there are only so many ways to get themselves out from under the debt." There is:

  1. Austerity,
  2. Default on the Debt or
  3. Financial Repression

In reality, the third is the only politically viable solution. Financial Repression " the cornerstone involves taking a little from everybody and giving it to a couple of favored parties". To do this involves three basic elements:

  1. Negative Real Interest Rates,
  2. Ring Fencing via Regulatory Controls,
  3. Elimination of warning signals such as gold appreciation.

JAPAN AS AS AN EXAMPLE

Let's consider Japan as an example. The Yen is down 33% over the last year as a stated policy direction of the government's Financial Repression implementation. As a direct consequence, imports are higher therefore making consumption items like energy more expensive for the average person in Japan.

Real wages and savings for the middle class in Japan are falling. However, if you are a corporation like Toyota it is better for business. Chris argues that Financial Repression is nothing more than a transfer from the people to companies such as Toyota . The government effectively believes it knows better through central control and planning where the public's money will be most effectively utilized.

Central planning never worked in Russia and after more than 20 years the proof can once again be confirmed in Japan. This is the stealth game being played against the public, not only in Japan but by countries practicing policies of Financial Repression around the world.

THE COMING CRISIS

True wealth NEVER gets destroyed, it only gets transferred!"

Chris points out that wealth is never destroyed. but rather it is the claims on wealth which are destroyed during a crisis. "A profound currency accident is coming" according to Chris where he "would not be surprised to see the Yen be completely obliterated just like the the Zimbabwe dollar." His strong recommendations are:

  1. Understand the problem,
  2. To importantly, take action,
  3. Be in Productive Assets,
  4. Make sure your money is managed by those who understand the new reality and today's true risks.

Wealth can no longer be stored in paper currency or "paper" claims in a Fiat Currency System.

Price and Value are separating and people forget that price is what you pay, but value is what you get. We soon will see an event where it will be perceived that great wealth is again destroyed. However, what investors MUST fully comprehend is that wealth is not destroyed but rather only transferred.

True wealth is the land, the property, plant & equipment, productive enterprises, raw resources and the people who fashion it all. That is the real wealth. Everything else is nothing more than paper claims on the true wealth. These claims can be made worthless overnight but wealth never is.

 

 

 

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Friday
November 7th
2014

JOHN BUTLER on FINANCIAL REPRESSION

 

John Butler

 

SPECIAL GUEST: JOHN BUTLER , John Butler is the publisher of the "Amphora Report", Author of "The Golden Revolution" and is Chief Investment Officer at Amphora; Atom Capital

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John Butler has 18 years experience in the global financial industry, having worked for European and US investment banks in London, New York and Germany. Prior to launching the Amphora Commodities Alpha Fund he was Managing Director and Head of the Index Strategies Group at Deutsche Bank in London, where he was responsible for the development and marketing of proprietary, systematic quantitative strategies for global interest rate markets. Prior to joining DB in 2007, John was Managing Director and Head of European Interest Rate Strategy at Lehman Brothers in London, where he and his team were voted #1 in the Institutional Investor research survey. In addition to other research, he publishes the Amphora Report newsletter which appears on several major financial websites. A cum laude graduate of Occidental College in California, John holds a Masters Degree in International Finance and Economics from the Fletcher School of Law and Diplomacy, associated with Harvard and Tufts Universities.

Published 11-07-14

25 Minutes

John Butler saw first hand during his years with Deutsche Bank and Lehman Bros (prior to its collapse), mounting evidence of Wall Street's "natural self discipline and internal self regulation of risk taking activity being pushed aside and a huge industry bias towards excessive leverage and risk taking control". He knew it could not end well which led him to become independent of this growing institutional mindset and to search for alternative approaches.

"... valuations versus real assets is the key element of the end game"

He recognized that FINANCIAL REPRESSION was fundamentally about limiting investor choice and to further this institutional direction of increasing risk taking to finance government debt. He has therefore came to define Financial Repression from the standpoint of both a narrow and broad definition:

FINANCIAL REPRESSION

BROAD DEFINITION: "Any Policy that constrains the ability of the financial markets and investor particpants in these markets to take rational actions to invest, diversify and manage the risk of their investment as they would personally prefer to do."

NARROW DEFINITION: "A specific tool kit of policies implemented by government which indirectly confiscate the wealth of the private sector and move it to a combination of the public sector and/or "too large to fail" institutions."

FINANCIAL REPRESSION IS ABOUT LIMITING INVESTMENT CHOICE

"The whole point of financial repression is to make it difficult or impossible for an investor to protect themselves"

John feels Financial Repression "is now extremely broad based (globally) and in fact you have to look very closely to find countries not actively pursuing some mix of Financial Repression policies."

A NEGATIVE SUM GAME

Butler has argued in his Amphora Report that competitive currency debasement is "is not a zero sum game but rather a negative sum game because policy makers don't realize that by trying to devalue against each other, unseen they are undermining the very credibility of unbacked fiat currencies generally."

Increasing the BRICS are "becoming increasingly wary of where all this is going and as a consequence are diversifying not only their fiat currency reserves but are diversifying into gold, oil fields and real assets generally."

HOW INVESTORS PROTECT THEMSELVES

"The only free lunch in economics is DIVERSIFICATION. The problem is that in a world of Financial Repression, the way you diversify yourself is very different than a world where financial represion is not an issue."

"There is no way out but Currency Debasement"

John outlines in this video specifically what the "new diversification" must consist of.

He believes the Fed "will blink" as the US dollar continues to rise as a consequence "of the deflationary pressures which are spreading across the world." He sees evidence of a major trend reversal coming in 2015 and possibly before the end of 2014.

 

 

 

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Friday
October 31st
2014

NICK BARISHEFF on FINANCIAL REPRESSION

 

Nick Barisheff

 

SPECIAL GUEST: NICK BARISHEFF , Nick Barisheff is the president and CEO of Bullion Management Group Inc., a bullion investment company which provides investors with a cost-effective, convenient way to purchase and store physical bullion. Widely recognized as a North American bullion expert, Barisheff has written and been quoted in numerous articles on bullion and current market trends.

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Published 10-31-14

33 Minutes

Nick Barisheff Talks FINANCIAL REPRESSION and the Real Chinese Gold Inventories.

FINANCIAL REPRESSION

Financial Repression is a massive wealth transfer from the savers to the borrowers, where the borrowers are primarily the government and Wall Street.  It is done so subtly that the vast majority of people are unaware of their loss of purchasing power over the years of true financial repression.

It is simply about real negative interest rates which are worse than most realize if you use John Williams' ShadowStats inflation rate of close to 10% in the US. Presently negative real interest rates are witnessed worldwide in all the heavily indebted developed economies.


These Governments haven’t been able to get out from under too much debt by either: 1- Austerity measures, 2- Taxation policies, 3- Inflation or 4- Economic Growth. The only politically expedient solution left is Financial Repression. The middle class feel this in two ways: 1- Lost interest income and 2- Earned income through wages not keeping up with inflation.

As a gold expert, Nick Barisheff believes gold should be included in investor’s portfolio as insurance. Gold should normally be 10% of assets but presently should be considered strategic and the allocation should be closer to 20%. He cites why but startling lays out the degree to which China is presently acquiring Gold.

THE REAL CHINESE GOLD INVENTORIES?

Nick believes China is closer to 5000 tons of gold than the 1000-1700 currently reported by official sources. He believes China is acquiring physical Gold in its Sovereign Wealth Fund which doesn’t have to report it to anyone. The last time they did the Chinese Central Bank Gold Reserves went from 800 to 1600 tonnes.  They haven’t reported in five years.


During this 5 years Nick argues the gold is coming from Leased Gold. There has been approximately 1500 tonnes per year in net leasing over the last 10 years.

