Friday, July 31, 2015

"Zombie Corporations Now Roam
The Real Economy"
In his latest Investment Outlook Bill Gross* has a message for market bulls:
"say a little prayer"
he emphasizes that "low interest rates are not the cure, they are part of the problem" .. the Zero Interest Rate Policy (ZIRP) has enabled "a host of zombie and future zombie corporations which now roam the real economy. Schumpeter’s 'creative destruction' –
the heart of capitalist progress has been neutered.
The old remains in place, and new investment is stifled.".. cites warnings from the Bank for International Settlements (BIS) which says the persistently ultra-low interest rates are sapping bank interest margins & causing mispricing in the financial markets, threatening the solvency of insurance companies & pension funds .. "Low interest rates are not the cure – they are part of the problem. Say a little prayer that the BIS, yours truly, and a growing cast of contrarians, such as Jim Bianco and CNBC’s Rick Santelli, can convince the establishment that their world has changed." [Is it gratifying to hear Bill Gross talking like Cliff Küle? OR is it scary?] 
LINK HERE to the essay
The Greek Coup: Liquidity 
as a Weapon of Coercion
“My father made him an offer he couldn’t refuse. 
Luca Brasi held a gun to his head and my father 
assured him that either his brains, 
or his signature, would be on the contract.” 
 — The Godfather (1972)
Ellen Brown* explains how Greece was coerced on its recent bailout by having its credit line choked off as a form of blackmail the Greek government could not refuse .. "The European Central Bank threatened to turn off the liquidity that all banks – even solvent ones – need to maintain their day-to-day accounting balances. That threat was made good in the run-up to the Greek referendum, when the ECB did turn off the liquidity tap and Greek banks had to close their doors. Businesses were left without supplies and pensioners without food." .. The Greek government was thus broken Mafia-style at the knees, "until it was forced to abandon its national sovereignty and watch its public treasures sold off piece by piece. Suspicious minds might infer that this was a calculated plot designed from the beginning to throw Greece’s prized assets onto the auction block, a hostile takeover and asset stripping for the benefit of those well-heeled entities in a position to purchase them, including the very banks, hedge funds and speculators instrumental in driving up Greek debt and destroying the economy." .. Brown emphasizes there is no sovereignty to a nation when it can not control its currency & credit .. Brown references the taped conference call when former finance minister Yanis Varoufakis exposed the trap that the euro zone countries are now in: "It seems there is virtually no legal way to break free of the euro and the domination of the troika. The government has no access to the critical data files of its own banks, which are controlled by the ECB." .. Brown recalls the quote from 1935 when Canadian Prime Minister William Lyon Mackenzie King warned - "Once a nation parts with the control of its currency and credit, it matters not who makes the nation’s laws. Usury, once in control, will wreck any nation."
LINK HERE to the essay
Restore The Glass-Steagall Act!
THERE HAS BEEN A MORE THAN CENTURY LONG STEADY RUINOUS EROSION OF CONSTITUTIONAL & LEGISLATIVE RESTRICTIONS ON THE BANK'S POWER TO CREATE MONEY FROM NOTHING .. BUT PERHAPS MORE THAN ANY ONE THING IN RECENT HISTORY, THE 1999 REPEAL OF 'GLASS-STEAGALL' WAS THE ERROR THAT HAS RUINED THE U.S. ECONOMY (& TO A DEGREE THE WORLD ECONOMY). THE SOLUTION WOULD BE SO SIMPLE - REINSTATE 'GLASS-STEAGALL'! BUT THAT IS NOT WHAT THE MAJOR BANKS THAT OPERATE THE FEDERAL RESERVE SYSTEM (& CONTROL OUR MONEY) WANT. THEY MADE EXTRAORDINARY PROFITS FROM KILLING THAT ACT & IT SEEMS THEY COULD CARE LESS ABOUT THE CONSEQUENCES TO EVERYONE ELSE. LENIN SAID THAT CAPITALISTS WOULD BE WILLING TO SELL THE ROPE WITH WHICH TO HANG THEMSELVES. THE REFUSAL OF THE BANKS TO HAVE GLASS-STEAGALL SIMPLY REINSTATED IS EVIDENCE OF TOO MUCH TRUTH IN LENIN'S COMMENTS.
----------------------------------------------------- 
Better Markets has put together a primer on the Glass-Steagall Act, what it is, why it is needed & efforts to reinstate it .. "After the Great Crash of 1929 and the Great Depression of the 1930s, laws were passed to create layers of protections between the gambling on Wall Street and the hardworking American families on Main Street. Importantly, these layers of protections were of different types: structural, regulatory and supervisory. The Glass Steagall Act was the key structural legal protection enacted. It prohibited the same bank from engaging in both relatively low risk traditional commercial banking (using FDIC insured and Fed backed savings accounts to make mortgage and business loans) and high risk investment banking (running mostly unregulated trading and securities). For more than 60 years, the Glass Steagall Act kept those activities separate and during that time .. the financial system avoided catastrophic crashes."
