A Warning Sign For The World

Greece Stumbles Defiantly Toward Default.

John Williams: $8,890 Gold, $517 Silver & Hyperinflation Update

from King World News:
John Williams, of Shadowstats, discusses some extraordinary prices for gold and silver as well as giving an update on his hyperinflation watch. Williams also says that there is no recovery in the economy and inflation is picking up steam. Here is what Williams had to say about the situation: “Hyperinflation Watch: The upside pressure on oil prices, at the moment, largely is from escalating political tensions in the Middle East, not from significant new weakness in the U.S. dollar. Risk remains high, though, of a sharp sell-off in the U.S. dollar and dumping of dollar-denominated paper assets, particularly as the euro area crises come to head and the damages are absorbed, in due course, by the global financial system.”
Read More @ Kingworldnews.com

Worldwide Media Trumpets That the $6 Trillion in Seized Bonds are “FAKE”, But Can’t Explain the Federal Reserve “Treaty of Versailles” Chests and Boxes

As with the May Flash Crash, and the $134 Billion in “counterfeit” US Bearer Bonds seized from two Japanese individuals who were attempting to smuggle them into Switzerland from Italy, this $6 Trillion in “fake” Bonds story would be forced down the memory hole as well, were it not for the alternative media.
Zero Hedge is of course asking the exact right questions. Tyler Durden writes:

“While we reserve judgment on the authenticity of the bonds, what we wonder is whether the boxes were also fake. Because while we can understand why someone would counterfeit the Treasury paper itself, what we don’t get is why someone would go the extra effort to also create a “fake” compartment in which to store it. In this case a compartment that is property of the “CHICAGO FEDERAL RESERVE SYSTEM.” Perhaps Fed uberdove and Chicago Fed President Charles Evans will be kind enough to explain why Versailles Treaty Chicago Fed crates are floating around in Europe (and filled with $6 trillion in supposedly fake bearer bonds)?”

But rest easy, just forget about it. According to the AP in the attached video, “U.S. officials confirm the Bonds were counterfeit.” U.S. officials? WHO exactly is “confirming” they are “fake”? Proven counterfeiters Timothy Geithner? Ben Bernanke? Criminals!
As always, there is likely much more here than meets the eye – and much more than will be reported on by the main stream press-titute media. The world is on the brink of financial Armageddon, and as James Rickards has said WWW3 will be a monetary affair. I contend that in this case, whether theese Bonds are “fake” or authentic as we suspect they may be, we have all just witnessed the intercept of the monetary equivalent of a nuclear WMD.

Ten Unanswered Questions About The Second Greek Bailout

Open Europe has published a briefing note outlining the ten questions and issues that still need to be resolved in the coming weeks in order for Greece to avoid a full and disorderly default on March 20. The briefing argues that, realistically, only a few of these issues are likely to be fully resolved before the deadline meaning that Greece’s future in the euro will come down to one question: whether Germany and other Triple A countries will deem this to be enough political cover to approve the second Greek bailout package. In particular, the briefing argues that recent analyses of Greece’s woes have underplayed the importance of the problems posed by the large amount of funding which needs to be released to ensure the voluntary Greek restructuring can work – almost €94bn – as well as the massive time constraints presented by issues such as getting parliamentary approval for the bailout deal in Germany and Finland. While the eurozone also continues to ignore or side-line questions over the whether a 120% debt-to-GDP ratio in 2020 would be sustainable and if, given the recent riots, Greece has come close to the social and political level of austerity which it can credibly enforce.

China Cuts RRR By 50 bps Despite Latent Inflation To Cushion Housing Market Collapse

It was one short week ago that both Australia surprised with hotter than expected inflation (and no rate cut), and a Chinese CPI print that was far above expectations. Yet in confirmation of Dylan Grice's point that when it comes to "inflation targeting" central planners are merely the biggest "fools", this morning we woke to find that the PBOC has cut the Required Reserve Ratio (RRR) by another largely theatrical 50 bps. As a reminder, RRR cuts have very little if any impact, compared to the brute force adjustment that is the interest rate itself. As to what may have precipitated this, the answer is obvious - a collapsing housing market (which fell for the fourth month in a row) as the below chart from Michael McDonough shows, and a Shanghai Composite that just refuses to do anything (see China M1 Hits Bottom, Digs). What will this action do? Hardly much if anything, as this is purely a demonstrative attempt to rekindle animal spirits. However as was noted previously, "The last time they stimulated their CPI was close to 2%. It's 4.5% now, and blipping up." As such, expect the latent pockets of inflation where the fast money still has not even withdrawn from to bubble up promptly. That these "pockets" happen to be food and gold is not unexpected. And speaking of the latter, it is about time China got back into the gold trade prim and proper. At least China has stopped beating around the bush and has now joined the rest of the world in creating the world's biggest shadow liquidity tsunami.

