Chris Martenson: "We Are About To Have Another 2008-Style Crisis"
Well,
my hat is off to the global central planners for averting the next
stage of the unfolding financial crisis for as long as they have. I
guess there’s some solace in having had a nice break between the events
of 2008/09 and today, which afforded us all the opportunity to attend
to our various preparations and enjoy our lives.
Alas, all good things come to an end, and a crisis rooted in ‘too
much debt’ with a nice undercurrent of ‘persistently high and rising
energy costs’ was never going to be solved by providing cheap liquidity
to the largest and most reckless financial institutions. And it has
not.
When Ron Paul stands up in front of a crowd and explains the fictional-reserve
banking system's unreality, some listen, many shrug and bury their
heads. When ZeroHedge does the same, comments are heavy but change is
slow to come. But when a 12-year-old girl, in a little over five
minutes can explain the total farce that is our monetary system,
surely people have to listen and break free of the matrix.
Victoria Grant, 12, explains how "The banks and the government have
colluded to financially enslave the people of Canada," and as CTV notes,
'Grant lays out a brief history of the Canadian banking system,
referencing obscure historical figures such as former Vancouver mayor
Gerald McGeer and explaining that the Bank of Canada held primary
control over government lending until the 1970's. Starting then, she
says, governments began borrowing from private banks instead at
considerably higher interest rates than those available through the
central bank. The result, Grant argues, is a rapidly increasing national debt.
The pint-sized pundit is quick to offer a solution. "If the Canadian
Government needs money, they can borrow it directly from the Bank of
Canada," she says. " ... Canadians would again prosper with real money as the foundation of our economic structure." The truth is out there - whether it comes from Alan Simpson, Ron Paul, ZeroHedge, or a 12-year-old Canadian young lady.
My Dear Extended Family,
Please make an effort to stay balanced. Greed is a condition of lack
of balance similar to fear. Fear is being fanned from within the gold
community as much or more than from outside. When people who know gold
is seriously under priced talk temporary bear, they kick good people
when they are down. When I last discussed this with Dean Harry Schultz
he made a great comment about the leading gold reviewers. Harry said
"You cannot herd cats."
We can never make good discussions when we are out of balance. If I
can be of any assistance it is to bring you back to balance as you
review your situation. The market manipulators depend on being able to
unbalance you and the greatest tool they have is to supply credit to the
margin junkies who live on the edge of greed. This helps them flash to
fear faster than the weather changes on Mt. Washington.
The continued strokes in the fiat money markets, regardless of where,
is bullish for gold. The problems of OTC derivative just brought into
the headlines by Morgan is alive and well, guaranteeing QE to infinity.
It is possible that due to the genus quant’s, many of these weapons of
mass financial destruction have taken on lives out of the control of
their manufacturers. How long the Fed wants to stare down the markets is
limited in time in a election year. QE is non-economic buying of US
treasuries. They are bought to create a rate by government.
Austerity has exploded in the face of politics in the EU. That always
results in changing politicians such as in France and Greece. The
recovery in US economic statistics is running thin. That will cause more
demand for liquidity especially in this election year as it is
liquidity that floats all boats, especially the wishes of the
want-to-again-be president.
The Fed has never failed a sitting administration in its history. The
Fed is not going to fail the sitting administration in this election
year. The assumed strength in the US dollar is a product only of the
mirror image of weaker euro. The US dollar is not going to purchase more
of anything US when currency induced cost push inflation is alive and
well. The USDX is an antiquated index in its weights and measures.
You must make your decision in present time, neither fearful or
greed-ful of the future. Look at every factor of gold and list them as
bullish or bearish.
My decision is to forge ahead.
Sales of gold or gold shares should only occur when there is a clear
and present need to pay bills with no other alternative. Your sales
should not be made in the unbalanced fear of the bear raids
fundamentally certain to fail in both gold shares as well as gold
itself.
Respectfully,
Jim
Jim
Obama Budget: 99 Senators Against, 0 For
Two months ago, Congress voted down the "Obama budget" by a vote of
414-0. Today, the Senate chimed in. The result was just as definitive.