LINK HERE to get the PDF



A TAKE A BREAK
BACK AGAIN FROM THE ARCHIVES .. CAN LEARNING BE FUN?  
Hayek vs. Keynes Rap .. This was the first one .. In our opinion, the 2nd one is better (the one below this one). Both are well done & it is surprising how clearly they answer the question: What is the difference between Keynesian Economics & Austrian School Economics? .. 8 minutes

Keynes vs Hayek
Don't miss the fight!
Keynesian vs. Austrian Economics
John Maynard Keynes battles Friedrich Hayek. Guess who we choose? 9 minutes worth sharing .. just for fun (jff) .. from our archives


Raoul Pal:
The Consensus Continues 
To Miss The Big Picture
The Global Macro Investor's Raoul Pal 'gets' the big macro economic & financial picture .. emphasizes how the U.S.$ is likely to get much stronger over the next 2 years - up perhaps 20% this year, with the euro down to perhaps around 75 cents .. sees this trend as severely affecting commodity prices, especially oil - it could go down to the $20s per barrel range again .. on China, he emphasizes the mainstream is underestimating the effects of its economy & stock market on the global economy & financial markets .. a slowing economy in Germany now risks leading Europe into recession .. 4 minutes
China’s 1929 Moment
Alasdair Macleod addresses what many are saying is China's 1929 moment .. an analogy with the emerging U.S. superpower back in 1929 when the U.S. Stock Market crashed, like China's Stock Market is now crashing ..  China's attempt to rescue the country's stock markets from collapse is far from succeeding .. the concern is the collapse could affect China's effort to have its currency play a greater role in international trade & inclusion in the IMF's money called the SDR .. "There can be little doubt that the recent announcement increasing her gold reserves by only 600 tonnes was made in the context of her desire for the currency to be included in the SDR. If she is rejected, China could swing the emphasis more firmly towards gold, which she owns and mines in abundance. If Plan A fails, it is time for Plan B .. The Chinese government almost certainly views gold as the ultimate money. The time is approaching for Plan B when a higher gold price would serve her interests better than membership of the SDR. It would reduce China's debt levels expressed in the ultimate money, without currency intervention. And it would also boost the personal wealth of her people. In short, it would be popular with ordinary people, at a time when the authorities' credibility is threatened by internal financial developments. It must be tempting. The effect on western capital markets, having been drained of physical bullion and left with uncovered gold liabilities, could be very interesting. After all, the Chinese curse was for us to live in interesting times."
LINK HERE to the essay
Dr. Ron Paul* on
Money Debasement & War
Dr. Ron Paul* sees wars as being paid for through inflation - the practice always ends badly as currency becomes debased leading to upward pressure on prices .. "Almost all wars, in a hundred years or so, have been paid for through inflation .. that is debasing the currency."
link here to the article
Albert Edwards: "It's 1997"
"The Virtuous Emerging Market Cycle Is Turning Vicious"
SocGen's Albert Edwards sees parallels between the financial & economic environment today & a similar environment to 1997 ..  "The 1997 Asian crisis demonstrated that there is no free lunch for EM in fixing a currency at an undervalued exchange rate.After a few years of export-led boom, market forces are set in train to destroy that artificial prosperity. Boom turns into bust as the BoP swings from surplus to deficit. Why? When an exchange rate is initially set at an undervalued level, surpluses typically result in both the current account (as exports boom) and capital account (as foreign investors pour into the country attracted by fast growth). The resultant BoP surplus means that EM authorities intervene heavily in the FX markets to hold their currency down. We saw that both in the mid-1990s and before and after the financial crisis .. As a virtuous EM cycle turns vicious (like now), commodity prices, EM asset prices and currencies come under heavy downward pressure - at which point it is difficult to discern any longer the chicken from the egg. In my view the egg was definitely laid a few years back as EM real exchange rates rose sharply and the rapid rises of FX reserves began to stall."
