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Labels & Tags | TIPPING POINT or 2013 THESIS THEME |
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MOST CRITICAL TIPPING POINT ARTICLES TODAY | MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - May 5th - May 11th 2013 | ||
RISK REVERSAL | 1 | ||
JAPAN - DEBT DEFLATION | 2 | ||
BOND BUBBLE | 3 | ||
EU BANKING CRISIS |
4 |
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SOVEREIGN DEBT CRISIS [Euope Crisis Tracker] | 5 | ||
CENTRAL BANK STRATEGY AT PLAY How to Shift to OPMF (Overt Permanent Money Financing) Estblish a Goal that CANNOT BE Achieved But where Central Bank Monetization is Accepted as the ONLY alternative available to acheive it. DEBTOR NATIONS
REAL GOAL - Financial Repression
CURRENCY CARTEL - A Certel is Defined as 'The Coordianted Effort to Manipulate Prices"
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05-09-13 | MONETARY | 5- Sovereign Debt Crisis |
AUSTERITY - Over in Europe Before it Was Every Implemented France Declares Austerity Over as Germany Offers Wiggle Room 05-06-13 Bloomberg French Finance Minister Pierre Moscovici declared the era of austerity over after his German counterpart offered flexibility on deficit cutting amid renewed bickering between Europe’s two biggest economies. “We’re witnessing the end of the dogma of austerity” as the only tool to fight the euro debt crisis, Moscovici said yesterday on Europe 1 radio. “We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.” Coalition lawmakers in Germany are pushing back against the two-year extension for France to meet European Union deficit rules floated by Olli Rehn, the EU economic and monetary affairs commissioner. “We made it clear to our government, the chancellor and finance minister that in the case of France a one-year delay to 2014 to fulfill the euro’s deficit rules is the absolute limit for us,” Norbert Barthle, budget-policy spokesman for Schaeuble’s Christian Democratic Union, said in a May 3 telephone interview from his constituency in southwestern Germany. “France must show that it’s willing to tackle structural reforms.” |
05-06-13 | EU FRANCE |
5- Sovereign Debt Crisis |
CHINA BUBBLE | 6 | ||
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MACRO News Items of Importance - This Week | |||
GLOBAL MACRO REPORTS & ANALYSIS |
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US ECONOMIC REPORTS & ANALYSIS |
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US ECONOMY - Signs of Increasing Economic Risk The Price Of Copper And 11 Other Recession Indicators That Are Flashing Red 05-08-13 Michael Snyder of The Economic Collapse blog via ZH There are a dozen significant economic indicators that are warning that the U.S. economy is heading into a recession. The Dow may have soared past the 15,000 mark, but the economic fundamentals are telling an entirely different story. If historical patterns hold up, the economy is heading for a very rocky stretch. For example, the price of copper is called "Dr. Copper" by many economists because it so accurately forecasts the future direction of the U.S. economy. And so far this year the price of copper is way down. But that is not the only indicator that is worrying economists. Home renovation spending has fallen dramatically, retail spending is crashing in a way not seen since the last recession, manufacturing activity and consumer confidence are both declining, and troubling economic data continues to come pouring out of Asia and Europe. So why do U.S. stocks continue to skyrocket? Will U.S. financial markets be able to continue to be divorced from reality? Unfortunately, as we have seen so many times in the past, when stocks do catch up with reality they tend to do so very rapidly. So you better put on your seatbelts because a crash is coming at some point. But most average Americans are not that concerned with the performance of the stock market. They just want to be able to go to work, pay the bills and provide for their families. During the last recession, millions of Americans lost their jobs and millions of Americans lost their homes. If we have another major recession, that will happen again. Sadly, it appears that another major recession is quickly approaching. The following are 12 recession indicators that are flashing red... #1 The price of copper has traditionally been one of the very best indicators of the future performance of the U.S. economy. The fact that it is down nearly 20 percent so far this year has many analysts extremely concerned...
#2 Home renovation spending has fallen back to depressingly-low 2010 levels. #3 As Zero Hedge recently pointed out, U.S. retail spending is repeating a pattern that we have not seen since the last recession...
#4 Manufacturing activity all over the country is showing signs of slowing down. In fact, Chicago PMI has dipped below 50 (indicating contraction) for the first time since the last recession. #5 In April, consumer confidence unexpectedly fell to a nine-month low...
#6 NYSE margin debt peaked right before the recession that began in 2002, it peaked right before the financial crisis of 2008, and it is peaking again. #7 The S&P 500 usually mirrors the performance of Chinese stocks very closely. That is why it is so alarming that Chinese stocks peaked months ago. Will the S&P 500 soon follow? #8 The economic data coming out of the Chinese economy lately has been mostly terrible...
#9 Things just continue to get even worse over in Europe. Unemployment in both Greece and Spain is now about 27 percent, and the unemployment rate in the eurozone as a whole has just set a brand new all-time record high. #10 Crude inventories have soared to a record high as demand for energy continues to decline. As I have written about previously, this is a clear sign that economic activity is slowing down. #11 Casino spending is usually a strong indicator of the overall health of the U.S. economy. That is why it is so noteworthy that casino spending is now back to levels that we have not seen since the last recession. #12 The impact of the sequester cuts is starting to kick in. According to the Congressional Budget Office, the sequester cuts will cost the U.S. economy about 750,000 jobs this year. |
05-09-13 | INDICATORS CYCLE GROWTH |
US ECONOMICS |
CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES | |||
QE - A 1142 Point SPX Market Distortion This Is The S&P With And Without QE 05-06-13 Zero Hedge For a while there, it seemed that even the densest of career economists who try to pass for stock pundits on financial comedy TV, were starting to get that without the Fed's (and the ECB's, and the BOE's, and the BOJ's) QE, the market would be much, much lower (whether 500 points lower as Gundlach suggested or much more, remains unclear). After all: by now it should have been clear to most that QE is doing nothing for the economy, and everything for the stock and bond market (here we certainly agree: there is a bond bubble, which by implication there is an even more massive stock bubble too - anyone who says the two are unlinked can be immediately put on mute). This is why we presented this chart previously: And is also why in January, we showed this update of the calendar days with and without QE: And yet, judging by the roster of TV guests appearing on assorted cable stations, the confusion is back again. So just to set the record straight, and make it so easy even Jeremy Siegel gets it, below is a chart showing the absolute performance of the S&P, starting with March 18, 2021 when full-blown QE1 was announced, and adding up all the S&P points "gained" under some QE regime: QE1 (2009-2010), QE2 (2010-2011), Operation Twist, QE3 and QE4 (2011 until today) on one hand, while subtracting all the S&P points "lost" when there was no QE or no advance notification of QE from the Fed, such as the period from the end of QE1 (March 31, 2021) until the QE2 announcement at Jackson Hole in August 2010, and from the end of QE2 on June 30, 2021 until the start of Operation Twist on September 21, 2011. The chart below is sufficiently self-explanatory that not even career economists will need assistance to grasp it. One final point: for all those who say the Fed's QE has "been successful", or the stock market is sufficiently strong and does not need any more forced liquidity injections, here is a simple suggestion: just end it. Crickets. |
