There is a common problem underlying the economic troubles of Europe, Japan, and the US: the symbiotic relationship between politicians who heed narrow interests and the growth of a financial sector that has become increasingly opaque (Igan and Mishra 2011). Bailouts have encouraged reckless behaviour in the financial sector, which builds up further risks – and will lead to another round of shocks, collapses, and bailouts. This is what Simon Johnson and Peter Boone have called the ‘doomsday cycle’. The continuing crisis in the Eurozone merely buys time for Japan and the US. Investors are seeking refuge in these two countries only because the dangers are most imminent in the Eurozone. Will these countries take this time to fix their underlying fiscal and financial problems? That seems unlikely. The nature of ‘irresponsible growth’ is different in each country and region – but it is similarly unsustainable and it is still growing. There are more crises to come and they are likely to be worse than the last one.
from Silver Doctors:
Jim Sinclair has sent an email alert to subscribers discussing the
background of the OTC collapse in the wake of Lehman Brothers, and WHY the Fed has no other options than to continue QE to infinity. Sinclair states that the
coming end game will be the recognition of the weakness of the Fed’s
balance sheet, and a resulting collapse in confidence in 2015-2017.
As QE3 to infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of the USA, the US dollar, continues to expand exponentially.
The end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow and the quality of the Federal Reserve balance sheet proceeds to deteriorate further.
Therefore the end game is the perception of the weakness of the lender of last resort, the Federal Reserve’s Balance sheet, as it impacts confidence the US dollar and US interest rates.
Read More @ Silver Doctors
Jim Sinclair has sent an email alert to subscribers discussing the
background of the OTC collapse in the wake of Lehman Brothers, and WHY the Fed has no other options than to continue QE to infinity. Sinclair states that the
coming end game will be the recognition of the weakness of the Fed’s
balance sheet, and a resulting collapse in confidence in 2015-2017.As QE3 to infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of the USA, the US dollar, continues to expand exponentially.
The end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow and the quality of the Federal Reserve balance sheet proceeds to deteriorate further.
Therefore the end game is the perception of the weakness of the lender of last resort, the Federal Reserve’s Balance sheet, as it impacts confidence the US dollar and US interest rates.
Read More @ Silver Doctors
by Susanne Posel, Occupy Corporatism:
As our Constitutional Republic descends into a total Fascist Dictatorship, there is a clear emergence of a police state to facilitate the instillation of this incredible takeover. Americans are monitored at every point of their existence; surfing the internet, speaking on the phone, text messages, emails, social media routines, CCTV cameras on every street corner, TSA internal checkpoints, Stasi networks through the Department of Homeland Security (DHS) See Something, Say Something campaign. And the list goes on and on . . .
Coinciding with the severe restriction on our freedoms afforded us by our Constitution; the US government is amassing unmistakable amounts of armory designed for protection against an unknown threat. The DHS have acquired an estimated 2,500 heavily armored vehicles under the cover of Police Rescue.
More ammunition has been solicited by the DHS. Within the next 4 years, they expect to acquire 200,000 million rounds of .223 rifle bullets.
Read More @ OccupyCorporatism.com
As our Constitutional Republic descends into a total Fascist Dictatorship, there is a clear emergence of a police state to facilitate the instillation of this incredible takeover. Americans are monitored at every point of their existence; surfing the internet, speaking on the phone, text messages, emails, social media routines, CCTV cameras on every street corner, TSA internal checkpoints, Stasi networks through the Department of Homeland Security (DHS) See Something, Say Something campaign. And the list goes on and on . . .
Coinciding with the severe restriction on our freedoms afforded us by our Constitution; the US government is amassing unmistakable amounts of armory designed for protection against an unknown threat. The DHS have acquired an estimated 2,500 heavily armored vehicles under the cover of Police Rescue.
More ammunition has been solicited by the DHS. Within the next 4 years, they expect to acquire 200,000 million rounds of .223 rifle bullets.
