Classic FX

Have entered the following positions and orders.

Long Slv /silver and Gld /gold.
edit, weekend close $19.84 and $1246.82 (spot)
:)
Prices are moving in the direction of our bias. Current prices,
$19.99 and $1259.20
:)


Reality Economics
by Llewellyn H. Rockwell, Jr.

As a culture, we like our reality on television, but seem to oppose it in economics.

For more than two years now, and even longer depending on your dating scheme, the federal government has waged war on the reality of the incredible Fed-fueled bubble that developed in housing with spillover effects on the rest of economic life.

That bubble had to explode to restore some sanity to the economic environment. There is no getting around that. The policies were all about trying to paper over what we did not want to deal with as facts. But the facts won't go away.

Do we have to make a television show to get Washington to see it?

The FDIC has admitted that some 829 banks remain at risk of failure. That's one in ten. Only 118 have failed this year but many more should have and would have absent Fed intervention. Meanwhile, there are no new banks started in the U.S. in the last quarter – the first time in 38 years that this has been true. As for the actual soundness of the banks, it's anyone's guess. How much bad debt they are carrying, with both lenders and borrowers agreeing to look the other way, is something that no one wants to know.

Then there is the other topic that no one wants to talk about: house prices. They need to fall more. Washington has attempted to prop them up with some 18 different programs from mortgage buyouts to tax schemes. It delayed the fall of prices for a time. But they have begun to fall again, exactly to the point where nature wants to take them.

The problem is that you can't artificially boost both supply and demand at the same time. If you subsidize housing construction and that results in more houses being built, you apply downward pressure on the prices of houses that are currently on the market. If you subsidize house buying, you also promote house selling, allowing the reality of the real estate glut to express itself in home prices.

There is no way that the central planners can get around this problem unless they both build and buy houses themselves and leave the rest of us out of it. That might help prettify the housing data but it does nothing to change market realities. Merrill Lynch, in fact, has published a report that suggests that the housing glut will not normalize for another five years and that assumes some reasonable slowdown in the pace of building.

Already the government has done everything in its power to override market signals, at the same time it is attempting to make market signals operate in a way that conforms to political priorities. The problem is that you can't do both. You have to either defer to the market or abolish it.

The same is true with unemployment rates, which are stubbornly high. Now, what does it tell you when there is a surplus of workers relative to the number of job opportunities? It means that in some sectors, jobs are selling at too high a price. There are fixes for this. You can lower the minimum wage, reducing the cost of hiring, or workers can lower their reservation wage.

As it stands, Washington is doing nothing to encourage any of these fixes, so of course unemployment remains very high. Many young people have actually removed themselves from the market by going back to school to avoid paying their student loans. The state universities are glad to take their money.

A good indicator of future business conditions is commercial and industrial loans. They continue to fall as if off a cliff. How does the Fed deal with this? By keeping rates as low as possible on the short end, so that way banks have nothing to gain by lending and consumers have nothing to gain by saving. Not smart.

Meanwhile long-term rates are being held down by the existence of a too-big-to-fail doctrine for mortgage-holding companies like the nationalized Freddie Mac and Fannie Mae. In a real market, there is no telling where rates would be, but they would be high enough to compensate for risk. When there is no risk, or that risk is socialized, you see the absurd scenario of falling rates during the largest mortgage crisis in American history.

A major difference between now and the 1930s relates to the standard of living of consumers themselves. Everyone is still shopping, still living high on the hog, still going out to eat, still spending lavishly. But how and why? The answer is consumer credit, which is down but not nearly in proportion to the fall in economic prospects.

Such opportunities didn't exist in the 1930s. People had to live within their means. Today we can all just go on fooling ourselves for as long as possible.

Do we even want to raise the ghastly subject of government finance? Let's not go there.

Suffice it to say that the entire system today is shot through with artifice that just can't last. What are we to do about it? The present course is going to drive us further and further into disaster. The only real answer was stated by Ludwig von Mises in 1931, in an essay in the book The Causes of the Economic Crisis.

Mises wrote in 1931 as follows, and there is really nothing to add to his analysis:

"The severe convulsions of the economy are the inevitable result of policies which hamper market activity, the regulator of capitalistic production. If everything possible is done to prevent the market from fulfilling its function of bringing supply and demand into balance, it should come as no surprise that a serious disproportionality between supply and demand persists, that commodities remain unsold, factories stand idle, many millions are unemployed, destitution and misery are growing and that finally, in the wake of all these, destructive radicalism is rampant in politics.

"The periodically returning crises of cyclical changes in business conditions are the effect of attempts, undertaken repeatedly, to underbid the interest rates which develop on the unhampered market. These attempts to underbid unhampered market interest rates are made through the intervention of banking policy – by credit expansion through the additional creation of uncovered notes and checking deposits – in order to bring about a boom.

"The crisis under which we are now suffering is of this type, too. However, it goes beyond the typical business cycle depression, not only in scale but also in character – because the interventions with market processes which evoked the crisis were not limited only to influencing the rate of interest. The interventions have directly affected wage rates and commodity prices, too....

"All attempts to emerge from the crisis by new interventionist measures are completely misguided. There is only one way out of the crisis: Forgo every attempt to prevent the impact of market prices on production. Give up the pursuit of policies which seek to establish interest rates, wage rates and commodity prices different from those the market indicates. This may contradict the prevailing view. It certainly is not popular. Today all governments and political parties have full confidence in interventionism and it is not likely that they will abandon their program. However, it is perhaps not too optimistic to assume that those governments and parties whose policies have led to this crisis will some day disappear from the stage and make way for men whose economic program leads, not to destruction and chaos, but to economic development and progress."

September 4, 2010by Llewellyn H. Rockwell, Jr.
 
Have entered the following positions and orders.

Long Slv /silver and Gld /gold.
:)
Still holding spot Silver and Gold from;
$19.84 & 1246.82

Current prices are;
$20.12
+1.41%

$1244.95
-0.15%
:)



FDIC's Bair Warns of Government "Exposure" in Mortgages

September 8, 2010
http://abcnews.go.com/Business/wireStory?id=11589815

WASHINGTON (Reuters) - A key U.S. banking regulator raised concern on Wednesday about the risk of "exposure" the government is taking on in the mortgage market and urged more stringent standards for underwriting mortgages.

"We should all be concerned about the type of exposure that the government is taking on through guaranteeing so many mortgages right now and make sure that we do have some prudent underwriting standards," Federal Deposit Insurance Corp Chairman Sheila Bair suggested in an interview on CNBC.

"The government is taking on a lot of exposure and guaranteeing most mortgages that are being originated these days," she said. "And I think the policymakers here are trying to balance the need for prudent underwriting with a need to support... what is still a very distressed housing market."

Mortgage finance giants Fannie Mae and Freddie Mac, under government control since September 2008, and the Federal Housing Administration, currently back some 90 percent of new U.S. mortgages.

Treasury Secretary Timothy Geithner said last month the U.S. government's role in housing finance should undergo "fundamental change," but that it should still provide some guarantees in the $10.7 trillion mortgage market.

In the interview, Bair said the Federal Reserve's rules were more focused on higher-cost loans and that the sweeping regulatory reforms President Barack Obama signed into law incorporated some good standards.

"But I think we can do a better job of having consistent, strong lending standards across the board for both bank and nonbank mortgage originators," Bair said.

She suggested tighter standards should include "very robust" income documentation, ability to repay standard loans and a significant down payment.

"Clearly there is a strong correlation between the amount of skin in the game a borrower puts in up front and how that loan performs," Bair said. "Do you put 20 percent down? You're committed to that house. You walk away from that house, you're going to lose a lot of the money that you put in up front."

(Writing by Joanne Allen; Editing by Kim Coghill)

Copyright 2010 Reuters News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
 
Have entered the following positions and orders.

Long Slv /silver and Gld /gold.
:)
Still long silver and gold from
silver from: $19.84
+3.07%
current $20.45

gold from: $1246.82
+1.78%
current $1268.98
:)


How Hyperinflation Will Happen In America

Gonzalo Lira | Sep. 13, 2010, 10:52 AM

Right now, we are in the middle of deflation. The Global Depression we are experiencing has squeezed both aggregate demand levels and aggregate asset prices as never before. Since the credit crunch of September 2008, the U.S. and world economies have been slowly circling the deflationary drain.

To counter this, the U.S. government has been running massive deficits, as it seeks to prop up aggregate demand levels by way of fiscal “stimulus” spending—the classic Keynesian move, the same old prescription since donkey’s ears.

But the stimulus, apart from being slow and inefficient, has simply not been enough to offset the fall in consumer spending.
Click here to see how it will happen >

For its part, the Federal Reserve has been busy propping up all assets—including Treasuries—by way of “quantitative easing”.

The Fed is terrified of the U.S. economy falling into a deflationary death-spiral: Lack of liquidity, leading to lower prices, leading to unemployment, leading to lower consumption, leading to still lower prices, the entire economy grinding down to a halt. So the Fed has bought up assets of all kinds, in order to inject liquidity into the system, and buoy asset price levels so as to prevent this deflationary deep-freeze—and will continue to do so. After all, when your only tool is a hammer, every problem looks like a nail.

But this Fed policy—call it “money-printing”, call it “liquidity injections”, call it “asset price stabilization”—has been overwhelmed by the credit contraction. Just as the Federal government has been unable to fill in the fall in aggregate demand by way of stimulus, the Fed has expanded its balance sheet from some $900 billion in the Fall of ’08, to about $2.3 trillion today—but that additional $1.4 trillion has been no match for the loss of credit. At best, the Fed has been able to alleviate the worst effects of the deflation—it certainly has not turned the deflationary environment into anything resembling inflation.

Yields are low, unemployment up, CPI numbers are down (and under some metrics, negative)—in short, everything screams “deflation”.

Therefore, the notion of talking about hyperinflation now, in this current macro-economic environment, would seem . . . well . . . crazy. Right?

Wrong: I would argue that the next step down in this world-historical Global Depression which we are experiencing will be hyperinflation.

Most people dismiss the very notion of hyperinflation occurring in the United States as something only tin-foil hatters, gold-bugs, and Right-wing survivalists drool about. In fact, most sensible people don’t even bother arguing the issue at all—everyone knows that only fools bother arguing with a bigger fool.

A minority, though—and God bless ’em—actually do go ahead and go through the motions of talking to the crazies ranting about hyperinflation. These amiable souls diligently point out that in a deflationary environment—where commodity prices are more or less stable, there are downward pressures on wages, asset prices are falling, and credit markets are shrinking—inflation is impossible. Therefore, hyperinflation is even more impossible.

This outlook seems sensible—if we fall for the trap of thinking that hyperinflation is an extension of inflation. If we think that hyperinflation is simply inflation on steroids—inflation-plus—inflation with balls—then it would seem to be the case that, in our current deflationary economic environment, hyperinflation is not simply a long way off, but flat-out ridiculous.

But hyperinflation is not an extension or amplification of inflation. Inflation and hyperinflation are two very distinct animals. They look the same—because in both cases, the currency loses its purchasing power—but they are not the same.

Inflation is when the economy overheats: It’s when an economy’s consumables (labor and commodities) are so in-demand because of economic growth, coupled with an expansionist credit environment, that the consumables rise in price. This forces all goods and services to rise in price as well, so that producers can keep up with costs. It is essentially a demand-driven phenomena.

Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency.

Right now, the U.S. government is indebted to about 100% of GDP, with a yearly fiscal deficit of about 10% of GDP, and no end in sight. For its part, the Federal Reserve is purchasing Treasuries, in order to finance the fiscal shortfall, both directly (the recently unveiled QE-lite) and indirectly (through the Too Big To Fail banks). The Fed is satisfying two objectives: One, supporting the government in its efforts to maintain aggregate demand levels, and two, supporting asset prices, and thereby prevent further deflationary erosion. The Fed is calculating that either path—increase in aggregate demand levels or increase in aggregate asset values—leads to the same thing: A recovery in the economy.

This recovery is not going to happen—that’s the news we’ve been getting as of late. Amid all this hopeful talk about “avoiding a double-dip”, it turns out that we didn’t avoid a double-dip—we never really managed to claw our way out of the first dip. No matter all the stimulus, no matter all the alphabet-soup liquidity windows over the past 2 years, the inescapable fact is that the economy has been—and is headed—down.

But both the Federal government and the Federal Reserve are hell-bent on using the same old tired tools to “fix the economy”—stimulus on the one hand, liquidity injections on the other. (See my discussion of The Deficit here.)

It’s those very fixes that are pulling us closer to the edge. Why? Because the economy is in no better shape than it was in September 2008—and both the Federal Reserve and the Federal government have shot their wad. They got nothin’ left, after trillions in stimulus and trillions more in balance sheet expansion—

—but they have accomplished one thing: They have undermined Treasuries. These policies have turned Treasuries into the spit-and-baling wire of the U.S. financial system—they are literally the only things holding the whole economy together.

In other words, Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.


Read more: http://www.businessinsider.com/how-hyperinflation-will-happen-in-america-2010-9#ixzz0zZU1ENl1
 
Have entered the following positions and orders.

Long Slv /silver and Gld /gold.
:)
Still holding Xag(silver) and Xau (gold) positions.

Current prices are:

Xag $20.76
+4.64%

Xau $1274.21
+2.20%
:)


The Trillion-Dollar Conspiracy
September 15, 2010
http://jasonkelly.com/2010/09/trillion-dollar-conspiracy/

America is not well. What’s worse, the problems facing the nation appear to come more from within than without, and the minority of citizens paying attention find it frustrating that the political system appears incapable of change.

I recently read The Trillion-Dollar Conspiracy by Jim Marrs, and found it in agreement with many of the articles I’ve written diagnosing America’s troubles. In this extended review, I’ll explore the book’s main points along with supporting material from my own work and other sources.

Before I begin, you should know that I don’t generally read conspiracy material. I find in mainstream publications plenty of reasons to doubt the intention of our nation’s leadership. I spend most of my time reading analyst reports and think tank white papers. I don’t need darker sources for the generation of dark conclusions. What I find remarkable in The Trillion-Dollar Conspiracy, however, is that many of the points made by its author are also made by more mainstream researchers. When people approaching their research from very different angles reach similar conclusions, it’s worth sitting up and taking notice. To that end, let’s explore the state of affairs as seen through the eyes of a conspiracy researcher, a type of journalist not often encountered on this site.

Marrs claims that the United States has become a nation of zombies, “dumbed down by controversial education programs, drugged out by an ever-growing pharmaceutical industry, and frightened into submission by constant threats of terrorism and economic collapse.”

He asks if a previously robust republic can transform into a zombie nation through a natural course of events, or if it needs a conspiracy. He thinks the latter. He sees the conspiracy coming from a new world order of elite globalists who are the “real rulers of America.” Until they’re “identified and confronted, no amount of hand-wringing, letter writing, or demonstrating can have any meaningful effect.”

Economically, the globalists want to rule the planet without regard to national borders. Hence the rise of multi-national corporations with fingers in every government pot. That requires socialism, which has taken root in almost every country except the United States. It needs to overtake America as well, which is why “a plan is in play to debase the US economy and impose a socialist system — whether Obama’s Marxist Socialism or Bush’s National Socialism apparently makes no difference to those wealthy or powerful enough to control the central bureaucracy of the state.”

The goal is to “turn the once-free and prosperous Republic of the United States into a socialist state populated by dumbed-down and destitute zombies by draining dry the nation’s money supply.”

He finds it fishy that the American economy is in danger of going through another Great Depression, but that “unlike the individuals of the 1930s — many of whom had come from an agricultural background and knew how to fend for themselves — the people in modern America can only look to government for their basic necessities.” He wonders if creating such dependence among the masses is the “real agenda behind the contrived financial meltdown” of the past few years.

He points out that both Democrats and Republicans chipped away at the economic foundations of the nation, a concept more fully explored in my book, Financially Stupid People Are Everywhere: Don’t Be One of Them. Marrs thinks the well documented fact that both major parties work to dismantle the US economy “adds considerable weight to the argument” that both “are controlled by the same globalists seeking to install a worldwide socialist system.”

He runs through a number of examples of wealthy globalists buying favor with government, including a disturbing suggestion that Freddie Mac’s former acting chief financial officer David Kellerman was murdered to prevent him from revealing to shareholders how much the Obama administration’s “housing recovery plan” was going to cost the firm. Regulators didn’t want that getting out, smacking as it did of somebody at the top wanting a catastrophic collapse. When Kellerman was found dead in his apartment, one police spokesperson said he had died of a gunshot wound before getting word that the official cause of death was to be that he’d hanged himself.

About Kellerman’s death, Marrs wrote, “More than one conspiracy-minded researcher believed that something more than suicide was at work” and that “there may have been other deaths connected to an effort to silence insiders who might have knowledge of the situation that someone does not want made public.”