Nick believes when this all becomes properly understood it will send shock waves through the system

GOLD EXPROPRIATION

There is no answer to how governments might react to markets suddenly pushing Gold prices up dramatically. Nick is skeptical of countries expropriating gold from its citizens like the US did in the 30’s but investors need to be prepared for surprise reactions. His view is the best answer is Diversification within the 6 Investment Asset Classes and within the Precious Metals class to be diversified between gold, silver and platinum. There have never been government attacks on Silver and Platinum.

  • Investors should be Diversified
  • Investors must Educate themselves
  • Investors Under Current Conditions should Strategically hold 20% of their

This is a most watch video for anyone interested in Gold Investing.

 

 

 

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Saturday
October 25th
2014

GRANT WILLIAMS on FINANCIAL REPRESSION

 

Grant Williams

 

SPECIAL GUEST: GRANT WILLIAMS , Grant Williams is Portfolio and Strategy Advisor for Vulpes Investment Management in Singapore−a hedge fund running $200 million of largely partners' capital across multiple strategies. Grant has 26 years of experience in finance on the Asian, Australian, European and US markets and has held senior positions at several international investment houses. Grant also writes the popular investment blog 'Things That Make You Go Hmmm...'

OPEN ACCESS

 

Published 10-25-14

38 Minutes

Grant has 26 years of trading experience in Asian equity markets, beginning his career with Robert Fleming in 1986 trading Japanese equities and derivatives in both London and Tokyo. Subsequently he has run Asian equity, convertible bond and ADR/GDR trading desks in New York, Hong Kong, and Singapore as well as spending several years trading Australian equities in Sydney. During that time, he spent 6 years with UBS and a further 9 years with Credit Suisse. Most recently he was Head of Asian Equity Trading for Jefferies in Singapore.

This is a 38 minute video discussion between Grant Williams and Gordon T Long on Financial Repression.

FINANCIAL REPRESSION

Grant suggests that the dictionary defines repression as essentially about trying to repress true feelings. Financial Repression is the government’s attempt to steer behavior away from true investments and into those that assist the government to pay down its debts.

“The result is essentially outright theft by borrowers from savers. The pool of savings on earth is the last really untapped pool of capital that government has to go after”.

According to Grant the explosion in credit through removal from the Gold Standard, financial engineering and keeping interest rates low has left a differential between Credit Growth and GDP that has forced governments with no choice but to adopt Financial Repression policies. By debasing their currency and through inflation government create the most insidious type of wealth transfer that most people just don't understand.

Grant believes we are in a trap with no way out.

He makes his point crystal clear by pointing out how truly devastating Financial Repression has been to savers in real terms:

WILLIAMS ADVISES INVESTORS

  • Be Flexible
  • Consider Cash (Short Term) on a Risk / Reward Basis
  • Consider Gold as an Insurance Policy

MESSAGE

  • Be Engaged,
  • Understand What is Happening,
  • Question What You Are Being Told,
  • Be Cautious,
  • Avoid Potentially Large Drawdowns

 

 

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Saturday
October 18th
2014

PHASE SHIFT?

 

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

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PHASE SHIFT?

Does the Current Market Volatility Signal A Trend Change in Sentiment?

Published 10-18-14

31 Minutes, 49 Slides

Gordon T Long poses three questions for debate with John Rubino regarding the current Geo-Political Event Risks and Macro Economics developments:

  1. Are the risks in fact bigger and more serious problems than we were seeing while the market was going up?
  2. Could it actually be a matter that investors are reacting differently because underlying mood / sentiment has changed for some reason?
  3. Are we unknowingly now over focusing on the Geo-Political Event Risks and Macro Economics developments as a result of the market going down (maybe for other reasons like reduced liquidity flows that no one is presently talking about - yet)?

John steps the discussion through risks such as: 1-the Islamic State, 2- Ebola, 3- The Strong $$$, 4- Japan & Europe, 5- Junk Bonds and 6- The"October" problem to illustrate that though the problems are more serious the real shift is in perceptions. He suggests that a phase shift occurs when "new headlines suddenly begin to seem both oppressive and really, really numerous, the public starts to feel that maybe we’re not okay after all!“

John suggests that the public is justified in being both confused and nervous because of the degree of market manipulation going on which has distorted price discovery, the pricing of risk and has allowed malinvestment to be hidden by continued roll-overs of every increasing levels of debt. He feels it will end, but it is impossible to know when - just that it will.

Gordon points out that the Federal Reserve still has more ammunition ready to go. He illustrates this with the recent derivatives contract signed between the Fed and the US option exchanges and well as the $300B Reverse Repo account "locked and loaded" in anticipation of any market correction that might ignite a potential cascading collateral collapse. This has the potential to change sentiment from fear to greed once the much needed bond rotation is complete.

Additionally, Gordon feels that though the central bankers are no doubt nervous they have not reached the dangerous point where they panic and pull out all the stops to protect the implosion of an over indebted and financially repressed system.

With the aid of 49 slides, this 31 minute video covers a lot of ground in an easy to follow dialogue.

 

 

 

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Saturday
Oct 4th,
2014

AMERICA'S TERMINAL POLITICAL DYSFUNCTION

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

OPEN ACCESS

with Charles Hugh Smith & Gordon T Long

25 Minutes

Charles Hugh Smith and Gordon T Long continue their discussion on Crony Capitalism in America.

HOW CRONY CAPITALISM WORKS

 -- Private interests influence government spending and regulations with lobbying and campaign contributions: Governance by the highest bidder.

-- The more successful the cronyism, the more money the corporations have to spend on lobbying, which serves to further protect their profits and share of government spending. This feedback loop rewards crony capitalism and limits classical capitalism’s key features: transparent markets and competition.

– An economy dominated by crony capitalism stagnates as competition is suppressed and government enriches those who are “more equal than others” (to borrow a phrase from Orwell)

SPECIAL INTEREST VETO POWER

-- One key dynamic in America’s political dysfunction is the veto power extended to special interests: any reform that costs them profits and/or impacts their share of Federal funds is vetoed.

-- Reform that doesn’t carry political/financial pain is not real reform

-- When every politically potent entrenched interest can veto unfavorable legislation and regulation, real reform is impossible 

ABSENCE OF REAL REFORM

 -- Without real reform, the system stagnates and manageable problems become crises.

-- Since entrenched interests refuse to accept any pain, problems fester for years beneath the half-measures and toothless “reforms” passed for public-relations purposes.

-- The problems (unfunded liabilities, explosive financial risks buried in the shadow banking system, etc.) then blossom into full-blown crises that cannot be resolved.

-- Crisis management leads to politically expedient Band-Aids that mitigate the symptoms without addressing, much less solving, the underlying political/financial diseases.

THE CRONY TRIBUTE SYSTEM

Gordon argues that Crony Capitalism today closely resembles the Roman "Tribute" System also adopted by the Mafia.Crimes being created today are met with fines. Guilty parties do not go to jail but rather the corporation pays a fine. Billion dollar crimes are assessed Million dollar fines. A percentage that closely mirrors a Tribute System. The government makes money through enforcement but not prevention. Corporations make fortunes with confidence that the government will settle for a piece of the fleecing of the people - and the game continues.

Gordon believe,s as the recent tapes released by Carmen Segarra indicate, the US regulatory system has effectively put the "Fox in charge of the Hen House"

 

 

 

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Tuesday
October 1st
2014

DOUGLAS FRENCH on FINANCIAL REPRESSION

 

Douglas French

 

SPECIAL GUEST: DOUGLAS E. FRENCH , Author, Past President of the Ludwig von Mises Institute and Casey Research Contributor

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Douglas French of Casey Research

on FINANCIAL REPRESSION

 

Published 09-30-14

28 Minutes

He received his master's degree in economics from the University of Nevada, Las Vegas, under Murray Rothbard with Professor Hans-Hermann Hoppe serving on his thesis committee. He is the former president of the Mises Institute. He is the author of Early Speculative Bubbles & Increases in the Money Supply and Walk Away: The Rise and Fall of the Home-Ownership Myth. Douglas E. French teaches at Troy University and writes for Casey Research.