Read More @ OccupyCorporatism.com
What Does the Invisible Hand Already Know About The Final End Game?
Eric De Groot at Eric De Groot - 6 hours ago
Jim's timeline commentary does a great job explaining why QE has become the
global policy tool of choice to kick the can (excessive debt of the Western
economies) down the economic road. In my opinion, his best observation
“once on the QE road there is no exit other than business recovery success
which will not occur” explains why gold is rallying and capital flows
remain...
[[ This is a content summary only. Visit my website for full links, other
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Total Donations over the last 3 1/2 years. approx $165.00 (Thank You). Donations will help defray the operational costs. Paypal, a leading provider of secure online money transfers, will handle the donations. Thank you for your contribution.
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On The Rise Of ETFs As A Driver Of Bond Returns
The seemingly inexorable rise of corporate bond ETFs
(most specifically HYG and JNK is the high-yield market, and LQD in
investment grade) have been discussed at length here as both a 'new'
factor in the underlying bond market's technicals (flow) as well as
their correlated impact on equity and volatility markets. Goldman Sachs'
credit team delve deep into the impact of these relatively new (and rapidly growing) structures with their greater transparency but considerably higher sensitivities and conclude that not only are they here to stay but the consequences of ETF-inclusion (dramatic outperformance bias relative to non-ETF bonds)
are deepening the liquidity divide (and relative-value) of what is
already a somewhat sparsely-traded market. Our concern is that, as the
divide grows (and liquidity is concentrated in ETF bonds), given the
crowding tendency we have witnessed, (even with call constraints at
extremes thanks to low interest rates), this is yet another crowded 'hot potato' trade hanging like a sword of Damocles over our markets (courtesy of Bernanke's repression).Apple's OEM FoxConn Launching Its Own Retail Stores
Two
weeks ago, when summarizing the state of the US vs China escalating
patent war (for now manifesting itself in the courtroom brawl between
Apple and Samsung, but soon to drag many more comparable companies down
in drawn out litigation), we observed that
while AAPL may have the upper hand, iPhone 5 map fiasco
notwithstanding, that "the Chinese politburo can one day decide to pull
FoxConn's operational license, in the process bankrupting AAPL
overnight" if China really wanted to turn the tables. Obviously, this
was the "thought experimental" MAD outcome which leads to loses
for everyone involved: both Apple and China (where Apple's contract
manufacturer FoxConn employs over 1 million workers). There is one other
alternative: that FoxConn, by now having reverse engineered the peak
of Apple's brilliance (whose latest evolutionary step was "lighter" and
"longer", which anyone could have come up with), decides to brave it
alone, and instead of being a contract manufacturer, to simply slap on a
FoxConn sticker, a la Acer and ASUS, and sell all
Apple-equivalent products at 50% off while collecting all the revenue.
Impossible, you say, Apple would never allow it? It is already
happening, first in high-growth Brazil, where FoxConn is now launching
its own stores.Insignificant Significance Of The “47%” Videos
After the financial debacle caused by a thieving and uncontrolled Thug-elite (banksters, Wall Street, moneyed interests), helped in part by a society ready to be courted by its very own ugly greed, this time in real estate, one would think the electorate would have economics as the prime, if not the sole focus when casting a ballot in this next presidential election. And that would entail castigating politicians, or parties, who could be justly blamed for such debacle and for embracing globalization without a viable plan for those Americans who would be left behind without living-wage jobs; while rewarding politicians, or parties, who offer a reasonable way out, not just of the present mess we are in, but of the impending uglier mess which looms in the horizon. But that would be taxing reality in a nation which has failed to charge Wall Street criminals, for the most part Republicans; in a nation where Bill Clinton, the godfather of American globalization, continues to be held in high esteem by a clueless Democrat party.The Fed Now Owns 27% Of All Duration, Rising At Over 10% Per Year
When it comes to diving trends in the Fed's take over of the Treasury market, there are those who haven't got the faintest clue about what is going on, such as Paul Krugman, who naively looks (as Bernanke expects all economists to) at the simple total notional of securities held by the Fed and concludes that the Fed is not doing anything to adjust fixed income risk-preference, and then there are those who grasp that when it comes to defining risk exposure in the bond market, and therefore in equities, all that matters is duration, expressed in terms of ten-year equivalents. Sadly, this is a data set that not every CTRL-V major or Nobel prize winner (in order of insight) can grab from the St. Louis Fed - it is however available to those who know where to look. And as the chart below shows, even as the Fed's balance sheet has remained flat in notional terms, its Ten Year equivalent exposure has soared, rising by 50% during Operation Twist alone, from $900 billion to $1.313 trillion. What this means in practical terms, as Stone McCarthy summarizes, is that the Fed now owns 27.05% of the entire inventory in outstanding ten-year equivalents. This leaves less than 75% of the market in private hands.