05-07-13 | US MONETARY |
CENTRAL BANKS |
CENTRAL BANKS - $10 Trillion In and $10 Trillion to Go The "Price" Of Record High Markets: $10 Trillion In Seven Years 05-02-13 JPM Asset Management CIO Michael Cembalest via BI By now everyone, even CNBC, admits that the only reason stocks are where they are is due to the G-7 central banks. What many may not know, however, is how we got here, and where we will be at the end of this year. The answer, as provided by JPM Asset Management CIO Michael Cembalest in the chart below, is at the dot in the top right. This will represent the addition of $10 trillion in liquidity, or alternatively the conversion of the "planetary nebula" of central bank balance sheet expansion, in the past seven years. And considering that, as we explained yesterday, there is another $10-11 trillion in scarce "quality collateral" that has to be injected into the financial markets via central banks collateral transformations, the number in yet another 7 years will be at $20 trillion if not exponentially higher, or higher than where US GDP will be. Cembalest's take:
Luckily, nothing bad happened in 1929. The difference this time, as is now very obvious, is that in the event the central banks fail at preserving the perpetual growth of what may truly be the final bubble (yes, a preposterous assumption), the central banks are already all in, unlike all previous credit, risk-asset, and housing bubbles. So who becomes the "bad bank" to the central banks when confidence in the "lender of last resort" finally gives way? Full note here |
05-06-13 | GLOBAL MONETARY |
CENTRAL BANKS |
Market Analytics | |||
TECHNICALS & MARKET ANALYTICS |
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MANUFACTURED MARKET - Flow Driven Versus Real Economy Are Stocks Cheap? 05-08-13 Bloomberg and Diapason Commodities via ZH The 'most hated' rally as mainstream media types prefer to call this manufactured 'market' is flashing red warning symbols under the surface wherever one looks (from complacency to earnings and macro) but, for now, none of that matters. All too often valuations for nominal equity prices are justified by data that is just as supported by fiat largesse as the flow-driven headline-making indices themselves. However, as Diapason Commodities' Sean Corrigan points out in this simple-to-understand chart, valuations for stocks are at extremes relative to the 'real' (even nominally inflated) economy. One glance at the chart of equity price relative to core capital goods orders and the message is clear - this is not an attractive time to be 'buying'; instead a time to be 'selling high' from all your gains. But that is not a narrative that plays well with asset-gathering commission-takers (who are just as dependent on the Fed since 'the AUM must flow' to keep them in the way they are accustomed - paging Larry Fink). The ratio of the S&P 500 to Core Capital Goods Orders (ExAir) has only been this high 4 times in the last 20 years. Each time it has marked a turning point in the cycle. On the other hand, the 'low' end of this ratio has been an excellent time to be entering stocks for a nominal surge. EQUITY PRICES Relative to CORE CPAITAL GOODS ORDERS Unless we are greeted with an enormous jump in capital goods orders - something that is self-evidently not occurring judging by PMIs, ISMs, and practically every data point (except NFP) - then equity valuations are 'stretched'. Charts: Bloomberg and Diapason Commodities |
05-10-13 | US ANALYTICS FUNDAMENTALS VALUATIONS |
ANALYTICS |
VALUATIONS - The NY Feds Equity Risk Premium Are Stocks Cheap? A Review of the Evidence 05-08-13 NY Fed Liberty Sreet Economics We surveyed banks, we combed the academic literature, we asked economists at central banks. It turns out that most of their models predict that we will enjoy historically high excess returns for the S&P 500 for the next five years.
EQUITY RISK PREMIUM: is the expected future return of stocks minus the risk-free rate over some investment horizon. Because we don’t directly observe market expectations of future returns, we need a way to figure them out indirectly. That’s where the models come in. In this post, we analyze Twenty-nine of the most popular and widely used models to compute the equity risk premium over the last fifty years. They include
Our calculations rely on real-time information to avoid any look-ahead bias. So, to compute the equity risk premium in, say, January 1970, we only use data that was available in December 1969.
The next chart shows a comparison between those two episodes and today. For 1974 and 2009, the green and red lines show that the equity risk premium was high at the one-month horizon, but was decreasing at longer and longer horizons. Market expectations were that at a four-year horizon the equity risk premium would return to its usual level (the black line displays the average levels over the last fifty years). In contrast, the blue line shows that the equity risk premium today is high irrespective of investment horizon. Why is the equity premium so high right now? And why is it high at all horizons? There are two possible reasons:
We can figure out which factor is more important by comparing the twenty-nine models with one another. This strategy works because some models emphasize changes in dividends, while others emphasize changes in risk-free rates. We find that
IMPACT LOW TREASURY YEILD HAVE ON EQUITY PREMIUM In the next chart we show, in an admittedly crude way, the impact that low Treasury yields have on the equity risk premium. The blue and black lines reproduce the lines from the previous chart: the blue is today’s equity risk premium at different horizons and the black is the average over the last fifty years. The new purple line is a counterfactual: it shows what the equity premium would be today if nominal Treasury yields were at their average historical levels instead of their current low levels. The figure makes clear that exceptionally low yields are more than enough to justify a risk premium that is highly elevated by historical standards.
But none of this analysis matters if excess returns are unpredictable because the equity risk premium is all about expected returns. So…are returns predictable? The jury is still out on this one, and the debate among academics and practitioners is alive and well. The simplest predictive method is to assume that future returns will be equal to the average of all past returns. It turns out that it is remarkably tricky to improve upon this simple method. However, with so many models at hand, we couldn’t help but ask if any of them can, in fact, do better. At face value, this result means that the models are actually helpful in forecasting returns. However, we should keep in mind some of the limitations of our analysis.
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05-10-13 | US ANALYTICS FUNDAMENTALS VALUATIONS |
ANALYTICS |
VALUATIONS - Kotok's Decade Ending 2200-2500 SPX KOTOK: Stocks Are Being Driven By Characteristics That Defy Conventional Valuation Techniques 05-09-13 David Kotok, Cumberland Advisors via BI This extraordinary stock market is driven by characteristics that defy conventional valuation techniques. I receive emails from people who tell me that the market is overextended, overvalued, and trading way above its 50- or 200-day moving average. If you look at the metrics, the market is all of those things. I receive other emails that talk about the valuation of the market. Is it reasonably “fair?” If you look at earnings expectations and the price of stocks this year and compare them to a metric, you would say the market is reasonably priced. MARKET REASONABLY PRICED: The math goes something like this.
STOCKS-INTEREST RATE RELATIONSHIP: The next metric ties the relationship between stocks and interest rates. We use a number of vehicles to make this comparison. I like the calculation of the equity risk premium that says how much you get paid for owning stocks versus riskless debt instruments.
VALUATIONS: Next metric. What will the earnings be for the S&P if you use this equity risk premium metric that we just described? Answer: somewhere around $135-$140, maybe $150, depending on the robustness of the economy. In which case, these stocks are currently cheap. Let’s sum this up.