This is a 28 minute video discussion between Douglas E French and Gordon T Long on Financial Repression.

Douglas French was a banker for 20 years in Las Vegas during its heady days and has many stories including witnessing sale people selling derivative products. "There is nothing like being on the ground. It is very easy to speculate and second guess people about bubbles (how could you do that!) when you are sitting in the Ivory Tower, but it is a lot different when you are on the ground seeing the bubble from inside out".

"The biggest bubble we have is US Treasuries. The believe you can't get hurt is a quality you always see in a bubble. The idea that lending an entity, that is $17T and going to $18T and beyond in debt, and will never be able to pay that back and the idea that you will get 2.5% for 10 years and it is 'return free risk' is certainly bubble territory!"

FINANCIAL REPRESSION

“You have PhD’s at the Fed trying to create economic growth with inflation and low rates. The repression is that people like you and I won’t ever be able to retire because we won't be able to get any return on our money so we can prop up the government and keep it in business."

This is the overall Macro Strategy of the government but central planning has never worked! ..... They are essentially trying to print their way out of a jam! ....... Because of Financial Repression almost ¾ Trillion dollars has gone to the government that should be in private hands!!!"

FRENCH WARNS INVESTORS

  • People should be worried about their pensions,
  • People should be worried about the Fed's Repo market and primary dealer delivery failures. This will likely be the cause of the next crash. Money Managers are playing musical chairs every quarter to keep this game going.
  • People should be concerned about liquidity seizures which need to be closely monitored as money managers currently scramble for collateral.
  • "Collateral through Rehypothecation has been pledged and pledged, over and over again.... the average person is going to extraordinarily shocked by something they never saw coming because it is something that is hard to explain and hard to understand".

 

 

 

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Tuesday
September 30th
2014

MISH SHEDLOCK TALKS FINANCIAL REPRESSION

 

"Mish" Shedlock

 

SPECIAL GUEST: MIKE ("Mish") SHEDLOCK , Publisher of the Global Economic Analysis Blog.

An espoused self educated Austrian Economist,  Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Read more at http://globaleconomicanalysis.blogspot.com

OPEN ACCESS

MISH SHEDLOCK TALKS FINANCIAL REPRESSION

Published 09-30-14

Mish Shedlock talks Financial Repression with Gordon T Long.

FINANCIAL REPRESSION

“Financial Repression is a set of fiscal & monetary policies for the express benefit of the ruling class – the politicians, the banks, and the already wealthy at the expense of everyone else”

THE GOAL

“It is about coercing the government into doing things that are in the express interest of the ruling class. The already wealthy are the ones who gain the most”

MISH CITES THE FOLLOWING EXAMPLES:

  • Quantitative Easing,
  • Interest Rate Suppression,
  • Bank Bailouts
  • China – They don’t let the Yuan float,
  • China- State Owned Enterprises for the benefit of the ruling class,
  • Europe – ECB with negative deposit rates,
  • Europe – LTRO and the T-LTRO,
  • JAPAN – Abe-nomics
  • Greece Bailout
  • Cyprus Bailout – Wealth got their money out but everyone else had their money confiscated to pay back the predominately German bond holders,
  • Public Unions,
  • Inflation is the Key Financial Repression Idea – It benefits the banks, politicians and wealthy

MISH ON "WAR"

“War is another example of Financial Repression. Who benefits?  The war mongers – the banks, politicians and wealthy. You can’t even get elected if you don’t support war because the whole Military-Industrial Complex is behind it and you will be labeled ‘weak on defense’”

FINANCIAL BUBBLES

“Financial Bubbles are a direct result of all these policies for the benefits of the banks and wealthy …. That is what the Fed does. That is what central banks do. They blow bubbles over time for the benefits of banks and wealthy”

MISH ON KEYNESIAN ECONOMICS

“No one has gone back and proven how idiotic it all is. This idea that you can pay to dig a ditch and then have someone else fill it back up and this will add economic benefit is lunacy! Yet the average Keynesian believes that. A sixth grader would find in inherently ridiculous!”

MISH’S VIEW ON HOW INVESTORS CAN PROTECT THEMSELVES

“Don’t participate in bubbles!! Get out of the financial markets. Buy some Gold and wait."

THE COMING CURRENCY CRISIS

Mish believes a currency crisis is coming which is most likely to start outside the US in likely Europe or Japan.

“This environment fosters banks and the wealthy to speculate. When it ends badly and we have to bail them out the average guy on the street is going to pay for it – again”

KEY MESSAGE

  • If you don’t have money in Gold - Get some!
  • If you are still speculating in financial bubbles – Stop.
  • Look outside the box – Look outside the US

 

 

 

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Tuesday
September 23rd
2014

CARTELS, MONOPOLIES & CRONY CAPITALISM

 

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

 

CARTELS, MONOPOLIES & CRONY CAPITALISM

Today's new dominating business model.

Published 09-23-14

John Rubino is quite blunt when he states:

"Crony Capitalism is now the dominate business model operating in the US! Most big corporations employ legions of lobbyists and throw millions of dollars at manipulating the political and regulatory process!"

Political office to his trained eye "has become nothing more than an extended job interview" for the high paying lobbyist jobs expected after leaving political office, financed by new corporate competitive strategies.

Rubino places the blame for this unintended consequence primarily on the policy of "Unsound Money" and a consumption based economy. John sees the banks and major corporations becoming more and more powerful to the extent that we no longer have separation. "We now have one big organization, where the big organization becomes dedicated to self perservation. Size and power is now the goal, not serving customers and not necessarily a honest process. They are doing this by taking advantage of the regulatory process."

He spells out why he believes a return to 'Sound Money" is the only way the process can be halted or reversed. The rate of expansion of government and the financialization of the economy suggests the situation is now so serious in the US that the only likely outcome will be a major financial and economic crisis. "It isn't a free market anymore!"

The clear goal of the current expanding monolithic government is nothing more than to "dole out more and more goodies to the people who are able to pay for those goodies!". Though he sincerely hopes the expected crisis will "right the ship", he is highly skeptical. History suggests otherwise to him.

The influence of corporations on government regulations to gain competitive advantage, risk avoidance and financial growth are being driven by the size of the government in the economy and increasing centralized control. Crony Capitalism as a consequence was therefore inevitable and expected by many - though highly undesirable by most.

"Money today is more and more made by people who place bets on the market and use regulations to move the markets in that direction, book a profit and move on. No real wealth is generated, only transferred."

Unfortunately, there are no counter-forces except public awareness and their organized attempts to stop it!

 

 

 

 

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Saturday
September 20th
2014

GordonTLong on WallStrforMainStr.com FINANCIAL REPRESSION

 

 

 

SPECIAL APPEARANCE: GordonTLong on WallStrforMainStr.com

Gordon T Long: Financial Repression Killing Middle Class & Capitalism Itself

WallStrForMainStr Interviews Gordon T Long:

"We have over 250 interviews with top guests in discussion. The Gordon T Long discussion is over an hour long and one of the best ones we've done all year."

 

 

 

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Friday
September 12th
2014

Ronald-Peter Stoeferle on FINANCIAL REPRESSION

 

 

 

SPECIAL GUEST: RONALD-PETER STOEFERLE , Incrementum Liechtenstein

Prior he worked for Raiffeisen Zentralbank (RZB) in the field of Fixed Income/Credit Investments and then later on joined Erste Group Bank, covering International Equities, especially Asia. In 2006 he began writing reports on gold and gained media attention when he expected the price of gold to rise to USD 2,300/ounce when the current price was only at USD 500.His six benchmark reports called "In GOLD we TRUST" drew international coverage on CNBC, Bloomberg, the Wall Street Journal, Economist and the Financial Times. He was awarded "2nd most accurate gold analyst" by Bloomberg in 2011. He also writes reports on crude oil. Mr. Stoeferle is managing two gold mining-baskets and one basket for silver mining-equities. He studied business administration and finance at the Vienna University of Economics and the University of Illinois at Urbana-Champaign. Mr. Stoeferle is also a Chartered Market Technician (CMT) and a Certified Financial Technician (CFTe).