Poor Americans – a group of the population of hundreds of millions –
who don’t pay federal income taxes do have jobs, but they earn to little
to pay taxes, either legally or because paying them would impoverish
them beyond survival. This is not lazy Americans sucking off the rest or
a tax revolt: this is life in conditions where, in just the last three
years, the word American Dream was replaced with American Austerity.
Since the banking collapse in 2008, incomes have fallen by the most
since the Great Depression. More than 50% are below the poverty line.
Almost two-thirds of the 33 million people living in families below the
poverty line have at least one family member who worked in 2011,
according to the Census Bureau.
Incomes Fall in the US Most Since Great DepressionIn fact, the number of people who worked full-time last year in the lowest income group – those who earn less than $20.262 a year, soared 17.3% in 2011. This was by far the largest increase for any group. Food inflation in the markets is not 2% like the federal government would lie to us about, but closer to 10%, like nations in diverse parts of the world, from South America to Southeast Asia.
Read More @ Silver Vigilante
[Ed. Note: LOVE THIS! People from all walks of life are waking up and WE CAN ALL make a difference!]
from TheAlexJonesChannel:
by Arwa Damon, CNN:
Ten days after four Americans were killed in their Libyan city,
hundreds marched in Benghazi and took over the headquarters of a radical
Islamist group tied to the attack.
Thousands of protesters had taken to the street earlier Friday, loudly declaring that they — and not those behind last week’s deadly attack — represent the real sentiments of the Libyan people. “I am sorry, America,” one man said. “This is the real Libya.”
In the evening, an offshoot of several hundred people then headed toward the headquarters for Ansar al-Sharia, a loosely connected radical Islamist group.
As militia members fled, the protesters torched a vehicle and took over the group’s building without firing a single shot. Some of those involved claimed to have freed at least 20 captives held inside, and expressed their intent to assume control over other Ansar al-Sharia buildings.
Read More @ CNN.com
I am going to tell you some stories. To make it interesting, I will
begin with one which could make one of my readers the deal of a
lifetime. It ends on September 30. He who hesitates is lost.
I begin with the obvious: the falling cost of Internet communications is revolutionizing the spread of knowledge. In doing so, it is undermining every establishment. Every establishment rests mush of its power on official views of the past. This is seen in the novel by George Orwell, Nineteen Eighty-Four. The tyrant who enforces the totalitarian state says this. “Who controls the past controls the future. Who controls the present controls the past.”
The cost of controlling the past has risen exponentially since 1995: the year that the graphics browser was introduced. Then came Google.
I know Orwell said this, because I just verified it on several websites. That took under one minute. There is some debate over punctuation: period, colon, or semicolon. I think I will not go to the trouble of looking it up in my library, which is in a special room miles away.
The cost of research is a tiny fraction of what it was in 1995. The Web has changed everything.
