Tag Archives: Real Economic Issues

12 Signs That An Imminent Global Financial Crash Has Become Even More Likely

Financials

Did you see what just happened?

by Michael Snyder | Economic Collapse | August 12, 2015

The devaluation of the yuan by China triggered the largest one day drop for that currency in the modern era.  This caused other global currencies to crash relative to the U.S. dollar, the price of oil hit a six year low, and stock markets all over the world were rattled.  The Dow fell 212 points on Tuesday, and Apple stock plummeted another 5 percent.  As we hurtle toward the absolutely critical months of September and October, the unraveling of the global financial system is beginning to accelerate.  At this point, it is not going to take very much to push us into a full-blown worldwide financial crisis.  The following are 12 signs that indicate that a global financial crash has become even more likely after the events of the past few days…

#1 The devaluation of the yuan on Tuesday took virtually the entire planet by surprise (and not in a good way).  The following comes from Reuters
China’s 2 percent devaluation of the yuan on Tuesday pushed the U.S. dollar higher and hit Wall Street and other global equity markets as it raised fears of a new round of currency wars and fed worries about slowing Chinese economic growth.

#2 One of the big reasons why China devalued the yuan was to try to boost exports.  China’s exports declined 8.3 percent in July, and global trade overall is falling at a pace that we haven’t seen since the last recession.

#3 Now that the Chinese have devalued their currency, other nations that rely on exports are indicating that they might do the same thing.  If you scan the big financial news sites, it seems like the term “currency war” is now being bandied about quite a bit.

 

#4 This is the very first time that the 50 day moving average for the Dow has moved below the 200 day moving average in the last four years. This is known as a “death cross”, and it is a very troubling sign.  We are just about at the point where all of the most common technical signals that investors typically use to make investment decisions will be screaming “sell”.

#5 The price of oil just closed at a brand new six year low.  When the price of oil started to decline back in late 2014, a whole lot of people were proclaiming that this would be a good thing for the U.S. economy.  Now we can see just how wrong they were.

At this point, the price of oil has already fallen to a level that is going to be absolutely nightmarish for the global economy if it stays here.  Just consider what Jeff Gundlach had to say about this in December…

And back in December 2014, “Bond King” Jeff Gundlach had a serious warning for the world if oil prices got to $40 a barrel.

“I hope it does not go to $40,” Gundlach said in apresentation, “because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be — to put it bluntly — terrifying.”

#6 This week we learned that OPEC has been pumping more oil than we thought, and it is being projected that this could cause the price of oil to plunge into the 30s

Increased pumping by OPEC as Chinese demand appears to be slackening could drive oil to the lowest prices since the peak of the financial crisis.

West Texas Intermediate crude futures skidded through the year’s lows and looked set to break into the $30s-per-barrel range after the Organization of the Petroleum Exporting Countries admitted to more pumping and China devalued its currency, sending ripples through global markets.

#7 In a recent article, I explained that the collapse in commodity prices that we are witnessing right now is eerily similar to what we witnessed just before the stock market crash of 2008.  On Tuesday, things got even worse for commodities as the price of copper closed at a brand new six year low.

#8 The South American debt crisis of 2015 continues to intensify.  Brazil’s government bonds have been downgraded to just one level above junk status, and the approval rating of Brazil’s president has fallen into the single digits.

#9 Just before the financial crisis of 2008, a surging U.S. dollar put an extraordinary amount of stress on emerging markets.  Now that is happening again.  Emerging market stocks just hit a brand new four year low on Tuesday thanks to the stunt that China just pulled.

#10 Things are not so great in the United States either.  The ratio of wholesale inventories to sales in the United States just hit the highest level since the last recession.  What that means is that there is a whole lot of stuff sitting in warehouses out there that is waiting to be sold in an economy that is rapidly slowing down.

#11 Speaking of slowing down, the growth of consumer spending in the United States has just plummeted to multi-year lows.

#12 Deep inside, most of us can feel what is coming.  According to Gallup, the number of Americans that believe that the economy is getting worse is almost 50 percent higher than the number of Americans that believe that the economy is getting better.

Things are lining up perfectly for a global financial crisis and a major recession beginning in the fall and winter of 2015.

But just because things look like they will happen a certain way does not necessarily mean that they will.  All it takes is a single “event” of some sort to change everything.

So what do you believe will happen in the months ahead?

Please feel free to join the discussion by posting a comment below…

 

12 Ways The Economy Is Already In Worse Shape Than It Was During The Depths Of The Last Recession

Did you know that the percentage of children in the United States that are living in poverty is actually significantly higher than it was back in 2008?

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by Michael Snyder | July 23, 2015

Did you know that the percentage of children in the United States that are living in poverty is actually significantly higher than it was back in 2008? When I write about an “economic collapse”, most people think of a collapse of the financial markets.

And without a doubt, one is coming very shortly, but let us not neglect the long-term economic collapse that is already happening all around us. In this article, I am going to share with you a bunch of charts and statistics that show that economic conditions are already substantially worse than they were during the last financial crisis in a whole bunch of different ways. Unfortunately, in our 48 hour news cycle world, a slow and steady decline does not produce many “sexy headlines”. Those of us that are news junkies (myself included) are always looking for things that will shock us. But if you stand back and take a broader view of things, what has been happening to the U.S. economy truly is quite shocking. The following are 12 ways that the U.S. economy is already in worse shape than it was during the depths of the last recession…

#1 Back in 2008, 18 percent of all Americans kids were living in poverty. This week, we learned that number has now risen to 22 percent

There are nearly three million more children living in poverty today than during the recession, shocking new figures have revealed.

Nearly a quarter of youngsters in the US (22 percent) or around 16.1 million individuals, were classed as living below the poverty line in 2013.

This has soared from just 18 percent in 2008 – during the height of the economic crisis, the Casey Foundation’s 2015 Kids Count Data Book reported.

#2In early 2008, the homeownership rate in the U.S. was hovering around 68 percent. Today, it has plunged below 64 percent. Incredibly, it has not been this low in more than 20 years. Just look at this chart – the homeownership rate has continued to plummet throughout Obama’s “economic recovery”…

Homeownership Rate 2015

#3 While Barack Obama has been in the White House, government dependence has skyrocketed to levels that we have never seen before. In 2008, the federal government was spending about 37 billion dollars a year on the federal food stamp program. Today, that number is above 74 billion dollars. If the economy truly is “recovering”, why is government dependence so much higher than it was during the last recession?

#4On the chart below, you can see that the U.S. national debt was sitting at about 9 trillion dollars when we entered the last recession. Since that time, the debt of the federal government has doubled. We are on the exact same path that Greece has gone down, and what you are looking at below is a recipe for national economic suicide…

Presentation National Debt

#5During Obama’s “recovery”, real median household income has actually gone down quite a bit. Just prior to the last recession, it was above $54,000 per year, but now it has dropped to about $52,000 per year…

Median Household Income

#6 Even though our incomes are stagnating, the cost of living just continues to rise steadily. This is especially true of basic things that we all purchase such as food. As I wrote about earlier this year, the price of ground beef in the United Stateshas doubledsince the last recession.

#7 In a healthy economy, lots of new businesses are opening and not that many are being forced to shut down. But for each of the past six years, more businesses have closed in the United States than have opened. Prior to 2008, this had neverhappened before in all of U.S. history.

#8Barack Obama is constantly telling us about how unemployment is “going down”, but the truth is that the percentage of working age Americans that are either working or considered to be looking for work has steadily declined since the end of the last recession…

Presentation Labor Force Participation Rate

#9Some have suggested that the decline in the labor force participation rate is due to large numbers of older people retiring. But the reality of the matter is that we have seen a spike in the inactivity rate for Americans in their prime working years. As you can see below, the percentage of males between the ages of 25 and 54 that aren’t working and that aren’t looking for work has surged to record highs since the end of the last recession…

Presentation Inactivity Rate

#10 A big reason why we don’t have enough jobs for everyone is the fact that millions upon millions of good paying jobs have been shipped overseas. At the end of Barack Obama’s first year in office, our yearly trade deficit with China was 226 billion dollars. Last year, it was more than 343 billion dollars.

#11 Thanks to all of these factors, the middle class in America is dying. In 2008, 53 percent of all Americans considered themselves to be “middle class”. But by 2014, only 44 percentof all Americans still considered themselves to be “middle class”.

When you take a look at our young people, the numbers become even more pronounced. In 2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”. But in 2014, an astounding 49 percentof all Americans in that age range considered themselves to be “lower class”.

#12This is something that I have covered before, but it bears repeating. The velocity of money is a very important indicator of the health of an economy. When an economy is functioning smoothly, people generally feel quite good about things and money flows freely through the system. I buy something from you, then you take that money and buy something from someone else, etc. But when an economy is in trouble, the velocity of money tends to go down. As you can see on the chart below, a drop in the velocity of money has been associated with every single recession since 1960. So why has the velocity of money continued to plummet since the end of the last recession?…

Velocity Of Money M2

If you are waiting for an “economic collapse” to happen, you can stop waiting.

One is unfolding right now before our very eyes.