S&P500 Q4 Profit Margins Decline By 27 bps, 52 bps Excluding Apple

What a difference a quarter makes: back in Q4 2011, in light of the imploding global economic reality, the only recourse equity bulls had to was to point out that corporate profitability was still at all time highs, and to ignore the macro. Fast forward a few months, when Europe's economic situation continues to deteriorate with the recession now in its second quarter, China's home prices have just slumped for a 4th consecutive month (forcing the PBOC to do only its second RRR cute since November), Japan is, well, Japan, yet where the US economic decoupling miracle is now taken at face value following an abnormally high seasonal adjustment in the NFP establishment survey leading to a big beat in payrolls and setting the economic mood for the entire month (with flows into confidence-driven regional Fed indices and the PMI and ISM, not to mention the Consumer Confidence data) as one of ongoing economic improvement. That this "improvement" has been predicated upon another record liquidity tsunami unleashed by the world's central banks has been ignored: decoupling is as decoupling does damn it, truth be damned. Yet the bullish sentiment anchor has flip flopped: from corporate profitability it is now the US "golden age." How long said "golden age" (which is nothing but an attempt to sugar coat the headline reality for millions of jobless Americans in an election year) lasts is unclear: America's self-delusion skills are legendary. But when it comes to corporate profit margin math, things are all too clear: the corporate profitability boom is over. As Goldman points out: with the bulk of companies reporting, in Q4 corporate profits have now declined by a significant 27 bps sequentially, and an even more significant 52 bps excluding Apple. 

When Debt Is More Important Than People, The System Is Evil

The ethics of debt, at least in the officially sanctioned media, boils down to: nobody made them borrow all those euros, and so their suffering is just desserts. What's lost in this subtext is the responsibility of the lender. Yes, nobody forced Greece to borrow 200 billion euros (or whatever the true total may be), but then nobody forced the lenders to extend the credit in the first place. Consider an individual who is a visibly poor credit risk. He would like to borrow money to blow on consumption and then stiff the lender, but since he cannot create credit, he has to live within his means. Now a lender comes along who can create credit out of thin air (via fractional reserve banking) and offers this poor credit risk $100,000 in collateral-free debt at low rates of interest. Who is responsible for the creation and extension of credit? The borrower or the lender? Answer: the lender. In other words, if the lender is foolish enough to extend huge quantities of credit to a poor credit risk, then it's the lender who should suffer the losses when the borrower defaults. This is the basis of bankruptcy laws--or used to be the basis. When an over-extended borrower defaults, the debt is cleared, the lender takes the loss/writedown, and the borrower loses whatever collateral was pledged. He is left with the basics to carry on: his auto, clothing, his job, and so on. His credit rating is impaired, and it is now his responsibility to earn back a credible credit rating....The potential for loss and actually bearing the consequences from irresponsible extensions of credit was unacceptable to the banking cartel, so they rewrote the laws. Now student loans in America cannot be discharged in bankruptcy court; they are permanent and must be carried and serviced until death. This is the acme of debt-serfdom.

A "Crystal Ball View Of Europe In 2022"

Zero Hedge has presented the work of Bulgarian modern artist Yanko Tsvetkov previously, both in 2010 and 2011. We are happy to see that his work which is meta irony on the weakest link of European culture: centuries worth of stereotype formation and development, has finally made its way into the mainstream media with the Guardian's "Stereotype maps: Is that what they think of us?" We are even happier to see that Tsvetkov has released a new one: a Crystal Ball view of Europe in 2022 which is his cartographic exercise in forecasting the political layout of Europe. While it is mostly an exercise in irony, we have to admit that the probability of him being spot on is high to quite high. We would however point out that by 2022 the "Europe Union" will be a satellite region of Russia, or as it will be better known then, Gazpromia.





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A timetable for Greek Default?




The Upside of Government Default

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