Read More @ LewRockwell.com
Ten days after four Americans were killed in their Libyan city,
hundreds marched in Benghazi and took over the headquarters of a radical
Islamist group tied to the attack.Thousands of protesters had taken to the street earlier Friday, loudly declaring that they — and not those behind last week’s deadly attack — represent the real sentiments of the Libyan people. “I am sorry, America,” one man said. “This is the real Libya.”
In the evening, an offshoot of several hundred people then headed toward the headquarters for Ansar al-Sharia, a loosely connected radical Islamist group.
As militia members fled, the protesters torched a vehicle and took over the group’s building without firing a single shot. Some of those involved claimed to have freed at least 20 captives held inside, and expressed their intent to assume control over other Ansar al-Sharia buildings.
Read More @ CNN.com
by Gary North, Lew Rockwell:
I am going to tell you some stories. To make it interesting, I will
begin with one which could make one of my readers the deal of a
lifetime. It ends on September 30. He who hesitates is lost.I begin with the obvious: the falling cost of Internet communications is revolutionizing the spread of knowledge. In doing so, it is undermining every establishment. Every establishment rests mush of its power on official views of the past. This is seen in the novel by George Orwell, Nineteen Eighty-Four. The tyrant who enforces the totalitarian state says this. “Who controls the past controls the future. Who controls the present controls the past.”
The cost of controlling the past has risen exponentially since 1995: the year that the graphics browser was introduced. Then came Google.
I know Orwell said this, because I just verified it on several websites. That took under one minute. There is some debate over punctuation: period, colon, or semicolon. I think I will not go to the trouble of looking it up in my library, which is in a special room miles away.
The cost of research is a tiny fraction of what it was in 1995. The Web has changed everything.
Read More @ LewRockwell.com
by Chautauqua, ZenGardner.com
It won’t be long now. Just over 90 days until the end of the Mayan
calendar arrives. Normally such well publicized “apocalyptic” dates
come and go without much serious notice from me. My friends all warned
me not to buy a ten thousand dollar computer software program in 1999,
but I did; just wasn’t too worried about Y2K, and was, by that time,
immune to the media hype which always swarms around such events.
It’s different this time …
The Mayans were all about TIME, hence the infamous calendar getting so much press lately. I began studying the Mayan calendar some 15 years or so ago, by reading the works of Jose Arguelles, especially a book called “The Mayan Factor”. Over the years Arguelles and other Mayan experts have added greatly to our understanding of this lost culture. The one thing I brought away from these studies was that all the chaos and destruction were side effects, and not the whole deal…which is all about the evolution of humankind from childhood to adolescence…not the end of mankind, but rather the end of doing all the wrong things for the wrong reasons; the end of greed! A new great Age.
Read More @ ZenGardner.com
It won’t be long now. Just over 90 days until the end of the Mayan
calendar arrives. Normally such well publicized “apocalyptic” dates
come and go without much serious notice from me. My friends all warned
me not to buy a ten thousand dollar computer software program in 1999,
but I did; just wasn’t too worried about Y2K, and was, by that time,
immune to the media hype which always swarms around such events.It’s different this time …
The Mayans were all about TIME, hence the infamous calendar getting so much press lately. I began studying the Mayan calendar some 15 years or so ago, by reading the works of Jose Arguelles, especially a book called “The Mayan Factor”. Over the years Arguelles and other Mayan experts have added greatly to our understanding of this lost culture. The one thing I brought away from these studies was that all the chaos and destruction were side effects, and not the whole deal…which is all about the evolution of humankind from childhood to adolescence…not the end of mankind, but rather the end of doing all the wrong things for the wrong reasons; the end of greed! A new great Age.
Read More @ ZenGardner.com
from Got Gold Report:
This week’s Commodity Futures Trading Commission (CFTC)
disaggregated commitments of traders (DCOT) report was released at
15:30 ET Friday. Our recap of the changes in weekly positioning by the
disaggregated trader classes, as compiled by the CFTC, is just below. The recap masks massive changes in positioning by the traders the CFTC classes as “commercial.”