OPEN ACCESS

Published 09-12-14

35 Minutes with Slides

Ronald-Peter Stoeferle is a noted Austrian economist and money manager who believes strongly that “we should expect that financial repression as well as wealth taxes in various facets which will increasingly gain in importance in coming years". He believes "this to be a disastrous strategy, as the redistribution will merely buy time, while the structural problems remain unsolved.”

FINANCIAL REPRESSION

“Financial repression always consists of a combination of different measures, which lead to a significant narrowing of the universe of investable assets for investors. Money which in a more liberal investment environment would have flowed into other asset classes, is channeled in a different direction. The goal of financial repression is an indirect reduction of government debt by means of the targeted manipulation of the cost of government debt, most of the time accompanied by steady inflation.”

"Financial repression is ultimately a government imposed transfer of wealth.”

Developed country governments because of their previous policy stances now have only two monetary options. Financial Repression is the course that has been chosen. This is because it is preferably to have “quiet debt reduction” achieved by :

- Direct or indirect capping of interest rates (especially on government bonds),
- Measures such as forcing domestic investors to invest in domestic capital markets, such as capital controls and regulations forcing institutional investors to hold portfolios with a “home bias”,
- Taxes that make alternative investments more expensive (e.g. transaction taxes),
- Measures that imply a direct or indirect influence of government on financial institutions (macro-prudential regulation),
- Negative deposit interest rates, which increase the incentive for banks to invest in relatively risk-free assets. Banks are thus encouraged to monetize government debt – something that can rightly be called an inflation policy.

 

 

 

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Saturday
Sept 6th
2014

WHY CRONY CAPITALISM IS HAPPENING

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

OPEN ACCESS

with Charles Hugh Smith & Gordon T Long

24 Minutes, 17 Slides

Why has classical capitalism devolved to crony-capitalism/crony-kleptocracies?

In this 24 minute video Gordon T Long and Charles Hugh Smith discuss through the aid of 17 slides the rapid advancement of Crony Capitalism in America. The facts are undeniable, but why is it becoming so obvious and undeniable? Why is it accelerating without any apparent 'checks and balances'? Where have the safeguards against this happening gone?

Understanding Why This Is Happening

1.  Those who control most of the wealth are willing to risk systemic collapse to retain their privileges and wealth.  Due to humanity’s virtuosity with rationalization, those at the top always find ways to justify policies that maintain their dominance and downplay the distortions the policies generate. This as true in China as it is in the U.S.

2.  Short-term thinking: if we fudge the numbers, lower interest rates, etc. today, we (politicians, policy-makers, money managers, etc.) will avoid being sacked tomorrow. The longer term consequences of these politically expedient policies are ignored.

3.  Legitimate capital accumulation has become more difficult and risky than buying political favors.  Global competition and the exhaustion of developed-world consumers has made it difficult to reap outsized profits from legitimate enterprise. In terms of return-on-investment (ROI), buying political favors is far lower risk and generates much higher returns than expanding production or risking investment in R&D.

4.  The centralization of state/central bank power has increased the leverage of political contributions/lobbying.  The greater the concentration of power, the more attractive it is to sociopaths and those seeking to buy  state subsidies, sweetheart contracts, protection from competition, etc.

5.  Any legitimate reform will require dismantling crony-capitalist/state-cartel arrangements. Since that would hurt those at the top of the wealth/power pyramid, reform is politically impossible.

6.  Understood in this light, it’s clear that central bank monetary policy—zero-interest rates, asset purchases, cheap credit to banks and financiers, QE, etc.—is designed to paper over the structural problems that require real reform. 

Japan is a case in point: the Powers That Be in Japan have put off real reforms of the Japanese economy and political system for 25 years, and they’ve enabled this avoidance by pursuing extremes of fiscal and monetary policy that have eroded the real economy and created long-term structural imbalances.

 

 

 

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Friday
September 5th
2014

Jeff Berwick on FINANCIAL REPRESSION

 

 

 

SPECIAL GUEST: JEFF BERWICK is a Canadian entrepreneur, libertarian and anarcho-capitalist activist who founded StockHouse Media Corporation in 1994, one of the most active financial website in Canada. He remained CEO until 2002. In 2013, Berwick announced plans to co-found the world's first Bitcoin automated teller machine (ATM). He presently resides in Acapulco, Mexico and is Chief Editor of THE DOLLAR VIGILANTE

OPEN ACCESS

Published 09-05-14

A 32 Minute PODCAST

THIS IS A PODCAST ONLY

 

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Wednesday
September 3rd
2014

Egon von Greyerz on FINANCIAL REPRESSION

 

 

 

SPECIAL GUEST: EGON von GREYERZ , Founder & Managing Partner, Matterhorn Asset Management AG and GOLDSwitzerland.

OPEN ACCESS

Published 09-03-14

33 Minutes with 35 Slides

A former banker, Corporate Vice Chairman of a FTSE 100 corporation and founder of Matterhorn Asset Management AG, Egon von Greyez “strongly believes there will be massive wealth destruction in the next few years”.

Von Greyerz personally defines Financial Repression in practical terms as the “manipulation and interference by government in the running of the economy and the lives of normal people”. What this will inevitably lead to he feels will be the “total control of the people and a police state – that is the way we are going in some countries!”

He has been worried about what is presently unfolding since the 1980’s and is very troubled about what he has witnessed and what he clearly saw was coming. “All this was inevitable. It is ridiculous for the central bankers to say they didn’t see this coming. Anyone with just a little bit of intelligence could have seen this coming (of course you can’t be a politician who never see things coming and central bankers are politicians)”.


Anything that goes up exponentially will come down very fast - at some point! …. there will be massive fall in inflation, implosion of the monetary system and implosion of assets – and that is to come!”

“The Federal Reserve was created in 1913 by the Bankers for the benefit of the bankers and since then we have had inflation for their benefit. Once the US became the world’s reserve currency the bankers controlled the whole world”.

The reason there is no way out is because “the only policy has been to ‘kick the can down the road’ and only thing central bankers have done is to pass it on to others, hoping they would survive their term and someone else would take over the problems. They can see the problems, they can see the risk. They can’t talk about it. They only have one solution. They have held interest rates at zero which is obviously ridiculous and one example of Financial Repression, and they have printed unlimited amounts of money and has now reached a point where it no longer has an effect.”


There is a lot of things investors can do to protect themselves from Financial Repression which Egon von Greyerz discusses for the listeners.

 

 

 

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Tuesday
Sept 2nd
2014

KFUG 101.FM

Counter Culture Radio

Gordon T Long

 

SPECIAL GUEST: KFUG 101.FM Counter Culture Ratio with Dan Schultz

OPEN ACCESS

Big Changes Coming Soon

with Dan Schultz

KFUG 101.FM

Counter Culture Ratio

AUDIO ONLY: 59 Minutes

 

 

 

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Saturday
August 16th
2014

THE SUB-PRIME ECONOMY

PART - II

 

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

 

A SUB-PRIME SOCIETY

Delinquency Debt & the Collections Crisis

Published 08-18-14

 

The 2008 Financial Crisis is often attributed to a sudden freeze in liquidity in the Shadow Banking System stemming from borrower default problems within the securitization of Mortgage debt.

Six years later we have an even larger problem which is now associated with a national sub-prime economy securitizing its debt through the same unregulated Shadow Banking System. As prior to the 2008 Financial Crisis, Credit regulations are once again mistakenly being quietly changed to increase credit flows.