We do not know what the stock market is going to do. Nobody does. We do not know whether the world is going to come to an end, or is going to be chugging full steam ahead for the next 15 years. Nobody does. What we do know is that when you line up all of the metrics that you can use to value stock markets, most of them will tell you that stocks are fairly priced and strategically cheap if you have a longer-term view. |
05-10-13 | US ANALYTICS FUNDAMENTALS VALUATIONS |
ANALYTICS |
PATTERNS - Breadth Narrrowing Fewer And Fewer Stocks Are Driving This Rally 05-09-13 Zero Hedge Intra-market breadth is deteriorating, suggesting fewer and fewer stocks are actually contributing to the current rally in global equities... It seems that all that can break us from this current index-driven 'melt-up' is hot or frigid data that confirms the economy is breaking out of its languid range (though it appears credit is starting to make that decision earlier than stocks). Internal market breadth narrowing rather than broadening presented (via BofAML) as a diffusion index (net % of global stocks that rose less net % of global stocks that fell over a rolling 3m period) and it seems credit is finding it hard to follow equity exuberance... Charts: BofAML and Bloomberg |
05-10-13 | US ANALYTICS PATTERNS |
ANALYTICS |
PATTERNS - "Most Shorted" Driving Market Higher As Short Sellers Deystroyed The Short Sellers Are Getting Destroyed 05-09-13 Bespoke via BI The chart below, courtesy of Bespoke Investment Group, shows how the most-shorted stocks have actually been the ones leading the market rally in the past few weeks.
Bespoke points out that Tesla and Green Mountain Coffee Roasters alone – two heavily shorted stocks – are both up over 20% today on company-specific news. There's also a bigger trend unfolding as the rally that began in November continues to extend itself further and further. While dividend-paying, defensive types of stocks have led most of the rally, investors seem to be rotating out of that group and into riskier – and perhaps more heavily shorted – names. Miller Tabak Chief Economic Strategist Andrew Wilkinson explained in a note to clients yesterday (emphasis added): We’ve noticed a perhaps interesting trend emerging between companies that consistently enhance their dividends and the benchmark S&P 500 index. Our chart of the day shows that as the stock market powers to new highs, Aristocratic dividend paying names are starting to underperform and perhaps indicating that equity buyers have become less concerned with what they are buying. If this erosion of the excess return often provided by consistent dividend payers is maintained during the month of May, it will be the first time since 2009 when the benchmark index rose in that month and exceeded the performance of the Aristocrats club. We should note too that that May 2009 was shortly after the bear market low when investors bought anything that had a pulse. Are we witnessing the same thing today after the Fed has crushed the yield curve? Looks like we're seeing a new leg of the market rally now |
05-10-13 | US ANALYTICS PATTERNS |
ANALYTICS |
RISK - US Equity Markets Disconnecting from Benchmarks Four Major Warning Signs to Market Investors 05-07-13 Phoenix Capital Research's blog via ZH The market is beyond overstretched at this point on a short-term, intermediate term, and long-term basis. The sheer number of warning signals is staggering. FALSE BREAKOUT - Rising Wedge The blow off top out of the rising wedge pattern we noted before is rolling over indicating this is likely a false breakout: LAGGING SMALL CAPS The Russell 2000 is lagging well behind the S&P 500. Small caps, in general, should lead a rally if it’s going to prove legit: CHINA - No Longer Leading China, which has lead the S&P 500 in general since the 2009 bottom peaked months ago: COPPER - Slowing Global Economy Copper, which serves as an excellent proxy for the global economy, is collapsing, showing that this rally in stocks is occurring while the global economy gets weaker and weaker. For more market insights and investment commentary visit us at: |
05-09-13 | RISK | ANALYTICS |
SENTIMENT - Extreme Levels of Complacency Extreme Complacency Trumps Macro's Biggest 5-Week Plunge In Two Years 05-07-13 Zero Hedge Of course, it doesn't matter (for now) but today's JOLTS data internals and Consumer Credit's miss just piled on to the misery and pushed Bloomberg's US Macro Surprise Index to its lowest in seven months. What is worse is the rate of collapse - the last five weeks have dropped faster than at any time since May 2011. The current level of US macro data suggests the S&P should be over 200 points lower - but as the charts below show relative volatility levels are more complacent now than in the pre-crisis vinegar strokes in 2008. US Macro data is anything but positive (no matter what your are told)...
Which suggests the But that does not seem to matter - as realized volatilities are now elevated in practically NO asset classes compared to 2008's exuberance where 84% of asset classes were at least showing some 'risk'...pre-crash and nowehere is the total lack of concern about downside risk any more evident than in the distribution of returns that the options market current implies for the S&P 500. The following chart shows an extreme perspective that downside risk is being priced out of options prices to the same extent as it was in the previosu bubble peak in 2006... As opposed to VIX (which merely tracks the perspective of market participants about volatility - two-sided risk), the chart above is a pure measure of the 'downside' risk and shows that complacency is at its highs... Source: Bloomberg and Citi |
05-08-13 | SENTIMENT | ANALYTICS |
RISK - Credit Bubble
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05-08-13 | CREDIT BONDS YIELD |
ANALYTICS |
PATTERNS - Crowded Trades Normally Tip the Boat The Most Crowded Trades 05-06-13 BofAML Global Research via ZH Herd-mentality, group-think, safety-in-numbers, or lemmings. When a trade becomes one-sided, we are often taught that contrarianism is the smarter position. When a trade becomes extremely one-sided, the market is at its most fragile. There are currently three trades that have become not just consensus, but are near record levels of extreme positioning - and with the help of leverage (and record margin levels) this all adds up to a risk-on market (since all the three trades are on the same side of the long central bank largesse, short safety view) that is over-prone to more significant corrections. Join the crowd or join the smarter money? Crowded Trade #1 - US Equities. Crowded Trade #2 - Short JPY Crowded Trade #3 - Short Precious Metals and it's at record-levels of margin... Current levels of both Net Free Credits and Margin Debt indicate extremely bullish sentiment in the equity market, the implication is contrarian bearish.
But the 'smart money' is hedging... Based on BofAML's exposure analysis, macro hedge funds continued to add to their shorts in risk assets including the S&P 500, NASDAQ 100 and commodities. Charts: BofAML |
05-07-13 | PATTERNS | ANALYTICS |
SENTIMENT - "Don't Fight the Fed" What Is Obvious About This Market? 05-05-13 OfTwoMinds Charles Hugh Smith What is "obvious" to those embedded in the conventional, MSM/state-manufactured worldview is not the same as what is obvious to those outside the asylum. Longtime readers know my analytic perspective is based on what psychiatrist/author R.D. Laing called the Politics of Experience.
