Sunday, February 14, 2016

The World's Top Performing Hedge Fund
Is Extremely Bearish
"U.S. growth is slowing and the market is likely to price in reduced monetary tightening. This should lead to a weaker dollar. This makes shorting Europe and Japan very appealing. Theoretically, this should make commodities and emerging markets (‘EM’) attractive, particularly if you are of the view that U.S. dollar strength is the reason emerging markets and commodities have been so weak. However, I think we have chronic oversupply of commodities, and real financial issues in China that cannot be resolved easily. This makes commodity related areas very unattractive, despite the prospect of renewed monetary easing by the Federal Reserve. Furthermore, the reaction to reduced tightening by the Federal Reserve, would almost certainly be more easing by every other central bank in the world. But as we have seen recently with both the ECB and BOJ, monetary activism is not always effective. I also worry about the prospects of a trade war, as populism becomes the new normal in politics globally. The future for me is now more uncertain than at any time I can remember. Or to fully quote the Chairman of the Board from Margin Call, 'I'm here to guess what the music might do a week, a month, a year from now. That's it. Nothing more. And standing here tonight, I'm afraid that I don't hear - a - thing. Just... silence.' .. Your fund remains long bonds, short equities."
- Russell Clark, Chief Investment Manager of Horseman Capital, World's Top Performing Hedge Fund
LINK HERE to the commentary
Stock Rout Deepens
Boom Bust .. discussion on falling financial markets around the world .. also Max Wolff, chief economist at Manhattan Venture Partners, offers his insights on the global market rout, particularly with regards to Japan’s recent downturn .. 1/2 hour total program
Will Capital Controls Return?
Daniel Amerman considers recent developments to discuss the possibility of governments initiating capital controls on the movement of money across international borders .. "For governments, the savings of the citizens are a resource for the nation, and there is a very long history of nations using capital controls on the amount and terms under which people's money is allowed to leave – or enter – a country. These restrictions have been seen most recently on a temporary basis during crisis in countries such as Greece and Cyprus – but what few people realize these days is that long-term capital controls were the norm for the advanced economies of the West during the 1940s, 1950s and 1960s. And capital controls may be on their way back – if some leading financial authorities get what they want. Which, in a vastly changed world, could impact our daily lives in ways which most people have never considered." .. given heavily indebted governments getting desperate for promoting economic growth sufficient to service their massive debts, capital controls are becoming a strong possibility .. "capital controls are a key component of financial repression - when the economy is good, debts are low, and markets are healthy, then rules and regulations often liberalize and free markets gain dominance over government controls. When markets get in trouble while the economy goes bad and governments become heavily indebted - then rules and regulations often increase as government controls become dominant over free markets .. financial fepression has a much more specific meaning as well. It is the name for a process in which nations effectively take wealth from savers, and use that wealth to reduce the effective size of national debts, or at least slow down the growth of national debts .. There are five traditional components to Financial Repression, with the first two components being 1) very low interest rates, and 2) a somewhat higher real rate of inflation (which can be quite different from the official rate of inflation) .. That situation is painful for savers, so the other three components effectively involve putting up fences so investors can't escape. These fences include 3) forced participation by financial intermediaries; 4) capital controls; and 5) discouraging or outlawing precious metals investment." .. Amerman concludes that capital controls could be deployed over a period of years by the G-20 with warning & discussion, or they could be deployed overnight in the event of financial or economic crisis - in either case, he advises planning ahead of time for their increasing probability.
LINK HERE to the article
LINK HERE to the rest of the article
Dr. Ron Paul* On 
Untangling Common Myths
Discussion on politicians & big money being given by donors .. also a discussion on eminent domain .. 25 minutes
click to enlarge

