Are You Ready For 3rd World America?

Posted by: Phoenix Capital Research

Post date: 06/16/2011 - 12:15

What happens when the next Crisis hits and a partial if not complete Government shutdown occurs? What happens when that 35% of incomes and salaries stops being paid? What happens when prisons and other Government paid services run out of money? What happens when the next major banking run reveals that there is no WAY on earth the FDIC can truly insure all the deposits in the US (other than more money printing from the Fed)? What happens when the US defaults on its debts?

 

 

 

Art Cashin Compares This Week's Action To The Days Before Black Friday 

Submitted by Tyler Durden on 06/16/2011 13:22 -0400

Yesterday's ominous selloff (today's very temporary EURUSD, and 100% cross-asset correlation, bounce notwithstanding: after all the data just got even worse courtesy of the Philly Fed, meaning much more pain for the S&P before QE 3 comes) got you a little jittery, with Flash Crashy overtones? You are not alone. Market veteran Art Cashin recounts that yesterday's market action was not so much reminiscent of 2010, or even the 2008 uber-volatile market, but really 1987. 

 

 

 

 

Guest Post: The Countdown To Sovereign Debt Write-offs Has Started 

Submitted by Tyler Durden on 06/16/2011 13:41 -0400

Don’t be fooled by the IMF’s announcement that Greece will get a new round of money. This bailout is merely to give a couple of months for the parties to seriously negotiate what haircuts and debt extensions investors need to take in Greece, and Ireland and Portugal. Virtually all the comments made by the parties involved fit in with the view that we are now in a phase where people are negotiating how much they will write off and what else they will do. Almost none of the comments indicate that anyone is really trying to put together a plan that is going kick the can down the road for a long time. I am fading this rally as only the most optimistic investor can believe that this problem doesn’t lead to real default/restructuring with haircuts in the next couple of months. 

 

 

 

 

The Second Dot Com Bubble Has Now Burst 

It is hard to believe that the first dot com bubble, so vivid to most semi-veteran traders, occurred over a decade ago. What is even harder to believe is that courtesy of the record liquidity bubble created by the Central Planning mafia, 2011 has already seen not only the second dot com bubble, but as the table below demonstrates, its bursting. Of all the dot com 2.0 IPO to hit the market in the past 3 months, the average return is now down 20%, but that has not prevented an underwriting syndicate comprised of the TBTFs to make billions in underwriting fees. Luckily, the fervor that previously had gripped some of the more volatile precious metals, and since spilled over into new public issues, has popped. Incremental cash will now be nearly impossible to get. To all companies that managed to take advantage of momo traders who have a memory of 15 minutes or less, congratulations. To everyone else: get in line for QE3. Wink, wink Groupon. 

 

 

 

 

Krieger On Peak Government 

While I spend a lot of time highlighting TPTB’s plan to form a world government, currency and central bank that doesn’t mean I think they will succeed. In fact, just as Wall Street played their hand too aggressively after being bailed out and are now going to go down for the count this round, The Powers That Be have also played their hand way too aggressively and not only will their dream of planetary control through a global fiat money system run by them completely fail, but their policies will fail so spectacularly and publicly that it will lead to what I call ”peak government.” Governments right at the moment are as big as they will ever be in our lifetimes. This is in my opinion a great thing for humanity and freedom but the transition to more localized rule of law will be tricky. We must be rational and help the sheep out as their world crumbles around them. They will be scared and looking for mommy. Governments won’t be in a position to help so we will need to do the heavy lifting. 

 

 

 

 

 

Federal Reserve Plant To Be Next Greek Finance Minister 

Submitted by Tyler Durden on 06/16/2011 12:23 -0400

Update: according to sources, L-Pap has taken the smart way out and has decided to reject the offer to replace G-Pap #2.
According to Greek TV, and this is not confirmed by the Greek government yet, Lucas Papademos ("L-Pap", or "The Plant") will replace "Goldman employee of the year" Giorgios Papaconstantinou, (or G-Pap the Second as he is known on Zero Hedge) who is now the sacrificial lamb of the complete failure that is the PASOK government in Greece. A quick glance at L-Pap's resume explains why the European banking cartel is delighted with this nomination: "He followed an academic career at Columbia University, as well as serving as Senior Economist at the Federal Reserve Bank of Boston in 1980. He joined the Bank of Greece in 1985 as Chief Economist, rising to Deputy Governor in 1993 and Governor in 1994. He was Vice President of the European Central Bank from 2002 to 2010." Take a wild guess whether The Plant will be on the side of his "constituency" or of the Criminal Banking syndicate in the upcoming plunder of Greece. And yes, this is quite bullish for the Ensolventzone Central Bank (and its currency) which was about to be saddled with tens of billions of defaulted debt pledged in its nether regions as cash collateral.

Recent Risk Spread Dispersion Closes As Algos Bid ES Higher 

Submitted by Tyler Durden on 06/16/2011 12:09 -0400

The ES-Risk spread, so closely followed by so many recently, has now closed. Following the major divergence yesterday when the ES plunged but was not nearly followed as closely by the broader risk basket aggregates. Well, following today's relief rally in the S&P, the spread has now closed as always seems to happen eventually. What happens next is anyone's guess as ES appears fairly priced from a 3 day regression perspective (although very rich on an intraday basis). 