Final outcome, between the Congress and the Senate, a grand total of zero votes were cast for the Obama budget... and a mere 513 against.
The Wisdom of Thucydides
Thucydides was probably born about 460BC and was for a time a General on the side of democratic Athens
against aristocratic Sparta in what is known as the Peloponnesian War
in which most of Greece took a side. After being exiled he wrote his
famous history. The passage that we’ve quoted here, in our opinion, one
of the finest passages of classical antiquity, describes the
breakdown of civil society and in doing so it perfectly describes every
civil war and revolution that has taken place in the almost two and half
thousand years since it was written. We bring it to your
attention in the vain hope that those who have blindly pursued the
policies which have brought Greece to the brink and risks plunging the
whole of Europe into the abyss, might consider more keenly the consequences of their actions and change course before it’s too late. Biderman Sees Post-Facebook Euphoria Rally Fading Quickly To Dysphoria
Supply
and Demand are what drive share prices in the stock market and Chrales
Biderman of TrimTabs takes to task the plethora of complicating
factors that are run in front of our eyes day after day on why we should
be buying stocks. While he is short-term bullish, expecting a
2-3% jolt to stocks on post-Facebook IPO euphoria (as selling positions
to fund the IPO allocation will fade), he remains medium-term bearish
with an eye for being short stocks and long gold. His
discussion of Stock Trading 101 is noteworthy and fits somewhat with our
incessant annoyance at the money-on-the-sidelines ignorance that
remains among so-called professionals who seem to remain ignorant of the
closed-loop nature of buyers and sellers in the financial markets -
leaving the important driver of market movements not earnings or
macro-data explicitly but the buybacks (or lack thereof) of corporations
(and money flow). An interesting alternate perspective.Rupee, Indian Stock Market
The Indian rupee seems to be somewhat oversold but I think the direction is
very clearly towards the weaker currency. Normally, if you let your
currency weaken significantly, it may help you near term but equally it
causes a lot of long-term economic damage. And hence, if the rupee
depreciates by 10-20 per cent in the near term, it will also help the
market. *Marc Faber is an international investor known for his uncanny
predictions of the stock market and futures markets around the world.*
Gold Bouncing from Support in Asian Trade
After what seems like a nearly vertical fall in the gold price over the
last 7 or 8 days, gold is finally getting a bit of a reprieve this evening
as it enters Asian trade. The interesting thing about this most recent
selloff is that reports of physical offtake have indicated good buying of
the metal down here at these levels. This has been swamped by hedge fund
liquidation and some fresh short selling as some in this category are
moving onto the short side.
As you can see on the chart, gold fell nearly right to the very bottom of
this 8 month long trading range before bouncing high... more »
Falling Gold Prices: A Few Thoughts
There's an element in India in the last several months which is very
strongly saying we've got all this money tied up in gold which is not good
for the economy,” Rogers says. To India’s west, “There are Europeans who
are talking about the need to sell their gold or at least to start offering
gold backed-convertible bonds. - *in CNBC*
Related: SPDR Gold Trust ETF (GLD)
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Tim... more »
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The ECB suspends payments to Recapitalize Greek banks/Run on Greek Banks/Spanish and Italian 10 yr bonds remain high/Portugal's 10 yr bond approaches 12%
Good evening Ladies and Gentlemen:
Gold closed down by $20.60 to $1536.20. The price of silver also fell by 88 cents to $27.17.
Gold tumbled with this announcement:
Gold Tumbles Into Bear Market on Concern Greece May Leave Euro
I rest my case.
The gold and silver markets were fast today as prices were basically all over the board.
We heard today that Greece will no longer receive money
Why Are Industrial Commodities Falling
Well, why industrial commodities are weak has nothing to do with Greece.