Survival+ 6: The Politics of Experience (April 2, 2021)
Survival+ 7: Simulacrum and the Politics of Experience (April 3, 2021)
In his prescient 1972 lecture, The Obvious, Laing explained the inherent difficulty of understanding "the obvious" when a systemic madness is taken as "normal":
To a considerable extent what follows is an essay in stating what I take to be obvious. It is obvious that the social world situation is endangering the future of all life on this planet. To state the obvious is to share with you what (in your view) my misconceptions might be. The obvious can be dangerous. The deluded man frequently finds his delusions so obvious that he can hardly credit the good faith of those who do not share them. We can summarize one aspect of this analysis by asking: what is "obvious" to those inside a system and what is "obvious" to those outside the system? Our experience of what is "obvious" says a lot about our cultural context and assumptions: the manufacture of our "news" and consensus, the mystification of our experience via propaganda and simulacra, what we perceive as "normal" relationships, work, goals, etc.
What is "obvious" to most participants is that the stock rally is fueled by central bank liquidity and quantitative easing, and since there is no limit in sight to these policies, there is also no limit to the stock market running higher.
It is also "obvious" that betting against this trend is an excellent way to lose money, so the number of people shorting the market dwindles with each push higher.
Equally "obvious" is the incentive to borrow money via margin to invest in the rising market: the higher it goes, the more you can borrow, and the more you borrow and plow into the market, the more you make. It is a wonderful self-reinforcing feedback loop.
Thus record-high margin debt is not a warning sign but evidence that the music is still playing, so by all means, keep on dancing:
Near-Record NYSE Margin Debt Leads to Caution (Bloomberg)
That the disconnect between the real economy and the stock market is widening is obvious, but there doesn't seem to be any intrinsic reason why it can't continue widening. As a result, many analysts are calling for a brief retrace and then another leg up to new highs. Others see a serious decline (10%+) this summer and a new high in Q4 2013 or Q1 2014.
In other words, what might be obvious to those outside the system--that all liquidity-driven bubbles end badly, usually when participants are convinced there is nothing to restrain the trend from going higher--is not at all obvious to participants and those cheering them on (the MSN, the Federal government and the Fed).
What I sense is a near-universal resignation of those attempting to call a top in the market, an acceptance that the trend is up for the foreseeable future and that trying to short this market (i.e. profit from a decline) is a fool's game.
The number of those willing to short the market, i.e. take the other side of the trade, has dwindled. Every sharp rally like last Friday's eliminates entire divisions of shorts, leaving the trade even more one-sided.
Yes, the market is manipulated and totally dependent on central bank QE, liquidity and outright buying of stocks and bonds. But the market is not as stable as presumed, and one-sided trades tend to capsize when everyone who feels safe being on one side of the boat least expects it.
Every trader wants to short the market after it becomes obvious the trend has reversed. But since there are so few shorts left, the decline (should one ever be allowed to happen) might not be orderly enough for everyone to pile on board. More likely, the train will leave with few on board and the initial drop will leave everyone who was convinced the uptrend was permanent standing shell-shocked on the platform with margin calls in hand.
When it is obvious the trend has reversed, it will be too late to profit from it.
The conclusion? What is "obvious" to those embedded in the conventional, MSM/state-manufactured worldview is not the same as what is obvious to those outside the asylum. |
05-06-13 | SENTIMENT | ANALYTICS |
SUPPLY EFFECT - Shortage of Investable Assets There's A Major Shortage Of Assets To Invest In 04-28-13 Citi via Cullen Roche, Pragmatic Capitalism via BI Fantastic chart and data here from Citi Research showing the issuance of various securities over the last 10 years in the Eurozone, US and Japan. It’s interesting to note the surge in treasuries that has occurred since the collapse in the GSEs and the so-called AAA bubble in real estate. It’s also interesting to note the decline in net issuance. In other words, the supply of asset issuance continues to run at a level well below pre-crisis levels. That might explain at least some of the broad upward pressure on assets in general. Here’s more excellent commentary from Citi:
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05-06-13 | FUND- MENTALS |
ANALYTICS |
LEVERAGE - Elevated Levels S-t-r-e-t-c-h-e-d! 05-02-13 Diapason Commodities via ZH Things in the 'economy' must be good - investors are nearing their most levered long to US equities ever. As Sean Corrigan notes, Net Margin (defined as NYSE Margin Debt minus Mutual Fund Liquid Assets) is within a hair of its all-time record high and relative to the March 2000 peak in the Wilshire 5000 (broadest US equity market cap), we are rapidly approaching 'peak' exuberance levels. Indicatively this should make sense since the market is at all time highs, but it is so because of central banks, not because of individual investors. So why would the investors themselves be just as stretched as the global central banks, and how does this leverage upon leverage unwind in the end? Source: Diapason Commodities |
05-06-13 | US ANALYTICS SENTIMENT
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ANALYTICS |
COMMODITY CORNER - HARD ASSETS | |||
GOLD UPDATE What YoU Need To Know GOLD - Chinese Bullion Imports Chinese Gold Imports Soar To Monthly Record On Insatiable Demand 05-08-13 Zero Hedge In what must be an inexplicable move to momentum-chasers everywhere, as gold continued to decline in price in March, and long before its targeted smash in April, China was not backing off its gold purchases of the yellow product. Quite the contrary: as export data released by the Hong Kong Census and Statistics Department overnight showed, Chinese gold imports in March exploded to an all time record high of 223.5 tons. This follows 97.1 tons in February, and brings the total imports for the first quarter of 2013, or 372 tons, on par with what China imported in the entire first half. It also means that since January 2012, China has imported an absolutely stunning 1,206 tons of gold. Putting this number in context, this is 20% more than the entire reporter official gold holdings of 1054 tons, and represents roughly half of the total 2500 tons of gold mined every year (a number which is set to decline as gold miners find current prices unsustainable and are forced to shut down production). Comparison of Chinese gold imports: 2012 vs 2013: And sequential change in Chinese gold imports since January 2012 or when the gold fever in China was truly unleashed: The latest official Chinese holdings: And if March was a record month for China, we can't wait for April when prices plunged and when physical buyers, who unlike paper momentum chasers buy more then lower the price falls will see the recent take down as a buying opportunity (if they can find physical of course). From Reuters:
And therein lies the rub: because if China fails to mask the ongoing soaring hot money inflows as reported earlier, and which amounted to over $180 billion in q1 as reported earlier, just watch as Chinese demand for physical goes truly off the charts. The rest of the story is well known but here it is from Reuters:
What about New York vaults? And specifically the biggest gold vault in the world, located 90 feet below 1 Chase Manhattan Plaza? Or is there maybe a correlation between the record drawdown in JPM's commercial holdings and the record break out of Chinese gold fever? We hope to find out soon. As for the increasingly irrelevant spot price of gold paper derivatives, we can only hope "experts" like Paulson et al can continue their liquidation of gold ETF "holdings" for as long as possible: after all one can buy far more gold more when the price is lower, not higher. |
05-11-13 | GLOBAL ANALYTICS GOLD |
PRECIOUS METALS |
