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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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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.”
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?
“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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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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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. 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.
THE CONTENT OF ALL MATERIALS: SLIDE PRESENTATION AND THEIR ACCOMPANYING RECORDED AUDIO DISCUSSIONS, VIDEO PRESENTATIONS, NARRATED SLIDE PRESENTATIONS AND WEBZINES (hereinafter "The Media") ARE INTENDED FOR EDUCATIONAL PURPOSES ONLY.
The Media is not a solicitation to trade or invest, and any analysis is the opinion of the author and is not to be used or relied upon as investment advice. Trading and investing can involve substantial risk of loss. Past performance is no guarantee of future returns/results. Commentary is only the opinions of the authors and should not to be used for investment decisions. You must carefully examine the risks associated with investing of any sort and whether investment programs are suitable for you. You should never invest or consider investments without a complete set of disclosure documents, and should consider the risks prior to investing. The Media is not in any way a substitution for disclosure. Suitability of investing decisions rests solely with the investor. Your acknowledgement of this Disclosure and Terms of Use Statement is a condition of access to it. Furthermore, any investments you may make are your sole responsibility.
THERE IS RISK OF LOSS IN TRADING AND INVESTING OF ANY KIND. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
Gordon emperically 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, he encourages you confirm the facts on your own before making important investment commitments.
DISCLOSURE STATEMENT
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 discussed 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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