Greece is an unimportant player in the commodities market. Industrial
commodity prices have performed miserably as well as the mining company
because they anticipate or because they smell more meaningful downing in
the Chinese economy, about which I have been warning for the last 6-9
months. *Marc Faber is an international investor known for his uncanny
predictions of the stock market and futures markets around the world.*
Why the Delay from the Fed in Announcing Additional Stimulus Measures
With all the turmoil and commotion occurring in Europe, with slowing growth
in China and with mixed signals coming out of the US, and now, especially
with global stock markets reeling and talk of "US fiscal cliffs" abounding,
one would expect the doves on the Fed to begin making noises and talking
nicely to the investment community about future plans for additional QE
measures. Some have even suggested that one of the things that the Fed also
might do is to further push back their date for any rate hike until "late
in 2014". For now however we are getting an eerie silence. Even today... more »
Japanese Pension Fund Switches To Gold
The IMF (announced $2.3 billion gold purchase), Soros, Pimco, Texas
Teachers Retirement fund - anyone see a definitive trend starting here?
From the Financial Times (Mark at Strategic Energy Research gave me the
heads up):* *
*Okayama Metal & Machinery has become the first Japanese pension fund to
make public purchases of gold, in a sign of dwindling faith in paper
currencies...With institutions warming to gold, too, demand could grow
further.*
Not much I can add to this article. Here's the LINK. You'll need to
register for a free password. The FT is worth the effort.
What I wi... more »
The ECB Presents: Inflation Island
After
a day full of depressing news, what is the best way to unwind? By
pretending one is former Goldman employee Mario Draghi and having to
grapple with 4 make believe scenarios, of course. These are: deflation, price stabeeleetee, high inflation and hyperinflation. But instead of actually being in his shoes, and stuck in a damp Frankfurt basement with the manual for Heidelberg: Mainstream 80, Web-fed Rotary Printer,
figuring out how to put it into overdrive, one can have fun from the
comfort of one's own REOed and mortgage-free (thank you Congressional
Politburo) home courtesy of the following ECB video game. Good luck, and
may the printiest man win.Has The Simple Retail Investor Become Smarter Than Sophisticated QIBs?
There
was a time when retail investors were mocked and derided by all: after
all whenever the big boys needed to unload they jest blew the whistle,
and like obedient lap dogs retail would buy at the very peak of the
market because "stocks are a once in a lifetime buy", leading to what
some call distribution, and others, a plunge. Not any more. In spite of
the recent 20% surge in stocks, following a pattern absolutely identical
to the one from September 2010 to March 2011, for the entire 32 week
duration of the artificial central bank induced rally beginning October
5, there were a total of 3 weeks of inflows into the market, totaling a
whopping $2.8 billion. The outflows: 29 weeks for a total of $96.6 billion, with $2.4 billion pulled out in the most recent week.
And as speculated that in the absence of the traditional greater fool
(that would be you dear reader hidden behind your E-Trade platform)
stepping in, the prop desks, prime brokers, and hedge funds had no other
choice... but to sell to each other, in the process exposing
sophisticated 'Qualified Institutional Buyers' as nothing more than
glorified, stock-peddling Pied Pipers who are good at only one thing:
manipulating the less sophisticated crowd. Which works until it doesn't.Quantifying The Plan Z Dry Powder - This Is The Greek ELA Borrowing Capacity
We already posted a full run down from JPM on what the immediate costs from a Greek EMU exit would be (starting at €400 billion and going higher), but one point that bears repeating is just how much borrowing capacity Greece has under the ELA in the aftermath of today's news that the ECB is leaving Greek banks to fend for themselves until such time as the Greek recapitalization payment is wired over to Greece, which the ECB has defined simply as "soon." The answer: woefully inadequate, and certainly not enough to backstop the remaining Greek deposits of €170 billion as of the end of March (likely far less now), at €65 billion. And that's an upside estimate: as JPM says "The true maximum amount that Greek banks can borrow via ELA is likely though to be significantly smaller because not all loans are accepted as collateral via ELA." Remember: this is all just one giant game of chicken - Greece's Syriza has bet the farm that the cost from a Greek fallout is just too big to Europe and the terms of the hated "Memorandum" will be adjusted, while to Europe, on the other hand, the outcome to Greece, at least according to Europe and the IIF's Dallara will be "between catastrophic and armageddon." So... Who blinks first?Silver Corzined, Stocks Einhorn'd, Financials/HYG Iksil'd
S&P 500 e-mini futures closed at their day-session lows, below yesterday's day-session lows,
and heading for overnight lows rapidly - once again giving up some
decent early gains amid much heavier volume into the close. Markets were
a mess today. Risk-assets in general had the highest
intra-correlation in a long-time - with FX, credit, rates, curves, and
stocks moving in almost lockstep all day (up then down).
