Friday, August 29, 2014

from distant archives
Jim Rogers: "If you are telling me the answer to debt problems is more debt, then I'm telling you, Tiger Woods could have answered his marriage problems by finding more girlfriends"
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more from archives of years ago
Most Dreadful Adviser Larry Summers: "The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending," VS.  Admired Adviser Jim Rogers: "That's like saying Tiger Woods could have solved his marriage problems by finding more girlfriends."
Whitewashing Reality? or Purposely 
Trying to Brainwash Everyone?
An article that credits Larry Summers (& Paul Krugman?) for trying to steer us right? Who in the world did more to mislead us all into economic disaster than Larry Summers? 
The misinformation (propaganda) is in a major mass media source. The one that gets it straight is a much lesser known blogsite .. again.
LINK HERE
or here for a warped view
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Today's 5* Post From Chris Martenson
WHY DOESN'T COMMON SENSE PREVAIL
over baffling bullspit?
[Our Guess? Most people would rather believe a load of baloney from their leaders that sensible advice from intelligent advisers]
Chris Martenson has his own version of the common sense that Jim Rogers gave us years ago: 'Central banks boldly claimed that the cure is identical to the disease! If the problem is debt then the solution is even more debt .. If the Fed were doctors, they would prescribe alcohol to the alcoholic. They would administer more lead to the lead-poisoned & would call for more water to put in the pool where someone is drowning
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Do not miss the latest essay at Peak Prosperity from Chris Martenson*. He says the simple common sense things that get lost in all the baffling bullspit from government  & their central banking partners. Chris says the current bubbles in financial assets are a deliberate creation by central banks .. "They were the 'experts' who decided to confront the excesses of decades past (which saw borrowing running at roughly 2x the rate of real economic growth) with even easier monetary policies designed to spur even more borrowing .. Rather than take stock of the simple fact that nobody can forever borrow at a faster rate than their income is growing (no matter how large that entity may be), the Fed, the ECB, the BoJ and the BoE have conveniently overlooked that simple fact ... then boldly claimed that the cure is identical to the disease. If the problem is debt then the solution is even more debt .. If the Fed, et al. were doctors, they would prescribe alcohol to the alcoholic. They would administer more lead to the lead-poisoned patient. They would call for more water to put in the pool where a drowning individual is floundering." .. Martenson hopes that when the current bubbles pop, the torches & pitchforks come out, forcing the central banks to answer to the public for their grievously poor decisions .. It's the central banks that set the tempo and the melody at the dance hall. When they flood the world with liquidity and set interest rates to 0%, they enforce a Hobbesian choice: either play along in the risk markets, or sit in cash earning less than nothing as inflation eats away at your purchasing power. The central banks are entirely to blame for mis-pricing money and that is the fundamental error that drives every bubble and betrays capital into hopeless investments."
LINK HERE to the essay
Fred Sheehan*:
 Here Come The Helicopters!
The Establishment Goes All-In
For A Keynesian Money Drop
In his latest essay, Fred Sheehan* remarks on the recent essay in Foreign Affairs in which the call is made to print money & put it directly into the hands of the people to spend .. Sheehan emphasizes printing money has never worked - "the grander the scale the worse the calamity" .. relates some historical examples: "The French state in 1790 was falling deeper into debt. The Assembly first confiscated Church property, found itself deeper in debt, authorized a 400 million assignat print, with a pledge that no more currency would be issued. The poor grew poorer, starved, and cries of 'We need more money!' elicited another 800 million assignats. This ended in collapse, including the redemptive pleasure of Assemblymen rolled on tumbrels through the streets of Paris to their end .. Germany in the early 1920s suffered central banker Rudolf Haverstein’s delusion. As jobs disappeared along with food, Haverstein worked the presses to death. (Ludwig von Mises recalled hearing 'the heavy drone of the Austrian Bank’s printing presses which were running incessantly day and night to produce new bank notes in Vienna.' Austria was following Germany’s lead; a temptation it still suffered from in the 1930s.) .. The historian Alan Bullock wrote: 'The inflation had the effect, which is the unique quality of economic catastrophe, of reaching down and touching every single member of the community in a way in which no political event can. The savings of the middle classes and working classes were wiped out at a single blow with a ruthlessness which no revolution could ever equal.'" .. Sheehan's key message here: The world's central banks have been working for well over a year on handing out money to the people. Their intention is to avoid the intermediate step of operating through commercial banks. The Federal Reserve, for example, generates (through electronic dollar credits to the banks) "money" (as the word is used today) in operations between the New York Fed and the primary dealers. After these electronic dollars are credited to banks, the money does not always get lent out or go where the central banks would like. The central banks are trying to get legislation that will permit direct currency transfers to the people.