Marrs quotes Lyndon LaRouche as saying, “There is no evident motive for suicide in this case, but there is a motive for suppressing making Kellerman’s views known. . . . The question is what else did David Kellerman know which influential circles did not want him to reveal?” Separately, LaRouche wrote an interesting article two weeks ago claiming that the emergency measures implemented by President Roosevelt in 1933-34 are needed to rescue America from the “disaster which the combination of the George W. Bush, Jr. and Barack Obama administrations have done to destroy this nation’s economy.”

Marrs sees all around us evidence that power from wealth “comes with the ability to donate to political parties, engage lobbyists, and provide grants to experts to think up new policies beneficial to the wealthy.”

By now, long time readers of this site and any other that explores the consequences of entrusting our money supply to private bankers at the Federal Reserve know that currency issued as debt is fraudulent. Marrs touches on this, quoting Darryl Robert Schoon, author of How to Survive the Crisis and Prosper in the Process: “In economies based on the fraudulent issuance of money as debt, there are only predators and victims. Bankers are the predators, society is the victim (businessmen are victims who often believe they’re predators) and governments are the well-paid-off referees in the rigged game being played out in today’s capital markets.”

Marrs finds it noteworthy that both Abraham Lincoln and John F. Kennedy were assassinated while attempting to get around the international bankers, “Lincoln by issuing his own money, greenbacks, and Kennedy in bypassing the Fed with US notes in 1963.”

He touched on why third parties in US politics are useful only to whichever of the two major parties don’t share the vote with them. Third parties never win, they just assure that whichever major candidate is closest to them in ideology will lose when they split the vote and leave the other candidate with the most votes of any of the three candidates — though not necessarily a majority.

In 1992, voters saw this happen with Ross Perot causing the first George Bush to lose, thereby enabling Bill Clinton to become president with less than a majority of votes cast. However, that same trick has happened many times in US history: Teddy Roosevelt’s Progressive Party in 1912 comes to mind.

My August 25 article, Both Democrats and Republicans Are Bad For America’s Finances, explored the uselessness of third parties as well. If you visit the article, be sure to read the excellent reader discussion at the bottom. I concluded that without campaign finance reform and instant runoff voting put in place, third parties will never serve as anything more than foils to one of the major candidates on the ballot. Thus, we’re stuck with choosing between kettles and pots in every election, and the kettles and pots are forged in the same fires of special interest funding.

Marrs commented on this subject in the Veritas interview attached at the bottom of this review. He discusses how politicians need television advertising, which is outrageously expensive and must be paid in cash, so they end up accepting money from the usual special interest groups. From 4:20 to 4:50 in the attached segment, Marrs says that once they’ve done that, “now they’re on the payroll; they’re bought and paid-for. And that’s a good majority of them. But if that doesn’t work, then they set you up with a woman or a young boy or something, and they get the goods on you, or they take you out to a party and say, ‘here, you know, try some of this,’ give you some crack cocaine then take pictures of you, and then they got the rest of them blackmailed. And then, for the handful that refuse to be blackmailed or bought, well their plane crashes, and they just kill you.”

Taking over a nation’s finances à la the Federal Reserve was a coup for private bankers. The only one better would be taking over global finances, and that’s what Marrs and others think is going on right now. He writes that many “believe the goal of the current financial crisis is to destroy the US dollar as the currency of world finance and, in the resulting chaos, put in its place a globalist-run monetary authority that pledges such a crisis shall not happen again.” If so, it would not be the first time that panic and emergency measures were used to implement long-term goals that would be impossible in normal times when clearer heads dominate.

Marrs discusses the Financial Stability Board (FSB) created in April 2009 during the G-20 London Summit. The FSB has its roots in the Financial Stability Forum (FSF) created in 1999 within the Bank for International Settlements. The new FSB “can set standards, policies, and regulations and then pass them on to the respective nations.” The chair of the FSB is Italy’s central bank head, Mario Draghi, a former Goldman Sachs executive and World Bank director. And you thought Goldman owned only America’s financial system! President Obama committed the US to follow the directives of the FSB when he signed the G-20 communiqué in London on April 2, 2009. With that, America’s Securities and Exchange Commission (SEC) and other financial regulatory bodies became subordinate to central bankers of other nations and the European Union.

Bruce Wiseman, president of the Citizens Commission on Human Rights and former chairman of the history department at John F. Kennedy University, told Marrs that Obama had “essentially turn[ed] over financial control of the country, and the planet, to a handful of central bankers, who, besides dictating policy covering everything from your retirement income to shareholder rights, will additionally have access to your health and education records.”

That “handful of central bankers” met just last Sunday for the Basel III negotiations and came up with a proposed set of new international banking rules, to be ratified by the Group of 20 leading industrial and developing nations in November.

Meanwhile, the pillaging of America’s finances continues expeditiously in the offices of the Federal Reserve. Its inspector general, Elizabeth A. Coleman “stunned a congressional panel” in May 2009 by “verifying that her office could not account for $9 trillion worth of off-balance sheet transactions made by the Fed between September 2008 and May 2009.” That’s quite a collection of misplaced receipts.

Beyond finance, Marrs examined the way large multinational food companies have taken control of government regulatory bodies to pave the way for mass-produced, unhealthy products that are more profitable than their natural alternatives. He looked at how Monsanto, specifically, patents seeds and takes over entire agricultural systems by legally binding farmers to use its seeds. He quotes Brian Thomas Fitzgerald of Greenpeace as saying, “By claiming global monopoly patent rights throughout the entire food chain, Monsanto seeks to make farmers and food producers, and ultimately consumers, entirely dependent and reliant on one single corporate entity for a basic human need.”

The entire food industry is locked up by a few giants that run such scams as the Smart Choices Program, supposedly intended to provide consumers with a quick guide to what’s good for them based on dietary guidelines. Marrs quotes its website as saying that the program “covers food and beverages in 19 distinct product categories, including cereals, meats, fruits, vegetables, dairy, and snacks, allowing shoppers to compare similar products.” In reality, it’s “nothing less than an industry scam, created and paid for by such outfits as Coca-Cola, ConAgra, General Mills, Kellogg’s, Kraft, and PepsiCo.”

The program’s approved products receive a bold, green checkmark printed on the fronts of their packages beside the reassuring phrase, “Smart Choices,” hinting to consumers that they don’t need to pore over the tedious list of ingredients and chemicals to guarantee their families nutritionally good taste. The items receiving the mark, however, are questionable. The list of approved brands includes such mainstays of nourishment as Froot Loops and Fudgesicle bars.

Marrs quotes former Texas agricultural commissioner and syndicated columnist Jim Hightower as saying, “But even by industry standards, this is goofy. I mean — come on, Froot Loops? A serving of this stuff is 41% sugar. That’s a heavier dose than if you fed cookies to your kids for breakfast. Wow, talk about setting a low bar for nutritional quality! Indeed, food manufacturers can slap a Smart Choice label on a product just by adding some vitamin C to it, even if the product also contains caffeine, saccharine, and chemical additives known to cause cancer and other diseases. That’s not smart, it’s stupid — and deceptive.”

It’s also a great way to get chemicals into people that make them more controllable, which is what Marrs thinks is actually going on. This began at roughly the same time the Federal Reserve came onto the scene, about 100 years ago. The Pure Food and Drug Act was passed in 1906 to supposedly protect the public from harmful chemicals found in many food preservatives that had begun showing up at about that time. In 1933, however, Arthur Kallet and F. J. Schlink published 100,000,000 Guinea Pigs: Dangers in Everyday Foods, Drugs and Cosmetics. The authors said that they wrote the book “in the interest of the consumer, who does not yet realize that he is being used as a guinea pig.”

Marrs quotes Kallet and Schlink: “If the poison is such that it acts slowly and insidiously, perhaps over a long period of years . . . then we poor consumers must be test animals all our lives; and when, in the end, the experiment kills us a year or ten years sooner than otherwise we would have died, no conclusions can be drawn and a hundred million others are available for further tests.”

With lifespans growing longer each decade, it’s hard to make the case that life has become less healthy under the influence of corporations. However, could it be possible that the food-borne “poisons” are not intended to kill people, but rather to control them? Marrs thinks so.

Another group with strong governmental ties is the pharmaceutical industry, and it, too, seems to be filling humans with chemicals that make them more docile and malleable to the desires of globalists. Big pharma has been phasing out natural remedies and leaving only expensive prescriptions on the market as healing agents. Marrs traces the origins of many of today’s largest big pharma outfits to the Nazi IG Farben complex, famous for its chemical research by luminaries like Otto Bayer, but infamous for working to help the Nazi government achieve its goals and for exploiting slave laborers at places such as Auschwitz concentration camp. In June 1943, US Senator Homer T. Bone told the Senate Committee on Military Affairs, “Farben was Hitler and Hitler was Farben.” After the war, 13 of the company’s directors were sentenced at the Nuremberg Trials.

What became of the patents and methodologies of IG Farben? They were claimed by the United States. West Germany’s first chancellor, Konrad Adenauer, said, “According to a statement made by an American expert, the patents formerly belonging to IG Farben have given the American chemical industry a lead of at least 10 years.”

Among the Nazi methods of controlling people that are now accepted as normal in America, Marrs examined sodium fluoridation. Is fluoride in toothpaste and municipal water systems really intended to keep your teeth white and healthy, or to make you more psychologically controllable?

Marrs quotes Charles Eliot Perkins, a US industrial chemist who was sent by the US government to help rebuild the IG Farben chemical plants in Germany at the end of World War II. In 1954, Perkins wrote a letter to the Lee Foundation for Nutritional Research, announcing that he’d learned the Nazi regime had used sodium fluoride as a method of “mass control.” The following is an excerpt from Perkins’s letter that Marrs provides:

I want to make this very definite and very positive. The real reason behind water fluoridation is not to benefit children’s teeth. . . . The real purpose behind water fluoridation is to reduce the resistance of the masses to domination and control and loss of liberty. Repeated doses of infinitesimal amounts of fluorine will in time gradually reduce the individual’s power to resist domination by slowly poisoning and narcotizing this area of brain tissue, and make him submissive to the will of those who wish to govern him. . . . I say this with the earnestness and sincerity of a scientist who has spent nearly 20 years’ research into the chemistry, biochemistry, physiology and pathology of “fluorine”. . . . Any person who drinks artificially fluoridated water for a period of one year or more will never again be the same person, mentally or physically.

I’m glad I grew up drinking from a private well in the Rocky Mountains!

Even that might not keep a person safe, though, as Marrs makes clear. Fluoride is a key ingredient in Prozac and many other psychotropic drugs. The scientific name for Prozac is even fluoxetine, which is 94% fluoride.

CORRECTION: I wrote the above paragraph in the original review after reading the following in Marrs’s book: “Most people do not realize that fluoride is a key ingredient in Prozac and many other psychotropic drugs. Prozac, whose scientific name is fluoxetine, is 94% fluoride.” Reader and medical doctor Don Frommer corrected that by emailing me the following: “The formula for [Prozac] is C17H18F3NO and its molecular weight is 309.3. This means that fluorine is only 3 out of the 40 atoms constituting it and 18% of it by weight.” I checked two other sources, and they confirmed what Dr. Frommer wrote. Thus, Marrs is wrong on this point. That makes Dr. Strangelove, referenced in the following paragraph, all the more amusing. I would like to thank Dr. Frommer for his help, and apologize to all of my readers for not catching this error prior to publishing my initial review.

To be fair, the claim that fluoride is being used to control the masses has been widely dismissed over past decades as excessive paranoia. It was part of the “Red Scare” of the 1940s and 1950s, and was even lampooned in Stanley Kubrick’s 1964 film Dr. Strangelove, in which the character General Jack D. Ripper kicks off a nuclear war to head off what he sees as a communist plot to “sap and impurify” the “precious bodily fluids” of the American people with fluoridated water.

Still, what if making fun of fluoridation is exactly what the globalists want? Marrs claims that studies show that the benefits of fluoride are greatly outweighed by its detriments but, “Given the massive amounts of money being paid by the pharmaceutical corporations to the corporate mass media, it is highly doubtful that many Americans will learn of the results of these studies any time soon. The entire history of fluoride in America is one of deceit and conspiracy.”

Beyond fluoride, Marrs examines the way the medical industry has morphed over time to reward doctors for prescribing drugs and to use experimental drugs on soldiers. With those twin platforms in place, government-connected pharmaceuticals that trace their roots back to the days of Nazi Germany have a drug pipeline into the veins of almost every American.

What’s the plan? Marrs writes that being able to put toxins into the masses fits “the agenda of the wealthy elite who have long supported eugenics and have been looking for ways to cull the human herd of ‘useless eaters.’” He refers to a 1974 report from the US National Security Council under Henry Kissinger stating that population growth in the so-called lesser-developed countries represented a serious threat to US national security. It’s not just the US population that globalists want under their thumbs, it’s the world population.

Marrs quotes Maxwell Taylor, former ambassador to South Vietnam and Chairman of the Joint Chiefs of Staff, and England’s Prince Philip as saying that the world population is out of control and should be brought back into control. Taylor suggested limited wars, disease, and starvation and said, “I have already written off more than a billion people.” Philip said, “The more people there are, the more resources they’ll consume, the more pollution they’ll create, the more fighting they will do. We have no option. If it isn’t controlled voluntarily, it will be controlled involuntarily by an increase in disease, starvation and war.”

While callous, the statements are factual. I’ve examined at length how all of the world’s major challenges share a root cause of overpopulation. I’ve also given up hope that the population will rein itself in voluntarily. The parts of the world growing quickly aren’t even aware of most of the planet’s challenges, much less the desirability of not breeding beyond replacement level. Still, if Marrs is correct that many of the government manipulations by industry are part of a global elitist plan to “cull the herd,” it’s a tad disturbing.

President Obama’s “science czar” is a man named John Holdren. His job is to counsel the president on the role of science in public policy. Back in the 1970s, Holdren wrote, “If some individuals contribute to general social deterioration by overproducing children, and if the need is compelling, they [could] be required by law to exercise reproductive responsibility. . .” Among the methods of enforcing population limits, Holdren researched involuntary sterilization, abortion, and mass sterilization through the infiltration of sterilizing agents into the public water supplies. Aha! A pattern emerges. Given Holdren’s background, it was hard to not think twice about his endorsement of mass vaccination against the swine flu.

Speaking of which, did you ever wonder what happened to that scare? I wrote a short piece called “Swine Flu’s Pandemic of Fear” in the May 2009 issue of The Kelly Letter, here in its entirety:

Swine flu. What a joke. Every year, the media get more desperate for ways to rile up the masses as the masses are ever more zoned out in front of game consoles and whatever else they waste time on.

It seems the word “pandemic” still packs firepower, now that Hollywood has made it the focus of a few blockbusters. The phrase “swine flu” combined with “pandemic” was too good to pass up, so it became the news item with the biggest media footprint year to date.

People are so out of touch, they stopped eating pork. Real news flash: it was never communicable via cooked meat. It was only communicable via exposure to infected pigs, and very few people experience that. Had anybody bothered to read past the headlines, they might have noticed.

For that matter, had anybody bothered to read history, they might have noticed this wasn’t the first time we’ve seen a pandemic scare in the media, nor even the first time we’ve seen a swine flu scare. The first swine flu scare happened all the way back in 1976, and we seemed to have pulled through that one intact. We also survived SARS in 2003 and bird flu in 2005. I guess we were due for a new one.

The word “pandemic” needs to be reserved for true population-threatening outbreaks. One way for journalists to make sure it’s reserved for such moments would be to read its definition. From Merriam-Webster, a pandemic is an “[Epidemic] occurring over a wide geographic area and affecting an exceptionally high proportion of the population.”

Did swine flu ever qualify? No. Less than 400 people were infected in the source country of Mexico, and less than 20 died. A single plane crash or train wreck affects more people, and some auto accidents are deadlier.

Moreover, it wasn’t even deadly as far as influenza strains go. The US reports an average of 36,000 deaths per year from influenza. That’s about 100 people per day in normal times, yet swine flu with its total body count of less than 20 turned into a news story so big that the president of the United States felt compelled to urge Americans to stay calm, but wash their hands and cover their mouths when coughing.

Vice President Joe Biden went further, saying on the Today show last week: “I wouldn’t go anywhere in confined places now. It’s not going to Mexico, it’s you’re in a confined aircraft when one person sneezes it goes all the way through the aircraft. That’s me. I would not be, at this point, if they had another way of transportation, suggesting they ride the subway. So from my perspective, what it relates to is mitigation. If you’re out in the middle of a field and someone sneezes, that’s one thing. If you’re in a closed aircraft or a closed container, a closed car, a closed classroom, it’s a different thing.”




Then again, why go out of the house at all? The right thing would have been to issue a nationwide lockdown where only those with enough rations to wait out the pandemic could survive. Don’t forward this to any politicians. They’d probably run with it.

In case you’re wondering what real pandemics look like, here’s a quick summary. The bubonic plague wiped out half of Europe’s population between 550 and 700 (Think the news cycle could keep people interested for 150 years?). Black Death, which was probably also bubonic plague, killed 75 million people in the four years from 1347 to 1351. More recently, the 1968 Hong Kong Flu killed 750,000.