Equities were smashed left, right, and center by comments from the Ira
Sohn conference (as it seems people have given up reading hedge fund
13Fs) with Einhorn's comments in particular showing up just how fragile
and thin the real liquidity picture is so many stocks. Silver plunged just after the European close
(margin/collateral calls?) and dragged the rest of the commodity
complex down with it as stocks basically turned on a dime after hitting
yesterday's closing VWAP this morning. Treasury yields rose and plunged in the same pattern
- ending the day marginally lower than overnight low yields at the
long-end but marginally higher at the short-end (post FOMC minutes). Financials were the worst performer
again, down around 1.5%, with the majors in particular now starting to
catch up to credit market's long-held conviction on these names (with MS -10.5% YTD and BofA plunging today but still +27.8% YTD). Gold remained relatively stable getting a lift post-FOMC
(along with silver as the inevitability of QE was clear - but an equity
plunge necessary before it can occur) - though we note the Gold/Silver ratio is now unch YTD.
Credit markets are not done worrying yet - and that weighed on JPM
(-2%) as IG9 pushed above 150bps offered for the first time this year
and HYG (the high-yield bond ETF) collapsed along with HY credit spreads. Still doesn't feel capitulative as overnight nerves for Greece remain high.The Fabled Greek Mega-Bailout
At various stages in the last two years everyone from China, to Germany, to the Fed to the IMF, to Martians, to the Imperial Death Star has been fingered as the latest saviour of the status quo. And so far — in spite of a few multi-billion-dollar half-hearted efforts like the €440 billion EFSF — nobody has really shown up. Perhaps that’s because nobody thus far fancies funnelling the money down a black hole. After Greece comes Portugal, and Spain and Ireland and Italy, all of whom together have on the face of things at least €780 billion outstanding (which of course has been securitised and hypothecated up throughout the European financial system into a far larger amount of shadow liabilities, for a critical figure of at least €3 trillion) and no real viable route (other than perhaps fire sales of state property? Sell the Parthenon to Goldman Sachs?) to paying this back (austerity has just led to falling tax revenues, meaning even more money has had to be borrowed), not to mention the trillions owed by the now-jobless citizens of these countries, which is now also imperilled. What’s the incentive in throwing more time, effort, energy and resources into a solution that will likely ultimately prove as futile as the EFSF?The trouble is that this is playing chicken with an eighteen-wheeler.
Listing David Einhorn's Likes And Dislikes
Here are some of the things that David Einhorn likes and does not like, having just started his speech at the Ira Sohn Conference:- Martin Marietta - stock plunges 10% and triggers circuit breaker.
- France - "a french default is not out of the question" - France not limit down yet. He says that a return to the Franc is not out of the question.
- Einhorn likes GJF.NO - "Norway is the only country which can finance itself."
- Einhorn likes Cairn Energy as it trades at discount to assets in just Britain and India.
- Says China is misunderstood and is not an investment opportunity: not enough money to feed the economy and banks aare becoming illquid; money is leaving the country
- Also does not like Japan for all the usual Kyle Bass and Andy Xie reasons. The Yen will continue strengthening.
- Einhorn likes AMZN, calls it "elephant in the room", but questions profit growth.
- Einhorn likes Dena Co, and Gree Inc in Japan
- Einhorn is short DKS
- Einhorn, who is long about $870MM AAPL as per last night's 13F, likes AAPL. Stunner.