LINK HERE to the essay
Germany Has Had Enough
In Helping The Euro Area
German Finance Minister Tells EU Leaders: Free Money Party's Over
Will Germany Ultimately Leave The Euro?
Bloomberg & WSJ articles on statements by the German Finance Minister Wolfgang Schaeuble expressing Germany's frustration with helping out the euro zone .. Germany emphasizes structural reforms & increases to competitiveness are needed, while the euro zone appears to be begging for more monetary stimulus .. "We can't deny that certain geopolitical risks are playing a very important role at the moment. There are indicators of an economic slowdown .. Nobody has a lesson to give to anyone else because everyone knows the rules."
Bloomberg:
*SCHAEUBLE SAYS HE 'UNDERSTANDS' HOLLANDE'S EU ECONOMIC PLAN
*SCHAEUBLE SAYS EUROPE NEEDS TO FIND WAYS TO FOSTER GROWTH
*SCHAEUBLE SAYS ECB HAS REACHED LIMIT IN HELPING EURO AREA
*SCHAEUBLE SAYS MONETARY POLICY CAN ONLY BUY TIME
Schaeuble: "Monetary policy can only buy time .. Liquidity in markets is not too low, it’s even too high. Therefore I think monetary policy has come to the end of its instruments and therefore what we urgently need is investments, regaining confidence by investors, by markets, by consumers .. I don't think ECB monetary policy has the instruments to fight deflation, to be quite frank .. It’s very important that we all know in Europe -- every member state -- that we have to stick to structural reforms and enhance competitiveness, even in Germany."
[Cliff Note: We've been suggesting the possibility of Germany leaving the euro for quite some time .. we would like to add that we wouldn't be surprised if they were going to leave the U.S.$$ based system altogether. They have been shafted in so many different ways]
LINK HERE to article summaries & commentary
Sprott's Rick Rule: 
Central Banks
Helping The Wealthy, 
Not The Middle Class
Wall St for Main St interviews Rick Rule .. Rule explains how the central banks are operating to benefit the wealthy, not the middle class ..  also he gives his thoughts on if lending money to bankrupt countries like Japan & Europe is a good idea .. also a discussion on the natural resource sector - gold, silver, base metals, oil & uranium markets .. 46 minutes
Financial Warfare Through
Cyberattacks On Banks
Could It Crash The Banking System?
The U.S. FBI & Secret Service are investigating a huge wave of cyberattacks on Wall Street banks .. Bloomberg: "The attacks were reported to have originated from Russia, though it is unclear if this is correct .. The motive may have been tense relations with the U.S. in Ukraine and the Middle East." .. 
JP Morgan Chase: this year will spend $250 million & dedicate 1,000 people to protecting itself:
"Cyberattacks are growing every day in strength and velocity across the globe. It is going to be continual and likely never-ending battle to stay ahead of it — and, unfortunately, not every battle will be won,"
- CEO Jamie Dimon said in his annual letter to shareholders
Bank of America: "Although to date we have not experienced any material losses relating to cyber attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future."
Citigroup: "Citi has been subject to intentional cyber incidents from external sources, including (i) denial of service attacks, which attempted to interrupt service to clients and customers; (ii) data breaches, which aimed to obtain unauthorized access to customer account data; and (iii) malicious software attacks on client systems, which attempted to allow unauthorized entrance to Citi's systems under the guise of a client and the extraction of client data. For example, in 2013 Citi and other U.S. financial institutions experienced distributed denial of service attacks which were intended to disrupt consumer online banking services .. because the methods used to cause cyber attacks change frequently or, in some cases, are not recognized until launched, Citi may be unable to implement effective preventive measures or proactively address these methods."
LINK HERE to the article
LINK HERE to another article
James Grant*: 
Two Alternative Outcomes 
From Federal Reserve Policy - 
Much Higher Inflation or More Money Printing
Jim Puplava interviews James Grant, Founder and Editor of Grant's Interest Rate Observer .. discussion covers an array of topics, including Grant’s outlook for Federal Reserve policy & how attempts to control or manipulate interest rates are ultimately futile .. 26 minutes