Just to recap, swine flu killed less than 20. That’s so far. A week ago, the figure was around 200, then dropped to 100, so the next stop may be zero.

Yesterday, Mexican Health Secretary Jose Cordova said, “The attack rate is not as broad as was thought.” You don’t say. Some of us never did think it was broad. Perhaps health officials could employ a little common sense in future situations so they don’t stumble into panicky assessments based on thin data.

The only good to come of this news cycle was a reminder to thinkers like you that media need to be taken with more than a grain of salt, they need a 50-pound block.

Marrs agrees with me. He wrote, “Despite the fact that only twenty swine flu deaths were reported in Mexico by September 1, 2009, the US corporate mass media continued a blitz of coverage on what was described as a pending pandemic.” He quotes Joel Skousen of World Affairs Brief as writing, “[Swine flu is] not an epidemic. This has all the markings of a propaganda campaign benefiting the huge pharmaceutical firms producing vaccines. It’s more than monetary motives that are driving this push. There seems to be a long-term agenda of making people totally dependent upon government money and actions to manage health.”

Marrs finds it “necessary to note that Daniel Vasella, chairman and CEO of Novartis, has regularly attended the secretive Bilderberg meetings since 1998.” It can’t be a coincidence that, “just two months after the 2009 Bilderberg meeting in Athens, the US government gave Novartis $690 million to manufacture swine flu vaccines.” Who else attends Bilderberg meetings? Barack Obama and Hillary Clinton, among others.

Marrs concludes that swine flu was “just another scam to increase profits for the pharmaceutical corporations and a failed attempt to see how much public control could be garnered by the globalist fascists.”

He reports that a former editor in chief of the New England Journal of Medicine, Dr. Marcia Angell, said that big pharma “has moved very far from its original high purpose of discovering and producing useful new drugs and it [is] now primarily a marketing machine to sell drugs of dubious benefit.” She thinks big pharma “uses its wealth and power to co-opt every institution that might stand in its way, including the US Congress, the FDA, academic medical centers, and the medical profession itself [as] most of its marketing efforts are focused on influencing doctors, since they must write the prescriptions.”

Chemicals weren’t the only way that Nazis controlled German society or that Communists controlled Soviet society. Another way was through psychiatric manipulation, and Marrs finds plenty of evidence of that taking place in America.

He quotes an article from the April 1993 edition of Atlantic Monthly: “A growing proportion of many school budgets is devoted to counseling and other psychological services. The curriculum is becoming more therapeutic: children are taking courses in self-esteem, conflict resolution, and aggression management. Parental advisory groups are conscientiously debating alternative approaches to traditional school discipline, ranging from teacher training in mediation to the introduction of metal detectors and security guards in the schools. Schools are increasingly becoming emergency rooms of the emotions, devoted to … repairing hearts.”

Marrs backs that up with numbers, reporting that “the number of child psychologists in US schools grew from a mere 500 in 1940 to more than 22,000 by 1990. In 2006, the number of school psychologists, including clinical and consultation, had grown to 152,000, with an anticipated 176,000 by 2016.”

This stunning growth is “worrisome to those who recall that in both Nazi Germany and the Soviet Union, the incarcerations and, ultimately, the genocides practiced there all began innocuously as mental health programs. Persons who were considered defective, either physically or mentally, were the first victims of the Nazis, long before they turned to the Jews.”

It seems to Marrs that “our entire educational system merely churns out young people prepared for either wage slavery or to become teachers.”

Of course, things don’t always go according to plan. Not every subject responds desirably to a regimen of brainwashing and drugs. You may have noticed the growing number of school shootings and teen suicides in recent decades. Marrs finds it disturbing that “virtually all of these killings have involved a student who was on — or was just coming off — mood altering drugs.” The tragedy at Columbine High School was partly caused by Eric Harris taking the prescription drug Luvox, argues Dr. Peter Breggin in his book Reclaiming Our Children. This is not a new type of observation. Consider the following from a 1999 article by Dr. Julian Whitaker in Health and Healing: “[V]irtually all of the gun-related massacres that have made headlines over the past decade have had one thing in common: they were perpetrated by people taking Prozac, Zoloft, Luvox, Paxil or a related anti-depressant drug.”

Is it possible that the collapsing economy and skyrocketing debt, which cripple the ability of ordinary people to amass capital with which to create personal financial freedom, is a deliberate creation by those who want to retain power for themselves? Specifically with regard to the drug industry, Marrs thinks so: “The effort by big pharm to mold education, physicians, politicians, and even health care in general to its will requires massive amounts of money. Such great sums are only available to the globalists with Nazi roots and well beyond the reach of even well-off Americans, thanks to a crumbling economy and never-before-seen debt.”

Our nation, which was “once an industrial fountainhead, spewing forth streams of consumer goods such as automobiles, televisions, and refrigerators in international trade” is now “merely a nation of zombies working in the service industry. Today, America’s largest consumer goods industries are health care and legal drugs.”

The poor educational results in America are fishy, too, seeing how they help further the agenda of those who want to control the masses. Marrs writes, “The dumbed-down condition of the schools is puzzling to many people since never before in history has a student population had access to such a wide variety and depth of educational resources. Yet, at the same time, never in the history of the world have students as a whole been less informed about the world largely due to a fixation on technology and self-interest.”

He quotes Mark Bauerlein, author of The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future: “Once youths enter the digital realm, the race for [their] attention begins, and it doesn’t like to stop for a half-hour with a novel or a trip to the museum. Digital offerings don’t like to share, and tales of Founding Fathers and ancient battles and Gothic churches can’t compete with a message from a boyfriend, photos from the party, and a new device in the Apple Store window.”

The education system is dumbed-down, so it produces dumbed-down teachers who produce dumbed-down students who become a dumbed-down population. Marrs calls that “the exact situation desired by old man Rockefeller and the elite globalists. The correlation is uncanny. It begs the question: Is this sheer happenstance or a conscious agenda?”

The zombie population is doing its part. Marrs reminds us that “there are more Americans living off the government than paying into it” because “Congress has allowed more and more nonproducers to live off the largesse of fewer and fewer producers.” Americans watch more TV these days than ever before, around 150 hours per month, with the “mass media currently in the hands of only five major multinational corporations: AOL-Time Warner, the Walt Disney Company, Viacom, Vivendi Universal, and News Corporation.” That’s led to once so-called watchdog media turning “into lapdogs for their corporate (and political) owners, which in turn has allowed the government to manipulate the public through national fearmongering.”

Echoing sentiments I’ve written many times, Marrs thinks the political charade we endure every couple of years when choosing between the puppet on the left and the puppet on the right will never reinstate “the individual freedom and capitalist initiative that once brought this nation to new heights of technological and social success … Simply bouncing back and forth between conservative and liberal presidential administrations, both controlled from the shadows by the same globalists, will not do the job.”

Unfortunately, Marrs runs up against what everybody seeking change eventually hits: the only people who can effect change are those currently in office who are controlled by forces that don’t want change. He offers good ideas like changing the currency system so that dollar printing is approved by Congress and issued by the Treasury as Treasury notes, placing Congress under the same Social Security plan as the rest of the nation, rescinding the National Security Act of 1947 that allows presidents to start wars without the consent of Congress, limiting corporations to just one lobbyist per congressman, rescinding the PATRIOT Act to stop its infringements on Americans’ civil liberties, and truly reforming the global banking system.

Every smart person I know agrees with that list and others like it. The problem is that each idea is politically impossible to achieve. Most have a been-there-tried-that quality to them, and yet the general deterioration of American society continues apace.

Marrs himself seems to acknowledge that reality when he predicts the tone of upcoming elections: “Taxpaying Americans will become so disenchanted and disgusted with the government’s attempts to turn America into a socialist government that they will accept an inevitable right-wing backlash. Again, America will oscillate back to a National Socialist administration as an answer to the country’s problems. As the economy deteriorates and the police state tightens its grip, the corporate mass media will present to the public a new leader as the nation’s savior.”

The evidence points to a worsening situation on all fronts, hinting that a major collapse is all that will reset the system. Marrs touches on this by mentioning that it’s “time to remember the three boxes of freedom — the Soap Box, the Ballot Box, and the Ammo Box.” Fine, but the first two have failed us miserably for nigh on 50 years now. That leaves only the third box, and citizens are already making sure it’s ready for what’s coming.

Marrs reports, “According to Federal National Instant Criminal Background Check system statistics, between January and March 2009 [the first three months of the Obama administration], Americans bought 3,818,056 firearms. . . . Is it possible that the nation is arming for something other than self-protection? Is a violent revolution inevitable?”

I’ve been exploring that theme in recent issues of The Kelly Letter, with a specific focus on the coming scramble for oil. The outlook is not good.

I’ll conclude with a paragraph from the final section of the book, which follows one suggesting that the only way Americans can prevail against the global elitists is by coming together in a way that enables “men and women of good intention and faith” to “agree to disagree…without being disagreeable.” The problem:

“To prevent such thoughtful unity, the globalist fascists have attempted to break the United States into divisions of race, sex, age, generation, and culture. They pit bureaucrats, politicians, academics, corporate leaders, and the public against one another in an agenda of divide and conquer … using their corporate mass media assets to degrade the popular culture, downgrade the education process, permit acceptance of a steady flow of illegal immigrants, and divide the population over peripheral issues such as party politics, abortion, sexual relationships, stem-cell research, so-called hate crimes, and the like.”

Right, and as I wrote in Financially Stupid People, “the moronic masses open wide for every lure.”
 
Have entered the following positions and orders.

Long Slv /silver and Gld /gold.
:)
Still holding metal positions from;
$19.84 & $1246.82

Xag (silver) $21.10
+6.36%

Xau (gold) $1290.68
+3.53%
:)


Banking System Collpase, on the Edge of The Precipice, Basel III
Politics
/ Credit Crisis 2010 Sep 22, 2010 - 03:42 AM
By: Matthias_Chang

The Global Too Big To Fail Banks are so precarious that literally anything can trigger a collapse in the coming months.

I have read recent commentaries on Basel III posted to various renowned websites and financial publication, but they missed (or deliberately misled) the underlying message of the proposals, the implementation of which will be delayed till 2017 and some till 2019.

Basel III is pure spin and its timing was to assuage the deep-seated fears that there are no solutions in sight to save the fiat money system and fractional reserve banking.

THE PROBLEM

The major global banks are all under-capitalised and this was all too apparent when Lehman Bros. collapsed. Banks were borrowing so much and so recklessly to play at the global casino that when the bets went sour, they were staring at a black-hole in the $trillions. In fact the banks are all insolvent.

The problem was compounded when the central bankers (all are corrupt without exception) and regulators turned a blind eye to how bankers defined what constituted “capital” so as to circumvent the need to maintain the capital ratio.

THE BASEL III SOLUTION

At its 12 September 2010 meeting, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced a substantial strengthening of existing capital requirements and fully endorsed the agreements it reached on 26 July 2010.

These capital reforms, together with the introduction of a global liquidity standard, deliver on the core of the global financial reform agenda and will be presented to the Seoul G20 Leaders summit in November.

The Committee’s package of reforms will increase the minimum common equity requirement from 2% to 4.5%.

In addition, banks will be required to hold a capital conservation buffer of 2.5% to withstand future periods of stress bringing the total common equity requirements to 7%.

This reinforces the stronger definition of capital agreed by Governors and Heads of Supervision in July and the higher capital requirements for trading, derivative and securitisation activities to be introduced at the end of 2011.

Increased capital requirements

Under the agreements reached, the minimum requirement for common equity, the highest form of loss absorbing capital, will be raised from the current 2% level, before the application of regulatory adjustments, to 4.5% after the application of stricter adjustments.

This will be phased in by 1 January 2015.

The Tier 1 capital requirement, which includes common equity and other qualifying financial instruments based on stricter criteria, will increase from 4% to 6% over the same period.

The Group of Governors and Heads of Supervision also agreed that the capital conservation buffer above the regulatory minimum requirement be calibrated at 2.5% and be met with common equity, after the application of deductions.

The purpose of the conservation buffer is to ensure that banks maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress.

While banks are allowed to draw on the buffer during such periods of stress, the closer their regulatory capital ratios approach the minimum requirement, the greater the constraints on earnings distributions.

This framework will reinforce the objective of sound supervision and bank governance and address the collective action problem that has prevented some banks from curtailing distributions such as discretionary bonuses and high dividends, even in the face of deteriorating capital positions.

A countercyclical buffer within a range of 0% - 2.5% of common equity or other fully loss absorbing capital will be implemented according to national circumstances.

The purpose of the countercyclical buffer is to achieve the broader macroprudential goal of protecting the banking sector from periods of excess aggregate credit growth.

For any given country, this buffer will only be in effect when there is excess credit growth that is resulting in a system wide build up of risk.

The countercyclical buffer, when in effect, would be introduced as an extension of the conservation buffer range.

These capital requirements are supplemented by a non-risk-based leverage ratio that will serve as a backstop to the risk-based measures described above.

In July, Governors and Heads of Supervision agreed to test a minimum Tier 1 leverage ratio of 3% during the parallel run period.

Based on the results of the parallel run period, any final adjustments would be carried out in the first half of 2017 with a view to migrating to a Pillar 1 treatment on 1 January 2018 based on appropriate review and calibration.

Systemically important banks should have loss absorbing capacity beyond the standards announced today and work continues on this issue in the Financial Stability Board and relevant Basel Committee work streams. [1]

THE LOOPHOLE & ADMISSION OF INSOLVENCY

Since the onset of the crisis, banks have already undertaken substantial efforts to raise their capital levels.

However, preliminary results of the Committee’s comprehensive quantitative impact study show that as of the end of 2009, large banks will need, in the aggregate, a significant amount of additional capital to meet these new requirements.

Smaller banks, which are particularly important for lending to the SME sector, for the most part already meet these higher standards.

The Governors and Heads of Supervision also agreed on transitional arrangements for implementing the new standards.

These will help ensure that the banking sector can meet the higher capital standards through reasonable earnings retention and capital raising, while still supporting lending to the economy.

THE IRON CLAD CONFIRMATION THAT BANKS ARE IN DEEP ****S

Please read all the passages which I have highlighted in bold in the above paragraphs. If the banks were at all material times adequately capitalised and the central bankers in collusion with these banksters and fraudsters were prevented from manipulations, there would not be any need for Basel III regulations.

In saying this, I am not in anyway conceding that even with these new requirements, the banks will be adequately capitalised.

The simple truth is that as long as the derivative casino is still running and banks are allowed to continue their off balance sheet activities, nothing will be resolved.

How can the ultimate capital requirement of 8 percent be adequate when leverage under Basel III is still allowed at the astronomical rate of 33:1?

In the second table, and it is a no brainer to conclude that the banking crisis (if we are lucky) may be “resolved” by 2015 but it is most likely that it can be only resolved by 2017/2018 .

This is an express admission that all banks would require such a long transition period to comply with the new requirements!

The stark reality is that the Too Big To Fail Banks do not have the ability and or the means to raise capital at this critical juncture.

To use an analogy, the banking patient will be in Intensive Care until 2017, which is rather optimistic for the projection implies that the patient may be able to recover.

It is my view that Basel III is pure spin and is intended to convey the impression that the central bankers and regulators have things under control. This is a big lie!

I have said in my earlier article that the FED through QEI purchased toxic assets from the banks and part of the monies were used to shore up the reserves and part to purchase treasuries (to give an illusion of better quality assets in banks’ balance sheet).

There are so much more, $trillions more of toxic waste that no amount of QE (quantitative easing) can remove them. This situation does not even take into consideration the toxic waste in SPVs – the off balance sheet mumbo jumbos. The FED and Accounting Bodies have suspended accounting and regulatory rules that have enabled the banks to hide such toxic waste in SPVs and not having to account for them in the banks’ balance sheet.

LIFE SUPPORT

QEI has merely enable the Too Big To Fail Banks to continue some form of banking activities thus deceiving the public that they are solvent and prevent a bank run.

But the central bankers cannot have the cake and eat it as well. In trying to shore up public confidence in banks with the introduction of Basel III, they have inadvertently let the cat out of the bag and as the above two tables show, the banks are all insolvent.

Additionally, whatever reserves that have been accumulated are insufficient to stimulate further lending, because the banks have reached their limits under the fractional reserve system. This is the reason for the contraction of credit and not as one commentator has postulated that Basel III would “contract credit”.

Two burdens are weighing down on the banks:

1) inadequate capital to meet liabilities (borrowings); and

2) inadequate reserves under fractional reserve banking.

This is a big mess!

THE CONFIDENCE GAME

At this moment, I cannot give a precise time-line as to how long the FED and the global central banks can prolong the confidence game, hoodwinking the public and sovereign creditors that all is well.

When confidence in banks evaporates for whatever reasons, the consequences will be ugly and there will be massive social upheavals across the globe.

The first indication that the game is up is when US treasuries are increasingly purchased by the FED to make up for the shortfalls by foreign creditors and to finance the ballooning US deficits.