But what most people really mean when they ask about these things is that they are wondering when the next great financial crisis will happen. And as I discussed yesterday, things are lining up in textbook fashion for one to happen in our very near future.

Once the next great financial crisis does strike, all of the numbers that I just discussed above are going to get a whole lot worse.

So as bad as things are now, the truth is that this is just the beginning of the pain.

 

 

Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now?

On Wednesday, commodities got absolutely pummeled, and at this point the Bloomberg Commodity Index is down a whopping 26 percent over the past twelve months

051514stocks

by Michael Snyder | Economic Collapse | July 23, 2015

If we were going to see a stock market crash in the United States in the fall of 2015 (to use a hypothetical example), we would expect to see commodity prices begin to crash a few months ahead of time.  This is precisely what happened just before the great financial crisis of 2008, and we are watching the exact same thing happen again right now.  On Wednesday, commodities got absolutely pummeled, and at this point the Bloomberg Commodity Index is down a whopping 26 percent over the past twelve months.  When global economic activity slows down, demand for raw materials sinks and prices drop.  So important global commodities such as copper, iron ore, aluminum, zinc, nickel, lead, tin and lumber are all considered to be key “leading indicators” that can tell us a lot about where things are heading next.  And what they are telling us right now is that we are rapidly approaching a global economic meltdown.

If the global economy was actually healthy and expanding, the demand for commodities would be increasing and that would tend to drive prices up.  But instead, prices continue to go down.

The Bloomberg Commodity Index just hit a brand new 13-year low.  That means that global commodity prices are already lower than they were during the worst moments of the last financial crisis

The commodities rout that’s pushed prices to a 13-year lowpulled some of the biggest mining and energy companies below levels seen during the financial crisis.

The FTSE 350 Mining Index plunged as much as 4.9 percent to the lowest since 2009 on Wednesday, with BHP Billiton Ltd. and Anglo American Plc leading declines. Gold and copper are near the lowest in at least five years, while crude oil retreated to $50 a barrel.

This commodity bear market is like a train wreck in slow motion,” said Andy Pfaff, the chief investment officer for commodities at MitonOptimal in Cape Town. “It has a lot of momentum and doesn’t come to a sudden stop.”

 

Commodity prices have not been this low since April 2002.  According to Bloomberg, some of the commodities being hit the hardest include soybean oil, copper, zinc and gasoline.  And this commodity crash is already having a dramatic impact on some of the biggest commodity-producing nations on the globe.  Just consider what Gerald Celente recently told Eric King

We now see that the Australian dollar is at a six-year low against the U.S. dollar. What are Australia’s biggest exports? How about iron-ore and other metals.

If we look at Canada, their currency is also now at a six-year low vs the U.S. dollar. Well, Canada is a big oil exporter, particularly some tar sands oil, which is expensive to produce.

We also now have the Brazilian real at a 10-year low vs the U.S. dollar. Why? Because it’s a natural resource rich country and they don’t have a strong market to sell their natural resources to.

Meanwhile, the Indian rupee is at a 17-year low vs the U.S. dollar. This is because manufacturing is slowing down and there is less development. If the Americans aren’t buying, the Indians, the Chinese, the Vietnamese — they’re not making things.

All of this is so, so similar to what we experienced in the run up to the financial crisis of 2008.  Just a couple of days ago, I talked about how the U.S. dollar got really strong just prior to the last stock market crash.  The same patterns keep playing out over and over, and yet most in the mainstream media refuse to see what is happening.

Something else that happened just a few months before the last stock market crash was a collapse of the junk bond market.

Guess what?

That is starting to happen again too.  Just check out this chart.

I know that I must sound like a broken record.  But I think that it is extremely important to document these things.  When the next financial collapse takes place, virtually everyone in the mainstream media will be talking about what a “surprise” it is.

But for those that have been paying attention, it won’t be much of a “surprise” at all.

When the stock market does crash, how far might it fall?

During a recent appearance on CNBC, Marc Faber suggested that it could decline by up to 40 percent

The U.S. stock market could “easily” drop 20 percent to 40 percent, closely followed contrarian Marc Faber said Wednesday—citing a host of factors including the growing list of companies trading below their 200-day moving average.

In recent days, “there were [also] more declining than advancing stocks, and the list of 12-month new lows was very high on Friday,” the publisher of The Gloom, Boom & Doom Report told CNBC’s “Squawk Box.”

“It shows you a lot of stocks are already declining.”

Others, including myself, believe that what we are going to experience is going to be even worse than that.

We live in such a fast-paced world, and most of us don’t have the patience to wait for long-term trends to play out.

If the stock market is not crashing today, to most people that means that everything must be fine.

But once it has crashed, everyone is going to be complaining that they weren’t warned in advance about what was coming and everyone will be complaining that nobody ever fixed the things that caused the exact same problems the last time around.

Personally, I am trying very hard to make sure that nobody can accuse me of not sounding the alarm about the storm that is on the horizon.

The world has never been in more debt, our “too big to fail” banks have never been more reckless, and global financial markets have never been more primed for a collapse.

Amazingly, there are still a lot of “experts” out there that insist that everything is going to be okay somehow.

Of course many of those exact same “experts” were telling us the same thing just before the stock market crashed in 2008 too.

A great financial shaking has already begun around the world, and it will hit U.S. financial markets very soon.

I hope that you are getting ready while you still can.

 

 

Greece Today, America Tomorrow?

The drama over Greece’s financial crisis continues to dominate the headlines

greece-greek-bankby Ron Paul | InfoWars | Originally published July 13, 2015

The drama over Greece’s financial crisis continues to dominate the headlines. As this column is being written, a deal may have been reached providing Greece with yet another bailout if the Greek government adopts new “austerity” measures. The deal will allow all sides to brag about how they came together to save the Greek economy and the European Monetary Union. However, this deal is merely a Band-Aid, not a permanent fix to Greece’s problems. So another crisis is inevitable.

The Greek crisis provides a look into what awaits us unless we stop overspending on warfare and welfare and restore a sound monetary system. While most commentators have focused on Greece’s welfare state, much of Greece’s deficit was caused by excessive military spending. Even as its economy collapses and the government makes (minor) cuts in welfare spending, Greece’s military budget remains among the largest in the European Union.

Despite all the handwringing over how the phony sequestration cuts have weakened America’s defences, the United States military budget remains larger than the combined budgets of the world’s next 15 highest spending militaries. Little, if any, of the military budget is spent defending the American people from foreign threats. Instead, the American government wastes billions of dollars on an imperial foreign policy that makes Americans less safe. America will never get its fiscal house in order until we change our foreign policy and stop wasting trillions on unnecessary and unconstitutional wars.

Excessive military spending is not the sole cause of America’s problems. Like Greece, America suffers from excessive welfare and entitlement spending. Reducing military spending and corporate welfare will allow the government to transition away from the welfare state without hurting those dependent on government programs. Supporting an orderly transition away from the welfare state should not be confused with denying the need to reduce welfare and entitlement spending.

On reason Greece has been forced to seek bailouts from its EU partners is that Greece ceded control over its currency when it joined the European Union. In contrast, the dollar’s status as the world’s reserve currency is the main reason the US has been able to run up huge deficits without suffering a major economic crisis. The need for the Federal Reserve to monetize ever-increasing levels of government spending will eventually create hyperinflation, which will lead to increasing threats to the dollar’s status. China and Russia are already moving away from using the dollar in international transactions. It is only a matter of time before more countries challenge the dollar’s reserve currency status, and, when this happens, a Greece-style catastrophe may be unavoidable.

Despite the clear dangers of staying on our recent course, Congress continues to increase spending. The only real debate between the two parties is over whether we should spend more on welfare or warfare. It is easy to blame the politicians for our current dilemma. But the politicians are responding to demands from the people for greater spending. Too many Americans believe they have a moral right to government support. This entitlement mentally is just as common, if not more so, among the corporate welfare queens of the militarily-industrial complex, the big banks, and the crony capitalists as it is among lower-income Americans.

Congress will only reverse course when a critical mass of people reject the entitlement mentality and understand that the government is incapable of running the world, running our lives, and running the economy. Therefore, those of us who know the truth must spread the ideas of, and grow the movement for, limited government, free markets, sound money, and peace.

 

3 Big Reasons Why The ‘Greek Debt Deal’ Is Really A German Trap

Greece is saved?

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by Michael Snyder | Economic Collapse | Originally published July 14, 2015

Greece is saved? All over the planet, news headlines are boldly proclaiming that a “deal” has been reached which will give Greece the money that it needs and keep it in the eurozone.

But as you will see below, this is not true at all.  Yesterday, when I wrote that “there never was going to be any deal“, I was not exaggerating.  This “deal” was not drafted with the intention of “saving Greece”.  As I explained in my previous article, these negotiations were all about setting up Greece for eviction from the euro.  You see, the truth is that Greece desperately wants to stay in the euro, but Germany (and allies such as Finland) want Greece out.  Since Germany can’t simply order Greece to leave the euro, they need some sort of legal framework which will make it possible, and that is what this new “deal” provides.  As I am about to explain, there are all kinds of conditions that must be satisfied and hurdles that must be crossed before Greece ever sees a single penny.  If there is a single hiccup along the way, and this is what the Germans are counting on, Greece will be ejected from the eurozone.  This “deal” has been designed to fail so that the Germans can get what they have wanted all along.  I think that three very famous words from Admiral Ackbar sum up the situation very well: “It’s a trap!