GOLD - JPM'S "Run on the "Vault" JPM Eligible Vault Gold Drops To Fresh Record 05-08-13 Zero Hedge Two weeks ago we reported about one of the biggest daily withdrawals of eligible gold from the JPM gold vault, it not on an absolute basis, then certainly on a relative, when in one day over 260k ounces of gold were withdrawn, leaving a record low 141.6k ounces, or just over 4 tons of gold in the vault. Subsequently, we tracked the daily additions and withdrawals of gold from the vault to see if any other major withdrawal request would come, instead discovering instance after instance of JPM reclassifying Registered gold into Eligible, which is how the vault saw its eligible inventory rish back to 195K ounces as of yesterday, without any actual net additions or more importantly withdrawals. It seems the pause of withdrawals has ended, and as of yesterday, another delivery led to a withdrawal of 53,658 ounces, or 28.5% of the total, leaving a fresh record low inventory of only 137,377 eligible ounces in the vault. As a result, total Eligible in the Comex system is now at a level of 6.13 million oz, or roughly the lowest since since 2009. And since much of the Eligible gold "additions" have come as a result of the reclassification of Registered gold into Eligible, the combined total of Eligible and Registered has also declined to levels last seen in 2008, at just under 8 million total ounces. But here's the real punchline: if JPM had not been allowed to arbitrarily convert registered gold into eligible in the past two weeks, the firm's current inventory of eligible gold would be just 83,718 troy oz, or a little over one and a half metric tons: an amount that is laughable and is about 3% of the maximum eligible gold (2.8 million oz) held at the JPM vault, shortly after its commercial reopening in October 2010. Earlier today, when reporting about the insatiable demand for physical out of China, following the report that "The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said." we asked "What about New York vaults? And specifically the biggest gold vault in the world, located 90 feet below 1 Chase Manhattan Plaza?" It appears the Chinese may have gotten just a little more gold out of New York today after all. Finally with gold at record low levels, pay attention to how much more registered gold is converted into eligible in the coming days. Because if one day the registered gold holders realize the "run on the vault" that is going on, and they too ask to have their gold moved elsewhere, then things will really get entertaining. Source: COMEX |
05-11-13 | GLOBAL ANALYTICS GOLD |
PRECIOUS METALS |
GOLD - Settling Physical in Paper (Dollars) Are We On The Verge Of Witnessing The Death Of The Paper Gold Scam? 05-09-13 Michael Snyder of The Economic Collapse blog, via ZH The legal claims on physical gold far exceed the amount of physical gold that the banks actually have by a very, very wide margin. And right now the bankers are scared out of their wits because their warehouses are being drained of physical gold at a frightening rate. So what happens when their physical gold is gone but they still have lots and lots of people with legal claims to gold? When that moment arrives, it will represent the end of the paper gold scam. Many believe that the recent takedown of the price of paper gold was a desperate attempt by the bankers to put off that day of reckoning, but it appears to have greatly backfired on them. Instead of cooling off demand for precious metals, it has unleashed a massive "gold rush" all over the globe. Meanwhile, word has been spreading among wealthy families in both North America and Europe that they had better grab their physical gold out of the banks while they still can. This is creating havoc in the financial community, and at least one major international bank has already declared that it will only be settling those accounts in cash from now on. The paper gold scam is starting to unravel, and by the time this is all over it is going to be a complete and total nightmare for global financial markets. For years it has been widely known that the promises that banks have made regarding their gold far exceed their actual ability to deliver, but we have never reached a moment of such crisis before. Posted below are quotes from people that know precious metals far better than I do. What these experts are saying is more than a little bit disturbing... -CME President Terry Duffy: What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real gold. That’s going to show you, people don’t want certificates, they don’t want anything else. They want the real product. -Billionaire Eric Sprott: So we see all of these paper (trading) volumes going through that bear absolutely no relationship to what’s going on in the physical markets. As you know I have always been a proponent of the fact that supply in the gold market was way less than demand, and by a very large factor. I think demand exceeds supply by at least 60%. The central banks are surreptitiously supplying that gold, and ultimately they will be running on fumes. When we hear about the LBMA not willing to deliver gold, and JP Morgan’s inventories at the COMEX have gone from 2.4 million (ounces) down to 160,000 ounces, it just makes you realize that all of this paper trading means nothing. It’s the real physical market that you have to rely on. -JS Kim: FACT #1: COMEX gold vaults were recently drained of 2 million ounces of physical gold in one quarter, the largest withdrawal of physical gold bullion from COMEX vaults in one quarter during this entire 12-year gold and silver bull. There has been speculation about the reasons that spurred these massive withdrawals of gold from COMEX vaults, but the most reasonable speculation is that no one trusts the bankers to hold on to their physical gold anymore, especially in light of Fact #2. Note below, that both registered AND eligible stocks of gold had heavily declined in recent months. Such an event signals a general distrust of the banking system from everyone holding gold in registered COMEX vaults. FACT #2: One of the largest European banks, ABN Amro, defaulted on their gold contracts and informed their clients that they would only settle their gold bullion contracts in cash and not in physical. So much for the supposed legality of financial contracts as a "binding" contract. So whether Fact #1 caused Fact #2 or vice versa is irrelevant. What IS apparent is that the level of trust in bankers to safekeep physical gold and physical silver is disappearing, as it should be, and as it should have already been for years now. But truth always takes some time to catch up to banker spread lies and that is what is happening now. I have been warning people never to trust bankers in deals involving gold and silver for years now, as in this article I wrote nearly four years ago informing the public that the SLV and GLD are likely a banker invented scam as well. FACT #3: Silver fraud whistleblower and London trader Andrew Maguire stated that the LBMA was having trouble settling gold contracts in bullion as well and stated that institutions that asked for physical settlement “were told they would be cash settled instead by a bullion bank.” In plain English, this is a default. So Andrew Maguire reported that the LBMA had already gone into default. In light of Fact #1 and Fact #2, the dominoes were starting to tumble and the house of cards that the bankers had built in gold and silver paper derivatives to deceive and hide the true fundamentals of the physical gold and physical markets from the entire world was rapidly starting to crumble. A financial earthquake of magnitude 2.5 was quickly threatening to evolve into one of the biggest financial earthquakes of all time in which the world’s confidence in all global fiat currencies would effectively have a well-deserved funeral. -Jim Sinclair: I think the reality is the supply situation is extremely volatile at this point, and even discussing it is like rubbing a raw nerve to the people who are in charge. The amount of discussion on the subject of warehouse supply, supply that is represented by the gold leases, indicated to the central planners that the demand for physical was going to continue to effect the exchanges. Although they did not expect any grandstand delivery, the mere continued draining of physical inventories was threatening the very functioning of the paper exchange. That threatening of the paper exchange and its ability to continue functioning is really taking off the blinders and revealing the truth behind the critical question, ‘Where is the gold?’ The question now is, ‘Where has the gold gone?’ Who has all of this gold? Because of the nature of gold leasing, all of this gold has been purchased and it has gone somewhere. The reality of the empty vaults reveal that the gold has gone missing. -Ronald Stoeferle: We’re seeing this rush to physical gold not only in the retail market, but also for the institutional players...[it's] just overwhelming…I [estimate] a 130-to-1 [ratio of paper to physical gold]…and I think in the last week we were really close to [triggering] a default of the paper market. -Gerhard Schubert, head of Precious Metals at Emirates NBD: I have not seen in my 35 years in precious metals such a determined and strong global physical demand for gold. The UAE physical markets have been cleared out by buyers from all walks of life. The premiums, which have been asked for and which have been paid have been the cornerstone of the gold price recovery. It is very rare that physical markets can have a serious impact on market prices, which are normally driven solely by derivatives and futures contracts… I did speak during the week with several refineries in the world, of course including the UAE refineries, and the waiting period for 995 kilo bars is easily 2-3 weeks and goes into June in some cases. A large portion of the 995 kilo bars in the UAE goes normally into the Indian market, but a lot of the available 995 kilo bars are destined for Turkey, at this time. We heard that premiums paid in Turkey have reached anything between US $ 20 and US $ 35 per ounce. -James Turk: Another indication of the demand for large bars is the huge drawdown in the gold stock in COMEX warehouses. It is noteworthy that COMEX reports show the drawdown is largely the result of dealers removing their inventory, their working stock. When that happens, you know the availability of supply is constrained. What all of this means, Eric, is one thing. If the central planners want to keep the precious metals at these low prices, to meet the demand for physical metal they will need to empty more metal from central bank vaults, or borrow metal from the ETFs as some have suggested is happening. Otherwise, the central planners will have to step back and stop their intervention, thereby letting the price of gold and silver rise so that demand tapers off, bringing demand and supply of physical metal back toward some kind of balance. We've seen this same situation several times over the last twelve years. It is what I have been calling a “managed retreat.” Despite the current weakness, I firmly believe we have again entered a critical period where the central planners will need to retreat once again in order to let the gold and silver prices climb higher. -The Golden Truth: And then I get a call from a close friend in NYC last Friday. His career has been in private wealth management in the private bank department of the Too Big To Fail banks. He's been looking for work and chats with old colleagues all the time. He called my Friday and told me he just got off the phone with a very high level private banker from a big Euro-based TBTF bullion bank, but who was at JP Morgan until about six months ago. This guy told my friend that there is a scramble by many very wealthy European families/entities to get their 400 oz bars out of the big bank vaults. He knows this personally, for a fact. He said the private banker community is small over there and the big wealthy families all talk to each other and act on the same rumors/sentiment. The Bundesbank/Fed and the ABN/Amro situations triggered this move. He knows for a fact JPM tried to calm fears about 3 months ago by sending a letter to it's very wealthy clients assuring them their bars were safe, in allocated accounts. He said right now those same families are walking into the big banks like JPM and demanding delivery of their bars or threatening to take their $100's of millions in investment portfolios to competitors. His wording was "these people are putting a gun to the heads of private banks and demanding their gold." I know this information is good because I know my friend's background and when he tells me his source is plugged in, the guy is plugged in. Not only that, my friend's source said that there's no doubt that someone like a John Paulson, not necessarily specifically him, but entities like him or it may include him, have held a gun to GLD and demanded delivery of physical in exchange for their shares. Regarding the Bundesbank/Fed situation, recall that the Bundesbank asked to have some portion of its gold sitting - supposedly - in the NY Fed vault in NYC sent back Germany. The total amount is 1800 tonnes. After behind the scenes negotiations, the Fed agreed to ship 300 tonnes back over seven years. To this day, the time required for that shipment has never been explained. Venezuela demanded the return of its 200 tonnes held in London, NYC and Switzerland and received it all within about four months. And regarding the ABN/Amro situation. ABN/Amro offered a gold investment account product that offered physical delivery of the gold in the investment account when the investor cashes out. About a week before the gold price smash, ABN sent a letter to its clients informing that the physical delivery of the bullion was no longer available and that all accounts would be settled with cash at redemption. I believe it was these two events that triggered the big scramble for physical gold by wealthy families/entities who were suspicious of the integrity of their bank vault custodial arrangement anyway. ***** So what does all of this mean? It means that we are entering a period when there will be unprecedented volatility for precious metals. There will be tremendous ups and downs as this crisis plays out and the bankers try to keep the paper gold scam from completely unraveling. Meanwhile, nations such as China continue to stockpile gold as if the end of the world was coming. According to Zero Hedge, Chinese gold imports set a brand new all-time record high in March...
And the number for April is expected to be even higher. Does China know something that the rest of us do not? We are also seeing a rapid decoupling between spot prices and physical prices. In fact, it is quickly getting to the point where the spot price of gold and the spot price of silver are becoming irrelevant. For example, demand for silver coins has become so intense that some dealers are charging premiums of up to 30 percent over spot price for silver eagles. That would have been regarded as insane a few years ago, but people are now willing to pay these kinds of premiums. People are recognizing the importance of actually having physical gold and silver in their possession and they are willing to pay a significant premium in order to get it. We are moving into uncharted territory. The paper gold scam is rapidly coming to an end. In the long-term, this will greatly benefit those that are holding significant amounts of physical gold and silver. |
05-11-13 | GLOBAL ANALYTICS GOLD |
PRECIOUS METALS |
GOLD - Shaking the 400 oz Bars Out of GLD The Truth About The Gold Being Drained From GLD 05-08-13 The Golden Truth In over 30 years of studying, researching, trading and investing in the financial markets, I have never seen the contrarian signals flashing as bullishly as they are for gold right now. - Link: Update On Gold: Is This The Bottom?
If the price of gold - for whatever reason, legitimate or not - gets crushed, it will tend to generate a lot of selling in the shares of GLD. In turn, that will generate the ability of the AP's to collect 100,000 share baskets and convert those baskets into gold that is removed from the GLD vault and into the "custody" of the specific AP who is turning in the shares. At today's price of gold, 100,000 shares represents about $14.2 million - 9,627 ozs of gold, or roughly .29 tonnes.
So where, you might ask, is all this gold going? It's not just vaporizing into thin air. Using today's price of gold, 293 tonnes is worth about $14.5 billion. If you look at that AP list above, all of them except the two hedge fund bookies are LBMA "bullion bank" market makers. Unless these bullion banks are keeping the gold for themselves - and if any of them were, it would have to show up in the footnotes of their next 10-Q - that gold is being delivered to buyers of it on the other side.