(DCOT Table for Friday, September 21, 2012, for data as of the close on Tuesday, September 18. Source CFTC for COT data, Cash Market for gold and silver.)
Continued…
In the DCOT table above a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting “longer” and red figures are traders getting less long or shorter.
Read More @ GotGoldReport.com
To all CIGAs,
After 50 years of monitoring the financial and economic situation on a daily basis, I can without a doubt state that this is the most clear and concisely put description that I have seen of a complex and highly political problem.
Jim Sinclair has once again described the world’s financial situation in a brilliant and coherent manner while advising hundreds of thousands how to protect themselves from oncoming events. In my opinion, every reader of JSMineset or Tanzanian Royalty Exploration emails should send a huge wave for gratitude to Jim for his clear, concise and in my opinion life saving guidance.
Respectfully yours,
Monty Guild
Economic Effects of QE Will Be Realized Soon Says The Markets CIGA Eric
Agreed, the message of the market confirms that the economic effects of QE3 will be realized soon. That’s why suggest that the equity bears read Jim’s comments below.
Growing trend energy behind the trend implies a steady rotation risk-on rotation (chart) into equities as long as the dominant cycle permits.
Chart: Risk-on versus Risk-off
My Dear Extended Family,
Everyone has an opinion of QE3. Almost all are wrong.
What has taken place here in its size, and in an almost simultaneous international unified approach has no precedent in economic history.
QE1 and QE2 were not failures. Do you have any idea what the world would have looked like if every major bank in the Western financial world broke?
It is easy to be a naysayer and say let the banks go broke, but you have no idea how hard it would have hit you and yours and maybe gold and silver. This is not to say that Debt Monetization, which QE represents, is correct, but it was the only tool available to central banks that would create infinite cash for the Fed and Treasury to use in a totally discretionary manner. Governments, because of the size of their debt, were incapable of applying the better tool for reviving economic activity, which is fiscal stimulation. One thing for certain is the infrastructure of the USA is collapsing in front of your eyes. Dar es Salaam airport looks better on approach than JFK. Dubai is beyond description. Roads from the Beijing airport are brand new. The USA infrastructure is disgraceful for a major power. New York City roads look like "Mad Max and the Day After." However when you are the major debtor nation fiscal stimulation is simply not possible. It will not happen because it cannot happen.
Please stop listening to those that tell you QE will have no effect. They are "Ignorant to Infinity." QE3 is going to have an unprecedented effect, as it is now simultaneous and global in scope.
Please make note of all the governments that screamed at the Fed for the use of QE1 and QE2 that are now applying QE to infinity.
There will be no QE4 because QE3 is going to go on continually with a month or two off now and then. Please recognize that it is hard for markets to discount what they do not believe in and therefore by definition do not anticipate.
Know within 90 days the economic effects of QE3 will be entering markets for money and therefore the markets for gold, silver, and most certainly the dollar.
Gold is going to at least $3500. Silver will certainly perform well also. The real support for the US dollar is .7200 on the USDX and it will trade there. The euro will trade at $1.35 and $1.40.
Ron McEwen of MUX fame said it correctly: "Patience is bitter; but the fruit is sweet!"
Respectfully,
Jim
Source: jsmineset.com
More…
My Dear Extended Family,
The final end game of QE3 to infinity, with a month or two off from time to time, will be a product of the long term viability of the Federal Reserve Balance sheet and the impact on the dollar there from.
Let’s review what has transpired and begin to look at what will happen:
1. OTC derivative manufacturers and distributors sold fraudulent paper to almost every entity as clients of the Western world financial system. Inherently the OTC derivatives manufacturers and distributors had part of the transaction on their books. No problem as long as the entire scam was a "Daisy Chain," a connected set of transactions that has the appearance of risk but when all netted out equals almost zero.