Apple Stock Has Lost Over 5 Years Of Dividend Gains Since Announcement
To
all Dividend funds who bought AAPL on hope the Dividend would lead
them to untold future riches and a perpetual stream of cash we have some
bad news: since the March dividend announcement (of $2.65/qtr)
you have already forfeited 5.66 years of dividend payments in the form
of capital losses. Because what so many forget is that stock dividends also have another side: capital gains. Or in this case losses.Deja LOL As Financials Continue To Plunge
It
wouldn't be the same in this post-BTFD-always-works, post-LTRO,
post-QE, post-central-bank-supported unreality if we didn't see an early
day rally rejected and dump back to its lows in the afternoon in the
S&P 500 e-mini futures. Of course JCP's Tilson-crushing continues
(-19%) as does the selling of financials - JPM -1.5% ($35 handle), MS
-3% (35% off its end-March highs and -8% YTD) - as credit indices do not
seem quite done with their unwinds quite yet.What Happens If Greek Payments Stop: Goldman's Thought Experiment On "The Day After"
Because it is one thing to predict the inevitable when one doesn't have a PhD in Economics, it is something totally different when it comes from the likes of Goldman Sachs (Huw Pill and Themistokis Fiotakis to be precise). In this case, that something is what happens at T+1, T being the inevitable (there's that word again) point where payments from the ECB to sustain the zombified Greek patient, all of which go to ECB funded entities anyway, stop. The biggest concern is that, as we suggested first thing this morning, the ECB is now engaged in a fatal game of chicken, whereby it is forcing Greeks to vote "Pro Bailout" (something that just dawned on the FT), in exchange for continued funding, because unlike last year when the threat of a referendum resulted in the termination of G-Pap, now there is no leader who can be sacrificed, and Europe has no real leverage over the people who have lost so much already, aside from threatening a full out bank system collapse. However, this could very well backfire as more and more Greeks pull their money out, not wanting to find out who blinks first as it would be their money that could be locked up in perpetuity, in essence making the ECB threat into a self-fulfilling prophecy. And as Goldman says, "If confidence is lost and a run on banks occurs, the implications are hard to assess." Well, as ZH warned yesterday, this is already starting. Again from the FT: "Athens-based bankers said withdrawals exceeded €1.2bn on Monday and Tuesday – 0.75 per cent of deposits – as President Karolos Papoulias failed in two final meetings with conservative, socialist and leftwing leaders to form a national unity government." Or double what was suggested yesterday...Three Charts On Why This Time Is 'Not' Different For Stocks
We
are constantly told that this time is different and we are on a
sustainable magic carpet ride to growth, that stocks are merely
'stabilizing' to allow earnings to catch up with valuations, and that
buying-the-dip is the obvious trade. However, as the three charts below
indicate - its no different this time at all. As Barclays notes, VIX and credit markets are leaking exactly as they did in 2010 and 2011
in preemptive anticipation of the end of Twist (and LTRO) leaving
stocks vulnerable to the real shocks of a real macro event risk world; equity
performance remains too good to warrant a central bank response (as we
just saw in the FOMC minutes) and TIPS breakevens are far above
previous intervention levels; and while bank funding fears, growth slowdown concerns, and sovereign downgrade worries are supposedly lesser than in previous sell-off periods, we suggest they are absolutely rising in anxiety and that is the catalyst for the next leg down before the inevitable QE/LTRO occurs.They will print money to Infinity and Beyond...
Fed Minutes: "Easing May Be Needed If Recovery Falters"
Key highlights:- SEVERAL ON FOMC SAID EASING MAY BE NEEDED IF RECOVERY FALTERS
- MOST' FOMC PARTICIPANTS SAW GRADUAL DECLINE IN JOBLESS RATE
- MOST FOMC PARTICIPANTS SAW INFLATION SUBSEQUENTLY AT-BELOW 2%
- MOST FOMC MEMBERS SAW UNEMPLOYMENT ABOVE TARGET IN LATE 2014
- SOME PARTICIPANTS SAW RISKS INFLATION PRESSURES COULD BUILD
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