 

 

 

 

 

Goldman: "Sorry, You Can't Blame The Philly Fed Collapse On Japan" 

Submitted by Tyler Durden on 06/16/2011 11:33 -0400

The firm, whose only job now as in 2010, is to pave the way for QE "Oliver Twist" 3, pulls one of the crutches used by the depression apologists, and makes the secular decline case that much stronger. To wit: "Weakness in the Philly Fed cannot be obviously explained by supply-chain disruptions or other special factors, as we argued in yesterday's US Daily. For example, the latest Beige Book comments on Philadelphia Fed district manufacturing activity said "declines in orders broadened from producers of apparel and rubber products to include producers of electronic equipment and instruments. Failure to pass a multiyear transportation infrastructure reauthorization bill and the ongoing real estate slump were cited by five different manufacturing sectors as hampering the recovery" (these comments refer to May rather than June). Slowing in "electronic equipment and instruments" could be related to supply-chain problems, but otherwise the weakness looks related to other factors." As to whether this means that the next stimulus is another payroll tax cut as Obama is hoping the republicans will allow, or more 2 Year rate caps, is unclear. What is certain is that the Keynesian monster must be fed.

Jim’s Mailbox

June 16, 2011, at 11:42 am
by Jim Sinclair 

Dear Monty,
QE1, QE2, TARP and all similar programs were "infinitely successful." They prevented a depression worse than any in history. When QE stops, if they ever do stop, you will get to see how successful they were as the world economy unwinds in months and gold unfortunately goes to $12,500.
Regards,
Jim





Stock collapse and $12,000 gold?
Commentary: Two certified doomsters are (slightly) more cautious By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) — After six down weeks and a savage slump on Tuesday, the specter of a 2008 Crash haunts Wall Street. But two certified doomsters are (slightly) more cautious.
This is the problem, as summarized by the latest Aden Forecast:
“Many respected analysts are warning that another financial crisis could be on the horizon similar to the one in 2008. They claim that since the 2008 meltdown was not allowed to end naturally, the conclusion is still coming. This is a real possibility since the fundamental, underlying factors that triggered the crisis to begin with still persist. Another possibility is just a renewed recession.”
One service that indisputably did call the Crash of 2008 (“a financial tsunami”) was Harry Schultz’s International Harry Schultz Letter. Schultz had a long and checkered career, especially as monitored by the Hulbert Financial Digest in its closing phase. But its last years were brilliant. Greatly to the disappointment of columnists seeking colorful copy, the letter closed last winter after 45 years of publication. ( See Jan. 10 column .)
However, Schultz still publishes a monthly essay in the Aden Forecast. The good news: As of last week, he doesn’t seem to see another Crash…yet.
Schultz has always had a scatter-shot style, combining eccentricities and insight, and this tendency seems to have become more pronounced. This is his only comment on the stock market:
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Dive in Silver Price a “Setup,” Says Sprott CIGA Eric
You bet it’s a setup. Silver’s money flow footprint illustrates management of the trend.
Headline: Dive in Silver Price a “Setup,” Says Sprott
Eric Sprott is CEO of Sprott Asset Management and a long-time proponent of owning both gold and silver. He is also a long-time proponent of the belief in the conspiracy theory whereby large financial institutions are colluding to drive silver prices down, as when prices fell from around $50 to $32 an ounce in May.
“In my heart of hearts I believe it was a manipulation,” said Sprott in an exclusive interview with Silver Investing News. “There was no market, it was a setup. They’ve just pushed it down. It’s ridiculous.”
The recent price correction has largely been attributed to the increased margin requirements from the CME group. Between April 25 and May 5, COMEX increased silver margins to as much as 12 percent – or $21,600 per contract – from 6 percent, before silver tumbled 25 percent.
Source: silverinvestingnews.com
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Soon Fear Will Turn Into Greed In Copper Market CIGA Eric
Follow the money! It has been repositioned into weakness. Soon the sellers of weakness will become chasers of strength. Do you understand the game yet?
Copper (JJC) And Copper Diffusion Index (DI)
Headline: Copper Stockpiles Dropping 50% in China May Spur Imports
Copper stockpiles in China, the world’s biggest consumer of the metal, may have dropped 50 percent in the past two months, potentially spurring more imports and higher prices.
Inventories in bonded warehouses, used to store shipments before duties are paid, may have declined to about 300,000 metric tons, according to estimates from traders and analysts in China including Shanghai East Asia Futures Co. The warehouses, whose holdings aren’t disclosed, contained about 600,000 tons at the end of March, according to Standard Bank Plc.
Increased shipments into China, which represents about 40 percent of global demand, may mean a rebound in prices that fell 9.8 percent from a record in February. Goldman Sachs Group Inc. (GS) anticipates copper trading at an all-time high of $11,000 a ton in 12 months as mining companies fail to keep pace with demand.
Source: bloomberg.com
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