All of a sudden, some entities may start to get real nervous and unload the treasuries, and the FED steps in to shore up treasuries. Then, the tipping point is reached and Hell breaks loose!

China is also part of this confidence game.

But, contrary to IMF and other renowned economists who are betting on China’s and Asia’s so-called economic strengths, I take the view that when US treasuries collapse, faith in all fiat monies will likewise evaporate and there will be massive capital flight to commodities, especially gold, silver and oil.

Asian stock markets will be devastated and there will be volatile gyrations in currency values.

Therefore, it is utter lunacy and recklessness for the Malaysian central bank (Bank Negara) and the government to even consider allowing the ringgit to be traded.

When confidence in dollar assets vaporises, China will be caught right in the middle. The third and final phase of the Global Financial Tsunami will devastate Asian economies and with it, the greatest depression in history will ensue.

Time Line?

Between now and anytime in 2011.

At the latest, 2012.

God help us.

Matthias Chang is a frequent contributor to Global Research. Global Research Articles by Matthias Chang

© Copyright Matthias Chang , Global Research, 2010

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.
 
Still holding metal positions from;
$19.84 & $1246.82

Xag (silver) $21.10
+6.36%

Xau (gold) $1290.68
+3.53%
:)
Still holding Xag (silver) & Xau (gold) long positions.
Current prices.

Xag (silver): $21.74
+9.58%

Xau (gold): $1309.52
+5.03%
:)


Money transfers could face anti-terrorism scrutiny
By Ellen Nakashima
Washington Post Staff Writer
Monday, September 27, 2010; 2:50 AM

The Obama administration wants to require U.S. banks to report all electronic money transfers into and out of the country, a dramatic expansion in efforts to counter terrorist financing and money laundering.

Financial institutions are now required to report to the Treasury Department transactions in excess of $10,000 and others they deem suspicious. The new rule would require banks to disclose even the smallest transfers.

Treasury officials plan to post the proposed regulation on their Web site Monday and in the Federal Register this week. The public could comment before a final rule is published and the plan takes effect, which officials say will probably not be until 2012.

The proposal is a long-delayed response to the 2004 Intelligence Reform and Terrorism Prevention Act, which specified reforms to better organize the intelligence community and to avoid a repeat of the 20S01 attacks. The law required that the Treasury secretary issue regulations requiring financial institutions to report cross-border transfers if deemed necessary to combat terrorist financing.

"By establishing a centralized database, this regulatory plan will greatly assist law enforcement in detecting and ferreting out transnational organized crime, multinational drug cartels, terrorist financing and international tax evasion," said James H. Freis Jr., director of Treasury's Financial Crimes Enforcement Network (FinCEN).

But critics have called it part of a disturbing trend by government security agencies in the wake of the 2001 attacks to seek more access to personal data without adequately demonstrating its utility. Financial institutions say that they already feel burdened byanti-terrorism rules requiring them to provide data, and that they object to new ones.

"These new banking surveillance programs are testing the boundaries of privacy," said Marc Rotenberg, executive director of the Electronic Privacy Information Center. "Many consumers both in the United States and outside are likely to object."


"This regulation is outrageous," said Peter Djinis, a lawyer who advises financial institutions on complying with financial rules and a former FinCEN executive assistant director for regulatory policy. "Consider me old-fashioned, but I believe you need to show some evidence of criminality before you are granted unfettered access to the private financial affairs of every individual and company that dares to conduct financial transactions overseas."

Djinis said he does not think the department has made a case that it could analyze such volumes of data effectively or needs so much raw data. "It's presumed that the information will be valuable in anti-terrorism activity," he said. "We're told, 'Trust us. Once we get the data, we'll determine what's legal or not.' "

John J. Byrne, formerly a longtime banking industry official and now executive vice president of the Association of Certified Anti-Money Laundering Specialists, said: "Just because it's easier to provide the data and to collect the data, it doesn't always mean it should be collected." If the government collects such information, he said, it "has the burden of explaining how it is being utilized."

Each year, financial institutions file with the Treasury Department about 1.3 million suspicious-activity reports and 14 million reports on transactions greater than $10,000.

Such reports have been "extremely valuable" in financial crime investigations, but the additional data would provide new opportunities, FinCEN spokesman Steve Hudak said. "Current investigations mainly look at individual trees," he said. "Using this data, FinCEN, and others, will be able to see the forest."

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For instance, Hudak said, officials currently do not know how much money is wired to any one country every year.

"With this data, we'll be able to establish baseline numbers so we can then spot what's abnormal and suspicious," he said. "John Smith may use a bank to wire money abroad in amounts that don't raise suspicion. But he may be using 10 banks to wire significant funds to dozens of counties."

Also, he said, the data can be cross-referenced with suspicious-activity reports and other data to make it "easier to follow the money."

The department said that the Sept. 11 hijackers were wired about $130,000 from overseas to help finance the attacks, but that the transactions fell outside reporting requirements. No suspicious-activity reports were filed, officials said.

Having such data "would have really helped us a lot" in the post-attack investigation, said Dennis M. Lormel, a former FBI agent who ran the Terrorist Finance Operations Section set up after the 2001 attacks. "We would have linked the group of hijackers together quicker."

Under the plan, money-transfer businesses such as Western Union would report transactions of $1,000 or more. ATM and credit card transactions would not be reported.

Authorities plan to funnel the information - about 750 million transfers a year - into a database for use by law enforcement and regulatory agencies.

Information typically accompanying a wire transfer includes the name, address and account number of the sender and recipient - and with money-service businesses, an identifier such as a driver's license or passport number.

The proposal also calls for banks to provide annually the Social Security numbers for all wire-transfer senders and recipients.

Brian Lynch, who was until May 2009 head of the FBI's terrorist financing section, said the plan is "great news" and would provide "more granularity" into the movement of money in financing crime.


Before the plan can take effect, the Treasury secretary must certify that the database can securely hold large volumes of information, and that the technology exists to analyze it effectively.

The United States reached agreement this year with the European Union allowing European banks' financial-transaction data to continue to be shared for terrorist-finance tracking purposes, but with stricter controls to guard against abuse.

For instance, U.S. officials can request European data relevant to a specific terrorist investigation, but only if they substantiate the need. The records are held by a Brussels-based bank consortium, the Society for Worldwide Interbank Financial Telecommunication, or SWIFT.

But if the proposed rule goes into effect, transactions between European and U.S. banks would be captured regardless of whether there is a substantiated need.

Sophie in't Veld, a member of the European Parliament from the Netherlands, said lawmakers undertook "painstaking" negotiations to restrict the amount of financial data to which the United States would have access. "It seems they're getting it anyway," she said.
 
Still holding Xag (silver) & Xau (gold) long positions.
Current prices.

Xag (silver): $21.74
+9.58%

Xau (gold): $1309.52
+5.03%
:)
Still holding from $19.84 and $1246.82 (spot)
These positions might be closed out, I will see what my secret numbers later today.

Current prices (spot)

Silver $23.25
+17.19%

Gold $1348.30
+8.14%
:)


Bank of Japan Plans to Make Investing Unprofitable
Written by Dave Forest
Wednesday, 06 October 2010 14:48

Overnight, the Bank of Japan announced unprecedented monetary policy. The Japanese are going "all-in" on economic stimulus.

Since the financial crisis, "monetary easing" has been a buzzword globally. For many governments, such policy has consisted of central banks buying government bonds. In essence, the banks pump new money into government coffers and the government turns around and pumps it onto the street. The hope being this infusion of cash will lift the economy.

Japan is an old hand at this. In fact, the Bank of Japan (BOJ) was buying government bonds long before it was fashion to do so in other developed nations. To the point where the BOJ today holds 55 trillion yen ($660 billion) worth of government bonds.

But apparently the Japanese aren't satisfied.

Today, the Bank of Japan announced it is moving to a program of "comprehensive monetary easing".

As part of the program, the Bank will attempt to drive overnight interest rates to "virtually zero". This shouldn't be a problem, as Japanese interest rates were almost there anyway.

Here's where it gets sensational. Low interest rates aren't enough for the BOJ. To allow further easing, the Bank is implementing an "asset purchase program" designed to pump more yen into the financial system.

The interesting thing is what assets the bank intends to purchase.

Of course, there's the usual suspects. Under the program, some 3.5 trillion yen ($40 billion) will be devoted to purchasing government bonds and treasury discount bills.

But that's not all. A further 1 trillion yen ($12 billion) will be earmarked for buying bonds from Japanese corporations, as well as purchasing exchange-traded funds (ETFs) and real estate investment trusts (REITs).

It's a bold move for a central bank to directly buy corporate bonds. Essentially, this will raise bond prices and lower yields to the point where such instruments may not be attractive to regular investors. If you're taking on the risks of investing in a corporation, you want to be compensated with higher yields. Direct government buying could make that impossible.

The real kicker is direct central bank buying of ETFs and REITs. As far as I'm aware, this has never happened on planet Earth (not in such a direct manner, anyway). The BOJ is buying directly into the stock market.

This again will reduce the potential returns on such investments. Making it harder for average investors to turn a profit. Even the Bank itself acknowledges this is a radical departure. A quote from today's public note: "It is an extraordinary measure for a central bank, particularly the purchase of financial assets to encourage the decline in risk premiums."

So, why is this happening?

Throughout today's official release, the BOJ talks about the need to decrease longer-term interest rates and risk premiums. Money-wise, this would have two effects. First, lower interest rates make it more likely (theoretically) that consumers and businesses will borrow money. The hope is they will then spend it, stimulating the economy.

(In practice, this has not worked out. Credit lines extended to Japanese businesses have been falling for the past two years, despite ultra-low rates. Same in the U.S., where outstanding bank loans to consumers and businesses have been declining steadily, even with interest rates near record lows.)

The other hope is that direct government buying of financial assets will make investment unprofitable. If yields on bonds, stocks and other financial instruments tank, people aren't going to park money in these things. Instead, they'll spend.

(Again, this is somewhat dubious. The Japanese have a history of saving their money, despite ridiculously low interest rates on saving accounts. That does appear to be changing the last few years however, so maybe the BOJ plan has some hope.)

Although unmentioned in today's release, this easing policy is also likely targeting the yen. The yen has gained 13% in value since May. And a strong currency is a big concern for an exporting nation like Japan.

By cramming more yen into the economy, the BOJ may be trying to debase the currency. We'll see if this follows. After today's announcement, the yen fell briefly against the dollar but has since rallied to stand higher than before than news.

I've mentioned a few times that Japan may be the site of the next big economic dislocation. The nation is now venturing into uncharted monetary waters. Beware the rocks.
 
Still holding from $19.84 and $1246.82 (spot)
These positions might be closed out, I will see what my secret numbers later today.

Current prices (spot)

Silver $23.25
+17.19%

Gold $1348.30
+8.14%
:)
Closing precious metal long positions.
Silver out: $24.14 (spot)
+21.67%

Gold out: $1365.74
+9.54%
:)

“The Great Dollar Devaluation Disaster” is Only Just Beginning – and the Intended Victim is YOU!
http://www.munknee.com/2010/10/the-...st-beginning-and-you-are-the-intended-victim/
October 17, 2010 by Editor · 2 Comments

I’m mad as hell about the shellacking our government has planned for you … for me … and for millions of other honest, hard-working Americans … and I absolutely refuse to stay silent while good people are stripped of their life savings, investments and even the retirement funds that are due to them … and by our own leaders. Words: 2120

So says Larry Edelson’s (www.uncommonwisdomdaily.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has reformatted into edited [...] excerpts below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Edelson goes on to say:

If it’s hard for you to believe that our own leaders have turned on us – that they are intentionally attacking your wealth and financial independence and that they have already begun executing their plan – I certainly understand but please – for your own sake and for your family’s safety – hear me out.

U.S. Has an Utterly Unpayable $127.8 Trillion in Debt Obligations
Ask anybody about how much Washington owes and they’re likely to say the national debt is somewhere around $12.8 trillion. As shocking as that massive number is, however, it is just a fantasy — a tiny fraction of the gargantuan amount our government really owes.

In actual fact, our real national debt is nearly TEN TIMES GREATER! In addition to that official $12.8 trillion national debt, Washington has written $108 trillion in off-budget, unfunded IOUs on Social Security, Medicare, Medicaid, its prescription drug program, its veterans benefits programs and its Federal pension programs that must also be paid. That adds up to more than $120 trillion and that’s not even counting the $1 trillion the new health care bill will cost us or the trillions in NEW deficits projected over the next 10 years! The truth of the matter is that, altogether, our leaders have obligated us … our children … and our children’s children … to pay off an utterly unpayable $127.8 trillion in debt.

Global Investors in U.S. Treasuries Are Recoiling in Horror
Until recently, we could count on overseas investors to buy our treasuries — effectively loan Washington the money it needs to pay its bills. In fact, foreigners fully fund over HALF of our borrowing addiction, holding $9.7 trillion in U.S. securities — including almost $4.6 trillion in bonds. They are horrified these days, however, at our leaders’ inability to manage the nation’s finances and wondering if we’ll be able to make good on our obligations to them and starting to snap their wallets shut.
a) In November 2009, for instance, China — the world’s largest investor in U.S. government debt — became a net SELLER of treasuries.
b) In December China sold a whopping $34 billion worth of U.S. government bonds with others following suit: Net overseas holdings of short-term treasuries fell by $53 billion.
c) In January 2010, foreign net purchases of U.S. Treasury securities plunged a shocking 69.8%. Japan, the second-largest foreign holder of U.S. debt, was also a net seller.
d) In February 2010, Beijing sold yet ANOTHER $11.5 billion of U.S. Treasuries, making that four consecutive months of dumping U.S. bonds.

[Editor's Note: Don't forget to sign up for our FREE weekly "Top 100 Stock Market, Asset Ratio & Economic Indicators in Review"]

This is all happening because Washington’s debts have finally reached the point of no return – they are absolutely, positively UNPAYABLE! We have reached the point of no return.

What are the Alternatives?
The simple truth, of course, is that Washington will never repay the full $127.8 trillion it owes. Think through the alternatives:

1. Borrow our way out of debt?
Virtually impossible. As we’ve seen, foreign investors who have loaned us the money that Washington needs to stay in business are already fed up. They’re worried that we’ll never be able to repay what we owe them. They’re now becoming net SELLERS of treasuries so it’s nearly impossible that they’ll be willing to throw trillions more of their money our way. Plus, even the mere hint that Washington was trying to borrow trillions more would crush bond prices and light the fuse on an interest rate explosion that would kill the economy.

2. Implement massive spending cuts?
A snowball’s chance in hell! The White House and Congress will continue doing what they’ve always done and what they’re doing right now – finding dozens of outrageous new ways to waste your money and plunge us even deeper in debt.
Meanwhile, Washington WILL make a show of addressing the crisis by delaying the retirement age for Social Security from age 65 to 68 and by reducing benefits.

How does that help you? It doesn’t. It just dilutes down what you’re already owed even more so if you’re looking for any meaningful cuts in wasteful spending in Washington, forget about it. Any real cuts needed to make any noticeable dent in the government’s $127.8 trillion debt would probably cause riots in the streets and guarantee a quick end to the career of every politician who voted for them.

3. Raise taxes drastically?
Sure, the Obama administration will raise your taxes but even the White House says that the most startling proposals would only generate an additional $43 billion in revenue. $43 billion, however, is only 3% of our $1.6 trillion annual deficit and only about one-third of one percent of the total $127.8 trillion Washington owes. At that rate, it would take 300 years to repay our government’s debt with new taxes! In fact, it would take new taxes of $1.1 million for every U.S. household to pay off this debt. Nobody has that kind of money, of course, and besides, a tax increase representing just a fraction of that amount would surely kill this feeble recovery, drive unemployment into the stratosphere and light the fuse on a Great Depression that makes the last one pale by comparison.

That leaves Obama and Bernanke with one and ONLY one alternative …

4. Devalue the U.S. dollar?
When war strategies to vanquish enemies wind up killing innocent civilians, it’s called “collateral damage.” Similarly, when political strategies to vanquish debt wipe out your wealth, the same term applies, and right now President Obama and Fed Chief Bernanke know that there is ONLY one way they can ever hope to make good on their massive debt obligations and that is to devalue the U.S. dollar! Only then can they hope to repay Washington’s debts — by doing it with cheaper dollars.

Obama and Bernanke also know that by doing so, they’re also gutting the value of every dollar you earn, spend, save, invest and plan to use in retirement but they think they have no choice. To allow Washington to default on its debts and obligations would almost surely cause the entire U.S. economic house of cards to collapse — and the blame would land squarely on the Obama administration’s shoulders.

You? You’re little more than collateral damage. If the only way to delay default is to rob you of everything you’ve worked for and everything you’re counting on to see you through retirement — that’s evidentially just fine with them.

