Marc Faber readies for hyperinflation, dollar’s demise and civil unrest

 

 

The upside for gold and silver will knock your socks off – Embry
 
With no easy solutions to the globe’s debt problems visible, Sprott Asset Management’s John Embry expects gold and silver to be significant beneficiaries but the road ahead will not be easy. Author: Geoff Candy
Posted:  Wednesday , 24 Aug 2011
For many commentators, gold is considered not only a constant store of value but, also, a barometer for the health of the global economic system and the currencies that pump through its veins.
For, John Embry, chief investment strategist at Sprott Asset Management, the current parabolic rise in prices, which have beat even his optimistic performance expectations this summer, is indicative of the unsustainable debt situation in which the world now finds itself.
Speaking on Mineweb.com‘s Gold Weekly podcast, Embry explains, "We’ve reached a stage in the debt cycle where it doesn’t appear we can move forward and on that basis you need more and more debt creation to generate the same dollar real GDP growth – and I don’t think we can get that kind of debt growth.  So to keep these systems stuck together they [governments] are going to have employ quantitative easing in massive quantities, and if they don’t, the current softness in the economy is going to turn into a rout."
Given the current levels of growth, Embry says, any halt in the funds propping up the banking system will result in significant deflation in "fairly short order" because the deflationary pressures within the West are huge.
But, he says, it is not just the West that is likely to suffer. "The Chinese miracle is grinding to a halt, they’ve dined out in the West for years and they paid for it by taking back our crappy paper but the fact is that they kept their economy going at breakneck pace and I would also say it is probably one of the most unbalanced economies I have ever seen.

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Orderly Panic Takes Hold Of World Markets

 

 

Charting The Biggest Structural Problem For US Banks, And What The Market Expects From Jackson Hole, Version N+1

Sometimes the general public can get confused in attempting to explain the complexities and the inefficiency of the banking sector when one simple chart brings the message home. A chart like that comes from the latest "Eye on the Market" from JPM's Michael Cembalest, who compares total bank deposits ($8.4 trillion), or bank liabilities, and total bank loan (about $2 trillion less) assets, or sources of cash flows that are supposed to fund bank liabilities and generate retained earnings, while the bank performs credit, maturity and risk transformation: a bank's three key functions. As the chart below shows, perhaps the primary reason why the economy is in its current deplorable state, is that instead of lending dollar for dollar to catch up with deposit growth, banks now rely on roughly $1.7 trillion in excess reserves with the Fed, an amount roughly equal to the difference between total deposits and loans, to plug the credibility gap. This also explains why according to Cembalest one of the expectations by the market from Jackson Hole is that IOER will be cut to 0% to promote bank lending, and thus the conversion of reserves into loans (something which the inflationistas out there will tell you is a big risk to a sudden surge in out of control inflation). So how does the Fed's direct intervention in bank balance sheets look like? Here it is.

Guest Post: Three Times Is Enemy Action

People seem surprised by the suddenness of the decline in the stock market. It keeps trying to rally, and the rallies keep getting sold. There’s no shortage of worrying circumstances in the real world to explain a fall in prices, and it’s normal for people to disagree about whether they should be going up or down. But the violence of this move has caught many of us by surprise. I don’t think it should have. I think there are good theoretical reasons, very simple, orthodox economic ones, to expect more of the same, to expect equally dramatic, or even more dramatic moves down, going forward. Of course, given the fact that I presumably have some sort of bets on the table, anything I say about that belief, like anything any market participant says, should be taken with a very large grain of salt. On the other side, there’s the danger that I’m merely stating the obvious, and wasting the reader’s time. (But then why are so many of us still long?). Nevertheless, despite the fact that I clearly can’t be trusted, and consequently won’t persuade many people to change their views, and even if there’s nothing startlingly original about what I’m going to say, I think it’s worth laying out what I believe to be the correct explanation of the crash as it’s still happening, so that later on, when we’re tempted to blame various scapegoats – derivatives traders, European politicians, bankers, our neighbors, immigrants, the opposing political party, etc., etc. – we’ll perhaps remember that one of these analyses was predictive of the timing and scale of the event at the time, while the others are invidious reconstructions after the fact.

Goldman's Latest Trade Recommendation: Sell Apple Puts - Loss: 30% In One Day

That's right: nothing like a little virtually unlimited downside just head of the most groundbreaking (if somewhat priced in) announcement in Apple history. We can only hope this recommendation to sell Apple $300 January Puts, with an initiation date of, well today, was purely a function of impeccably bad timing, because if Apple opens tomorrow at the futures closing price of $357, these will be worth $14.21: a rather unpleasant 30% loss in a few short hours.

Complete Chinese War Preparedness And Military Update

Now that Keynesianism has failed (repeatedly and miserably, although certainly not during wartime - during those times it is curiously successful at 'stimulating'), and only those willfully blind refuse to see how this extended slow-motion collapse ends, below we present the latest, 2011 Edition, of the Annual report to Congress revealing "Military and Security Developments Involving the People's Republic of China" or, in short, everything that one needs to know to defend from and/or attack the world's most populous nation. For those short on time, here are the key charts.






CBO Report: "The future is rosy"

Posted by : Bruce Krasting

Post date: 08/24/2011 - 21:25

A very positive spin on things from the CBO. Of course, politics has nothing to do with it.

A banking system built on lies and deception





Can you survive if you're YOYO? Commissioner preaching preparedness

Another consideration: “It’s obvious with the financial situation that something’s coming, like triple-digit inflation and a run on the banks and people can’t get their money out. The government’s not going to be there for you,” she said.

Read more: http://www.gazette.com/articles/phones-123510-yoyo-power.html#ixzz1W031eiIe

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