2. Until Lehman was flushed, and flushed it was, most all OTC derivatives could have been netted to zero in a derivative resurrection bank. Losers would have rejoiced and winners would have declared war. However when Lehman was forced into bankruptcy it broke the "Daisy Chain" (a chain of near risk-less transactions when netted) of the OTC derivatives scam. At this point winners had won huge and loser had lost huge and there was no longer a means of repair to the quadrillion dollar scam. The problem has no practical solution other than transferring all losing paper to the balance sheet of the Federal Reserve where then it was anticipated no non-government "mark to market" audit would ever occur. It was the perfect hole to stick the junk into.
3. The size of the OTC derivative market stood at one quadrillion one hundred and forty four trillion as reported by the Bank of International Settlement, the counter internationally.
4. The Bank of international Settlements, seeing this outrageous number, changed their computer method of valuation to maturity assuming no failures and reduced the size of OTC derivatives of all kinds to a more acceptable but still huge number of $700 trillion notional value.
5. In the first and second round of QE the Federal reserve purchased OTC derivatives including the variety called securitized mortgage debt to remove them from the balance sheets of the Western world financial system, thereby improving the Western world’s financial institutions balance sheet and preventing an international industry wide bankruptcy. That means the Federal Reserve has impaired its balance sheet in order to repair some of the balance sheet integrity of the Western world financial system. The amount they have purchased is significant, but not compared to total outstanding above more than one quadrillion dollars.
6. The reason for QE to infinity, QE3, is the failure of business activity in the Western world to pick up with early huge monetary stimulation so as to repair the balance sheet of the Western financial world financial system. The unseen crisis is the hidden weakness of the Western world financial system thanks to FASB (The gatekeepers of world accounting) which allows financial institutions internationally to hide their losses by valuing their paper at whatever the bank wants it to be with no reference to seek a market value, primarily because there is none to seek.
7. The crisis not seen by Fed observers is the true balance sheet condition of the loses on the trillions of dollar of worth-less paper fraudulent paper because numbers are given but no independent mark to market audit has been or is likely performed.
8. As QE3 to infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of the USA, the US dollar, continues to expand exponentially.
9. The end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow and the quality of the Federal Reserve balance sheet proceeds to deteriorate further.
Therefore the end game is the perception of the weakness of the lender of last resort, the Federal Reserve’s Balance sheet, as it impacts confidence the US dollar and US interest rates.
Now you know what brings about the end game.
In the future I will do small simple articles dealing with the impact on markets of a to be Bankrupt Central Bank, the US Federal Reserve. The end game could come sooner, but only if there was an independent "mark to market" audit of the Federal Reserve inventory of worthless paper which remains unlikely no matter who wins the election in November.
Those of you invested in gold and silver vehicles of all kinds (with the exception of ETFs and futures) rest well this weekend. $3500 will easily be a place gold trades. The Canadian dollar and blasphemy to the euro snobs, the Swiss franc, remain go to vehicles for cash positions. Yes cash because you to not have to pay to own them as you do with a sovereign paper with negative interest.
Your watchman,
Jim
Total Donations over the last 3 1/2 years. approx $165.00 (Thank You). Donations will help defray the operational costs. Paypal, a leading provider of secure online money transfers, will handle the donations. Thank you for your contribution.
This week’s Commodity Futures Trading Commission (CFTC)
disaggregated commitments of traders (DCOT) report was released at
15:30 ET Friday. Our recap of the changes in weekly positioning by the
disaggregated trader classes, as compiled by the CFTC, is just below. The recap masks massive changes in positioning by the traders the CFTC classes as “commercial.” (DCOT Table for Friday, September 21, 2012, for data as of the close on Tuesday, September 18. Source CFTC for COT data, Cash Market for gold and silver.)
Continued…
In the DCOT table above a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting “longer” and red figures are traders getting less long or shorter.