As Yogi Berra said: "Its Deja vue all over again!"

A BIGGER "COLLECTIONS" CRISIS

The US collections problem is with little doubt worse than it was six years ago once the government and its' credit pusher lobbyists' 'spin' is removed.

  • 77 Million Americans face debt collectors.
  • 35% of Americans have debt in Collection. Roughly, every third person you pass on the street is going to have debt in collections. The average is $5,178.
  • Roughly 1 out of 20 (5.3%) of people with a credit file are at least 30 days late on a credit card or other non-mortgage account (e.g., automobile loan, student loan).
  • A staggering 70% of census tracts have at least 25% of people with reported debt in collections. This means it is a US wide problem.
  • Health care-related bills account for 37.9 percent of the debts collected, according to a new report commissioned by the Association of Credit and Collection Professionals. Student loan debt represents another 25.2 percent and credit cards make up 10.1 percent, with the rest of the collections going for local governments, retailers, telecoms and utilities.
  • According to a new study by the Russell Sage Foundation, the inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36% decline... Welcome to America's Lost Decade. Simply put, the NY Times notes, it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer.
  • Tow trucks in America no longer have Towing on the side of the trucks but instead has been replaced with TOWING & RECOVERY. Think of it, everyone is driving new cars they can't afford so towing is small business but 'recovery' is now there primary business.

The American family is broke.

Government Policies of Financial Repression have crippled savers and pensioners.

The US middle class which feeds the 70% consumption economy has been 'gutted' with escalating costs in health & education, removal of defined benefits for retirements while have real disposable income shrunk.

THE 70% CONSUMPTION ECONOMY PROBLEM

The government is caught in a trap where it perceives it must increase credit to thereby increase consumption to sustain a 70% consumption economy. It has only so many options available as shown below.

GOVERNMENT's ONLY RESPONSE: Change the Rules

The simple truth is after an initial period of "Extend & Pretend" Policies, then replaced by "Kick-the-Can-Down-the-Road" Policies it has resorted to "Fake It Until You Make It. To do this they are changing the credit rules. When governments get into a problem you can always count on them to change the rules. John Rubino and I in this 30 minute video show how the government is doing this regarding Credit Card FICO scores, Car Loans, Student Loans, Mortgages and HELOCS.

 

WHY IT WON'T WORK

All of this is a waste and won't work. Citi Rob Buckland's lays out the four cycles of credit:

Phase 1: This begins at the end of a recession, when interest rates have fallen, money is cheap, but stocks are still battered.

Phase 2: A bull market sets in during phase 2, when stocks start to rise as easy credit lubricates the economy.

Phase 3: This is the tricky part. Stocks are still flying high, but credits spreads are widening as investors become increasingly unwilling to finance further risk. Corporate CEOs have now experienced a lengthy period of gains and become risk-happy. (And we'd note that central banks are already talking about tightening credit by raising interest rates.) Bubbles can form in Phase 3, Buckland says, as the high-flying stock market ignores the early warning signs of the deteriorating credit market. Hello, tech startup IPOs!

Phase 4: Stocks react to the lack of available credit by collapsing, and we see the kinds of things you get in a recession: "This is the classic bear market, when equity and credit prices fall together. It is usually associated with collapsing profits and worsening balance sheets," Buckland says.

We're in Phase 3 right now, Buckland says, but we may not be very far into it. Here's (Click to see Buckland's checklist of warning signs for Phase 3) .

CONCLUSIONS

60% of the families in America have absolutely no buffer for an emergency except to increase their debt levels. A third have nothing saved for retirement with the private sector no longer having meaningful pension plans.

The whole system is being financed within the Shadow Banking System which is borrowing short and lending out long to the Sub-Prime Economy. It is ripe for someone to yell "fire" and to see short term liquidity implode as it did in 2008.

 

 

 

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Saturday
July 26th
2014

Call on Next Credit Crisis Coming True

 

Gordon T Long

 

SPECIAL GUEST: Financial Survival Network Radio

OPEN ACCESS

Call on Next Credit Crisis Coming True

with Kerry Lutz & Gordon T Long

AUDIO ONLY: 24 Minutes

From the Financial Survival Network:

In our last discussion, Gordon T. Long predicted that another credit crisis was forming. That was nearly two months and sure enough we’re witnessing the start of a sub-prime auto debt bubble. Great call on Gordon’s part. Lately he’s been writing about the stock-buyback bubble. This work is starting to gain traction as well. David Stockman had a recent article about IBM’s rampant buyback’s. Gordon’s work is always ahead of the curve, which is why he’s a regular on FSN.

 

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Saturday
July 19th
2014

MYSTERIOUS BUYING

 

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

The TAR PIT that is FINANCIAL REPRESSION

with John Rubino & Gordon T Long

30 Minutes, 15 Slides

Macroprudential Policies of Financial Repression have been steadily accelerating since the implosion of the Dotcom Bubble.

Many of the consequences of Monetary Malpractice which Gordon T Long and John Rubino outlined and cautioned about in 2012 are now evident on a daily basis which are chronicled in this 30 minute video.

Alarmingly it is taking more and more draconian and manipulative central planning actions to keep the financial ship afloat.

Unfortunately, both John and Gordon see things getting much worse for very specific reasons which the Federal Reserve has begun subtle signaling.

 

 

 

 

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Monday
July 14th
2014

THE SUB-PRIME ECONOMY

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

OPEN ACCESS

THE SUB-PRIME ECONOMY

Students, Car Buyers & Retail Stores

with Charles Hugh Smith & Gordon T Long

28 Minutes, 23 Slides

GROWING SUB-PRIME POPULATION

In this 28 minute video Gordon T Long and Charles Hugh Smith discuss through the aid of 23 slides the growing sub-prime population in America. It is getting little attention as more and more citizens are effectively being squeezed into the category that was once termed 'sub-prime' but which is now simply the US Economy.

The biggest increases in credit are coming the areas least able to afford increased debt levels, who see themselves as having no other survival choice in modern day America..

1. STUDENTS & THEIR PARENTS

2. INCREASING NUMBER OF CAR BUYERS

3. RETAIL STORE CHAINS

 

BREADWINNER ECONOMY FAILING

The little discussed truth is that fewer and fewer jobs today actually pay a "breadwinner's" salary. 48% of all new jobs being created in America now pay less than $24K/Annum GROSS. Even with both spouses working the numbers don't add up when rents are 1500/Mo, Day Care $1000/Mo and car payments for two cars to commute to fewer jobs are minimally over $500/Mo. Then there are 3 levels of taxes, fees, licenses etc and exploding food, gas, utility, health and education costs. It is any wonder America is now accelerating deeper into a sub-prime economy?

SHADOW BANKING

The problem during the 2008 crisis was sub-prime mortgages which sent shock waves through the Shadow Banking System. A system based on borrowing short and lending long. Today the Shadow Banking system is feeding off Student Loans, Car Loans and REITS. All are being securitized, repackaged and bundled through the Shadow Banking System. Like mortgages prior to the financial crisis, it was delinquencies which started to rise which imploded the system. This is a show which is soon coming once again returning to a theater near you!!

 

 

 

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Saturday
June 28th
2014

GEO-POLITICAL TURMOIL

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

OPEN ACCESS

GEO-POLITICAL TURMOIL

Instability, Fragmentation, Resource Wars

with Charles Hugh Smith & Gordon T Long

21 Minutes, 19 Slides

SOURCES OF INSTABILITY  

FAILED Governments/States
    • North Korea,
    • Venezuela,
    • Pakistan, etc.
      • Weak Institutions & Corruption
      • Failed Political Governance  
        • Failure of Central Planning Model
        • Failure of Neo-Liberal Model of Capitalism
        • Global Supply Chains Under Pressure

    FRAGMENTATION of nation-states assembled in the 20th century by the Great Powers

  • Iraq,
  • Syria, et
ISIS

DIVIDED Geopolitical loyalties of traditional states

  • Ukraine

RESOURCE WARS

  • ENERGY and transport of energy (Ukraine, Iraq, Africa, China-vs-Rest of East Asia, etc.)
  • FEWER resources (food, water, energy)
  • SHORTAGES / RISING PRICES of resources

INSOLVENCY of Nations/Governments due to unpayable debts (Greece, Cyprus, etc.)