LINK HERE to the article
Monopoly Is Everywhere 
Say Mainstream Economists; 
Austrian Economists Roll Their Eyes
Mainstream economists see "monopoly power" everywhere -- even when a breakfast cereal company differentiates its product via advertising. It's crazy. In today's episode we discuss the mainstream view of monopoly, as well as so-called perfect competition & monopolistic competition. You'll be begging for some Mises & Rothbard by the time this podcast is over .. 36 minutes
Physical Gold Protects 
You From Cyber Attacks 
"Physical gold is a non-digital asset. You can’t attack it with cyber warfare, so I think it has another insurance function for investors there .. I think it’s always very important to own gold. I’ve recommended that investors have about 10% of their portfolio in the yellow metal .. If I’m right and some catastrophic event is on the horizon, then that 10% would be your portfolio insurance .. Digital or paper gold allows the counterparties to terminate the agreement by giving the investor a dollar value of their gains. But that would deprive you of any future gains. You might get cashed out just as the crisis was beginning and not be able to participate in the upside as the crises worsened."
- Jim Rickards*
link here to the reference
Cutting Ties with the
U.S. Government
Sovereign Man talks with a former U.S. Citizen .. discussion takes place in the mountains of Sardinia Italy .. hear how/why he cut ties to the U.S. government… and what his life is like now .. 1 hour podcast
LINK HERE to the podcast
PEAK GOLD vs. PEAK SILVER
Commentary sees the peak of U.S. shale oil production now & the peak of global oil production very soon .. "Thus, the world will have LESS and LESS oil in the future each year to run the system… and this includes the mining industry .. If we consider that it takes the primary gold mining industry (on average) 100 times more diesel to produce an ounce of gold than the primary silver mining industry, peak oil will impact the gold mining industry a great deal more than the primary silver mining industry. Which is why I believe we will see a peak of primary gold production before primary silver production."
LINK HERE to the commentary
click to enlarge
CLICK TO ENLARGE:
Courtesy of: Visual Capitalist
click to enlarge
Investment Legends Warn Of  
A 'Systemic Event' Storm Coming
"More and more insiders are warning of a potential systemic event .. The first sign of real trouble concerned a number of investment legends choosing to close shop and return investors’ capital .. The first real titan to bow out was Stanley Druckenmiller .. He has since stated he is "extremely worried" about stocks .. Seth Klarman used to manage the fourth largest hedge fund in the U.S.. A legendary value investor (copies of his book Margin of Safety sells for over $1,500 on Amazon), Klarman returned billions in assets under management to outside investors citing 'too few' opportunities in the market (again, a legend stating that the market was overvalued) .. Beyond the legends, institutional investors have been net sellers of stocks in 2014 and on into 2015. The same goes for hedge funds .. And finally, we get to today, where one of the largest asset managers in the world at Fidelity stated that we are heading for a 'systemic event... similar to the financial crisis' and that owning precious metals and physical cash is a good idea .. The punch line? This was a bond fund manager. One of the class of investors who have poo poo’d Gold and physical cash in the past because those assets pay next to or no dividend .. And even HE is warning that it’s time to take safety and prepare .. Smart investors should take note of this now. It is a MAJOR red flag to be watched closely."
- Graham Summers
link here to the essay 
DISCLAIMER: The report is a sales/marketing tool for Phoenix Capital. We neither endorse or criticize their paid services. We are saying they make good points & make them well. We trust our readers to 'separate the wheat from the chaff' when we post things that serve as someones' marketing material.
5*!
Central Bank Manipulation 
Intervention In Gold Markets
"Intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake." -Paul Volcker "Nikkei Weekly" 2004
"Central banks stand ready to lease gold in increasing quantities should the price rise." -Alan Greenspan 1998 as Fed Chairman
Chris Powell* heads up the Gold Anti-Trust Action Committee Inc. - his group has compiled an extensive set of evidence .. he has written a recent letter to Bloomberg to emphasize that the gold market is manipulated in addition to other financial markets that were described in a recent essay on Bloomberg: "This is the official record of longstanding Western central bank and government policy, a record drawn from government archives and public statements by central bankers themselves.
This intervention is easily confirmed by reviewing records
and putting the right specific questions to central banks, the Bank for International Settlements, and the International Monetary Fund .. 
A summary of the most important documentation developed by GATA over the years, some of it quite recent, complete with links to the documents themselves, is posted at ..."
LINK HERE to the letter
LINK HERE to the text of a speech by Chris Powell that is probably the best compilation of evidence of Central Bank gold price intervention
[Cliff Note: It may take a week to review all the links to evidence that Powell has cited. Use our search engine to return to this posting in the future. Calling Powell's work 'the best' is not to disparage the great work of John Embry 'NOT FREE, NOT FAIR'. That was written in 2004 and still deserves to be read & reread. Chris Powell has become a Cliff Küle Hero. He may seem like an unlikely hero, because he is the opposite of charismatic, BUT he has painstakingly compiled evidence of gold market intervention that is virtually irrefutable.]