So why is this “Greek debt deal” really a German trap?

The following are three big reasons…

#1 The “Deal” Is Designed To Be Rejected By The Greek Parliament

If Germany really wanted to save Greece, they would have already done so.  Instead, now they have forced Greek Prime Minister Alexis Tsipras to agree to much, much harsher austerity terms than Greek voters overwhelmingly rejected during the recent referendum by a vote of 61 percent to 39 percent.  Tsipras has only been given until Wednesday to pass a whole bunch of new laws, and another week to make another series of major economic changes.  The following comes from CNN

Greece has to swiftly pass a series of new laws. Prime Minister Alexis Tsipras has until Wednesday to convince Parliament to pass the first few, including pension cuts and higher taxes.

Assuming that happens, Greek lawmakers have another week, until July 22, to enact another batch of economic changes. These include adopting European Union rules on how to manage banks in crisis, and do a major overhaul to make Greece’s civil courts faster and more efficient.

Can Tsipras actually get all this done in such a short amount of time?

The Germans are hoping that he can’t.  And already, two of Syriza’s coalition partners have publicly declared that they have no intention of voting in favor of this “deal”.  The following is from a Bloomberg report

Discontent brewed as Tsipras arrived back in the Greek capital. Left Platform, a faction within Syriza, and his coalition partners, the Independent Greeks party, both signaled they won’t be able to support the deal. That opposition alone would wipe out Tsipras’s 12-seat majority in parliament, forcing him to rely on opposition votes to carry the day.

The terms of the “deal” are not extremely draconian because the Germans want to destroy Greek sovereignty as many are suggesting.  Rather, they are designed to provoke an overwhelmingly negative reaction in Greece so that the Greeks will willingly choose to reject the deal and thus be booted out of the euro.

And this is what we are seeing.  So far, the response of the Greek public toward this deal has been overwhelmingly negative

Haralambos Rouliskos, a 60-year-old economist who was out walking in Athens, described the deal as “misery, humiliation and slavery”.

Katerina Katsaba, a 52-year-old working for a pharmaceutical company, said: “I am not in favour of this deal. I know they (the eurozone creditors) are trying to blackmail us.”

On Wednesday, the union for Greek public workers has even called a 24 hour strike to protest this “agreement”

Greece’s public workers are being called to stage a 24-hour strike on Wednesday, the day their country’s parliament is to vote on reforms needed to unlock the bankster eurozone plan agreed to by Greek Prime Minster Alex Tsipras.

Their union, Adedy, called for the stoppage in a statement issued today, saying it was against the agreement reached with the eurozone.

The Greek government is not guaranteed any money right now.

According to Bloomberg, the Greek government must pass all of the laws being imposed upon them by the EU “before Greece can even begin negotiations with creditors to access a third international bailout in five years.”

The Germans and their allies are actually hoping that there is a huge backlash in Greece and that Tsipras fails to get this package pushed through the Greek parliament.  If that happens, Greece gets ejected from the euro, and Germany doesn’t look like the bad guy.

#2 Even If The “Deal” Miraculously Gets Through The Greek Parliament, It May Not Survive Other European Parliaments

The Greek parliament is not the only legislative body that must approve this new deal.  The German and Finnish parliaments (among others) must also approve it.  According to USA Today, it is being projected that the German and Finnish parliaments will probably vote on this new deal on Thursday or Friday…

Thursday/Friday, July 16/17: Eurozone parliaments must also agree to the plan for Greece’s $95 billion bailout. The biggest tests may come from Finland and Germany, two nations especially critical of Greece’s handling of the crisis. Berlin has contributed the most to Greece’s loans.

Either Germany or Finland could kill the entire “deal” with a single “no” vote.

Finnish Finance Minister Alexander Stubb has already stated that Finland “cannot agree” with a new bailout for Greece, and it is highly questionable whether or not the German parliament will give it approval.

I think that the Germans and their allies would much prefer for the Greeks to reject the deal and walk away, but it may come down to one of these parliaments drawing a line in the sand.

#3 The Deal Makes Implementation Extraordinarily Difficult

If Greece fails to live up to each and every one of the extremely draconian measures demanded in the “deal”, they will be booted from the eurozone.

And if you take a look at what is being demanded of them, it is extremely unrealistic.  Here is just one example…

For instance, the Greek government agreed to transfer up to 50 billion euros worth of Greek assets to an independent fund that will raise money from privatization.

According to the document, 25 billion euros from this fund will be poured into the banks, 12.5 billion will be used to pay off debt, and the remaining 12.5 billion to boost the economy through investment.

The fund will be based in Greece and run by the Greeks, but with supervision from European authorities.

Where in the world is the Greek government going to find 50 billion euros worth of assets at this point?  The Greek government is flat broke and the banks are insolvent.

But if they don’t find 50 billion euros worth of assets, they have violated the agreement and they get booted.

This whole thing is about setting up Greece for failure so that there is a legal excuse to boot them out of the euro.

And it actually almost happened very early on Monday morning.  The following comes from Business Insider

As the FT tells it, German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras rose from their chairs at 6 a.m. on Monday and headed for the door, resigned to a Greek exit from the euro.

“Sorry, but there is no way you are leaving this room,” European Council president Donald Tusk reportedly said.

And so a Grexit was avoided.

For the moment, Greece has supposedly been “saved”.

But anyone that believes that this crisis is “over” is just being delusional.

The Germans and their allies have successfully lured the Greek government into a trap. Thanks to Tsipras, they have been handed a legal framework for getting rid of Greece.

All they have to do now is wait for just the right moment to spring the trap, and it might just happen a lot sooner than a lot of people may think.

 

JP Morgan to Pay Another Slap on the Wrist Fine for Engaging in Systemic Consumer Credit Card Debt Fraud

Average citizens are treated under the U.S. “justice” (or just us?) system

jp-morgan-bankby Michael Krieger | Liberty Blitzkrieg | Originally published July 9, 2015

Just yesterday, I published a post titled: Florida Man Sentenced to 2.5 Years in Jail for Having Sex on the Beach. The purpose of that post wasn’t to justify his actions, but rather to highlight the difference between how average citizens are treated under the U.S. “justice” system, and how thieving, remorseless financial oligarchs are treated.

While, Mr. Caballero may have ruined the day of a few beach goers by crudely having sex on a public beach in broad daylight, he didn’t run the U.S. economy into the ground and cause destitution to tens of millions of Americans. Nor did he received trillions in taxpayer backstops and bailouts, only to turn around and pay himself a record bonus and then carry on with extremely profitable, illegal financial schemes. No, it was the bank executives who did (and continue to do) all of that. Guess who ends up in prison?

And now, for the latest financial scam perpetrated by JP Morgan, as well as the insignificant slap on the wrist fine, I present the following – this is from Reuters:

JPMorgan Chase & Co has agreed to pay at least $125 million to settle probes by U.S. state and federal authorities that the bank sought to improperly collect and sell consumer credit card debt, according to people familiar with the matter.

The settlement also includes about $50 million in restitution, the sources said.

The nation’s largest bank has been accused of relying on robo-signing and other discredited methods of going after consumers for debts they may not have owed and for providing inaccurate information to debt buyers. Robo-signing refers to signing documents in mass quantities without reviewing records.

I mean, what’s the big deal here? Clearly sex on the beach presents graver threat to American society.

The U.S. Consumer Financial Protection Bureau (CFPB), 47 states and the District of Columbia are expected to announce the settlements as soon as Wednesday, the people said.

California Attorney General Kamala Harris sued in 2013, claiming the bank engaged in fraudulent and unlawful debt collection practices against 100,000 California credit card borrowers over some three years.

The state claims the bank flooded state courts with questionable lawsuits, filing thousands every month, including 469 such lawsuits in one day alone.

In September 2013, the U.S. Consumer Financial Protection Bureau ordered JPMorgan to refund $309 million to about 2 million customers for illegal credit card practices, including charging consumers for credit card monitoring services they did not receive.

Thanks for playing suckers. Now go BTFD.

 

A Serial Short Seller Asks “Do Governments & Central Banks Ever Lose?”

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by Jared Dillian | Zero Hedge | July 10, 2015

We are about a week into the Greek non-crisis, and nothing especially scary has happened. Stocks opened up lower a couple of times, and there was one wild trading day in EURUSD, but everything is essentially unchanged. Which surprised everyone. Including me, a little.

I used to be a plunger. Loved shorting stuff. I had one muscle, and I flexed it constantly. By my rough calculations, I was up about 18% by the time Lehman went bankrupt in 2008. The more turmoil, the better.

I was born in a bear market. Literally, in 1974, and figuratively—I learned to trade in the dot-com bust. Seven years into my trading career, I had experienced two crashes. I know lots of people who got rich buying GE at six bucks. I almost shorted it there.

So the past six years have been tough on me. I’ve made money, but not a lot. Worse, I’ve been conditioned to expect that whenever I spend a bunch of money on S&P puts, I’m going to get sconed and watch them melt to zero while the market rips higher.