OBSERVATIONS  

  • Each source of instability generates regional instability that disrupts other nation-states and attracts wealthy-states/quasi-Imperial interventions that further destabilize the region.
  • The likelihood that all these interlocking sources of instability will go away naturally or be resolved is low.  Predictability is also low as instability is intrinsically non-linear.
  • National and global instability caused by eroding purchasing power of currencies; as currencies lose purchasing power, imports become prohibitively expensive, triggering higher prices and shortages that exacerbate wealth/income inequalities.

 

 

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Tuesday
June 22nd
2014

Iraq About US Dollar, Hyperinflation Trouble in 2015

 

Gordon T Long

 

SPECIAL GUEST ON: USAWatchdog.com

OPEN ACCESS

Iraq About US Dollar, Hyperinflation

Trouble in 2015

Greg Hunter’s USAWatchdog

VIDEO ONLY: 30 Minutes

From USAWatchdog.com

By Greg Hunter On June 25, 2014 USAWatchdog.com

4

Macroeconomist Gordon Long says, “We’re not really running a capitalist system.  We are running a credit system.  Instead of using savings, we are using credit.  Credit, the way we are doing it now, is really a form of counterfeiting.  If you look at the $72 trillion shadow banking system that we have operating right now, that is generating this credit . . . it collapsed in 2008 . . . and now it’s on a hairy edge.   It’s not mortgages and housing this time.  It’s student loans through Sallie Mae.  These students don’t have any hope of paying this back.  We are talking north of $1.1 to $1.2 trillion.  It’s car loans this time because of subprime.  That’s the way to look at car loans, they are sub-prime. . . . And you got these highly leveraged real estate investment trusts also operating through the shadow banking system.  These problems are blatantly evident, and I don’t think the powers that be have any control over them.”

On the next financial crisis, Mr. Long contends, “I think 2008 was an early warning signal of the magnitude of the problem.  We didn’t fix it.  We did extend and pretend.  Dodd-Frank did not solve the underlying issues.  The global swaps market went from $600 trillion to $700 trillion last year, alone.  We’ve watched the shadow banking system push through $72 trillion.  So, we didn’t stop it.  We just, in fact, inflamed it even worse, and we got into even riskier kinds of assets.  Is it imminent?  No, I think we are talking 2015.  I think we have a little bit of a deflation scare before we get into the hyperinflation.  Don’t underestimate the central bankers and the politicians’ ability to kick the can down the road.  They still got some more bullets here.”

Will the crisis in Iraq get out of control?  Gordon Long says, “I happen to think that it probably will because we are not resolving the basic problems.  But the big core issue here is the petrodollar.  It’s not about oil and it’s not about gas.  It’s about what it is bought and paid for in, and that is U.S. dollars.  There is no one that trades any one of those products in anything other than U.S. dollars . . . right now, as of today. . . . As long as the trading continues in U.S. dollars, all those dollars will stay out there and not come back to the United States.  When it comes back to the United States, you will have hyperinflation.  These conflicts need to be seen in the context of they are really going to force groups to trade in other than the U.S dollar.  That’s the problem because they are going to come back.  They are going to say I have a U.S. dollar, and I am going to make a claim on it.  That’s what is going to drive the hyperinflation.  That’s what is going to drive the currency crisis.  This is about trading in the U.S. dollar. . . . We are looking at spring 2015 to Q three.  There is trouble there.”

On government debt and suspicious bond buying in places like Belgium, Gordon Long says the government has to keep finding was to sell Treasury bonds to finance the huge U.S. debt.  Long explains, “They not only have to sustain the buying, but they actually, right now, need a shock to the system, what I will call a bond scare, so money will move out of an over-inflated equity market. . . . And they need that to drive down the interest rates, push up the bond prices and get that financing charge much lower.”  Long goes on to say, “The real game that is going on here is a complex game, but it’s pretty simple, what they are trying to do and that is they are trying to finance the government’s debt.”

Join Greg Hunter as he goes One-on-One with Gordon Long of GordonTLong.com.

 

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Tuesday
June 24th
2014

MYSTERIOUS BUYING

 

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

MYSTERIOUS BUYING

US Treasuries & Equities

 

with John Rubino & Gordon T Long

28 Minutes, 43 Slides

With the aid of 43 slides, Gordon T Long and John Rubino debate three highly unusual and mysterious buying patterns which have emerged in the US Treasury and Equity markets.

1- THE MYSTERIOUS BELGIUM US TREASURY BUYER

Who is the stealth buyer who is buying US Treasuries through Euroclear in Belgium?

Is it:

  • US FEDERAL RESERVE
  • US TREASURY
  • EU'S ECB
  • CHINA'S PBOC
  • BIS /IMF

What would be their individual motives for buying, why keep it so secretive and where would the funding come from?

2- THE $29.1T IN PUBLIC CENTRAL BANKING BUYING

Why would central banks and public institutions be buying such large quantities of equities?

The FT reports 

“A cluster of central banking investors has become major players on world equity markets." The report, to be published by the Official Monetary and Financial Institutions Forum (OMFIF), confirms $29.1tn in market investments, held by 400 public sector institutions in 162 countries, which "could potentially contribute to overheated asset prices." China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, according to officials.

3- THE $1T IN PRIVATE S&P 500 BUYBACKS IN 2 YEARS

Why would corporations buyback nearly $1T of S&P 500 equities over the last two years? This is unprecedented!

THE CONSEQUENCES OF MISPRICING RISK AND FAILED PRICE DISCOVERY

What are the ramifications of the withdrawal of this degree of treasuries and equities from the financial markets?

 

Join Gord and John for a very enlightening, "no holds barred" discussion on all the above questions.

 

 

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Thursday
June 12th
2014

Can Government Kill the Uber App?

 

Gordon T Long

 

SPECIAL GUEST: Financial Survival Network Radio

OPEN ACCESS

Can Government Kill the Uber App?

with Kerry Lutz & Gordon T Long

AUDO ONLY: 36 Minutes

From the Financial Survival Network:

Gordon T. Long was on today talking about the Uber Revolution taking place in Europe. Seems the state-sponsored taxi monopolies are none too happy about the competition that this little app is causing them. Nevermind the employment opportunities for all the unemployed students, it’s undermining the power of the state. And what’s going on with the re-hypothecation scandal in China. Who owns anything anymore? Nonone knows. Just wait till the next crash.

 

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Saturday
May 17th
2014

PARADOX OF INFLATION

 

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

with John Rubino & Gordon T Long

23 Minutes, 22 Slides

IS A DEFLATION SHOCK COMING?

John discusses his two latest articles: 'Deflation Shock Coming? May 9th and Deflation Shock Coming? Part 2: Even Here May 15th in the context of the Inflation or Deflation debate and the implications for:

  • Asset prices (especially stocks and real estate which look highly vulnerable here) and
  • Policy in 2015 (when most of the major economies should be back to aggressive QE).

PARADOX OF INFLATION

We have two worlds. One in the emerging markets and developing economies who are fighting inflation and in the developed economies who have signs of continued deflationary pressures. Now we are seeing inflation falling rapidly in China and Europe while producer prices just jumped in the US? What is going on?

Gord suggests we will have both in a specific sequence with regional counter-currents with his biggest inflationary worry being food.