What is the Government Doing to Resolve the Situation?
Our government has begun intentionally debasing our own currency by:

1. Flooding the World with Unbacked Paper Dollars
Money is subject to the laws of supply and demand just like any commodity. If you want to lower the price, simply increase the supply. Just do that and the buying power of the greenback will plunge. Your bank statement may still say you still have $25,000 but in truth, when you go to spend that money, it only buys as much as $18,000, or $15,000, or $12,000 used to because the value of your money has been stolen from you.

Just in the last two months alone, the Fed has agreed to create $1.25 trillion out of thin air to buy mortgage-backed securities including another $300 billion to buy U.S. Treasuries alone. The liabilities on the Fed’s balance sheet have roughly DOUBLED — from $1.2 trillion a year ago to more than $2 trillion today – and the actions announced by the Fed in March are most likely to expand that to well over $3 trillion over the next year!

From September 10, 2008 to March 10 of this year, Bernanke has increased the nation’s monetary base from $850 billion to $2.1 trillion. That’s an irresponsible, irrational and insane increase of 2.5 times in just 18 months — and you must not underestimate its sweeping historical significance:

Nearly 218 years ago, Treasury Secretary Alexander Hamilton established the dollar as America’s national currency when Congress passed the Coinage Act of 1792. Since that memorable date, the United States has suffered through one pandemic, two great depressions, 11 major wars, and 44 recessions. Four U.S. presidents have been assassinated while in office. Hundreds of thousands of businesses have gone bankrupt and tens of millions of Americans have lost their jobs but not once has the U.S. government ever resorted to the kind of extreme abuses of its money-borrowing and money-printing power we’re seeing today!

2. Defaulting on its Debts by Devaluation
You’ve probably been hearing a lot lately about how overvalued the Chinese yuan is and how that gives the Chinese an unfair trade advantage and how hard the Obama administration has been working to convince Beijing to raise the yuan’s value against the dollar in order to level the playing field but the only problem is that it is all a lie.

The truth is, the average Chinese worker earns a tiny fraction as much as American workers do. Even if the yuan DOUBLED or TRIPLED in value against the dollar, Chinese products would still be far cheaper on world markets than U.S.-made products so what’s the real reason why Washington is so desperate to have China INcrease the value of the yuan? Simple: By doing so, they will be automatically DEcreasing the relative value of the dollar — and they’ll be able to repay China, and everyone else who owns treasuries or is owed money by Uncle Sam using CHEAPER dollars!

Don’t think it’s going to happen? Well, let me tell you something: For the last nine years I’ve been warning that China would keep the value of its yuan extremely low — so it could keep its exports cheap, build up a massive trade surplus with the U.S. and a huge pile of cash but I also warned that, as soon as it had a big cash hoard and a strong enough domestic consumption to sustain its economy WITHOUT such massive growth in its exports to the U.S., it would let the yuan get stronger, driving DOWN the value of the U.S. dollar – and that day has come. China will soon go ahead with a yuan revaluation — and dollar devaluation.

Such a revaluation ot its currency won’t negatively impact China nearly as much because Beijing has been preparing for this the entire time by gobbling up natural resources left and right, not only for strategic supply needs, but also to hedge against the inevitable U.S. dollar devaluation. The steps are now in motion:
a) Singapore, for the first time in its history, pushed the value of its currency higher.
b) The Korean won, Malaysian ringgit, Indian rupee and Taiwan dollar will likely soon begin to rise rapidly against the dollar.
c) China will probably soon end the yuan’s peg to the greenback and allows its currency to move higher.

Be Advised: You Are the Intended Victim!
With each and every revaluation, YOUR dollar is worth LESS and make no mistake about it: This is nothing more and nothing less than highway robbery and YOU are the intended victim!

The greenback has already plunged as much as 33% in real, trade-weighted terms since its 2002 high. By that measure, every dollar in your wallet … in your savings account … in your brokerage account … and in your retirement account is worth only 67 cents.

The handwriting is on the wall: This great dollar disaster is only just beginning. Obama and Bernanke have no choice. Either they dramatically devalue the dollar over the next three years, or they go down in history as the first administration to default — to welch on the government’s debt obligations.

*http://www.uncommonwisdomdaily.com/dollar-doomsday-2010-protect-your-wealth-and-profit-9283 (Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.)
 
Closing precious metal long positions.
Silver out: $24.14 (spot)
+21.67%

Gold out: $1365.74
+9.54%
:)
As presumed, metals had topped out and proceeded to pull back quite a few points. Gold spot came down to under $1320, Silver spot to about $23.20.
We'll be waiting for the magic numbers to line up again to buy.
:)


Cato: Bernanke Is Not Printing Enough Money
http://www.economicpolicyjournal.com/2010/10/cato-bernanke-is-not-printing-enough.html
A commentary on monetary policy that can only be described as coming out of the playbook of Zimbabwe's Robert Mugabe has been published on the pages of the Cato Institute. The conclusion of the commentary is that Fed chairman Ben Bernanke, who has over a trillion dollars sitting in excess reserves that can come flying into the economy at any time, and who promises a new round of trillion dollar money printing, is not inflating enough.

I kid you not.

Using Milton Friedman as cover, despite the fact that Friedman was very weak on monetary policy, the piece, written by David Beckworth and William Ruger, states:

Had he been alive, Friedman would have been shocked to see the Fed in late 2008 and early 2009 allow nominal income, as measured by nominal GDP, to experience its sharpest downturn since the Great Depression. He would also be amazed to learn that nominal GDP forecasts are once more headed down.

Given these developments, Friedman would likely be calling on the Fed again to do a better job stabilizing nominal income...were Friedman alive today, he would balk at the notion that the Fed is out of ammunition. He would remind us that in the early-to-mid-1930s, when the economic environment was far worse and short-term interest rates were near the zero bound, monetary policy easily generated a recovery. Therefore, the Fed could do likewise today.

Friedman would likely make the case today for more aggressive monetary action. It is time for "Helicopter Ben" to earn his nickname.
Publishing this kind of regime nonsense makes one wonder just what the Koch funded Cato Institute is all about. Lew Rockwell appears to have nailed it:

This is yet another example of how the Koch Brothers operate. While their ideological institutions on public campuses or Capitol Hill operate under a veneer of libertarianism or even Austrian economics, the actual policies they push expand the State: massive money printing (for the big banks and big companies), school vouchers (to deliver private schools into the hands of government), the Ownership Society (every person a homeowner through Greenspan’s housing bubble), Social Security Privatization (a new layer of forced savings on top of the present SS taxes, to benefit Wall Street), etc. Is it any wonder that the Kochs have never, in 28 years, invited Ron Paul—the only public official for honest money—to their annual monetary conference, but instead invite and hail the central bankers who can do the plutocrats so much good?
Let's get a few things straight about Milton Friedman, when it came to government licensing of businesses and individuals and when it came to price controls, Friedman could argue with the best of them.

Yet, he was nowhere near the consistent thinker that Ludwig von Mises was. Friedman failed to ground his economics in proper methodology and clearly never understood Hayek's great book on methodology, The Counter Revolution of Science.

And he had no clue about the business cycle. This is clear because he would never have called for Fed money printing, ever, if he understood how such printing distorted the capital structure.

That Cato would allow such a piece to be printed, which hails Friedman's money printing advocacy, indicates that they themselves don't get the business cycle or there are other motives which are ranked higher than economic truth.

As Stephan Kinsella has pointed out, this habit of straying from fundamental libertarian principles is not a one time phenomena for Cato. He lists 17 other cases.

Bottom line: Any organization that is promoting money printing, especially at a time like the present when commodity prices are soaring, is far from a friend of liberty. Money printing pure and simple is theft and gives an edge to those who get the money first. It is most damaging to those on fixed income, like the elderly. Among the beneficiaries are the banking elite and those who hold vast quantities of commodities, such as oil. It's about the evil rich getting more rich and more evil. Beware those that are friends of inflation.
 
Zero positions held, waiting to enter long metals.
:)

Imminent Big Bank Death Spiral
By: Jim Willie CB, GoldenJackass.com
The mortgage & foreclosure scandal runs so deep that ordinary observers can conclude the US financial foundation is laced with a cancer detectable by ordinary people. The metastasis is visible from the distribution of mortgage bonds into the commercial paper market, money market funds, the bank balance sheets, pension funds under management, foreign central banks, and countless financial funds across the globe. Some primary features of the cancerous tissue material are mortgage bond fraud, major securities violations, absent linkage to property title, income tax evasion, forged foreclosure documents, duplicate property linkage to single mortgage bonds, NINJA (no income, no job or assets) loans to unqualified buyers, and more. In fact, more is revealed it seeems each passing week toward additional facie to high level and systemic fraud. The world is watching. The growing international reaction will be amplified demand for Gold, from recognition that the USDollar & USEconomy have RICO racketeering components extending to Wall Street banks and Fannie Mae mortgage repositories.



The centerpiece question, when the US bond fraud is coupled with European sovereign debt distress, comes down to WHAT IS MONEY? The answer is Gold & Silver and not much of anything else. Other assets like crude oil or farmland are effective hedges against tainted money, but when they contain debt tethers, they too are vulnerable. Huge flows of funds are fleeing traditional asset groups. Some mistakenly still believe the USTreasurys to be a safe haven. A shock of cold water comes to them when that bubble goes into reverse perhaps several months later after reaching 2% yields. The big magnificent epiphany in the last couple years has been that a house is not a hard asset, but rather a debt instrument extension. Important questions have arisen as to what assets are free from counter-party debt risk. The grand demands for physical gold prove that the futures gold contracts are not money either, but tainted Wall Street and London securities contracts that keep the system going.



The big banks have been called too big to fail. What a ruse! They are too big to plow under without removal from power of the bankers themselves. They are too big to permit their balance sheets to be liquidated without a US banking system seizure together, and a 30% to 50% additional housing market price decline. They are too big to send into receivership without igniting a credit derivative sequence of explosions. They are too big to block the widespread practice of fraud and enforcement of law of regulations. However, a wondrous spectacle has begun to shine light. The mortgage & foreclosure scandal could turn out to be the big US Bank tombstone epitaph, as bank revenues from mortgages halt, as home owners refuse to make mortgage payments, as court cases unfold in full view, as class action lawsuits prove racketeering at a systemic level, as MERS and REMICs are frozen by the courts from further activity. Time will tell. Time will reveal extraordinary efforts by the USCongress to pass ex-post facto laws that legalize the bond fraud and contract violations from the past. Remember back in July 2007 when Bernanke claimed this was just a subprime mortgage problem. The Jackass called it an absolute bond crisis.



THE GIGANTIC ACHILLES HEEL EXPOSED

Two critical elements have been identified. The MERS electronic title registry system was designed to facilitate recording of property titles as associated mortgage bonds traded freely and changed ownership hands. Unfortunately, the title database has no legal standing, as declared by several state courts, including some supreme courts. Banks or financial firms holding the mortgage notes cannot team with the title database and force eviction during the home foreclosure process. That is the first gaping flaw. The second is the REMIC funding facility. The Real Estate Mortgage Investment Conduit was designed to facilitate funding mortgages, in particular Fannie Mae mortgages. Unfortunately, the conduit funding vehicle intentionally omitted citation of the mortgage income stream owner, so as to avoid income taxes. The lack of identification means that the Fannie Mae asset backed securities might lack any legal tie to the mortgage loan income stream.



If the casual observer concludes that Fannie Mae mortgage bonds have no value, then that observer matches the same thought pattern of the Jackass, and the same as an increasing number of financial experts. The mortgage finance boom was more a racketeering scheme to send financial products through the pipeline, earn fees, set up arbitrage, enable leveraged schemes, and justify executive bonuses. At the same time, the scheme had the perceived benefit of putting money in people's hands to spend when their jobs were shanghaied on a ship to China. It concealed the destruction of the USEconomy. It made homes very convenient piggy banks to abuse in consumer binges, as people eagerly burned their furniture. Harken back to the Great Macro Asset Economy, a slippery chapter scripted by Greenspan, one of several heretical chapters. Many citizens were turned into paupers who lost all their home equity, while 22% of the nation today lives in homes bearing negative equity overhead. To claim an elaborate Ponzi Scheme seems a fair characterization. The USGovt hands are dirty. The reflection on USTreasurys is filled with risk of a popped bubble. The reflection on the USDollar is filled with risk of downdrafts since a corrosive currency.



The Europeans have their damaged sovereign debt, but the Americans can boast twin beasts in the USTreasury Bond bubble and the USAgency Mortgage Bond scam. The scam involves mortgage bond fraud from improper perfection of property title that ensures revenue stream. The scam involves securities violations from usage of the MERS title database, duplicate properties in multiple bonds, and forged documents. The scam involves faulty finance vehicles (REMIC) with deep intractible flaws in the structure of funding the loans, whose remedy would come with a $1 trillion tax bill due (estimated by bank analysts). Just last weekend, the state of California demanded as part of a class action lawsuit, with MERS at the center, between $60 and $120 billion in unpaid property title recording fees. One might wonder if any potential criminal fraud was avoided in the mortgage industry during the last decade that saved a few bucks and added to bank profit. The MERS & REMIC twins represent the two unfixable banking Achilles Heels. Can the USCongress forgive the fraud with a fresh piece of supercharged legislation?? If they do, then civil disobedience will blossom across the land, in the form of public demonstrations, marches on Washington, non-payment of monthly mortgage bills, and demands to prove property title. The global response will be to sell any bonds with a US$ denomination.



The fallout comes as shattered integrity of the USDollar after broken credibility of the USFed and ruined prestige of Wall Street, all while a sanctioned USTreasury Bond bubble puffs. The full USGovt guarantee of the Fannie Mae clearinghouse cesspool contents bridges the gap between USTBonds and USAgency Mortgage Bonds. One might argue that Agency Bonds differ from USTBonds only in the claim of linkage to mortgage income and ultimately home seizure, except that linkage is being removed in plain view to the public. The USDollar will suffer. Rather than fall versus other major currencies, the wrecked monetary system will take down all major currencies. Each fiat paper currency is being exposed as illegitimate in different ways. The consequences will be:

All cost structures will rise, causing a worse global recession, a very heavy painful consequence.
Income levels will not rise to meet the challenge, since monetary inflation destroys capital and erodes wealth engines in corporate structures.
The US$-based bond markets take on a racketeering glow in global view.

The vast monetization schemes are set to come into motion for the bond market in general. The objects are hardly just USGovt debt securities, not even just Fannie Mae mortgage securities, but big bank Corporate Bonds as well. The scheme will paint the USDollar in a light with a RICO tint, as in racketeering, sanctioned by the US finance ministry and shielded from prosecution by US legal authorities and regulatory bodies. Worse still, the Financial Accounting Standards Board has permitted accounting fraud to the big dead US banks. Since April 2009, they have been permitted to declare any value they wish on their toxic balance sheets. That has enabled them to take advantage of USGovt largesse, direct USFed redemption of toxic bonds, called widely banker welfare. That has enabled them to tap the 0% money tree that produces carry trade profits. The only stipulation was the banks were required to place their excess cash at the USFed itself, which thereby hid the central bank's insolvency, and distracted attention from the absence of Loan Loss Reserves for the banks. Details on the USFed balance sheet, and big bank vulnerability to further losses, are provided in the October Hat Trick Letter. Toss in the High Frequency Trading schemes, and the US financial markets look to contain more crooked venues than the Las Vegas casinos. The USDollar lies at great risk in the process.



BIG BANK VULNERABLES AGAIN

The next QE2 is a done deal but with the details missing. The next TARP-2 bailout package is having its justification and foundation fashioned from the building blocks of need and desperation, along with the cement provided by banking lobbies. The two initiatives will likely meld paths. A disorderly condition comes. An armada of lawyers is on the job ready to challenge mortgage securities, foreclosure orders, and much more. Class action lawsuits are on the docket. The US financial platforms are unraveling. The USDollar will follow a path to oblivion, locked in a destructive spiral. The Competing Currency War assures that other major nations will undermine, debase, and devalue their currencies rather than seek out, plan, and establish a new monetary system. The investment in a broken system will soon be realized as infinite, with unchecked aid, even $trillions tossed in Black Holes. The sound money experts have always argued that accelerated funds are required to maintain a bubble. Gold will therefore skyrocket in price, as the monetary system will be actively ruined from unchecked money creation. The silver price gains will be at least double the gold gains. Markets are beginning to take control, and kick aside the corrupt control levers. The horizon features a big US bank on death watch. The ripple effects will be shocking even to those who expect it. Other big banks will be dragged down in a chain reaction, while illicit control in certain key markets will be stripped away. Control will be lost by the Powerz. Confusion will rein. The bank stock index BKX signals an imminent breakdown. The dustbin awaits!!