The real kick in the nuts was when the market was melting down on Ebola fears in October and St. Louis Fed President Bullard walks out with a “buy” ticket stapled to his forehead.

Here’s another way to look at this: We had two crashes in seven years, and if you go back in history, the market doesn’t crash all that often.

Like the ‘50s. Stocks went up, quietly, for a decade. Nothing happened.

But this isn’t the ‘50s. There’s an IPO boom, a VC boom, valuations are stretched, and crap like Fitbit is going public. Shake Shack has a bigger valuation (I am told) than the entire coal industry.

We have unicorns and decacorns, and it’s only a matter of time until we have a centicorn. All the kids are going to startups. Talk about risk-taking.

I have seen worse bubbles, but the markets are definitely running hot.

So a developed country is about to default on a couple of hundred billion dollars worth of debt, and the market just shrugs. Worse, it sets a nasty precedent for other, larger economies defaulting on debt. Seems much more contagious than Russia in 1998. And stocks are bulletproof. The only selling going on is in China.

Serious question: Do you give up shorting? Like, throw in the towel?

The thing that gets a lot of people is that they believe the market is engineered by the authorities to go higher. Like Bullard with his rate comments. But it’s gotten so bad, there are wide swaths of people who think the Fed is actually buying stocks. ZeroHedge talks about this all the time.

There is a pretty funny Twitter account called 3:30 Ramp Capital, LLC. Plunge Protection Team rumors have been around since the beginning of time, but six years of stocks going straight up have given rise to all kinds of other theories. (For the record, the Fed fully acknowledges its interventions in the bond market, but it has never admitted to trading stocks.)

And it’s true that “the authorities” want the price of financial assets (stocks, bonds) to go up, and the price of hard assets (commodities) to go down… which is exactly what has happened.

So do governments and central banks ever lose?

In the old days, they lost all the time. In one extreme example, an individual hedge fund took out the entire Bank of England. But central banks are currently on a massive winning streak.

So to answer the question, “Will we ever have a crisis,” you need to answer the question, “Will we ever be allowed to have one?”

I’m not just some crazy guy asking these questions. Market professionals I talk to, hedge fund managers, mutual fund managers, will freely discuss the widespread distortions in the market. They feel like they can’t ply their trade. What I mean is, you can’t buy stuff cheap and sell it dear. Everything is dear, and it keeps going up, and you have to participate or get left behind.

That’s not the way it was in the ‘50s. There was all kinds of value to be found. That was how Warren Buffett made his money.

Today, I realized that, outside of some biotech stuff, I haven’t written about an individual stock in months. There’s just nothing interesting to buy, and you certainly can’t short anything. You’ll get your head blown off.

At one point in my career, I was really good at market timing. Calling tops and bottoms. You just can’t do it anymore. Tops never happen, and bottoms don’t get deep enough to find value. We haven’t had a 10% correction in how long?

Honestly, it’s so hard to invest in this environment, I’ve made nearly all my money in the last two years trading FX. It’s the only thing that makes sense.

This is a lot of me whining. And I’m secretly hoping that this letter means there will be a return to rationality soon.

But probably not. Stupid usually gets stupider.

 

Birth Pangs Of The Coming Great Depression

050914burningmoney

 

The signs of the times are everywhere – all you have to do is open up your eyes and look at them

Michael Snyder | Economic Collapse | January 30, 2015

The signs of the times are everywhere – all you have to do is open up your eyes and look at them.  When a pregnant woman first goes into labor, the birth pangs are usually fairly moderate and are not that close together.  But as the time for delivery approaches, they become much more frequent and much more intense.

Economically, what we are experiencing right now are birth pangs of the coming Great Depression.  As we get closer to the crisis that is looming on the horizon, they will become even more powerful.  This week, we learned that the Baltic Dry Index has fallen to the lowest level that we have seen in 29 years.  The Baltic Dry Index also crashed during the financial collapse of 2008, but right now it is already lower than it was at any point during the last financial crisis.  In addition, “Dr. Copper” and other industrial commodities continue to plunge.  This almost always happens before we enter an economic downturn.  Meanwhile, as I mentioned the other day, orders for durable goods are declining.  This is also a traditional indicator that a recession is approaching.  The warning signs are there – we just have to be open to what they are telling us.

And of course there are so many more parallels between past economic downturns and what is happening right now.

For example, volatility has returned to the markets in a big way.  On Tuesday the Dow was down about 300 points, on Wednesday it was down another couple hundred points, and then on Thursday it was up a couple hundred points.

This is precisely how markets behave just before they crash.  When markets are calm, they tend to go up.  When markets get really choppy and start behaving erratically, that tells us that a big move down is usually coming.

At the same time, almost every major global currency is imploding.  For much more on this, see the amazing charts in this article.

In particular, I am greatly concerned about the collapse of the euro.  The Swiss would not have decoupled their currency from the euro if it was healthy.  And political events in Greece are certainly not going to help things either.  Economic conditions across Europe just continue to get worse, and the future of the eurozone itself is very much in doubt at this point.  And if the eurozone does break up, a European economic depression is almost virtually assured – at least in the short term.

 

And I haven’t even mentioned the oil crash yet.

There is only one other time in all of history when the price of oil collapsed by more than 60 dollars, and that was just prior to the horrific financial crisis of 2008.

Since the last financial crisis, the oil industry has been a huge source for job growth in this country.  The following is an excerpt from a recent CNN article

The oil sector has added over a half million jobs — many of them high paying — since the recession ended in June 2009. That’s 13% of all US job growth over that period.

Now energy companies and related sectors are laying off thousands. Expect that trend to continue, bears say.

But losing good jobs is just the tip of the iceberg of this oil crisis.

At this point, the price of oil has already dropped to a catastrophically low level.  The longer it stays at this level, the more damage that it is going to do.  If the price of oil stays at this level for all of 2015, we are going to have a complete and total financial nightmare on our hands

For the first time in 18 years, oil exporters are pulling liquidity out of world markets rather than putting money in. The world is now fast approaching a world reserve currency shift. If we see 8 to 12 months at these oil prices; U.S. shale industry will be wiped out. The effect on junk bonds will cascade to the rest of the stock market and U.S. economy.

…and this time there will be nothing left to catch the falling knife before it hits the American economy right in the heart. Not the FED nor the U.S. government can stop what’s coming. Liquidity will freeze up, our credit will be downgraded, the stock market will start to collapse, and then we can expect the FED to come in and hyper-inflate the dollar. This will cause the world to finish abandoning the world reserve currency in the last rungs of trade. This will be the end of the petrodollar.

Something that I have not discussed so far this year is the looming crisis in emerging market debt.

 

This is a really big deal.  As a Business Insider article recently detailed, we could be talking about hundreds of billions of dollars…

Russia this week became the first of the major economies to lose its investment grade status from Standard & Poor’s, falling out off the top ratings category for credits deemed to have a low risk of default for the first time in a decade.

If Moody’s and Fitch follow, conservative investors barred from owning junk securities must sell their holdings. JPMorgan estimates this means they may ditch $6 billion in Russian government rouble and dollar debt.

Russia may have company. Almost $260 billion worth of sovereign and corporate bonds – nearly a tenth of outstanding emerging market (EM) debt – is in danger of being relegated to junk, according to David Spegel, head of emerging debt at BNP Paribas, who calls such credits “falling angels”.

And no article of this nature would be complete without mentioning derivatives.

I could not possibly overemphasize the danger that the 700 trillion dollar derivatives bubble poses to the global financial system.

As we enter the coming Great Depression, derivatives are going to play a starring role.  Wall Street has been pumped full of funny money by global central banks, and our financial markets have been transformed into the greatest casino in the history of the world.  When this house of cards comes crashing down, and it will, it is going to be a financial disaster unlike anything that the planet has ever seen.

And yes, global central banks are very much responsible for setting the stage for what we are about to experience.

 

I really like the way that David Stockman put it the other day…

The global financial system is literally booby-trapped with accidents waiting to happen owing to six consecutive years of massive money printing by nearly every central bank in the world.

Over that span, the collective balance sheet of the major central banks has soared by nearly $11 trillion, meaning that honest price discovery has been virtually destroyed. This massive “bid” for existing financial assets based on credit confected from thin air drove long-term bond yields to rock bottom levels not seen in 600 years since the Black Plague; and pinned money market costs at zero—-for 73 months running.

What is the consequence of this drastic financial repression along the entire yield curve? The answer is bond prices which keep rising regardless of credit risk, inflation or taxes; and rampant carry trade speculation that can’t get out of its own way because  central banks have made the financial gamblers’ cost of goods—the “funding” cost of their trades—-essentially zero.

Of course I am not the only one warning that a new Great Depression is coming.  For instance, just consider what British hedge fund manager Crispin Odey is saying…

British hedge fund manager Crispin Odey thinks we’ve entered an economic downturn that is “likely to be remembered in a hundred years,” and central banks won’t be able to stop it.

In his Odey Asset Management investor letter dated Dec. 31, Odey writes that the shorting opportunity “looks as great as it was in 07/09.”