FOOD PRICES

Food price increases are politically destabilizing and bring predictable social unrest. The recent rapid rise in food prices should now be a concern.

There is no sure outcome to the debate but many of the signals that give us directional clues are now emerging. Join Gordon and John as they explore the subject.

 

 

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Saturday
May 10th
2014

THE GOLDEN ERA OF LOW HANGING FRUIT

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

OPEN ACCESS

THE NEW NATURE OF WORK

Jobs, Occupations & Careers

with Charles Hugh Smith & Gordon T Long

25 Minutes, 24 Slides

In this 25 minute video Charles High Smith and Gordon T Long discuss the dramatic changes currently underway in the Nature of Work.

Discussed are:

    • NEW AGE
      • OCCUPATIONAL DRIVERS
      • SKILLS
    • VALUE PROPOSITION
    • SELF ACCREDITATION
      • HUMAN & SOCIAL CAPITAL
      • THE MOBILE CREATIVE
    • HYBRID OWNERSHIP

THE VALUE PROPOSITION

HIGH TOUCH WORK

This is work where most of the value is in human interactions. This includes psychotherapy, service in fine-dining restaurants, helping elderly people, running a farmers market, etc.

PROBLEM SOLVING WORK 

Computer programs can only solve known problems, i.e. problems where the solution is already known and can be broken down into processes that can be performed by software or machines.

VALUE CREATION WORK

Doing work that cannot be broken into programmable processes.

HYBRID OWNERSHIP

Also discussed are new collaboration models which are allowing work to operate globally.

 

 

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Saturday
May 3rd
2014

UKRAINE:

Financial Warfare

 

John Rubino

 

SPECIAL GUEST HOST: JOHN RUBINO, Author & Publisher of DollarCollapse.com

OPEN ACCESS

EU: Financial Repression

with John Rubino & Gordon T Long

27 Minutes, 38 Slides

According to John Rubino the EU is being penalized and disadvantaged for attempting a more prudently sound Monetary Policy. Unfortunately the old adage of "Bad Money forcing out Good Money" is occurring and will force the ECB to soon succumb to the pressures of the other, even more monetary spendthrift, developed economies.

A positive current account and falling inflation has kept the Euro strong, which is now undermining further possible EU/ECB recovery efforts. Mario Draghi and the ECB have recently been very vocal that actions will soon need to be taken to weaken the Euro.

This has all the earmarks of escalating Currency Wars as Japan blatantly debases the Yen as a cornerstone of ABE-nomics and The Fed still prints at a rate of $55B/Month (Current TAPER rate).

With the "Baby Boomers" now retiring in Europe (much sooner than the US due to more generous entitlements), the massive unfunded and 'cash accounting' pension and entitlements programs in Europe are hitting fiscal operating budgets. There is little policy alternatives, without unprecedented social unrest, but to rapidly re-expand the money supply in an unsterilized fashion.

FINANCIAL REPRESSION

As a consequence, with little media coverage the EU is stepping up its policies of Financial Repression to combat the soon to explode "in budget" government debt levels which have previously been shrouded in government obfucation and 'creative' accounting.

RACE TO DEBASE

We are now in a global "race to debase" as the developed nations debase their currencies to reduce debt burdens, while the emerging economies traditionally have debased their currencies to gain or maintain export led mercantilism economic strategies.

We are left with the developed economies exporting inflation and the rest of the world exporting deflation. The balance is shifting and the question is which way will it tip?

 

 

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Tuesday
April 29th
2014

It's Beginning to Look A Lot Like 2008

 

Gordon T Long

 

SPECIAL GUEST: Financial Survival Network Radio

OPEN ACCESS

It's Beginning to Look A Lot Like 2008

with Kerry Lutz & Gordon T Long

AUDO ONLY: 26 Minutes

From the Financial Survival Network:

Gordon T. Long joined us today for a discussion about the rapidly growing fissures in the worldwide credit markets. Cars sales are up but so are sub-prime auto loans. People can afford auto lease payments, but they can’t afford to handle the huge repair bill at the end of the warranty period. China’s credit bust is here and you better watch out for what’s next.

 

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Saturday
April 26th
2014

TREACHEROUS MARKETS AHEAD

 

Richard Duncan

 

 

SPECIAL GUEST: RICHARD DUNCAN , Economist, Author & Publisher of RichardDuncanEconomics.com.com

OPEN ACCESS

ABOUT RICHARD DUNCAN

Richard Duncan is the publisher of Macro Watch, a video-newsletter that analyzes trends in credit growth, liquidity and government policy in order to anticipate their impact on asset prices and economic growth.

He is also the author of three books on the global economic crisis.  The Dollar Crisis: Causes, Consequences, Cures (2003); The Corruption of Capitalism (2009); and, The New Depression: The Breakdown Of The Paper Money Economy (2012).

Since beginning his career as an equities analyst in Hong Kong in 1986, Richard has served as global head of investment strategy at ABN AMRO Asset Management in London, worked as a financial sector specialist for the World Bank in Washington D.C., and headed equity research departments for James Capel Securities and Salomon Brothers in Bangkok.  He also worked as a consultant for the IMF in Thailand during the Asia Crisis.

Richard has appeared frequently on CNBC, CNN, BBC and Bloomberg Television, as well as on BBC World Service Radio.

TREACHEROUS MARKETS AHEAD

The Fed Taper is Presently Too Tight

SPECIAL GUEST:

Richard Duncan

33 Minutes, 34 Slides

According to global economist Richard Duncan, there are treacherous markets ahead in 2nd half 2014 and investors need to be on heightened alert.

TREACHEROUS MARKETS AHEAD

The reasons for caution is that the liquidity drain in 2nd half 2014, due to the Federal Reserve's Policy implementation of Taper, will potentially take the floor out from under US equity markets. Because of this Richard Duncan strongly believes the Fed is highly likely to reverse policy when equity markets inevitably begin weakening.

WHAT NOW MOVES CURRENCY MARKETS

Quantitative Easing within the global fiat currency regime has ushered in a new methodology for determining currency changes that is not fully appreciated.

CHINA'S ECONOMIC CRISIS

Richard is extremely concerned about China and feels its growth model of export-led and investment-driven is now in crisis. He illustrates why the current distortions in gross fixed capital formation and investment are unsustainable and the precarious position it leaves modern China in.

There is a lot to consider in this 33 minute video supported by over 34 originally researched slides.

 

 

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Saturday
April 19th
2014

PART II

What the Technicals Are Telling Us

 

Bert Dohmen

 

 

SPECIAL GUEST : BERT DOHMEN , Publisher of The Wellington Letter and President Of Dohmen Capital

OPEN ACCESS

DOHMEN: What the Technicals Tell Us!

Part II

with Bert Dohmen & Gordon T Long

13 Minutes, 22 Slides

Bert called the recent market weakness and sell off on CNBC Asia on March 23rd. He said it was going to be a race between Wall Street getting the backlog of IPO's out and the market caving in. He was very specific in identifying the extreme warning signals in the NASDAQ and Small Cap stocks and the identification of a key reversal on March 21st in the S&P. A key reversal day which he feels is always seen at major tops.

Though Bert feels a near term bounce is likely the week of April 14th he doen't believe it will be sustained. The smart money has been and will continue to take full advantage of any market strength to exit.

Bert had taken full advantage of the prior parabolic run-up with a strategy of buying those stocks with no earnings as he believed those stocks would rise the "fastest and mostest". That period he feels is now over for the year. He exited all long positions on March 24th which is an unusual position for Dohmen Capital to take but they feel so strongly about the degree of risk now at hand.

THREE PEAKS AND A DOMED HOUSE

Last November at a webinar Bert warned of what he referred to as Three Peaks and a Domed House (below). He felt it was eerily similar to 1929.

Join Bert Dohmen and Gordon T Long as they assess the risk presently inherent in the US equity markets.