Read More @ GotGoldReport.com
from MyBudget360.com
Recently the topic of taxes has been put on center stage again. Aside
from the political bickering the data shows us an even more disturbing
trend. The middle class is demonstrably shrinking at a time that the
government is spending money it doesn’t have while the Fed is digitally printing money
to save its allied banks. The reason nearly half of Americans pay no
federal taxes, this is different from other taxes (i.e., payroll, sales,
etc) is that nearly half of Americans make too little money. This
might come as a surprise to many given that we are the wealthiest nation
on the face of the planet. However, we need only remember that we have
the highest percentage of Americans on food stamps in a generation with
nearly 46.5 million receiving this aid.
Yet part of the data also reflects our aging population. After all,
since 1 out of 3 Americans have zero in savings many retire relying
completely on Social Security for their income.
Read More @ MyBudget360.com
Recently the topic of taxes has been put on center stage again. Aside
from the political bickering the data shows us an even more disturbing
trend. The middle class is demonstrably shrinking at a time that the
government is spending money it doesn’t have while the Fed is digitally printing money
to save its allied banks. The reason nearly half of Americans pay no
federal taxes, this is different from other taxes (i.e., payroll, sales,
etc) is that nearly half of Americans make too little money. This
might come as a surprise to many given that we are the wealthiest nation
on the face of the planet. However, we need only remember that we have
the highest percentage of Americans on food stamps in a generation with
nearly 46.5 million receiving this aid.
Yet part of the data also reflects our aging population. After all,
since 1 out of 3 Americans have zero in savings many retire relying
completely on Social Security for their income.Read More @ MyBudget360.com
by John Mauldin, Gold Seek:
The Gold Report:
Back in January you said the European Union (EU) would have to make
serious political decisions with “major economic consequences” in 2012.
Is the EU making those decisions and what is your prognosis?
John Mauldin: It is doing its best to avoid making decisions, but is being forced to make them, ad hoc. The EU allowed the European Central Bank (ECB) to print money to monetize debt. The ECB is buying time for governments to achieve structural reform.
Structural reform, not the debt, is the problem. The debt is a symptom of bad policies, of a system set up for failure. The EU translated a theory into fact, and the theory did not work.
TGR: Is that theory the EU itself?
JM: The theory is the monetary union. If the EU had just left the trade union alone without trying to layer the monetary union on, it would have been just fine. But the EU wanted a single currency. It was part of the Europhiles’ dream. The EU thinks the monetary union is the sine qua non and it is not.
Read More @ GoldSeek.com
The Gold Report:
Back in January you said the European Union (EU) would have to make
serious political decisions with “major economic consequences” in 2012.
Is the EU making those decisions and what is your prognosis?John Mauldin: It is doing its best to avoid making decisions, but is being forced to make them, ad hoc. The EU allowed the European Central Bank (ECB) to print money to monetize debt. The ECB is buying time for governments to achieve structural reform.
Structural reform, not the debt, is the problem. The debt is a symptom of bad policies, of a system set up for failure. The EU translated a theory into fact, and the theory did not work.
TGR: Is that theory the EU itself?
JM: The theory is the monetary union. If the EU had just left the trade union alone without trying to layer the monetary union on, it would have been just fine. But the EU wanted a single currency. It was part of the Europhiles’ dream. The EU thinks the monetary union is the sine qua non and it is not.
Read More @ GoldSeek.com
by Nickolai Hubble, Daily Reckoning.com.au:
‘Everyone is on the edge of his seat.
Except for us. We fell off years ago’.
– Bill Bonner, 13th September
It’s been a crucial two weeks. Germany’s constitutional court ruled that the European bailout fund is legal. Ben Bernanke, Mario Draghi and Masaaki Shirakawa fiddled with the money supply in America, Europe and Japan. The result was impressive. Not much happened.
That about sums up the last few years, too. The most tumultuous economic times we’ve seen for decades globally and nothing much happens in Australian asset markets.
It doesn’t matter whether you use a 1 year, 5 year, or 10 year chart, the Aussie stock market has been in the doldrums. Here’s the last four years of going nowhere:
So much for diversification and index investing. If you picked your stocks carefully and reinvested dividends, you might have done ok.