The Failed "No Brainer"
Trade - Shorting Govt Bonds
GaveKal calls it the modern day "Widow Maker Trade" - shorting U.S. Treasury bonds .. points out how treasury yields have plunged to new 1-year lows .. reminds everyone on the popular trade over the last decade to short Japanese government bonds - the first "Widow Maker Trade" .. "The trade seemed to make all the sense in the world with Japanese government dept soaring to new heights which would, as the logic went, inevitably cause the bond vigilantes to wreak their havoc on the JGB market. Instead, bond yields kept falling (from 2% in 2006 to just .49% today) and many a trader was carried out on a stretcher."
Despite all the analysts warning of rising treasury bond yields this year, the exact opposite has happened .. "if anything the trend lower in yields is accelerating" .. references the chart above explaining the pervasiveness of traders shorting U.S. treasury bonds - "We observe a highly negative correlation with 10-year treasury yields (blue line, right axis) in that the non-commercial traders seem to up their short positions as yields rise, and vice versa, and thus have usually been wrong at major turning points. At the beginning of the year the non-commercial trader net short position in 10-year treasury bonds was as the highest level over the last six years and today that same group is still net short despite the fall in yields. Over the past six years treasury yields haven't stopped falling until the non-commercial traders adopted a net long position, and that level is still far off from here." .. click on charts to enlarge
link here to the commentary
PBS: How American Companies
Change Their Address
To Avoid Corporate Taxes
Federal Reserve's
Zero Interest Rate Policy (ZIRP)
Has Accomplished Zilch
Gordon T Long*: "The removal of the USA from
the gold standard along with ZIRP have proven to be
disasters for the U.S. Wager Earner."
click on chart to enlarge
click to enlarge
Your Health Is the Result 
of a Symbiotic Relationship 
with 100 Trillion Bacteria
Outside Our Box
Dr. Mercola article & video on the role & activity of microbiome - the colonies of microbes living in your gut & all over your body .. gut health is reflected in your gut bacteria - it ultimately affects mental health & emotional well-being .. "The best way to optimize your gut flora is through your diet. A good place to start is by drastically reducing grains and sugar, and avoiding genetically engineered ingredients, processed foods, pasteurized foods, and chlorinated tap water. Pasteurized foods can harm your good bacteria, and sugar promotes the growth of pathogenic yeast and other fungi. Grains containing gluten are particularly damaging to your microflora and overall health .. A gut-healthy diet is one rich in whole, unprocessed, unsweetened foods, along with traditionally fermented or cultured food .. You may also want to consider a high-potency probiotic supplement, but realize that there is no substitute for the real food."
LINK HERE to the article
Ex White House Official Says A Decision Was Made To Lie
 & Rising Inflation Will Bring
 Tragedy, Chaos & Human Suffering 
"We both know that governments in the West and in Japan have to attempt to inflate their way out of the massive debt problems they face. A decision was made this time versus the 1970s to lie to the people -- to release phony government statistics about inflation and real GDP. What about the decision to attempt to inflate away the debt and to mislead the public about the actual inflation numbers? .. you can see the price hikes are now beginning. This will feed into the data and then the Fed and other central banks are going to be trapped in a corner. The people who will be hurt the most are the poor, the weak -- the ones who don’t have savings and who don’t have the information to be able to manage this terrible process. I think there are enormous social consequences to an inflation .. in the 1970s everybody did understand that the poor would get crushed and therefore there were wealth transfers that took place during the 1970s. Now, we have a big argument in America about benefits -- who gets them and who doesn’t get them. It’s a very tough and difficult argument, but inflation does ravage the low income people so violently that inevitably governments will have to start throwing money in that direction. And I would say that the events we are seeing in Ferguson are maybe an example of this. The pain threshold is being reached in certain communities in the United States. And it will always be the poorest communities that feel the grocery bill going up faster than everybody else. And since we can’t withstand social unrest, governments will try to find a way to push more capital in that direction. So then you will have two issues: inflation and wealth transfers, and that becomes doubly controversial."
- Former Special Assistant to the President of the United States for Economic Policy Dr. Philippa “Pippa” Malmgren
link here to the article
'The Buyback Party Is Over'?
Albert Edwards Warns 
The "Market Is Now 
Running On Fumes"
SocGen's Albert Edwards sees the 10-year government bond yields in the U.S. & UK extending to below 1% like many countries in Europe now .. thinks quantitative easing (QE) has been the driver for the stock market, providing fuel for the heavy corporate bond issuance being used for stock buybacks .. "Companies themselves have been the only substantive buyers of equity, but the most recent data suggests that this party is over and as profits also stall out, the equity market is now running on fumes .. It is widely accepted the Fed's QE program has inflated asset prices way above fundamental values (higher inequality being one unwelcome by-product). Andrew Lapthorne has identified the mechanism whereby QE, by shrinking the available stock of investable government bonds, has encouraged investors to instead gobble up other debt assets all along the risk spectrum. Companies issuing at low yields into this buying frenzy are doing what they always like doing with debt in the final throes of an economic cycle .. they issue cheap debt to buy expensive equity ..When the funding for corporate bond issuance stops (for whatever reason, i.e. QE ends), share buybacks also stop and one of the biggest drivers for the equity bull market is removed."
LINK HERE to the commentary
"We are living in a free market capitalist system"
HOPEFULLY THE DAY WILL COME WHEN EVERYONE UNDERSTANDS THAT YOU CAN'T HAVE FREE MARKETS &/OR REAL CAPITALISM WHEN ONE GROUP HOLDS MONOPOLY CONTROL OF THE CREATION & DISTRIBUTION OF MONEY
Monopoly control of the creation & distribution of money? It is like playing the board game, MONOPOLY, but the game's banker also gets to play the role of 'Godfather' over the other players.
What Could Go Wrong?
Security & Centralized Data, 
Risks To The Financial Markets
INET Economics special video .. A global watchdog has sounded the alarm about the growing danger of cyber attacks, on financial markets, warning that firms & regulators around the world need to address the “uneven” response to the threat of online assaults .. interview with Prof. Amir Herzberg, Head of the Security Area in the Department of Computer Science at Israel’s Bar-Ilan University .. points out the very high aggregation of information concentrated in a few behemoth providers such as Google, Yahoo!, Facebook, & Microsoft. This structure appears harmless - What could be wrong with that? .. this structure makes the flow of information far easier to control & restrict .. it is antithetical to a free market of ideas .. Google or Facebook will become the ultimate re-sellers of everything, will control huge swaths of our markets, which has profound implications for a healthy competitive free market .. it also has fiscal implications for governments, since these multinational corporations have huge flexibility in terms of where they book their profits, in spite of their nationality .. also a discussion on the implications of governments overriding individual privacy rights .. also expresses concerns of cyber warfare on the financial markets & peace .. 20 minutes 