And here's an account out of India about the massive gold demand there in April and May: “The biggest slump in gold prices in more than three decades on April 15 spurred banks, traders and jewelers to import more than 100 tons last month, said Rajesh Khosla, managing director of MMTC-PAMP India Pvt. Purchases this month will match April’s imports, he said”And here's a refreshingly honest assessment of the situation from an Indian newspaper: The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said LINKIf you read that entire article, you'll see that in 2012, India/China imported more than 1/3 of the global gold production and will likely account for close to 50% this year. This is the unintended consequences for the Central Banks who are spear-heading the manipulation of the price of gold for the purposes of defending the dollar and fiat currencies. This rabid demand for 400 oz. gold bars from China/India (not to mention Russia, Turkey, Viet Nam, pretty much all of southeast Asia) goes a long way toward explaining the rumors that were circulating during February and intensified in March that the LBMA was in danger of facing a big delivery default. Layer on top of this the fact that many wealthy families in Europe are now demanding delivery of the gold bars that JPM and other bullion banks are holding custody of. The report on this from my friend was confirmed independently by a source of Bill Murphy's over in Europe. This is exactly why ABN/Amro announced a week before the $200 hit on gold that they would no longer deliver physical gold from their gold investment account product and would instead only settle redemptions in cash. That product catered to high net worth investors over there. ABN didn't have the gold that would be required to satisfy delivery claims. It was a fractional bullion investment account, just like all the other big bank "bullion" investment products. Morgan Stanley settled a lawsuit several years ago for this type of scheme using silver. But they never admitted guilt. So in connecting all the dots, there is no question in my mind that the big price smashing of gold in mid-April was an operation designed to shake loose enough 400 oz. gold bars out of GLD in order to satisfy the enormous delivery demands coming from Asia, India and even within Europe. GLD is the only possible source of above-ground 400 oz. gold bars that could be used to satisfy this enormous demand for physically deliverable bars. At some point, and probably sooner than most people are willing to believe, this physical demand is going to force an upward "explosion" of the paper derivatives being used to hold down the spot price right now. In 30 years of studying and trading the financial markets, I have never seen contrarian indicators for any market sector flashing as bullishly as they are for gold and silver, which further confirms my view that the metals have bottomed and are getting ready to give those of us who held on the ride of a lifetime. |
05-11-13 | GLOBAL ANALYTICS GOLD |
PRECIOUS METALS |
GOLD - Drivers To Watch Catherine Austin Fitts: Another Gold Smackdown Coming? 04-25-13 DollarCollapse.com MACRO - Watch Copper
BANK DEPOSITS - Derivatives and Volatility
STORM
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05-11-13 | GLOBAL ANALYTICS GOLD |
PRECIOUS METALS |
GOLD - Supply / Demand SOURCE: E-mail from Bill Holter "When" does the current unsustainable and lopsided (soon to be proven fraudulent which yes, includes "intent") business model of the precious metals market blow up in a default?
So where is all of this Gold coming from if mine supply cannot satisfy the current and apparently exponentially growing demand? You can look at the numbers from the Shanghai exchange.
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05-11-13 | GLOBAL ANALYTICS GOLD |
PRECIOUS METALS |
DOW: GOLD - Shallow Fibonacci Retracements The crash in nominal 'price' is followed by a Fib 23.6% retracement rally as hope triumphs over adversity... only for reality to rapidly re-emerge... |
05-09-13 | GOLD | PRECIOUS METALS |
THESIS Themes | |||
2013 - STATISM |
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2012 - FINANCIAL REPRESSION |
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1971 SUSPENSION OF GOLD EXCHANGE - The Triggering Event Visualizing The Collapse Of Fiat Currencies 05-07-13 Zero Hedge
THE PROPAGANDA that came with leaving the Gold Standard Listen Closely to how a flawed decison is sold to the American People.
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05-08-13 | THESIS | |
FEDERAL RESERVE - A Flawed Financial Foundation 11 Reasons Why The Federal Reserve Should Be Abolished Michael Snyder of The Economic Collapse blog via ZH
If the American people truly understood how the Federal Reserve system works and what it has done to us, they would be screaming for it to be abolished immediately. It is a system that was designed by international bankers for the benefit of international bankers, and it is systematically impoverishing the American people. The Federal Reserve system is the primary reason why our currency has declined in value by well over 95 percent and our national debt has gotten more than 5000 times larger over the past 100 years. The Fed creates our "booms" and our "busts", and they have done an absolutely miserable job of managing our economy. But why do we need a bunch of unelected private bankers to manage our economy and print our money for us in the first place? Wouldn't our economy function much more efficiently if we allowed the free market to set interest rates? And according to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is the one that is supposed to have the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures". So why is the Federal Reserve doing it? Sadly, this is the way it works all over the globe today. In fact, all 187 nations that belong to the IMF have a central bank. But the truth is that there are much better alternatives. We just need to get people educated. The following are 11 reasons why the Federal Reserve should be abolished... #1 The Greatest Period Of Economic Growth In The History Of The United States Happened When There Was No Central Bank Did you know that the greatest period of economic growth in U.S. history was between the Civil War and 1913? And guess what? That was a period when there was no central bank in the United States at all. The following is from Wikipedia...
So if our greatest period of economic prosperity was during a time when there was no Federal Reserve, then why shouldn't we try such a system again? #2 The Federal Reserve Is Systematically Destroying The Value Of The U.S. Dollar The United States never had a persistent, ongoing problem with inflation until the Federal Reserve was created in 1913. If you do not believe this, just check out the inflation chart in this article. The Federal Reserve systematically penalizes those that try to save their money. Inflation is a tax, and the value of each one of our dollars goes down a little bit more every single day. But over time, it really adds up. In fact, the value of the U.S. dollar has fallen by 83 percent since 1970. Anyone that goes to the grocery store on a regular basis knows how painful inflation can be. The following is a list that shows how prices for many of the things that we buy on a regular basis absolutely skyrocketed between 2002 and 2012...
Even the price of water has absolutely soared in recent years. According to USA Today, water bills have actually tripled over the past 12 years in some areas of the country. So how can the Federal Reserve get away with claiming that we are in a "low inflation" environment? Well, what Ben Bernanke never tells you is that the way that the government calculates inflation has changed more than 20 times since 1978. The truth is that the real rate of inflation is somewhere between five and ten percent right now, but you will never hear about this on the mainstream news. #3 The Federal Reserve Is A Perpetual Debt Machine The Federal Reserve system was designed to be a trap. The intent of the bankers was to trap the U.S. government in an endless debt spiral from which it could never possibly escape. But most Americans don't understand this. In fact, most Americans don't even understand where money comes from. If you don't believe this, just go out on the street and ask regular people where money comes from. The responses will be something like this... "Duh - I don't know. I've got to get home to watch American Idol." This is why it is so important to get people educated. I think that most Americans would be horrified to learn that the creation of more money in our system also involves the creation of more debt. The following is a summary of money creation that comes from one of my previous articles...
So what does the Federal Reserve do with those Treasury bonds? I went on to explain what happens...
Men like Thomas Edison and Henry Ford could not understand why we would adopt such a foolish system. For example, Thomas Edison was once quoted in the New York Times as saying the following...
Unfortunately, today most Americans don't even understand how the system works. They just assume that we have the best system in the entire world. Sadly, the reality is that the system is working just as the international bankers that designed it had hoped. The United States has the largest national debt in the history of the world, and we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day in a desperate attempt to keep the debt spiral going. #4 The Federal Reserve Is A Centrally-Planned Financial System That Is The Antithesis Of What A Free Market System Should Be Why do we need someone to centrally-plan our financial system? Isn't that the kind of thing they do in communist China? Why do we need someone to tell us what interest rates are going to be? Why do we need someone to determine what "the target rate of inflation" should be? If we actually had a free market system, the free market would be the one "managing" our economy. But instead, we have become so accustomed to central planning that any alternatives seem to be absolutely unthinkable. For example, CNBC cannot possibly imagine a world where the Fed (or some similar institution) was not running things...