The pressured bank stock index breakdown will be led by Bank of America, HSBC, and Wells Fargo. The Wall Street firms remain protected bastions. The comprehensive fraud in a chain link, from home loan origination to bond securitization to debt ratings to ultimate foreclosure, reveals a corrupt protected broken bankrupt system. Its financial status will be clearly broken soon in full view. Further accounting fraud sanctioned by the FASB might come about, but the date with the destiny of failure is assured. My best source from the banking world believes the wheels come completely off the renegade wagon train that blocks the free market for determining a fair gold price when HSBC fails, and that event is imminent. That renegade wagon train has trademarks bearing the name USGovt and Wall Street nameplates, a merged enterprise. A chain reaction will follow. HSBC manages the SPDR gold exchange traded fund for its gold bullion inventory (symbol GLD). To those who were shocked by the mortgage fraud, wait until they witness the broken suppression levers and devices holding down the gold market. An estimated 50 to 60 thousand tonnes of gold bullion have been naked shorted by the biggest banks. Its value is worth between $2.16 and $2.60 trillion. Wait until the GLD fund lawsuits line up, since most of their gold has been leased by the COMEX and LBMA, since many of its shares have been used to cover short gold contracts.



PERHAPS JUST LAUNCH QE2 AT NIGHT

The USFed is showing some reluctance, remorse, or second thoughts about launching a gigantic second Quantitative Easing ship loaded with acid into icy waters. John Hilsenrath has reported the hesitation in the Wall Street Journal, claiming only a few hundred $100 billion of bond debt might be monetized. The prevailing sentiment is that QE2 might not succeed in reviving the USEconomy and not might succeed in clearing the sclerotic condition in the banks. Whether wrenching constipation or multiple sclerosis in the banking channels and arteries, what difference!! My main question is WHEN DID 'QE1' EVER END?? The grand bond monetization is mostly hidden from view for USTreasurys, since almost every auction is a failure. The grand bond monetization is mostly hidden from view for USAgency Bonds, since mammoth activity in Fannie Mae basements keeps the lid on evidence that their bonds have gone worthless, and contains the acidic spillover. Watch the backdoor bank welfare in a TARP-2 package soon to be tossed into QE2. Watch the overall debt monetization be kept much more hidden from view, a new national priority. The USDept Treasury and the USFed do care what the world thinks, when the threat of them pulling the global plug on the United States seems a viable option to stop the cancer from spreading even more on a global scale. A cancer has been exposed in the global reserve currency. Reaction should be much more evident in the Gold price than in currency exchange rates. They move relative to each other.



An enormous pressure point in the legal process right here, right now is the threat of Put-Backs. A mortgage security is put back to the bank that packaged the securities from a portfolio neatly arranged in tranches of loans, when the mortgage backed bond is forced by the courts to be bought back by the bank, after fraud or negligence or contractual defects were demonstrated. A fiduciary responsibility is enforced in the bond securitization process. Estimates wildly have come forth that $2 trillion, give or take a few hundred $billion, in mortgage bonds will be put back to the big banks. They are scrambling to win support from the USCongress for quick action. The TARP-1 package worth almost $800 billion was motivated by declines in the housing market. To be sure, plenty of Bait & Switch was evident, but leave that aside. The TARP-2 package might be required at least $1.5 trillion, motivated this time by securities violations, defective fraudulent MERS & REMIC devices, and contract fraud, when the specter of class action lawsuits, even with RICO claims, hangs overhead. These are felony crimes, a far cry from a declining market.



The second round of big bank TARP bailouts certainly has come in a vastly different light. To solve the challenge, look for the USDept Treasury (controlled by Goldman Sachs) and the USFed (controlled by godfathers to Wall Street banks) to conduct a more secretive monetization of the big bank bond exposure. THEY WILL MONETIZE THE PUTBACKS IN THE DEAD OF NIGHT, DONE IN SECRET, WITHOUT FANFARE, IN A MORE DIRECT CABAL EXERCISE. They will use Fannie Mae as a bad bank, a bond garbage can, its reason for being, its raison d'être. When caught, they will claim they did it to avoid a USEconomic Depression. The truth is more that they will conceal their activity in order to retain power, to enable much more banker welfare courtesy of the captured USGovt, even to prevent a collapse on US soil.



GLOBAL BANKERS ANGRY & FEISTY & DEMANDING

The G-20 ministers have come forth with a vacant pledge as a working theme. Regard it as the billboard message of crisis. Ignore the words, but take serious note of the theme, since it wraps words around the alarm. The competitive currency devaluations will be devastating, even as fast moving trade deficits will be the visible outcome. National trade gaps will go out of control. The G-20 finance ministers issued an opening preliminary statement, a working theme. They will pledge to refrain from competitive devaluations and endorse market based exchange rates, whatever that means. Of course, the silent vote is not made by nations that shun attendance, like Brazil. They decided not to attend, due to stated concerns over growing hostility in competitive currency policy. China might have pulled that cord, as Brazil earned a favor. A US proposal was evaluated to set targets for current account gaps on the pathway to rebalancing global growth and realigning exchange rates. The United States will surely be kept exempt, causing more friction. The G-20 Meeting is telling of the crippling devastation coming in the Competing Currency War, which will take down the entire monetary system. And furthermore, the evidence will be seen in the trade deficits. For instance, even Turkey is setting record deficits. Large deficits will be unavoidable. The obvious outcome of the G-20 Meeting was a sharp pullback in the US monetization project planning, but it will be temporary.



Talk of a Plaza-2 Accord has begun, but it will find zero traction. Unfortunately, any such accord requires nations to take the lead in sacrificing their domestic economies and banking systems. Such nations would have to agree to higher currencies, which harm their economies. Not gonna happen!! Instead, expect conflict, disruption, and chaos to grow. What is needed is consensus and order to depreciate the USDollar in relation to the other major world currencies by direct intervention. The present day environment has no maturity, no cooperation, and no order. It is loaded with resentment, animosity, and a desire to topple the horribly corrupt and recognized villains in Wall Street and London, where power is wielded without respect and thefts are perpetrated without conscience. In fact, a spirit of retribution and deserved vengeance permeates the FOREX winds. Witness the Competing Currency Wars soon in full glory, which have moved past first gear, and are well into second gear. USFed Chairman Bernanke has in essence threatened to inflate with QE2 to infinity in order to support a system that cannot any longer be supported, a rickety US$-centric system. Commodity prices are surging, and emerging economies are battling against fast rising price inflation. The USEconomy operates under 7% to 8% annual price inflation, but emerging nations have it a bit worse. Currency appreciation is a necessary tool to keep prices under control for other nations. The BIG problem here is that they are reluctant to allow significant currency appreciation as long as the Chinese Yuan remains static and fixed. The key is China. No nation will agree to a currency rise without China doing so first, and doing so with some magnitude to matter. Emerging nations are cutting deals, even with non-Anglo industrial nations, to avoid usage of the USDollar in trade settlement. If Plaza-2 happens, it will have China as its champion.



The Yen Carry Trade has a vast hidden doorway. Japan has revealed a hidden pressure point. It is the unwind of the great Yen Carry Trade. It was the greatest financial engineering project in modern history. The Jackass found it utterly amazing that the venerable Kurt Richebacher had no idea what it was, and his popular acclaimed newsletter had a moniker devoted to credit and currency markets. Its unwind is coming to an end finally with a climax upward thrust in the Yen, amidst clouding factors like the rise of China. In fact, China is diversifying its FOREX reserves to some extent by using USTreasurys to purchase Japanese Govt Bonds, which has drawn great anger from Tokyo. Witness more currency war battles, bigger than skirmishes.



The climax chapter of the USTreasury Bond bubble, with its benchmark 0% label, removes the Yen Carry Trade since both sovereign bonds offer near 0% yield. The yield differential is eliminated. The end of the great carry trade signals a monetary system breakdown and finally a USGovt debt default. The carry trade provided tremendous demand for the USTreasurys, which has been replaced by the Printing Pre$$. The Yen currency is the quiet litmus index of the competing currency war, its turbo-charge. It remains hidden from view and free from discussion. Details are provided on it in the October issue of the Hat Trick Letter, along with many implications of the bank condition on the gold price.



GOLD CONSOLIDATES BIG GAINS

The gold price rose almost 200 points from the beginning of August to the first week of October. It is consolidating the gains, a digestion process. The resistance was broken. More importantly, the big US bank chokehold of the gold market was somewhat broken. A bull market remains, and the strong seasonal months of December and January lie around the corner. The effect of a seasonally strong September has been seen. The Competing Currency War, the deadly round robin exercise to devaluate currencies, feeds the gold bull in magnificent style. The G-20 platitudes will be brushed aside. The gold bull is given a rich diet in huge volumes of fiat money from strained monetary presses, justified to protect export trade, committed to serve the broken banks. In the middle of the sovereign debt crisis and the mortgage bond eruption and the insolvent bank condition, GOLD IS REGARDED AS THE SAFER HAVEN, since not tied to debt and not associated with counter-party risk. Gold has emerged as a global reserve asset, a competing currency!!
 
Hello fellow traders, hope all is going well. Have not been posting calls on here lately, so I could be focused with a job I have trading for a private individual. The Precious Metals strategy I had been posting on here is extremely profitable, but was setting up only about every 5 weeks, or even more, because the markets unbridled move up. Leaving me with having to fill these 'dead times' with random news articles.
I have modified my strategy to now be able to trade both long & short directions, with set-ups happening about every 2 weeks if not sooner.
Carry on.
:)


Euro under siege as now Portugal hits panic button
By Bruno Waterfield and Robert Winnett, The Daily Telegraph November 15, 2010

The euro is facing an unprec****ted crisis after another country indicated on Monday night that it was at a "high risk" of requiring an international bail-out.
Portugal became the latest European nation to admit it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems.
Greece also disclosed that its economic problems are even worse than previously thought.
Angela Merkel, the German Chancellor, raised the spectre of the euro collapsing as she warned: "If the euro fails, then Europe fails."
European finance ministers will meet in Brussels on Tuesday to begin discussions over a new European stability plan that is expected to result in billions of pounds being offered to Ireland, Portugal and possibly even Spain.
David Cameron said he was thankful that Britain had not joined the euro, but indicated his displeasure that taxpayers in this country face a pounds 7?billion liability in any bail-out package.
The veteran Conservative MP Peter Tapsell warned that the "potential knock-on effect" of the Irish crisis "could pose as great a threat to the world economy as did Lehman Brothers, AIG and Goldman Sachs in September 2008".
Ireland has resisted growing international pressure to accept EU financial assistance amid concerns that this would lead to a surrender of political and economic sovereignty.
However, the German government is expected to signal that Ireland may have to accept a pounds 77?billion bail-out, along with a loss of economic and political independence, as the price of preserving the euro.
Mrs Merkel said that the single currency was "the glue that holds Europe together".
Her words came as fellow eurozone members Portugal and Spain rounded on Ireland. They fear that international concerns over the euro will lead to so-called market contagion spreading to them.
Fernando Teixeira dos Santos, the Portuguese finance minister, said: "There is a risk of contagion. The risk is high because we are not facing only a national problem. It is the problems of Greece, Portugal and Ireland. This has to do with the eurozone and the stability of the eurozone, and that is why contagion in this framework is more likely."
Mr Teixeira dos Santos added: "I would not want to lecture the Irish government on that. I want to believe they will decide to do what is most appropriate together for Ireland and the euro. I want to believe they have the vision to take the right decision."
He later sought to clarify his comments, insisting that Portugal was not preparing to seek assistance.
Greece had earlier added to the growing uncertainty when it said it would breach the conditions for the bail-out it was granted by the EU earlier in the year. The Greek government said its debt problem was far worse than previous dire forecasts.
Eurostat, the EU statistics agency, said Greece's 2009 budget deficit reached 15.4 per cent of gross domestic product, significantly above its previous figure of 13.6 per cent.
George Papandreou, the Greek Prime Minister, said new European-wide taxes may now be needed to fund bail-outs.
"We need a mechanism which can be funded through different forms and different ways," he said. "My proposal is that taxes such as a financial tax or carbon dioxide taxes could be important revenues and resources for funding such a mechanism."
Irish ministers continued to insist publicly on Monday that they did not require a European bail-out to help meet the cost of repaying the country's debts. However, reports suggested that it may require help to shore up its banks.
Jean-Claude Juncker, the head of the Eurogroup of finance ministers, said the eurozone was indeed ready to act "as soon as possible" if Ireland sought financial assistance. But he stressed that "Ireland has not put forward their request".
Ireland suffered the worst recession of any major economy and has amassed government debts of more than euros 100?billion (pounds 84?billion). It has an unemployment rate almost twice as high as Britain at 13.2 per cent and has a record deficit equivalent to 32 per cent of its gross domestic product.
Senior figures at the European Central Bank lined up on Monday to insist that the Irish accept international help to reassure investors that the euro was secure.
Miguel Angel Fernandez Ordonez, the Bank of Spain governor and a member of the ECB's governing council, said: "The situation in the markets has been negative due in some part to the lack of a decision by Ireland. It's not up to me to make a decision. Ireland should take the decision at the right moment."
 
Just waiting for the next position set-up.
:)


BOB RUBIN: "US In Terribly Dangerous Territory," Bond Market May Be Headed For "Implosion"
Aaron Task | Nov. 17, 2010, 11:24 AM

Warning of the risk of an "implosion" in the bond market, former Treasury Secretary Robert Rubin says the soaring federal budget deficit and the Fed's quantitative easing are putting the U.S. in "terribly dangerous territory."

Speaking at an event at The Pierre Hotel in New York City honoring Sen. Kent Conrad (D-N.D.), Rubin joined the growing number of current and former officials (foreign and domestic) to criticize QE2. The Fed's plan to buy $600 billion of Treasuries "has a lot of risk," he said, calling the international reaction "horrendous."

Rubin, who issued a similar warning about the bond market at The FT's "Future of Finance" conference in October, said Congress' vote on raising the deficit ceiling next spring could be the "trigger" for a rout in the Treasury market. Several Republican and Tea Party candidates vowed to not increase the government's debt ceiling unless Democrats agree to sharp cuts in spending that may not be politically tenable.

A Congressional standoff on the debt ceiling could spook international investors, Rubin said, alluding to a market event similar to the Dow's 778-point plunge on Sept. 29, 2008, when the House initially voted no on TARP.

While most pundits worry about the potential for China to dump its Treasury holdings, the former non-executive chairman of Citigroup said a financial version of the Cold War concept of Mutual Assured Destruction will likely prevent them from doing so. But he is worried about selling by the government's of Singapore, Hong Kong and Malaysia. "They could say ‘the Chinese are stuck but we're not,'" Rubin predicts.

Rubin's comments came during a panel discussion that also featured Sen. Conrad, chair of the Senate Budget Committee, former Nebraska Senator Bob Kerrey and former U.S. Comptroller General David Walker. The panel was moderated by former Commerce Secretary Pete Peterson, the senior chairman and co-founder of The Blackstone Group as well as founder of the Concord Coalition.



Read more: http://www.businessinsider.com/rubin-bond-market-implosion-2010-11#ixzz15fDTqvtI
 
Zero positions held, waiting to see how this week ended.
:)


Knight Research' Stunning Call: "The Game Is Over"
Submitted by Tyler Durden on 11/17/2010 15:52


The Game Is Over

The simple story is this: We believe the structural and cyclical terms of global trade have finally reached their tipping point. This will catalyze a wholesale change in sentiment and a historic repositioning of risk assets. The emerging market global growth story is over.

In meetings with clients throughout October, we began emphasizing our growing concerns about the nearly ubiquitous confidence the financial markets—and for that matter, global leaders and their body politic—have in China; and by extension, the rest of the emerging market story, commodities, and the direction of foreign exchange cross-rates.
Not surprisingly, our concerns were met with varying degrees of resistance; but the overall consensus clearly favored a very bullish, asymmetric outcome over both the near and intermediate terms. When pressed as to our own sense of timing and specific catalysts for broad-based trend reversal, candidly we were unclear. Our sense then, was that the higher and faster the commodity markets pushed, the sooner the reversal would occur. But we have now clarified our view.
In just the past several weeks, we believe the data and government actions out of China, the back-up in US interest rates, the Fed’s emphatic commitment to QE2, intensifying pressures across the EU, broadly rising commodity prices, government efforts to control hot money flows, have finally pushed the global terms of trade to their tipping point.
And now, as is evident by the flight to safety, and growing evidence that China will soon try and effect price controls in addition to raising interest rates and significantly changing the rules for their vast network of Local Government Funding Vehicles (LGFVs); the writing is on the wall. The game is over.
The simple story is this: The structural and cyclical terms of global trade have reached their tipping point which will effect a wholesale change in sentiment and a historic repositioning of risk assets.
So what do we consider the “terms of global trade”? Structurally, per our top chart, they are the intersection of Government Policy (viz., rule of law, market systems, trade law, etc.,) Resource and Industry (viz., natural resources, labor/demographic pools, industrial advantages, import dependencies, etc.,) and Economic Security (viz., the sovereign’s competitive standing, the relative power/needs of the citizenry, the mandate/control of the government, etc.) And cyclically, (as represented by the light blue, bold arrows) the terms of trade are defined by the intersection of foreign exchange rates, commodity prices, and the cost and availability of trade finance.
And in our assessment given:
The structural breakdown of the credit and labor markets in the developed world and the anemic outlook for nominal GDP growth
The immaturity of the developing world and their vulnerability to credit shocks and uncontrollable inflation
China’s dependence upon non-economic, and unsustainable credit expansion to maintain growth far beyond natural export and domestic demand, and
Asia’s dependence upon imported energy and agriculture
the game is over. Presently, we believe that the broad-based resurgence of investor confidence in the emerging market and secular bull market in commodities will end badly; proving that the rally which commenced in Q2 2009, was in fact an “echo bubble” facilitated by massive—and unsustainable—stimuli from the Chinese Government

And although such cataclysmic shocks rarely result in rhythmic, straight line fractures, the chain of price adjustments should be relatively clear. Accordingly, we expect a shockingly powerful rally in the dollar, broadbased weakness across the commodity sector, a dramatic widening of emerging market credit spreads, and what could prove to be a stampede of hot fund flows out of the emerging markets.
We appreciate both the gravity and the brevity of this note; but then again, the story is simple.
We believe that the end of the Great Consumer Credit Cycle and the vast structural differences in the terms of trade between the United States, the EU, and China, have finally caught up with the secular bull thesis on Emerging Market and Commodities. Quite ironically, the Fed’s aggressive policies will likely prove to be the catalyst which breaks China’s unbridled expansion of credit and non-economic growth, ushering in a wholesale rebalancing of risk assets.
 