“My point is that we used all our monetary firepower to avoid the first downturn in 2007-09,” he writes, “so we are really at a dangerous point to try to counter the effects of a slowing China, falling commodities and EM incomes, and the ultimate First World Effects. This is the heart of the message. If economic activity far from picks up, but falters, then there will be a painful round of debt default.”

Even though most average citizens are completely oblivious to what is happening, many among the elite are heeding the warning signs and are feverishly getting prepared.  As Robert Johnson told a stunned audience at the World Economic Forum the other day, they are “buying airstrips and farms in places like New Zealand“.  They can see the horrifying storm forming on the horizon and they are preparing to get out while the getting is good.

It can be very frustrating to write about economics, because things in the financial world can take an extended period of time to play out.  Sadly, most people these days have extremely short attention spans.  We live in a world of iPhones, iPads, YouTube videos, Facebook updates and 48 hour news cycles.  People no longer are accustomed to thinking in long-term time frames, and if something does not happen right away we tend to get bored with it.

But the economic world is not like a game of “Angry Birds”.  Rather, it is very much like a game of chess.

And unfortunately for us, checkmate is right around the corner.

Source

 

How Capitalism Dies

out of business

Can you think of a single thing a politician or central banker has contributed to the welfare of the world?

Bill Bonner | Zero Hedge | January 27, 2015

Two Comedy Acts

Today, we’re going to tell you why America’s middle class is getting poorer. Or put another way, we’re going to show you how capitalism dies.

Two comedy acts appeared last week: President Obama’s State of the Union address and Mario Draghi’s QE announcement.

Mr. Obama claimed credit for a “recovery” that has left the typical American poorer than he was before. And not only is he poorer, but also he is more dependent on the very people who engineered the phony recovery. (See below.)

Mr. Draghi followed up with a series of one-liners, the gist of which was that he now proposes to save Europe from the specter of inadequate inflation.

ECB to the Rescue

Who could take Draghi seriously? After all, what’s wrong with stable prices? Nothing at all! The 19th century had fairly stable prices… as well as the fastest GDP and wage growth in human history. Serious consumer price inflation didn’t begin in the US until the 1970s, when America’s new flexible, adaptable, expandable, super-duper fiat money came into service.

Since then, the cost of living in the US is up roughly 600%. And the rate of economic growth has fallen. Mr. Draghi did not mention these facts when he announced his euro-debasement program. But it hardly mattered. The real purpose of euro-zone QE is the same as the real purpose of the US version – to prevent the cronies from getting what they deserve.

 

They own hundreds of billions of euro worth of European sovereign bonds – now trading at the highest prices and lowest yields in recorded history. Many were bought with negative yields. And now, with aging populations, rising debt levels, gummed-up regulations, rising living costs, rising taxes and falling revenues, there is almost no way these bonds can be worth what speculators paid for them.

How are the insiders going to get their money back? The ECB to the rescue! It promises to transfer $1.3 trillion to the financial elite over the next 21 months – buying sovereign bonds and other slippery obligations at the rate of €60 billion ($67 billion) every month. Not that we are complaining; we’ve got a sense of humor!

Besides, we’re card-carrying members of the 1%… and happy to get a share of the loot. If only we had bought those Italian sovereign bonds! So, there you have it…

In the New World, the commander-in-chief claims credit for something he didn’t do. In the Old World, the central-banker-in-chief claims to be doing something not worth doing. Neither is doing what he should do.

 

Germany-2-yr_-yield

Germany’s 2 year note now sport a yield to maturity of minus 0.143%. All over the developed world, more than $ 4 trillion in sovereign debt are now trading at negative yields. This is no longer just return-free risk, it is at the next stage where you have to pay for the risk to lend money to governments that in a sober assessment cannot be called anything but effectively insolvent.

America’s Disappearing Wealth Creators

We chuckle … and move on. We were supposed to tell you about how it was possible for the average American to get poorer at a time that should have been the most productive and prosperous ever. We won’t disappoint you.

Who makes people better off? President Obama? Mario Draghi? Can you think of a single thing a politician or central banker has contributed to the welfare of the world? We can’t.

Did they invent hamburgers? Did they pave roads? Did they produce wheat or lay bricks? We’re exaggerating to make our point. They are, no doubt, amusing at dinner parties. And they pet their dogs.

But sticking to the material world, the world of getting and spending, has a president or central banker ever put in a decent day’s work or added a single centime or farthing to the nation’s GDP? Not that we know of. Then who has?

If we had to put a title on this little discussion, we might call it: “America’s Disappearing Wealth Creators.” Or if we wanted to be more lurid: “How the Zombies Ate America’s Entrepreneurs.”

More information…. Source

 

 

Dow Plunges 360 Points, Erases All Post-QE Gains

stock-market-trading

The Nasdaq is today’s biggest loser, down over 2.2%

Zero Hedge | January 27, 2015

The Dow is now down 360 points on the day – its biggest point drop in 19 months. Perhaps more notable is that since the End of QE3, The Dow is now down 0.4% – but the fundamentals we hear you cry…

The Nasdaq is today’s biggest loser, down over 2.2%

20150127_dow11_0

Source

 

Why Printing Money will end badly for the US

fedmoney You are witness to possibly the greatest economic slight of hand ever perpetuated on a people.

Zero Hedge | January 24, 2015

You may have heard the news, the European Central Bank have started up the printing press. They are soon to print upwards of €60 Billion a month. The crowds of economic pundits have collectively cheered. Europe stands to enjoy significant near term benefits, but at what cost?

They speak of lower government borrowing costs for new debt, by lowering funding costs and thus the hurdle that projects must meet to become viable. They believe our exchange rate will fall and our goods will be come cheaper abroad. European products and services will be flying off the shelves, etc. Well, it is an absolute nonsense. Yes there will be short term benefits. Any time you give a liquidity jolt you temporarily relieve pressure. But the longer term risks are far far greater, now that the act of QE has been taken.  Essentially the technocrats have short circuited the capitalist system which continuously prices risk based on perceived repayment risks and cost of funds.  This is a road to ruin as returns become obscured by official and politically motivated credit flows.

They will argue that deflation is a threat and must be tackled early before it takes hold. This is a smoke screen. The deflation we are experiencing is spotty and multi faceted and is primarily being driven by lower oil prices which are a global phenomena, not a purely European one. Secondly oil prices have already begun to stabilise and if anything are likely to drift higher from here. Don’t get me wrong deflation is a vey dangerous condition and can lead to a vicious negative feedback vortex to a state of depression. But we are no where near that level of risk or type of deflation.

The thing is it is being sold as a low risk, one way bet. Worryingly there has been no talk of the actual cost or the ramifications of his new measure.

So who pays? Someone has to, you can not just create money out of thin air. The answer is “we do, you and I”, in the form of a devalued currency, diminished savings and devaluing pensions.

The ECB was always going to to launch Quantitative Easing whether it wanted to our not. Once the Fed, BOJ, BOE launched their programs in 2008 it was only a matter of time. We are in a era of global competitive currency devaluation were desperate governments must devalue currencies in order to spur domestic growth by improving the value of exports.

The problem with QE or money printing is it is a like a Pandora’s box. Once it is opened it can never be put away again. There will, now, always be an easy way out of every economic issue. All interested parties will now be able to eye this short term financing tool as away of solving short term issues. The Euro will likely morph into the Lira over time.

 

QE is not actually the creation of money, not in real terms. What it is is the reallocation of the monetary pool from those that have a share to those that do not. All they have done is to devalue the Euro’s held by duplicating and allocating the new Euros to central banks. The Central Banks will in turn buy junk assets off commercial banks and government bonds all in return for cash.

The hope is that the banks will lend the new cash to businesses who will employ people and in doing so add productivity and value to the economy, increasing bank earnings and taxes and wealth.

But the banks will not do that. They will hold the money first to improve their capital ratio’s then they will invest in the the stock market via funds or other instruments.

The ECB also hope that the governments will have more money in the treasury and be able to tax less, but they wont, rather they will allocate to social partners such as Unions.

In short what we are seeing is the wholesale capture of the monetary system by special interests and the mass confiscation of wealth from pensioners and savers to governments and government proxies. I fear that we have just passed a monetary Rubicon that may eventually undermine the very basic social contract of our capitalist system: work hard and you will prosper.

It will take time for the effects of this to be felt but the gates have been well and truly opened and from now on we are only as strong as our weakest political masters at their weakest moment. Those actors will surely plunder this monetary tool.

This tragically could be the step that opens the gate to extreme political entities who can canvass on the widest remit and promise everything to everyone. Indeed the definition of “urgent need” will change by degrees over time, until it will take very little to invoke a new round of money printing.

You are witness to possibly the greatest economic slight of hand ever perpetuated on a people, when the long gaze of history looks at this decision, deflation fears will not be part of the final analysis, arrogance, stupidity and theft will be.

Read more from GoldCore

Russia and China ‘Furiously’ Buying Up Gold As “a Global Currency Crisis – Albeit Unstated – is Underway”

gold

Are you prepared? Is anyone? Brace yourself…

Mac Slavo | SHTFPlan.com | January 21, 2015

A larger global currency shift is underway…

And it may be happening much more quickly than anyone has realized.