Santelli Exchange:
European Deterioration
A follow-up to yesterday's post, Rick Santelli & Yra Harris discuss the euro & the deterioration of Europe, geopolitical impacts .. "If you put your money in a European bank, you have to be a moron."
LINK HERE the yesterday's post
The value of global equities has 
hit a record $66.158 trillion
click to enlarge chart
click to enlarge
The Process For 
Printing U.S. Currency

Thursday, August 28, 2014

 
In 1814 British Forces Burnt Washington D.C. To The Ground. In 1913 Washington D.C. Established A New 'Structure' For The U.S. Monetary System ..Modeled On The Bank of England.

Simon Johnson* (of MIT) says we may be witnessing the analogue of the British burning down our political capital; the banking system controls Washington D.C. .. the banking system modeled on the Bank of England's system. [Cliff Note: Is it pure coincidence that the 'British Model' for money & banking has regained control of Washington D.C.? We think not. Those who understand how to control a monetary system can be patient & shrewd.]

Johnson recalls the War of 1812 when British & Canadians set fire to the White House, Treasury Department & Congress .. "Today, it is a domestic interest group – very large banks – that has captured Washington. The costs are likely to be far higher than they were in 1814." .. Regarding efforts to contain the TOO BIG TO FAIL BANKS he says: "As FDIC Vice Chairman Tom Hoenig put it, 'Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn’t require unrealistic assumptions and direct or indirect public support.'" .. Johnson concludes: "American forces performed disastrously in August 1814, allowing the British to capture and burn the capitol. Two hundred years later, we may well be witnessing that battle’s intellectual and policymaking analogue."
LINK HERE to the essay
Federal Reserve Vice Chairman Says
U.S. Preparing Bank Bailins
"The Great Recession is a near-worldwide phenomenon, with the consequences of which many advanced economies continue to struggle. Its depth and breadth appear to have changed the economic environment in many ways and to have left the road ahead unclear .. Work on the use of the resolution mechanisms set out in the Dodd-Frank Act, based on the principle of a single point of entry–though less advanced than the work on capital and liquidity ratios–holds the promise of making it possible to resolve banks in difficulty at no direct cost to the government .. As part of this approach, the United States is preparing a proposal to require systemically important banks to issue bail-inable long-term debt that will enable insolvent banks to recapitalize themselves in resolution without calling on government funding–this cushion is known as a 'gone concern' buffer."
- Federal Reserve Vice Chair Stanley Fischer
LINK HERE to his speech
LINK HERE to related article on financial repression