Saturday, February 13, 2016

Central Banks Are Trojan Horses, 
Looting Their Host Nations.. 5*!
"Economics professor Richard Werner* – who created the concept of quantitative easing – has documented that central banks intentionally impoverish their host countries to justify economic and legal changes which allow looting by foreign interests.
The Fed Bailed out foreign banks … more than Main Street or the American people.
IT Bailed out wealthy corporations, including hedge funds ..  Is largely responsible for creating the worst inequality in world history .. Acted as cheerleader in chief for unregulated use of derivatives at least as far back as 1999, and is now backstopping derivatives loss .. Allowed the giant banks to grow into mega-banks, even though most independent economists and financial experts say that the economy will not recover until the giant banks are broken up .. Preached that a new bubble be blown every time the last one bursts.
The Fed’s main program for dealing with the financial crisis – quantitative easing – benefits the rich and hurts the little guy,
as confirmed by former high-level Fed officials, the architect of Japan’s quantitative easing program and several academic economists.
Indeed, a high-level Federal Reserve official says quantitative easing is 'the greatest backdoor Wall Street bailout of all time.
Earlier U.S. central banks caused mischief, as well. For example, Austrian economist Murray Rothbard wrote: 'The panics of 1837 and 1839 … were the consequence of a massive inflationary boom fueled by the Whig-run Second Bank of the United States.' .. Indeed,
the Revolutionary War was largely due to the actions of the world’s first central bank, the Bank of England
Professor Werner: 'Central banks have legally become more and more powerful in the past 30 years across the globe, yet they have become de facto less and less accountable. In fact, as I warned in my book New Paradigm in Macroeconomics in 2005, after each of the ‘recurring banking crises’, central banks are usually handed even more powers. This also happened after the financial crisis. So it is clear we have a regulatory moral hazard problem: central banks seem to benefit from crises. No wonder the rise of central banks to ever larger legal powers has been accompanied not by fewer and smaller business cycles and crises, but more crises and of larger amplitude.'"
- Washington's Blog
link here to the reference
Negative Interest Rates Are 
Coming To The U.S.?
Wall St For Main St interviews Greg Mannarino .. discussion on the Federal Reserve & global central banks implementing negative interest rates .. thinks because all the major central banks constantly talk & "plan" with each other that it's inevitable that the U.S. will also try negative interest rates just like Japan & parts of Europe are trying .. thinks this will hurt the real economy further & that the stock market is in a slow motion crash .. thinks gold & silver have bottomed due to physical supply constraints & money leaving the stock market & going into hard assets like precious metals .. 28 minutes
JP Morgan's Head Quant:
"Buy Gold, Cash & VIX"
JP Morgan's head quant Marko Kolanovic sees the following risks to the financial markets: deterioration of sentiment & fundamental selling, deleveraging of hedge funds, increasing volatility .. "Global markets are now facing a significant 'negative wealth effect’ that has a potential to result in a recession. This negative wealth effect of low commodity prices and a strong USD combined with the slowdown in China could be comparable to that of the financial crisis (it involves diverse effects ranging from layoffs in the Global Energy sector to a lack of EM Sovereign wealth flowing into developed market equity hedge funds). While the economists were debating if the low-priced oil is good or bad for the economy, the equity markets never had any doubts – Oil and Equities were moving down together .. Since the end of last year, we have been advocating increased allocation to gold, cash and VIX. Specifically on gold, we have argued that it would benefit from the main market concern, which is the rising risk of a global recession, as well as potential mitigation of these risks: the Fed turning more dovish and a weaker dollar removing pressure from emerging markets and the commodities sector. In an unlikely tail scenario that we see as a temporary loss of confidence in central banks, gold would likely benefit as well."
LINK HERE to the article
Peak Prosperity News Update
Chris Martenson has just issued an alert for the potential of a market crash worldwide - he is seeing several indications of this likely to happen sometime soon .. highlights how central bank policies have steered investors & retirees into risky assets - but now with increasing levels of risk in the world, this is all coming to a head .. 7 minutes
click to enlarge

Friday, February 12, 2016

GoldMoney's Alasdair Macleod: 
"When The State Corrupts Its Own Money,
It Ultimately Destroys It"
"The best way to understand NIRP is to regard it as a tax imposed by the central bank. There are now an estimated $7 trillion of government bonds with negative yields, costing the global private sector $7bn for every 0.1% of negative redemption yield. Commercial banks will also seek to recover the cost of negative rates on their loan books by increasing their charges to customers, including borrowers, as the banks in Switzerland have already demonstrated. So paradoxically, negative interest rates will not stimulate economic growth, instead they will be an extra cost to bond investors, savers and borrowers, discouraging the expansion of bank credit and genuine investment in bonds. The only beneficiary is the central bank, which collects the NIRP tax and inflates the asset prices on its balance sheet. Such tinkering always ends in the tears of unintended consequences. It is a measure of how desperate the extraordinary measures considered by central banks have become .. There can be little doubt that banks are too fragile to survive the bad debts that will be the consequence of even a partial slide towards debt liquidation .. This is why central banks first introduced zero interest rates, and are now experimenting with NIRP. But as already described above, logically NIRP acts as a tax on bondholders and the banks. The cost is passed on to their customers, so it is not the economic stimulant central bank economists believe. It is a racing certainty that some of the $5 trillion growth in deposits and savings in bank accounts since the Lehman crisis will begin to move into gold and other non-fiat currency hedges .. It would appear that finally we are approaching the destructive end of central bank monetary policies. We are about to discover the hard way, as desperation over the failure of monetary policy mounts, that when the state corrupts its own money it ultimately destroys it."
LINK HERE to the essay
Dr. Marc Faber*: This Is An Appetizer
For Something Bigger
Central Banks Remind Me Of One Flew Over The Cuckoo's Nest
Faber says this week's market selloff & volatility is just "an appetizer of something larger" .. "My sense is that many policies that were implemented- in particular zero interest rates and more recently negative interest rates- are rather negative for asset markets than positive .. They create a lot of uncertainty in investors’ minds and we have statistics on all the countries that have introduced negative interest rates. In all these countries actually the savings rate went up .. These policies may be actually counterproductive… they are negative for bank earnings… I’m not blaming only the Fed. I’m blaming the Fed, the Bank of Japan and the ECB under Mr. Draghi. They talk to each other every day, they coordinate monetary policies" .. Faber compares the central banks to the 1975 film One Flew Over the Cuckoo's Nest - "The central banks remind me of the movie ‘One Flew Over the Cuckoo's Nest’ where the doctors are the insane, whereas the inmates are actually quite common people with common sense and normal .. This is exactly what I think is happening today." .. 6 minutes
China’s $34 Trillion Experiment 
Is Exploding:
Full Kyle Bass* Letter 5* DON'T MISS IT