Things are definitely in motion. Call it a game of musical chairs, or an exercise in rearranging chairs on the Titanic, or just that a tilting balance of power. Just don’t make the mistake of thinking this is all routine.

As Michael Snyder just reported:

The absolutely stunning decision by the Swiss National Bank to decouple from the euro has triggered billions of dollars worth of losses all over the globe. 

[…]

And these are just the losses that we know about so far.  It will be many months before the full scope of the financial devastation caused by the Swiss National Bank is fully revealed.  But of course the same thing could be said about the crash in the price of oil that we have witnessed in recent weeks.  These two “black swan events” have set financial dominoes in motion all over the globe.  At this point we can only guess how bad the financial devastation will ultimately be.

 

The key to understanding how the hammer will fall may lie in: gold.

In the material world that governs politics and economics, there has always been one golden rule: he who has the gold makes the rules.

Put China at the top of the next generation of rule makers, then.

China has been quietly stockpiling gold for years now. In fact, it is stockpiling so much gold that many have speculated that it may be building a gold-backed yuan currency that would make the Dollar pale in comparison on the global market.

Bottom line: no one knows just exactly how much gold China has amassed:

Buying surreptitiously allows Beijing to buy bullion at bargain prices; if the world knew how much gold China was really amassing, a run on gold the likes of which the globe has never seen would likely ensue. “We believe China is controlling the gold price because it is buying in such a way so as not to push prices up.” That’s the opinion of respected precious-metals analyst Julian Phillips of The Gold Forecaster, along with a host of other informed sources. (source)

It is widely believed that China has accumulated larger – possibly much larger – reserves since. (source)

Lots of other countries are rapidly buying up gold, too, including – Serbia, Greece, Ecuador, Mexico, Kazakhstan, Kyrgyzstan, and Tajikistan.

But reportedly no one is buying gold at a faster pace than Russia.

Back in August it was reported that:

Russia’s increase is the most dramatic, according to the recent report from the IMF. The Russian central bank has almost doubled its gold holdings within the last 5 years to 1,094.8 tonnes in June of this year. China’s Central Bank followed with an increase of 75% from its holdings in 2009.

Bloomberg reported in November:

The country has tripled its gold reserves since 2005 and is holding the most since at least 1993, IMF data show.

There is little doubt that gold plays a major factor in Russia’s posturing during a global showdown that involves proxy war and military tensions in the Ukraine, Syria, Iraq and other parts of the globe.

Moscow’s purchase of bullion and the assault on the bank can be seen as tactics of a single strategy designed to break the monopoly of the dollar. Gold is Russia’s hedge against that hegemony; it can’t be hacked.

More than that, Putin has been positioning his motherland to team up with China to solidify the emerging BRICS system which aims to thwart decades of Anglo financial dominance with a un-dollar currency system that will also include a development bank.

Russia’s response has been to buy gold and turn east, cementing deals with China and, it would seem, firing the opening salvos in a cyber currency war with the U.S. (source)

Warnings have sounded about a tipping of the global balance:

Russia is also increasing its gold reserves. China and Russia have been exchanging their U.S. dollar reserves and buying physical gold. Last year we speculated that this dynamic would create a shortage in gold leading to much higher prices. Russia and China now rank in the top ten countries by gold reserves.

With Russia now in what appears to be a currency war with the U.S., they may find a willing partner in China to create an alternative international financial system that does not rely upon or use the dollar. Irrespective of either country’s intentions, their physical gold buying sprees continue unabated. (source)

To that end, Russia has been amassing as much gold as possible, in a bid to outmaneuver its enemies in a silent economic war to hold onto its independence and further project its status.

Nearly every bit of gas and oil that Russia sells to neighbors in Europe and Asia is converted from dollars into gold reserves – and even with the collapsing oil price, that amount could still be staggering.

Many have pointed to the gold and oil trade off as Putin’s grand chess strategy:

Thus, the Western world, built on the hegemony of the petrodollar, is in a catastrophic situation. In which it cannot survive without oil and gas supplies from Russia. And Russia is now ready to sell its oil and gas to the West only in exchange for physical gold! The twist of Putin’s game is that the mechanism for the sale of Russian energy to the West only for gold now works regardless of whether the West agrees to pay for Russian oil and gas with its artificially cheap gold, or not.

If it ever comes to throwing down the gold and putting everyone’s cards on the table – ounce for ounce, and ton for ton, China and Russia will be major contenders in the global system, worthy of the kind of respect that equates both sovereignty and diplomatic power.

Keep in mind that China is also the world’s leading gold miner, producing more than 420 metric tons in 2013 numbers, with Russia ranked behind the U.S. as the fourth largest with 220 tons produced each year.

BRIC by BRIC a new system is being erected.

China has quietly declared war on the U.S. worthless dollar but can you blame them? They already have in place Chinese Yuan Swap facilities, which started the non U.S. dollar trade practice years ago. In 2012 China completed trade agreements with most nations they trade with called BRICS. They also have a BRIC Development Fund with a reported $200 billion already funding infrastructure needs and to deal with their toxic U.S. T Bonds. They will be busy replacing these bonds with gold and the chartered bank (Bank of China, Peoples Bank of China) will compete with the IMF and World Bank. (source)

The strings that come with IMF and World Bank loans give the U.S. and Europe leverage over developing countries, and thus, control. With a competing development bank, China and Russia will literally be building the infrastructure for growing global control.

Germany Has Already ‘Called’ – The World Second Largest Holder of Gold Has Demanded Repatriation of Its American Holdings

The elephant in the room of this entire affair is, of course, the United States. Ostensibly, they are far and away the world’s largest holder of gold, officially holding more than 8,000 tons of gold, and further housing thousands of tons of gold for various allies – especially in Europe.

However, very serious speculation has arisen about the veracity of U.S. claims to gold possession. No audit has taken place of Fort Knox, where the gold is held, since the Eisenhower administration, and many believe that significant portions have been lent or sold on the market to meet other obligations. Conventional wisdom, touted by such official mouthpieces as CBS, asserts that despite lacking confirmation of this gold through an audit, the question of who holds the gold just doesn’t matter anymore:

Fort Knox began losing its luster when the United States went off the gold standard in 1971. Before that, gold bars packed into a secure vault gave people faith in the country’s currency. Today, however, Fort Knox’s gold is now an asset on the Federal Reserve’s balance sheet, not a key part of our monetary system.

With decades of the U.S. dominating world finance through the petrodollar, no one was in a position to demand answers to this plaguing question, including the European nations with substantial deposits there.

However, things have changed since the 2008 financial crisis. The petrodollar is fading, and with it, American hegemony. Numerous European countries are now demanding, politely or not, to repatriate their gold.

For Germany, it has become an important question economically as well as politically. Nominally, it is the world’s second wealthiest in gold reserves, with more than 3,300 tons. However, the vast majority of its holdings have been kept in New York and London, due to post-World War II spheres of influence in Europe. With worries about the future of global economics, and a keen eye on the demise of the dollar, Germany has become decisive about keeping its gold closer to home.

Despite a 2012 decision in Germany to repatriate more than 600 tons of gold being held by the New York Federal Reserve, only 5 tons had actually been transferred across the Atlantic at the start of 2014, with the Bundesbank reassuring the German people that all is well, despite delays in the process.

Was their gold actually there, or have the delays been due to the need to buy back physical gold to meet demands on their ‘call’?

While this remains officially unclear, a fresh report yesterday claimed that Germany’s gold repatriation was still underway, and supposedly ‘on schedule’:

“The Bundesbank successfully continued and further stepped up its transfers of gold,” the central bank said in a statement.

“In 2014, 120 tonnes of gold were transferred to Frankfurt from storage locations abroad: 35 tonnes from Paris and 85 tonnes from New York.”

According to the German central bank’s own data, 1,447 tonnes are stored at the Federal Reserve Bank in New York, 438 tonnes at the Bank of England in London and 307 tonnes at the Banque de France in Paris.

Under the Bundesbank’s new gold storage plan in 2013, it decided to bring back 674 tonnes from abroad by 2020 and store half of its gold in its own vaults.

The Dutch were apparently more successful in quickly repatriating some 122 tons of gold from the New York Fed back in November:

As the debate regarding whether or not Switzerland should keep the bulk of its gold reserves at home on Swiss soil reaches it’s climax – the referendum takes place on Sunday – it is telling that the Dutch announced on Friday that they have just secretly repatriated 122 tonnes of their sovereign gold reserves from New York back to Amsterdam.

The Dutch Central Bank went so far as to state that the action was designed to install public confidence in the ability of the central bank to manage crises. The prospect of further shipments from the U.S. remains open as they are keeping the logistical details secret.

Meanwhile, during this silent drama, the Ukraine has been rapidly emptied out of its gold reserves.

Following the coup in Ukraine, the nation’s gold reserves mysteriously plummeted to “near zero”, with reserves depleting from from about $1.8 billion in gold reserves to “near zero,” raising speculation that it was transferred to the U.S. Meanwhile, some $874 million in gold was officially sold in October 2014 to service its debts. Did the Federal Reserve steal Ukraine’s gold to meet calls on its lacking gold reserves?