Have entered the following Metals buy positions.

Xag/usd long: $27.38

Xau/usd long: $1354.90
:)


The Fear Factor in the Muni Bond Market
By HEIDI N. MOORE

Is the great municipal bond apocalypse finally upon us?

The panicky-looking dip in municipal bond demand this week makes it look imminent. According to Reuters data, cities and states canceled $3 billion in planned bond sales, or more than 10 percent of the $24.4 billion of issues in the pipeline.

At the same time, prices have been falling rapidly, with investors demanding roughly half a percentage point more in yield than they did earlier this month because they perceive that risk has risen significantly in the past two weeks.

Add to this that municipal bond funds have shown themselves averse to pouring more money into the bonds, and it is no wonder at all that many traders are wondering whether the bottom is finally falling out from the municipal market. Municipal bonds, after all, represent the relative health of America’s cities and states, and in these recessionary times there are fair concerns about whether all can meet their obligations — particularly strapped California.

And add to all of this that Chris Whalen, the founder of Institutional Risk Analytics, predicted that California would default on its debt, as would many other cities and states — and no bailouts would be forthcoming.

It may not be the end, however — yet. According to Chris Mauro, director of municipal research for RBC Capital Markets, municipal bonds are not crashing right now.

What municipal bonds always had going for them were low default rates and solid credits. A study by Fitch Ratings once pegged the long-term default rate for the bonds as 0.25 percent. Because cities and states rarely defaulted on their debt, municipal bonds won a reputation as a safe haven for investors even in recessions. That much has not changed — somewhat incredibly, considering that the financial crisis has struck so deep and that the municipal bond market is so large (Roubini Global Economics estimates its size at $2.7 trillion).

Mr. Mauro argues instead that municipal bonds are being buffeted by what analysts call technical issues: a big imbalance between supply (and lots of it) and demand (currently not so hot).

“I don’t deny there are some significant issues relating to the health of state and local governments,” Mr. Mauro said. But right now, he said, “the fiscal problems at the state and local level won’t be apparent to everyone until we see what next year’s budget proposals have in store.”

Mr. Mauro argued that no news had emerged to make investors rethink municipal bonds. Cities and states are no worse off, financially, than they were Nov. 8 before municipal bonds started to take a hit.

In fact, Mr. Mauro does not expect any big reckoning in municipal bonds until at least February, when many cities and states start quarreling about their planned 2012 budgets.

So what’s hitting the municipal market now? Look to a last-minute stampede in a rival form of bonds that cities and states just simply like better right now.

There is a huge investor rush toward popular Build America Bonds, the year-old program to help municipalities sell taxable bonds. The Build America Bonds program encourages cities and states to issue debt by refunding them 35 percent of the cost of selling bonds. In only a year, Build America Bonds have come to represent 20 percent of all new bond issues by cities and states. The Build America Bonds program is set to expire in just a few weeks unless Congress intervenes. That is creating a rush of supply by cities and states, which want to rush to issue them, and investors, who want to hurry to buy them.

Some estimates put the rush of Build America Bonds at $40 billion — a daunting amount of supply to come to market in only six weeks.

Of course, even if the municipal bond market as a whole does not collapse, that still does not help beleaguered California. The state is trying to sell $14 billion of municipal bonds to market but has been stymied by lawsuits. Meanwhile, its budget deficit is growing every day. For problems like that, the municipal bond market has no easy answers.
 
Have entered the following Metals buy positions.

Xag/usd long: $27.38

Xau/usd long: $1354.90
:)
Still holding previous metal positions.

Xag long: $27.83
+1.64%

Xaus long: $1365
+0.75%
:)


Dollar to Become World's `Weakest Currency,' Drop to 75 Yen JPMorgan Says
By Shigeki Nozawa - Nov 17, 2010 7:25 PM PT

The dollar may fall below 75 yen next year as it becomes the world’s “weakest currency” due to the Federal Reserve’s monetary-easing program, according to JPMorgan & Chase Co.

The U.S. central bank, along with those in Japan and Europe, will keep interest rates at record lows in 2011 as they seek to boost economic growth, said Tohru Sasaki, head of Japanese rates and foreign-exchange research at the second-largest U.S. bank by assets. U.S. policy makers may take additional easing steps following the $600 billion bond-purchase program announced this month depending on inflation and the labor market, he said.

“The U.S. has the world’s largest current-account deficit but keeps interest rates at virtually zero,” Sasaki said at a forum in Tokyo yesterday. “The dollar can’t avoid the status as the weakest currency.”

The Fed said on Nov. 3 it will buy $75 billion of Treasuries a month through June to cap borrowing costs. The central bank has kept its benchmark rate in a range of zero to 0.25 percent since December 2008. The Bank of Japan on Oct. 5 cut its key rate to a range of zero to 0.1 percent and set up a 5 trillion yen ($59.9 billion) asset-purchase fund.

The dollar traded at 83.38 yen as of 12:04 p.m. in Tokyo after falling to a 15-year low of 80.22 on Nov. 1. The greenback declined to post-World War II low of 79.75 yen in April 1995. The U.S. currency has declined against 12 of its 16 most-traded counterparts this year, according to data compiled by Bloomberg.

Tightening Unnecessary

There’s no need for any monetary tightening in the U.S. as even prolonged easing won’t heighten inflationary pressures with the balance sheets of banks and households still hurting from the fallout of the global financial crisis, Sasaki said.

Ten-year Treasury yields may decline to around 2.25 percent over the next year, and their premium over similar-maturity Japanese yields won’t widen, he said. The benchmark 10-year Treasury yielded 2.89 percent today.

The world economy is likely to expand 3 percent next year amid the extra liquidity provided by central banks, “repeating a pattern from early 2002 to the end of 2004” when improving risk appetite boosted stocks and commodities and the dollar fell 25 percent against the yen, Sasaki said.

With monetary easing in the U.S., Japan and Europe likely to bolster the global recovery and increase demand for yield, the yen is poised to weaken against other currencies beside the dollar to levels last seen in early 2007, Sasaki said.

Japan will refrain from selling the yen even if it strengthens against the dollar, following international criticism of foreign-exchange intervention, he said. The nation intervened in the currency markets for the first time in six years on Sept. 15 when the yen climbed to a 15-year high.
 
Have entered the following Metals buy positions.

Xag/usd long: $27.38

Xau/usd long: $1354.90
:)
Still holding positions from previous post.

Xag long: $27.65
+0.99%

Xau long: $1379.46
+1.81%
:)


The horrible truth starts to dawn on Europe's leaders
By Ambrose Evans-Pritchard

The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict.

In a speech this morning, EU President Herman Van Rompuy (poet, and writer of Japanese and Latin verse) warned that if Europe’s leaders mishandle the current crisis and allow the eurozone to break up, they will destroy the European Union itself.

“We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union,” he said.

Well, well. This theme is all too familiar to readers of The Daily Telegraph, but it comes as something of a shock to hear such a confession after all these years from Europe’s president.

He is admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back it up – and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of North and South Europe had come anywhere near sustainable convergence – may now backfire horribly.

Jacques Delors and fellow fathers of EMU were told by Commission economists in the early 1990s that this reckless adventure could not work as constructed, and would lead to a traumatic crisis. They shrugged off the warnings.

They were told too that currency unions do not eliminate risk: they merely switch it from currency risk to default risk. For that reason it was all the more important to have a workable mechanism for sovereign defaults and bondholder haircuts in place from the beginning, with clear rules to establish the proper pricing of that risk.

But no, the EU masters would hear none of it. There could be no defaults, and no preparations were made or even permitted for such an entirely predictable outcome. Political faith alone was enough. Investors who should have known better walked straight into the trap, buying Greek, Portuguese, and Irish debt at 25-35 basis points over Bunds. At the top of boom funds were buying Spanish bonds at a spread of 4 basis points. Now we are seeing what happens when you build such moral hazard into the system, and shut down the warning thermostat.

Mr Delors told colleagues that any crisis would be a “beneficial crisis”, allowing the EU to break down resistance to fiscal federalism, and to accumulate fresh power. The purpose of EMU was political, not economic, so the objections of economists could happily be disregarded. Once the currency was in existence, EU states would have give up national sovereignty to make it work over time. It would lead ineluctably to the Monnet dream of a fully-fledged EU state. Bring the crisis on.

Behind this gamble, of course, was the assumption that any crisis could be contained at a tolerable cost once the imbalances of EMU’s one-size-fits-none monetary system had already reached catastrophic levels, and once the credit bubbles of Club Med and Ireland had collapsed. It assumed too that Germany, The Netherlands, and Finland would ultimately – under much protest – agree to foot the bill for a ‘Transferunion’.

We may soon find out whether either assumption is correct. Far from binding Europe together, monetary union is leading to acrimony and mutual recriminations. We had the first eruption earlier this year when Greece’s deputy premier accused the Germans of stealing Greek gold from the vaults of the central bank and killing 300,000 people during the Nazi occupation.

Greece is now under an EU protectorate, or the “Memorandum” as they call it. This has prompted pin-prick terrorist attacks against anybody associated with EU rule. Ireland and Portugal are further behind on this road to serfdom, but they are already facing policy dictates from Brussels, but will soon be under formal protectorates as well in any case. Spain has more or less been forced to cut public wages by 5pc to comply with EU demands made in May. All are having to knuckle down to Europe’s agenda of austerity, without the offsetting relief of devaluation and looser monetary policy.

As this continues into next year, with unemployment stuck at depression levels or even creeping higher, it starts to matter who has political “ownership” over these policies. Is there full democratic consent, or is this suffering being imposed by foreign over-lords with an ideological aim? It does not take much imagination to see what this is going to do to concord in Europe.

My own view is that the EU became illegitimate when it refused to accept the rejection of the European Constitution by French and Dutch voters in 2005. There can be no justification for reviving the text as the Lisbon Treaty and ramming it through by parliamentary procedure without referenda, in what amounted to an authoritarian Putsch. (Yes, the national parliaments were themselves elected – so don’t write indignant comments pointing this out – but what was their motive for denying their own peoples a vote in this specific instance? Elected leaders can violate democracy as well. There was a corporal from Austria … but let’s not get into that).

Ireland was the one country forced to hold a vote by its constitutional court. When this lonely electorate also voted no, the EU again disregarded the result and intimidated Ireland into voting a second time to get it “right”.

This is the behaviour of a proto-Fascist organization, so if Ireland now – by historic irony, and in condign retribution – sets off the chain-reaction that destroys the eurozone and the European Union, it will be hard to resist the temptation of opening a bottle of Connemara whisky and enjoying the moment. But resist one must. The cataclysm will not be pretty.

My one thought for all those old friends still working for the EU institutions is what will happen to their euro pensions if Mr Van Rompuy is right?
 
Have entered the following Metals buy positions.

Xag/usd long: $27.38

Xau/usd long: $1354.90
:)
Still holding previous positions.

Xag/usd long: +0.62%

Xau/usd long: +1.34%
:)



China, Russia quit dollar on bilateral trade
08:22, November 24, 2010

China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday in St. Petersburg.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.

The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.

Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China's Tianwan nuclear power plant, the most advanced nuclear power complex in China.

Putin has called for boosting sales of natural resources - Russia's main export - to China, but price has proven to be a sticking point.

Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia's energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.

Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.

Wen's trip follows Russian President Dmitry Medvedev's three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world's biggest energy producer with the largest energy consumer.

Wen said at the press conference that the partnership between Beijing and Moscow has "reached an unprecedented level" and pledged the two countries will "never become each other's enemy".

Over the past year, "our strategic cooperative partnership endured strenuous tests and reached an unprecedented level," Wen said, adding the two nations are now more confident and determined to defend their mutual interests.

"China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power," he said.

"The modernization of China will not affect other countries' interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries."

Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a "fair and reasonable new order" in international politics and the economy.

Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.

Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.

Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.

He left St. Petersburg for Moscow late on Tuesday and is set to meet with Russian President Dmitry Medvedev on Wednesday.

Source: China Daily/Agencies
 
Have entered the following Metals buy positions.

Xag/usd long: $27.38

Xau/usd long: $1354.90
:)
Still holding positions.

Xag/usd: +0.69%

Xau/usd: +1.47%
:)
sesame_street_thanksgiving.jpg


Betting In The Endgame
Posted Tuesday, 23 November 2010

There is a difference between betting in the endgame and betting on the endgame. The former is a fool’s avocation whereas the latter is a once in a lifetime opportunity.

The endgame of capitalism is a uniquely different environment where investors find themselves faced with increasingly dangerous options. In the endgame, proven strategies are improvident, buying and holding becomes a time bomb and speculators are favored over investors because of excessive liquidity and volatility.

Capitalism, a system of credit and debt that produced 300 years of growth is now dying. The bankers’ debt-based money has created such levels of debt that even 0 % credit can no longer induce growth. In the endgame, the problem is not the lack of credit—it’s the excessive amount of debt.

…sooner or later, too much credit always turns into a giant debit as borrowers crumple under the burden of escalating interest payments…

Melchior Palyi, economist, 1892-1970

Capitalism’s problem has always been debt, the inevitable byproduct of credit-driven expansion. In times of economic growth, merchants of debt, i.e. bankers, sell debt to those seeking returns; but, in the endgame when economies contract, IOUs cannot be repaid as defaulting debt overwhelms the ability to pay what is owed.

Today, central bankers are caught in a trap of their own making. Removing gold from the international monetary system in 1971 allowed governments and bankers to expand their balance sheets to historic heights. The price, however, was the debasement of their currencies, a price which is now being exacted.

Gold is up 29 percent this year and is heading for a 10th annual gain, the longest winning streak since at least 1920 in London, partly on demand for an alternative asset to protect against the debasement of currencies.

Bloomberg.com, November 8, 2010

In 1971, on the advice of Milton Friedman (Ben Bernanke’s mistaken mentor), President Nixon ended the convertibility of the US dollar to gold; and, since then, central bankers have been fighting to keep their debt-based paper money functioning without the backing of gold—a fight they are now losing.

Gold..has risen again today in most currencies and reached new record nominal highs in sterling (877.30/oz) and is targeting record nominal highs in euros . Competitive currency devaluations and currency debasement is seeing all fiat currencies fall in value against gold.

Goldcore.com, November 9, 2010

That an economic system based on leveraged debt actually lasted three centuries is a miracle as well as an abomination. Its passing will nonetheless be mourned by those who still believe that bankers are benign wizards of modern finance overseeing orderly and just markets.

In truth, bankers are self-serving parasites whose dispensation of credit ultimately leaves societies, businesses and nations bankrupt on the gallows of compounding unpayable debt.

INVESTORS FORCED TO TAKE ON RISK
By keeping interest rates low, central bankers are trying to force investors to take on more risk to keep their economies functioning. By so doing, however, central bankers are distorting underlying free market dynamics as investors should be reducing, not increasing risk, in such times.

The consequences of distorting free-market forces have devastating repercussions in the endgame. This is what happened in 2002 when Greenspan cut interest rates to 1% and in so doing created the catastrophic US real estate bubble whose collapse brought global credit markets to a halt in 2007.

Capitalism’s free markets are only free as long as they serve the bankers’ quid pro quo that markets accept the bankers’ leveraged debt, i.e. capital, as money. Such markets flourished before gold’s complete removal from bankers’ bogus money in 1971, setting the endgame in motion; and, now, 39 years later, the endgame is almost over as monetary disarray and defaulting debt take their toll.

In should be noted that Greenspan’s real estate bubble could not have expanded without the collusion of credit-rating agencies and US regulators. As regulators looked the other way, credit agencies such as Moody’s, S&P and Fitch fraudulently gave subprime mortgages the highest AAA rating allowing institutional investors, e.g. pension funds and insurance companies, to buy trillions of dollars of high yielding toxic debt extending capitalism’s endgame a few more years.