I've got an idea - let's let the free market "manage" U.S. interest rates and the American economy. I know, it's a crazy idea, but I have a sneaking suspicion that it just might work beautifully. #5 The Federal Reserve Creates Bubbles And Busts Do you remember the Dotcom bubble? Or what about the housing bubble? By dramatically distorting interest rates and financial behavior, the Federal Reserve creates economic bubbles and the corresponding economic busts. And guess what? When will the American people decide that they have had enough? If you can believe it, there have been 10 different economic recessions since 1950. And of course the Federal Reserve even admits that it helped create the Great Depression of the 1930s. Perhaps it is time to try something different. #6 The Federal Reserve Is Privately Owned It has been said that the Federal Reserve is about as "federal" as Federal Express is. Most Americans still believe that the Federal Reserve is a "federal agency", but that is simply not true. The following comes from factcheck.org...
And even the Federal Reserve itself has argued that it is "not an agency" of the federal government in court. So why is there still so much confusion about this? We should not be allowing a private entity that is owned and dominated by the banks to make decisions that dramatically affect the daily lives of all the rest of us. #7 The Federal Reserve Greatly Favors The "Too Big To Fail" Banks Since the Federal Reserve is owned by the banks, should we be surprised that it serves the interests of the banks? In particular, the Fed has been extremely good to the "too big to fail" banks. Over the past several decades, those banks have grown tremendously in both size and power. Back in 1970, the five largest U.S. banks held 17 percent of all U.S. banking industry assets. Today, the five largest U.S. banks hold 52 percent of all U.S. banking industry assets. #8 The Federal Reserve Gives Secret Bailouts To Their Friends The Federal Reserve is the only institution in America that can print money out of thin air and loan it to their friends any time they want to. For example, did you know that the Federal Reserve made 16 trillion dollars in secret loans to their friends during the last financial crisis? The following list is taken directly from page 131 of a GAO audit report, and it shows which banks received secret loans from the Fed...
If you will notice, a number of the banks listed above are foreign banks. Why is the Fed allowed to print money out of thin air and lend it to foreign banks? #9 The Federal Reserve Is Paying Banks Not To Lend Money Did you know that the Federal Reserve is actually paying U.S. banks not to lend money? That doesn't make sense. Our economy is based on credit, and small businesses desperately need loans in order to operate. But the Fed has decided to pay banks not to risk their money. Section 128 of the Emergency Economic Stabilization Act of 2008 allows the Federal Reserve to pay interest on "excess reserves" that U.S. banks park at the Fed. So the big banks can just send their cash to the Fed and watch the money come rolling in risk-free. As the chart below demonstrates, the banks have taken great advantage of this tremendous deal... #10 The Federal Reserve Has An Astounding Track Record Of Failure Over the past ten years, the Federal Reserve has been an abysmal failure when it comes to running the economy. But despite a track record of failure that would make the Chicago Cubs look like a roaring success, Barack Obama actually decided to nominate Ben Bernanke for a second term as the Chairman of the Federal Reserve. What a mistake. Just check out some of the things that Bernanke said prior to the last financial crisis. The following is an extended excerpt from an article that I published previously... ***** In 2005, Bernanke said that we shouldn't worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to "full employment"....
In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets....
In 2006, Bernanke said that housing prices would probably keep rising....
In 2007, Bernanke insisted that there was not a problem with subprime mortgages....
In 2008, Bernanke said that a recession was not coming....
A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure....
***** There are many, many more examples that could be listed, but hopefully you get the point. And now it is happening again. Bernanke is telling the American people that everything is going to be just fine and that no major problems are ahead. Do you believe him this time? #11 The Federal Reserve Is Unaccountable To The American People What is the most important political issue to most Americans? Survey after survey has shown that the American people care about the economy more than anything else. So why do we allow an unelected, unaccountable entity that is privately-owned to make our economic decisions for us? The Federal Reserve has become so powerful that it has been called "the fourth branch of government". Every four years, presidential candidates argue about who will be best at managing the economy, but the truth is that it is the Fed that manages our economy. We are told that the "independence" of the Federal Reserve is absolutely critical, but don't the American people deserve to have a say in the running of the economy? Our system is broken. It is a system that will continue to create more bubbles and more debt until the entire thing finally collapses for good. Thomas Jefferson once stated that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing....
But instead of banning government borrowing, we have allowed ourselves to become enslaved to a system where government borrowing actually creates our money. We do not need to have a central bank. There are much better alternatives. We just need to get people educated. |
05-08-13 | THESIS | |
The Potemkin Rally 05-06-13 David Rosenberg via Lance Roberts of Street Talk Live blog,via ZH The real fed funds rate is very negative. The last time this occurred was when Author Burns was Fed chairman. The following two decades were not kind. Furthermore, negative real rates in the past... ...have always led to asset bubbles. |
05-07-13 | THESIS | |
2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS |
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2010 - EXTEN D & PRETEND |
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CORPORATOCRACY - CRONY CAPITALSIM | |||
GLOBAL FINANCIAL IMBALANCE | |||
SOCIAL UNREST |
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CENTRAL PLANNING |
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STANDARD OF LIVING |
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CORRUPTION & MALFEASANCE | |||
CORRUPTION - Revenue Reporting In Question SURVEY: Company Bosses Around The World Are Lying About Revenue 05-06-13 Ernst & Young via BI LONDON, May 7 (Reuters) - Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young says in its latest Fraud Survey published on Tuesday.
In India, over a third felt justified in offering cash - triple the number in western Europe. "Our survey shows that to find growth and improved performance in this environment, an alarming number appear to be comfortable with or aware of unethical conduct," David Stulb, head of E&Y's fraud investigation and dispute services practice. In Spain, ranked alongside Russia and just below Nigeria and Slovenia, 61 percent of staff believed companies often exaggerated results, compared with only 7 percent in Finland. And E&Y said the vast majority of managers from Norway to Nigeria and Russia to Greece were feeling the pressure to deliver a good financial performance over the next 12 months, despite little optimism that business conditions would improve. They were now forced to balance the risks of expanding into rapid-growth markets, where winning contracts can go hand-in-hand with corruption, cutting costs further and piling pressure on staff or suppliers - or distorting results, the firm said. E&Y warned multinationals based in mature markets they could be more vulnerable to the risks of unethical behaviour. One quarter of those asked thought watchdogs in rapid-growth markets focussed more on the behaviour of foreign businesses. The consultancy called on managers to ask more robust questions, focus on key risks, such as poor due diligence accounting checks of intermediaries and associates, and punish unethical behaviour.
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05-07-13 | THEME | |
NATURE OF WORK | |||
CATALYSTS - FEAR & GREED | |||
GENERAL INTEREST |
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Tipping Points Life Cycle - Explained
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FAIR USE NOTICE This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. DISCLOSURE Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments. COPYRIGHT © Copyright 2010-2011 Gordon T Long. The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from him
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