And Now the Swiss…

The recent shock announcement that the Swiss are decoupling from the Euro is the latest domino to fall, and could set off the long-feared chain reaction.

Many are asking if it signals the end of the Euro as a currency… and if so, what else after that?

The Swiss had vowed to not allow the franc to rise beyond 1.20 francs per euro. With the removal of that cap, the franc soared as much as 30% against the euro on Thursday, an unheard-of move in the currency markets.

It tells the world loudly that a global currency crisis – albeit unstated – is underway … that Western economies and Western sovereign debt is so out of whack that the only ammo left in the arsenal is currency.

Currencies are now being sacrificed in an effort to save economies. And the only winner in that environment is gold. (source)

If possession is said to be 9/10ths of the law, and he who has the gold makes the rules, what does that tell you about fiat currencies, digital currencies and the balance of global power?

Are you prepared?

Is anyone?

Brace yourself…

Source

 

Obama to Call For New Tax Increases

obamanation

 

Will use State of the Union address to target top earners, investment, inheritance… (Ed: but NOT him exempt Elite…)

Fox News | January 18, 2015

President Obama plans to call for billions in tax increases on top earners – including a hike in investment tax rates — in order to fund new tax credits and other measures the White House claims will help the middle class.

The president’s proposals, which also include eliminating a tax break on inheritances, are likely to be cheered by the Democratic Party’s liberal base when they are announced Tuesday night in his State of the Union address. However, the tax increases are all but certain to be non-starters with the new Republican majority on Capitol Hill.

The president’s address — his first to a Republican-led Congress — will call for $320 billion in tax increases over 10 years. Aside from funding new tax credits including a tax credit for working families and expanding the child care tax credit, the White House says that money would go to funding measures to make college more afforable and accessible, including the president’s recently announced plan to make community college free for many students.

The centerpiece of the president’s tax proposal is an increase in the capital gains and dividends rate on couples making more than $500,000 per year to 28 percent, the same level as under President Ronald Reagan. The top capital gains rate has already been raised from 15 percent to 23.8 percent during Obama’s presidency.

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If the Fed Has Nothing to Hide, It Has Nothing to Fear (Audit the FED….)

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The American people have suffered long enough under a monetary policy controlled by an unaccountable, secretive central bank…

Ron Paul | January 19, 2015

Since the creation of the Federal Reserve in 1913, the dollar has lost over 97 percent of its purchasing power, the US economy has been subjected to a series of painful Federal Reserve-created recessions and depressions, and government has grown to dangerous levels thanks to the Fed’s policy of monetizing the debt. Yet the Federal Reserve still operates under a congressionally-created shroud of secrecy.

No wonder almost 75 percent of the American public supports legislation to audit the Federal Reserve.

The new Senate leadership has pledged to finally hold a vote on the audit bill this year, but, despite overwhelming public support, passage of this legislation is by no means assured.

The reason it may be difficult to pass this bill is that the 25 percent of Americans who oppose it represent some of the most powerful interests in American politics. These interests are working behind the scenes to kill the bill or replace it with a meaningless “compromise.” This “compromise” may provide limited transparency, but it would still keep the American people from learning the full truth about the Fed’s conduct of monetary policy.

Some opponents of the bill say an audit would somehow compromise the Fed’s independence. Those who make this claim cannot point to anything in the text of the bill giving Congress any new authority over the Fed’s conduct of monetary policy. More importantly, the idea that the Federal Reserve is somehow independent of political considerations is laughable. Economists often refer to the political business cycle, where the Fed adjusts its policies to help or hurt incumbent politicians. Former Federal Reserve Chairman Arthur Burns exposed the truth behind the propaganda regarding Federal Reserve independence when he said, if the chairman didn’t do what the president wanted, the Federal Reserve “would lose its independence.”

Perhaps the real reason the Fed opposes an audit can be found by looking at what has been revealed about the Fed’s operations in recent years. In 2010, as part of the Dodd-Frank bill, Congress authorized a one-time audit of the Federal Reserve’s activities during the financial crisis of 2008. The audit revealed that between 2007 and 2008 the Federal Reserve loaned over $16 trillion — more than four times the annual budget of the United States — to foreign central banks and politically-influential private companies.

In 2013 former Federal Reserve official Andrew Huszar publicly apologized to the American people for his role in “the greatest backdoor Wall Street bailout of all time” — the Federal Reserve’s quantitative easing program. Can anyone doubt an audit would further confirm how the Fed acts to benefit economic elites?

Despite the improvements shown in the (government-manipulated) economic statistics, the average American has not benefited from the Fed’s quantitative easing program. The abysmal failure of quantitative easing in the US may be one reason Switzerland stopped pegging the value of the Swiss Franc to the Euro following reports that the European Central Bank is about to launch its own quantitative easing program.

Quantitative easing is just the latest chapter in the Federal Reserve’s hundred-year history of failure. Despite this poor track record, Fed apologists still claim the American people benefit from the Federal Reserve System. But, if that were the case, why wouldn’t they welcome the opportunity to let the American people know more about monetary policy? Why is the Fed acting like it has something to hide if it has nothing to fear from an audit?

The American people have suffered long enough under a monetary policy controlled by an unaccountable, secretive central bank. It is time to finally audit — and then end — the Fed.

This article first appeared at RonPaulInstitute.org.

Richest 1% to Own More Than Rest by 2016…

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Share of global wealth keeps increasing

AFP | January 19, 2015

Wealth accumulated by the richest 1 percent will exceed that of the other 99 percent in 2016, the Oxfam charity said Monday, ahead of the annual meeting of the world’s most powerful at Davos, Switzerland.

“The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast,” Oxfam Executive Director Winnie Byanyima said.

The richest 1 percent’s share of global wealth increased from 44 percent in 2009 to 48 percent in 2014, the British charity said in a report, adding that it will be more that 50 percent in 2016.

Source

There Is No Inflation (Unless You Eat Food, Use Water, Live In A House, Get Sick, Go To School, Or Do Taxes)

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Your government keepers will continue to drown you in propaganda and misinformation

Jim Quinn | Zero Hedge | January 17, 2015

 

Government data reports are so funny. The blaring headlines today tells us that prices dropped in December. We are all saving billions from the drop in oil and gas. Hallelujah!!!

The corporate MSM never digs into the numbers to get the real truth. These reports and their distribution to the sheep are designed to keep you sedated and calm. Facts are not necessary. How this data pertains to your everyday life is not important to the .1% who control the flow of information.

Here is a link to the detailed inflation numbers by category. We already know they massage these numbers to achieve a happy ending, but even the massaged numbers tell an entirely different story than the one peddled to the masses by the government and corporate media.

 

I don’t know about you, but the costs listed above account for a significant amount of my budget. Do those price increases jive with the message being spewed by the government controlled media?

The credibility of their numbers is highly questionable in that they say health insurance accounts for .75% of a person’s annual budget. They actually have the balls to say health insurance fell by 0.5% over the last year. I’d love to hear from anyone out there whose health insurance premiums fell in the last year. Mine went up by 20%.

Your government keepers will continue to drown you in propaganda and misinformation. But the average person should know they are being lied to. They see how much money they have left over at the end of every month. If any.

 

Source

 

 

The second most powerful banker in America

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Stanley Fischer settles in as Janet Yellen’s No. 2 at the Fed

Kate Davidson | Politico | January 2, 2015

Stanley Fischer came to the Federal Reserve in the spring with a higher profile than any vice chairman in the 100-year history of the institution after leading Israel’s central bank and holding top jobs at the International Monetary Fund and World Bank.

Fed Chair Janet Yellen pushed for him to be her No. 2 in a move that was viewed as a show of confidence and strength as she prepares to lead the Fed through one of it most challenging periods, managing the wind down of massive stimulus programs put in place following the financial crisis.

The pairing was dubbed a central banking “dream team” by Fed watchers.

In his first six months on the job, Fischer has rewarded Yellen’s confidence by helping communicate the Fed’s policy moves to nervous financial markets while publicly defending the central bank against a growing chorus of critics. To many on Wall Street he helped alleviate worries about the lack of direct financial market involvement on her résumé.

“Stan Fischer has market experience and goodwill that Chair Yellen doesn’t have,” said Jack Ablin, chief investment officer at BMO Private Bank. “It’s not a slam on the Fed chairman, it’s simply different experience.”

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Michael Lewis Explains How the Stock Market Is Rigged

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April 2, 2014

Dick Durbin said the Banksters own the place…  and they also own Congress.

 

Watch the report filed on YouTube here…

 

The Federal Reserve Has No Integrity

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Paul Craig Roberts and Dave Kranzler

April 1, 2014

As we documented in previous articles, the gold price is driven down in the paper futures market by naked short selling by the Fed’s dependent bullion banks. Some people have a hard time accepting this fact even though it is known that the big banks have manipulated the LIBOR (London Interbank Overnight Rate – London’s equivalent of the Fed Funds rate) interest rate and the twice-daily London gold price fix.

Image: Federal Reserve (Wiki Commons).