The critical role that credit rating agencies played in the collapse of markets was predicted by economist Melchior Palyi. In The Wall Street Journal article The Man Who Called the Financial Crisis—70 Years Early (11/6/10), the WSJ credited Palyi (1892-1970) with having predicted the current financial crisis and its cause in 1936.

PALYI’S NEXT PREDICTION
Palyi later made another prediction about a trend that could eventually cause the collapse of the western banking system. Palyi noted that after 1950 gold was being drained from central bank monetary reserves at an unprecedented rate before disappearing then into private hoards.

Melchior Palyi first came to my attention in an article subtitled, Gold Vanishing Into Private Hoards (5/31/2007) by Professor Antal E. Fekete, another Hungarian-born economist. In that article, Fekete wrote:

While doing research in the Library of the University of Chicago in the early 1980's I came across the unfinished manuscript of a book with the title: The Dollar: An Agonizing Reappraisal. It was written in the year 1965. It has never been published (although it has received private circulation).

The author, monetary scientist Melchior Palyi, a native of Hungary, died before he could finish it. Monetary events started to spin out of control in 1965, culminating in the default on the international gold obligations of the United States of America six years later in August,1971. Palyi had correctly prophesied that event which occurred after he died.

Palyi observed that beginning in 1950, gold bullion began moving out of government reserves into private hoards, a trend that would eventually empty government coffers of the gold that backed their paper currencies. If continued, Palyi predicted this would lead to the breakdown of the entire gold-based monetary setup of the West.

Palyi was right. Six years later, gold was removed as the foundation of the global monetary system. For the first time in history all money was fiat. The following is excerpted from Palyi’s unpublished work, The Dollar: An Agonizing Reappraisal (1965):

1950 is the watershed year marking the start of a new era in the relationship between gold and paper money. In the twelve-year period ending in 1964 the Western World's gold mines and Russian gold sales (about $1 billion in 1963-64) combined, produced $16 billion worth of gold, but official gold reserves have grown only by $7 billion. More than 50 percent, on average, of the new gold bypassed official reserves and vanished in private hoards. [bold, mine]

On the top of that the prime reserve currency, the U.S. dollar (that is backing many other currencies) had lost close to one-half of its gold reserves. By the end of 1965 our reserves have declined from a peak of $24.7 billion in September, 1949, to less than $14 billion -- of which $835 million is a sight deposit of the International Monetary Fund.

Not only has the richest country [the US] failed to attract any part of the new gold supply; it has actually lost more than $10 billion's worth. If continued, this process would herald the breakdown of the entire gold-based monetary setup of the West, with incalculable consequences. [i.e. the endgame)

Professor Fekete wrote that in 2007 the amount of gold now in private hoards was greater than all the gold produced before 1950:…gold absorption into private hoards for the 15-year period from 1950 through 1965 was of the same order of magnitude as the U.S. gold reserve at its peak in 1949, the largest gold concentration ever in history.

This private absorption of gold is unprecedented, both as to its magnitude and to its speed. The total amount of gold absorption for the entire 57-year period 1950-2007 [is] an amount greater than all the gold produced in history before 1950. ..Fifty percent of all gold in existence has been produced since 1960. The same fifty percent has been withdrawn during the same period of time from the public domain, and disappeared in private hoards.

There is no way to account for this gold. We do not know the location, the identity of owners, nor their intentions what they wanted to do with it…
The question is: Who has been buying all that gold?

THE ROTHSCHILDS
In the endgame, systemic stress often reveals information that would otherwise never be discovered. One such discovery is an unexpected clue to the identity of those buying the world’s gold reserves since 1950. The clue emerged as a consequence of the UK’s increasingly perilous finances.

A clue to the mystery buyers surfaced on November 1st when in a speech in the House of Lords, Lord James of Blackheath revealed that a shadowy group [referred to as Foundation X by Lord James] had contacted him with an offer to help solve the UK's economic problems, a group that possesses more gold than all the world's bullion reserves combined.

On the basis of these gold holdings—in excess of 30,000 tons—Foundation X is in all likelihood a front for the Rothschilds, the infamous banking family which has a long history with gold.

The family patriarch, Nathan Rothschild, first began dealing in gold in 1809, in 1840 the Rothschilds were appointed bullion brokers for the Bank of England and from 1919 to 2004 the family firm oversaw the daily fixing of the gold price in London—and, most likely, are now the mysterious buyers who have been purchasing most of the world’s gold since 1950.

Note: This is a link to the speech where Lord James revealed Foundation X’s offer of aid to the UK: http://www.liveleak.com/view?i=869_1288858103&c=1. Prior to his peerage, Lord James had a career as a highly respected banker and corporate director and his reference to “laundering terrorist money” refers to his work for the UK in dissolving bank accounts used by the IRA.

http://www.belfasttelegraph.co.uk/n...-more-than-1billion-of-ira-cash-14995248.html

The multi-billion pound offer of “Foundation X” to aid the UK is an indication of just how serious these times are. The collapse of the global banking system threatens the power of all who have benefited from the systemic indebting of others, a group that certainly includes the Rothschilds.

It is clearly in the Rothschilds’ self-interests to now help England, the nation which made their banking empire possible through its legitimization of debt-based capital as money. The fortunes of England and the Rothschilds have been intertwined for centuries and should England collapse, the power and influence of the Rothschilds would decline as well.

The endgame is bringing about the end not only of capitalism, but the vast empires of wealth to which it gave rise. That the elites are now worried about the economic stability of sovereign nations is evidence that the endgame is drawing closer to its inevitable end.

THE END
Debt is the critical issue now facing the world’s governments. How it should be approached is the focus of much debate. In a recent exchange of views hosted by the news program, Russia Today, I and others discussed the global debt crisis. To view the discussion, go to
.

The debt crisis is part of capitalism’s endgame. In 1981, Buckminster Fuller predicted that the world’s power structures would collapse. In 1991 communism fell and today capitalism is following in communism’s fatal footsteps.

Fuller was not the only one who predicted the seriousness of the present crisis. Among them were economists Melchior Palyi, Ludwig von Mises, John Exter, economic historian David Hackett Fisher, American historians William Strauss and Neil Howe and others. Given the severity of this crisis, it is a short list.

Another unlikely source, however, recently came to my attention; a psychic channeling in 1992 also predicted today’s debt-driven economic troubles [note the use of the word monetary in the channeling]:

... In your country [USA] right now you see some signs of economic recovery on some levels. However, it has not reached its full stage of recovery and there will be additional times of turmoil in the monetary sense concerning your country and the world as a whole.
The monetary situation is not good as most of you are aware...The debt of the country is phenomenal. If it were a private individual it would have been forced to declare bankruptcy long before now. There will be some financial challenges throughout the world in the years ahead…
Dr. Blair, channeled message, March 20, 1992.
That a psychic message predicted an event completely missed by the vast majority of trained economists says something about (1) economists, (2) the training of economists and (3) psychics.
Dr. Blair, channeled by the late medium, Dr. Robert Ireland in Tucson, spoke on many subjects. Some of Dr. Blair’s economic predictions are included in a talk I gave at the Temple of Universality on October 31st. To view, go to http://www.youtube.com/view_play_list?p=469EF20E6E32E248

THE REASONS FOR THE CRISIS
In his channeling in 1992, Dr. Blair explained the reasons for the coming crisis, reasons that bear a close similarity to those given by Buckminster Fuller in the introduction to Fuller’s book, the Critical Path.
It will be a spiritual revolution…It will be a time of trials and tribulations but one that brings mankind closer together. Man will come to each other’s aid for the purpose of helping and uplifting his brother.

Dr. Blair, channeled message, March 20, 1992

Humanity is moving ever deeper into crisis—a crisis without precedent.
First, it is a crisis brought about by cosmic evolution irrevocably intent upon completely transforming omnidisintegrated humanity from a complex of around-the-world, remotely-deployed-from-one-another, differently colored, differently credoed, differently cultured, differently communicating, and differently competing entities into a completely integrated, comprehensively interconsiderate, harmonious whole.

Critical Path, Buckminster Fuller, St. Martin’s Press, 1981, page xvii:

The crisis has not yet brought about the radical transformation of humanity that Buckminster Fuller and Dr. Blair predicted. This is because the requisite level of severity has not yet been reached. It will be.

Buy gold, buy silver, have faith.

Darryl Robert Schoon
 
Last edited:
Have entered the following Metals buy positions.

Xag/usd long: $27.38

Xau/usd long: $1354.90
:)
Still holding positions.

Xag current: $26.61
-2.81%

Xau current: $1356.53
+0.12%
:)


Chinese Exchanges Hike Margins On Virtually All Commodities In (Temporary) Attempt To Cool Surging Prices
Submitted by Tyler Durden on 11/26/2010

Just because the CME's hikes in all sorts of commodity margins were perfectly innocent and only had to do with "risk management" functions, we read with little surprise that China's Dalian Commodity and Shanghai Futures Exchanges are now also in the indirect price suppression, pardon, risk management business. Earlier reports confirm that both exchanges will hike margins on virtually every single commodity traded in China. This is likely the last stop gap measure before the central bank is forced to implement a rate hike and cool already near record inflation. As the CME's failed attempts to kill silver and gold price appreciation using margin pressure have so far done very little, we expect that the short-term impact of this move will wear off within a weak, at which point prices will resume their upward climb with a vengeance.

From Dow Jones

BEIJING (Dow Jones)--The Dalian Commodities Exchange will raise the required margins for soybean, soymeal, soyoil, palm oil, corn, linear low-density polyethylene and polyvinyl chloride contracts to 10%, effective Monday, the bourse said in a statement on its website Friday.

The daily limit for price movements will be increased to 6%, it said.

The changes follow government calls to crack down on speculative activity that has been driving price increases, especially in agricultural commodities.

"The move can efficiently curb speculation," said Liu Qing, an analyst at Xinhu Futures Co.

She said the measures were unusually strong, as margin requirements are usually raised only before holidays.

"The exchange will take more risk-control measures to stabilize the market, if risks increase," the DCE said.

On Tuesday, it had raised the required margins for soymeal and soyoil to 7%.

The Zhengzhou Commodities Exchange--on which cotton, sugar, wheat, rice and rapeseed oil are traded--raised required margins and daily trading limits for some of its key agricultural products effective Friday.

Trading limits for cotton, early-season rice and sugar were lifted to 7%, with margins set at 12%, it said. Hard wheat trading limits were raised to 6%, with margins set at 10%.

Normally, minimum trading margins for products on the Dalian and Zhengzhou exchanges are set at 5% and daily trading limits range between 4% and 6%.

The government has become increasingly concerned about inflationary pressures, however, so various ministries and departments have begun to take action.

The Ministry of Agriculture has urged farmers to expand area cultivated with vegetables to ensure supplies, the China Banking Regulatory Commission has ordered banks to extend more loans to agricultural producers and traders, and the People's Bank of China has said it will reduce excess liquidity in the banking system.

The increase in the country's consumer price index hit a 25-month high last month. The index rose 4.4% from a year earlier in October, driven by a 10.1% rise in food prices, which account for one third of the CPI basket.

And just to make sure the message is heard loud and clear, the Shanghai Futures Exchange did an identical move just hours earlier.

From Bloomberg:

The Shanghai Futures Exchange, where the world’s top three metals contracts are traded, will increase margins and daily price limits in the latest move by China to curb speculation and cool inflation.

Margins on copper, aluminum, steel wire, gold and fuel oil will rise to 10 percent, the bourse said in a statement. They gain to 12 percent for steel-reinforcing bars and zinc, and to 13 percent for rubber, after the market closes on Nov. 29, it said. Daily price limits for all products will widen to 6 percent from Nov. 30, it said.

China, the world’s biggest consumer of commodities, has pledged to control prices, and may raise interest rates a second time this year to slow the fastest inflation in two years and curb food costs that jumped 10.1 percent in October. The nation has also made trading commodity futures more expensive.

“This is another move aimed at controlling risk and curbing speculation,” Yu Ye, an analyst at Minmetals Futures Co., said by phone from Shenzhen.

Bottom line: these moves will achieve a price drop in the near term as marginal speculators are kicked out. We anticipate that the effect will last about a week, at which point price increases will resume with an even more pronounced pace and the PBoC will have no choice but to hike rates. For now, however, crisis has been averted, and yet another can kicking stop-gap has been implemented that does nothing to fix the underlying problem and everything to soothe the symptom in hopes that someone somewhere will actually do the right thing.
 
Have entered the following Metals buy positions.

Xag/usd long: $27.38

Xau/usd long: $1354.90
:)
Still holding positions.

Current prices:

xag/usd $27.13
-0.92%

xau/usd $1366.91
+0.89%
:)


The Stench of US Economic Decay: Russia and China Dump the US Dollar
Dr. Paul Craig Roberts
November 29, 2010


On Thanksgiving eve the English language China Daily and People’s Daily Online reported that Russia and China have concluded an agreement to abandon the use of the US dollar in their bilateral trade and to use their own currencies in its place. The Russians and Chinese said that they had taken this step in order to insulate their economies from the risks that have undermined their confidence in the US dollar as a world reserve currency.

As China has a large and growing supply of dollars from trade surpluses with which to conduct trade, China is signaling that she prefers Russian rubles and Brazilian reals to more US dollars.

This is big news, especially for the news dead Thanksgiving holiday period, but I did not see it reported on Bloomberg, CNN, New York Times or anywhere in the US print or TV media. The ostrich’s head remains in the sand.

Previously, China concluded the same agreement with Brazil.

As China has a large and growing supply of dollars from trade surpluses with which to conduct trade, China is signaling that she prefers Russian rubles and Brazilian reals to more US dollars.

The American financial press finds solace in the episodes when sovereign debt scares in the EU send the dollar up against the euro and UK pound. But these currency movements are just measures of financial players shorting troubled EU-denominated debt. They are not a measure of dollar strength.

The dollar’s role as world reserve currency is one of the main instruments of American financial hegemony. We haven’t been told how much damage Wall Street fraud has inflicted on EU financial institutions, but the EU countries no longer need the US dollar for trade between themselves as they share a common currency. Once the OPEC countries cease to hold the dollars that they are paid for oil, dollar hegemony will have faded away.

Another instrument of American financial hegemony is the IMF. Whenever a country cannot make good on its debts and pay back the American banks, in steps the IMF with an austerity package that squeezes the country’s population with higher taxes and cuts in education, medical and income support programs until the bankers get their money back.

This is now happening to Ireland and is likely to spread to Portugal, Spain, and perhaps even to France. After the American-caused financial crisis, the IMF’s role as a tool of US imperialism is less and less acceptable. The point could come when governments can no longer sell out their people for the sake of the American banks.

There are other signs that some countries are tiring of America’s irresponsible use of power. Turkey’s civilian governments have long been under the thumb of the American influenced Turkish military. However, recently the civilian government moved against two top generals and an admiral suspected of involvement in planning a coup. The civilian government further asserted itself when the prime minister announced on Thanksgiving day that Turkey is prepared to react to any Israeli offensive against Lebanon. Here is an American NATO ally freeing itself from American suzerainty exercised through the Turkish military. Who knows, Germany could be next.

Meanwhile in America the sheeple remain content with, or blind to, their role as sheep to be slaughtered to feed the rich. The Obama administration has managed to come up with a Deficit Commission whose members want to pay for the multi-trillion dollar wars that are enriching the military/security complex and the multi-trillion dollar bailouts of the financial system by reducing annual cost-of-living increases for Social Security, raising the retirement age to 69, ending the mortgage interest deduction, ending the tax deduction for employer-provided health insurance, imposing a 6.5% federal sales tax,
while cutting the top tax rate for the rich.

Even the Federal Reserve’s low interest rates are aimed at helping the banksters.

The low interest rates deprive retirees and those living on their savings of interest income. The low interest rates have also deprived corporate pensions of funding. To fill the gap corporations are issuing billions of dollars in corporate bonds in order to fund their pensions. Corporate debt is increasing, but not plant and equipment that would produce earnings to service the debt. As the economy worsens, servicing the additional debt will be a problem.

In addition, America’s elderly are finding that fewer and fewer doctors will accept them as patients as a 23% cut looms in the already low Medicare payments to doctors.

The American government only has resources for wars of aggression, police state intrusions, and bailouts of rich banksters. The American citizen has become a mere subject to be bled for the ruling oligarchies.

The police state attitude of the TSA toward airline travelers is a clear indication that Americans are no longer citizens with rights but subjects without rights. Perhaps the day will come when oppressed Americans will take to the streets like the French, the Greeks, the Irish, and the British.

Dr. Paul Craig Roberts is the father of Reaganomics and the former head of policy at the Department of Treasury. He is a columnist and was previously the editor of the Wall Street Journal. His latest book, “How the Economy Was Lost: The War of the Worlds,” details why America is disintegrating.
 
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