Bert Dohmen cautions that global government's are not yet finished their attempts to keep assets prices up and therefore investors must be 'on the alert'.

 

 

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Saturday
April 19th
2014

PART I

Baltic Freight, Shipping Credit and China

 

Bert Dohmen

 

 

SPECIAL GUEST : BERT DOHMEN , Publisher of The Wellington Letter and President Of Dohmen Capital

OPEN ACCESS

BALTIC FREIGHT, SHIPPING CREDIT

& CHINA

Part 1

with Bert Dohmen & Gordon T Long

23 Minutes, 37 Slides

Bert Dohmen who recently authored "The Coming China Crisis" is now warning about Chinese shipping credit and what he sees in oversea freight rates. He believes there was a major dividing line that was crossed in June 2013 when overnight bank lending rates abruptly tripled. Though government actions quieted things down on the surface (at least temporarily), below the surface an avalanche of credit issues has ensued.

CHINA

Bert predicted much of what is currently occurring in his book and describes it as China hitting the "Great Wall of Communism". As an export led economy being capital investment driven it is now time for innovative entrepreneurs to take over, but they can't. 41% of Chinese GDP is primarily foreign capital investment which has slowed and new investment from investment savings is not occurring. "It has gone as far as it can go!" according to Bert Dohmen.

The basic reason is mal-investment due to corruption and the unregulated and massive shadow banking system which has taken hold of the Chinese economy. With $21T of loans outstanding the unregulated shadow banking system has funded half of these loans and is now facing escalating levels of default.

Most troubling is the level of corruption and the control that the government owned "SOB" exercise. Only recently has the scale of the corruption began to made visible outside of China.

BALTIC FREIGHT RATE & SHIPPING CREDIT

Chinese government economic numbers are manipulated and therefore shipping levels and their rates are the actual measure of the real global trade which investors need to study.

The Chinese private sector is in recession and has been for some time which can be seen in the 40% decline in one month in the Baltic Freight rates. This was made clear last month when 300 tons of Soybeans could not get a shipping letter of credit. Additionally, financial leverage being employed regarding the use of imported commodities as loan collateral became public.

The shipping credit 'canary' is very reminiscent of exactly what preceded the 2007 global financial collapse.

US ECONOMIC "DEMAND ENGINE" IS STALLED

China's export lead and investment driven economy has been powered by the US consumer. However US and European retail sales and real disposable income is sending an unambiguous message that slowing growth and even contraction lay ahead. US Money velocity has been steadily falling as US businesses continue to resist investment. This does not bode well for for an already tenuous problem in China.

Bert sees turbulent times directly ahead as the realities of slowing global trade come home to roost in China.

 

 

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Saturday
April 15th
2014

THE GOLDEN ERA OF LOW HANGING FRUIT

 

Charles Hugh Smith

 

 

Regular Co-Host: CHARLES HUGH SMITH , Author & Publisher of OfTwoMinds.com

OPEN ACCESS

THE GOLDEN ERA of

LOW HANGING FRUIT

with Charles Hugh Smith & Gordon T Long

26 Minutes, 36 Slides

The US and China may have both passed their Golden Era's where the low hanging fruit of prosperity has been picked. Though very different situations with different challenges, both global industrial powerhouses exhibit some surprising similarities. Also, both face challenges and hurdles that may not be surmountable without great social readjustment.

USA - A Former Export Led and Now Consumption Driven Economy

The 1950s/60s in the US should not be considered as "normal"-- but rather as a one-off, extraordinary anomaly. The era was extremely unique. Unfortunately, many unsustainable assumptions became inculcated into the fabric of American culture based on false expectations. This has subsequently led to massive distortions as a result of futile fiscal and monetary attempts to sustain a society consuming more than it produces.

The distortions are now in plain view as the Wall Street financial engine and its financialization has completely disconnected 'Wall Street' from the realities of 'Main-Street America'.

CHINA - An Export Led but Investment Driven Economy

China's problems may be different but their unprecedented growth of credit is not.

When China's economic (in purchasing power parity (PPP) or nominal dollars) GDP was $500 billion, an expansion of $50 billion equated to 10% a year. Now that China's PPP gross domestic product is around $13 trillion, a 10% growth rate would require an expansion of $1.3 trillion--roughly the entire GDP of Spain or Canada.

Obviously, fast growth is easy when low-hanging fruit was abundant, but becomes progressively more difficult to maintain as the economy expands. This is especially true when you realize that China's GDP has been investment driven. The investment growth now required is no longer mathematically possible as is the rate of moving to a more consumption led growth. The Chinese people are savers, not the consumers that Americans are.

Chinese savers and investors have historically, instead of consuming, invested heavily in housing. Unfortunately, Chinese housing is showing major signs of cracking. Both Charles and Gordon see the Shadow Banking system as the commonality which is being used to sustain the imbalances and distortions - at least temporarily.

It is clear the Chinese and American economies are facing new era's where the low hanging fruit is gone and the 'heavy political lifting' lies ahead.

 

 

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Saturday
April 5th
2014

MARKET DISTORTIONS:

Buybacks & Dividends

 

Lance Roberts

 

Special Guest: LANCE ROBERTS Lance’s investment strategies and knowledge have been featured on Fox 26, CNBC, Fox Business News and Fox News. He has been quoted by a litany of publications from the Wall Street Journal, Reuters, The Washington Post all the way to TheStreet.com as well as on several of the nation's biggest financial blogs such as the Pragmatic Capitalist, Zero Hedge and Seeking Alpha.

OPEN ACCESS

MARKET DISTORTIONS : Buybacks & Dividends

with Lance Roberts & Gordon T Long

23 Minutes, 31 Slides

Corporate stock buybacks and dividends are great strategies to drive up stock prices and rewards shareholders, but there is a dangerous downside when this is primarily the result of temporary cheap money and 'manufactured earnings' from creative accounting magic.

Lance Roberts and Gordon T Long with the aid of 31 charts highlight why this is happening, how reported earnings are disconnected from the underlying economy and the risk to investors that has emerged as a consequence. Lance categorizes this period as the biggest 'reverse Robin Hood effect' in history with wealth over the last 5 years being transferred from the middle class to the upper wealthy class.

Stagnate sales growth in the top line is a direct result of low levels of corporate capital. The capital investments being made are primarily targeted at cost reductions in labor. With labor at historic lows, as a percentage of record profits, corporations may be ill prepared to maintain current levels of earnings, dividends and buybacks.

In this wide ranging conversation on the future of buybacks and dividends, the subjects explored include:

  • Productivity and exploding automation advances in the service sector,
  • A slowing rate of global aggregate demand growth,
  • Shrinking real disposable income levels,
  • Current corporate cash flow levels but falling EBITDA flows,
  • Off balance sheet borrowing for buybacks and dividends,
  • Asset to Debt levels showing the degree of growth in leverage to manufacture earnings.

Consumption doesn’t create a strong economy. Wealth doesn’t come from consumerism.

Wealth is created as a result of capital spending which has plummeted!

Both Lance and Gord believe strongly that more deflation is still ahead before broad based inflation takes hold. Money velocity continues to fall with wage inflation frozen and commodity price inflation showing only in pockets.

The global economic slowdown we are presently seeing will put pressure on corporate earnings and their ability to maintain current buyback and dividend levels.

Lance warns of risk and how important and little appreciated "Loss of Capital" and "Loss of Time" is to most individual investors.

 

NOTE: 24 hours after this show was taped, Trim Tabs announced that new stock buybacks in Q1 2014 fell to $134.4B from $214.4B in Q4 and were the lowest in 5 quarters.

"Corporate actions have turned less supportive of stock prices. The decline in the volume of buybacks is a cautionary sign, as buyback volume and the S&P 500 have a high positive correlation."

TrimTabs Chief Executive David Santschi

 

 

 

 

 

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