Almost every week it is possible to illustrate the appearance of a large number of contracts shorting gold at times of day when trading is thin. The short-selling triggers stop-loss orders and margin calls and hammers down the gold price.

The Fed has resorted to this practice in order to protect the value of the US dollar from Quantitative Easing.

In order for the Fed to effectively support the reserve status of the U.S. dollar by pushing it higher when it starts to drop, the Fed has also to prevent the price of gold from rising. Intervention in the gold market has been occurring for a long time. However, in the last several years the intervention has become blatant and desperate, as rising concerns about the dollar are causing countries such as China and Russia to accumulate fewer dollars and more gold.

During the month of March the Fed and the big banks implemented aggressive intervention against the rising price of gold and the plunging value of the U.S. dollar. Events in Ukraine may have stimulated demand for physical gold and selling of the U.S. dollar, but it was mainly further erosion of the U.S. economy, as reflected in more deterioration of economic data released during March, that pushed gold up and the dollar down.

The dollar index is a “basket” of currencies used to measure the relative value of the U.S. dollar. The largest components of this basket are the euro and the yen (it also includes the British pound, Canadian dollar, Swedish krona and Swiss franc). During February and March, the dollar started to decline in response to increasingly negative U.S. economic reports, continued Fed money printing (QE) and the Ukraine crisis.

On the last day of February, the dollar index dropped below 80. The 80 level is a key technical trading level and if the dollar were to stay below this benchmark for an extended period of time, large holders of dollars would start selling their dollar holdings out of fear that the dollar would be headed even lower. The Fed and the U.S. Treasury needed to do something in order to force the dollar index back over 80.

As part of its intervention in the currency market to get the dollar back over 80, the Fed also needed to stop gold from rising back over $1400, which it was on the verge of doing by the middle of March. Just like 80 is key level, below which technical selling of the dollar kicks in, $1425 is another key level for gold for which large buy and short-covering orders would be triggered. In other words, to support any manipulated move higher in the dollar, the Fed needed to intervene in the gold market to force the price of gold lower. The graphs below illustrate the key points of dollar/gold intervention during March.

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As we reported previously, the Fed, using its agent banks like JP Morgan and Goldman Sachs, intervenes in the gold market by “bombing” the market with a large quantity of Comex gold future contracts. This typically occurs at periods of time when the market is very quiet and trading is at a lull. These engineered market interventions are now commonly referred to as “mini-flash crashes.”

As the dollar was consolidating its trading range below 80 and the price of gold was headed toward $1400, flash crashes started occurring more frequently and with more intensity. During the first week of March, gold was getting ready to shoot through the $1350 level and the Fed used two distinct flash crashes to contain gold below $1350 (first two red circles on the graph).

During the week of March 10th, the price of gold started moving quickly higher toward the $1400 level, as the Ukraine crisis was front and center in the news and investors moved money into the safe-haven of gold. The Fed used several mini-flash crashes in an attempt to contain the move. The red circles on the gold graph show the points in time in which the Comex gold futures market was “bombed” with contracts in order to slow down the upward momentum that the price of gold was gaining in the first half of March.

Then early in the morning on March 17th, with the tension subsiding somewhat between the U.S. and Russia after Crimea voted to join Russia and war didn’t break out, the Fed and its agent banks went to work on manipulating the price of gold lower and forcing the U.S. dollar higher . The red arrows on the gold graph show where the Fed dropped gold future “bombs” on the gold market in order to force the price of gold lower. The huge bursts of sell-volume almost always occurred during periods of low trading activity.

On March 18th, the Federal Reserve Open Market Committee (FOMC) convened for a two-day meeting, with its policy statement to be released March 19th at 2 p.m. EST. A study of how gold performs during the week in which there is an FOMC meeting showed that, on average, gold drops $37 for that week. This compares to almost no change during the same week during months in which no meeting is held. As you can see, the mini-flash crashes were used to force the price of gold down $72 from top to bottom during the March FOMC meeting week. The dollar graph shows the big spike in the dollar, which took the dollar back over the 80 level right after the FOMC meeting was concluded.

The Fed’s aggressive engineering of the mini-flash crashes continued during the last week of March. The group of red arrows on the right side of the gold graph show points in time Monday (March 24) – Friday (March 28) when there were sudden bursts of high volume selling in the April gold contract. Monday’s flash crash to start the week involved 6,437 contracts dumped onto the Comex right as the Comex gold trading floor opened at 8:20 a.m. For comparison purposes, 855 contracts had traded the minute before the Comex opened. Recall from one of our previous articles that gold gets hit right at the open of the Comex flooor trading session at least 85% of the time. This serves to set a downward momentum for the day’s trading.

Remember, the purpose of Quantitative Easing is to support the balance sheets of a few over-sized banks and to finance the federal budget deficit at an artificially low rate of interest. In other words, QE supports failed banks and federal fiscal irresponsibility. In order to successfully carry off this blatant misuse of public policy, the price of gold, a measure of the dollar’s value, must be suppressed. The Federal Reserve’s lack of integrity speaks volumes about the corruption of the US government.

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.

 

Related Articles

Bailouts: A Slap in the Face to the Honest and Productive

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Mark Crovelli
lewrockwell.com

March 31, 2014

As the owner of a construction company, I am all too familiar with the concept of insolvency.  Any company that assumes irresponsible risks, makes poor judgments, or that mismanages its cash flow, (in the sense that its current liabilities exceed available cash), is or will shortly be bankrupt.  I’ve seen it all too many times, and I am all too familiar with the negative ramifications of such an event for every other entity doing business with such a company.  I’ve personally been stiffed by insolvent companies more frequently than I care to remember or admit.

While I am familiar with bankruptcy, insolvency and corporate overreach, I am completely unfamiliar with the concept of a “bailout.”  In the real world, where cash flow and debt are irrevocable entries in an accounting ledger, there is no miracle “bailout” waiting in the wings, and there are no angelic figures or agencies waiting to step in to help out the incompetents.  In the world in which I live and work, people who make forecasting or accounting errors are ruthlessly punished by the market.  Those of us who can forecast accurately, satisfy customers, and manage cash flows survive and possibly even prosper, if we work hard enough.  Those who cannot are relegated to bankruptcy or some non-ownership position in a company that shields them from risk and responsibility.  There is no third alternative.

I am thus seriously perplexed and enraged to read about government “bailouts” occurring on a regular basis all over the modern world.  The Ukrainian junta is apparently going to be “bailed out” with money stolen from men like me, because the previous Ukrainian government racked up enough debts to render the entire society insolvent.  Goldman Sachs, GM, and AIG were all effectively “bailed out” because their previous executives were so outstandingly incompetent and corrupt that they rendered their institutions insolvent by orders of magnitude.  The morons at the U.S. Postal Service were once again “bailed out” by the federal government because they are so completely clueless and worthless that they cannot profitably move folded pieces of paper around.   The same holds true for Social Security and Medicare, which are both being rewarded for their insolvency by being “bailed out” with tax money from the U.S. government’s general fund.  The list is almost endless: Citi, Chrysler, Long Term Capital Management, Mexico, Fannie and Freddie, the ECB, Greece, Spain, China’s shadow banks…

What the hell is a “bailout,” other than a reward for incompetence or criminality and a slap in the face (and the wallet!) to honest and responsible people all over the world?  I literally cannot fathom what would occur to my industry if every moron, crook and gambler was gifted underserved money or credit as a reward for his disservice to the global market, yet this is national and even global policy at the moment.  The more criminal or incompetent you are, to more “bailout” money you should expect.

The hideous immorality of government “bailouts” has been obscured by the professional apologists of the state: the academics and the policy wonks.   To a professor of political science or economics, stealing money from honest, hard-working men in order to rewarding crooks and morons is labeled “moral hazard.”  This lofty-sounding word is used as a cover for a massive crime, in the same way that academics use the innocuous sounding term “rent-seeking” to refer to voracious robbery by the political classes.

“Moral hazard” in common English means that it will cause massive problems down the road to reward idiots and criminals for being idiots and criminals.  Duh.  Concealing this obvious truism with the ambiguous term “moral hazard” allows the academic and journalistic classes to endlessly debate whether or not the so-called costs outweigh the so-called benefits, freeing up room for politicians and their cunning advisors to dabble in the practice whenever profitable or convenient.

Meanwhile on Mainstreet, owners of construction companies and landscaping companies warily eye their cash flows in the hope of avoiding insolvency.  Owners of restaurants and bars battle every day to retain and serve their customers and keep their doors open, because they know they lack the political clout to get a “bailout” from the state legislature, the U.S. congress, or the Fed.  And owners of every other imaginable type of company across the country struggle every day to keep afloat in the beautiful and honest part of the economy that is still relatively free.

Their reward for their hard work, thrift and sound business acumen will be to fork over a part of their earning to “bail out” the Ukrainian junta, of all people.  If that doesn’t demonstrate for once and for all that taxation is theft, and that government is nothing but a marauding gang of thieves, then nothing will.  If that doesn’t demonstrate to the American Working Man that he is nothing more than a draft horse for the parasitical political classes, then nothing will.

Think about that tomorrow morning when you get saddled up to earn money, not for yourself or your family, but for the Ukrainian junta and the U.S. Postal Service.