Read More @ DailyReckoning.com.au
‘Everyone is on the edge of his seat.Except for us. We fell off years ago’.
– Bill Bonner, 13th September
It’s been a crucial two weeks. Germany’s constitutional court ruled that the European bailout fund is legal. Ben Bernanke, Mario Draghi and Masaaki Shirakawa fiddled with the money supply in America, Europe and Japan. The result was impressive. Not much happened.
That about sums up the last few years, too. The most tumultuous economic times we’ve seen for decades globally and nothing much happens in Australian asset markets.
It doesn’t matter whether you use a 1 year, 5 year, or 10 year chart, the Aussie stock market has been in the doldrums. Here’s the last four years of going nowhere:
So much for diversification and index investing. If you picked your stocks carefully and reinvested dividends, you might have done ok.
Read More @ DailyReckoning.com.au
To all CIGAs,
After 50 years of monitoring the financial and economic situation on a daily basis, I can without a doubt state that this is the most clear and concisely put description that I have seen of a complex and highly political problem.
Jim Sinclair has once again described the world’s financial situation in a brilliant and coherent manner while advising hundreds of thousands how to protect themselves from oncoming events. In my opinion, every reader of JSMineset or Tanzanian Royalty Exploration emails should send a huge wave for gratitude to Jim for his clear, concise and in my opinion life saving guidance.
Respectfully yours,
Monty Guild
Economic Effects of QE Will Be Realized Soon Says The Markets CIGA Eric
Agreed, the message of the market confirms that the economic effects of QE3 will be realized soon. That’s why suggest that the equity bears read Jim’s comments below.
Growing trend energy behind the trend implies a steady rotation risk-on rotation (chart) into equities as long as the dominant cycle permits.
Chart: Risk-on versus Risk-off
My Dear Extended Family,
Everyone has an opinion of QE3. Almost all are wrong.
What has taken place here in its size, and in an almost simultaneous international unified approach has no precedent in economic history.
QE1 and QE2 were not failures. Do you have any idea what the world would have looked like if every major bank in the Western financial world broke?
It is easy to be a naysayer and say let the banks go broke, but you have no idea how hard it would have hit you and yours and maybe gold and silver. This is not to say that Debt Monetization, which QE represents, is correct, but it was the only tool available to central banks that would create infinite cash for the Fed and Treasury to use in a totally discretionary manner. Governments, because of the size of their debt, were incapable of applying the better tool for reviving economic activity, which is fiscal stimulation. One thing for certain is the infrastructure of the USA is collapsing in front of your eyes. Dar es Salaam airport looks better on approach than JFK. Dubai is beyond description. Roads from the Beijing airport are brand new. The USA infrastructure is disgraceful for a major power. New York City roads look like "Mad Max and the Day After." However when you are the major debtor nation fiscal stimulation is simply not possible. It will not happen because it cannot happen.
Please stop listening to those that tell you QE will have no effect. They are "Ignorant to Infinity." QE3 is going to have an unprecedented effect, as it is now simultaneous and global in scope.
Please make note of all the governments that screamed at the Fed for the use of QE1 and QE2 that are now applying QE to infinity.
There will be no QE4 because QE3 is going to go on continually with a month or two off now and then. Please recognize that it is hard for markets to discount what they do not believe in and therefore by definition do not anticipate.
Know within 90 days the economic effects of QE3 will be entering markets for money and therefore the markets for gold, silver, and most certainly the dollar.
Gold is going to at least $3500. Silver will certainly perform well also. The real support for the US dollar is .7200 on the USDX and it will trade there. The euro will trade at $1.35 and $1.40.
Ron McEwen of MUX fame said it correctly: "Patience is bitter; but the fruit is sweet!"
Respectfully,
Jim
Source: jsmineset.com
More…
My Dear Extended Family,
The final end game of QE3 to infinity, with a month or two off from time to time, will be a product of the long term viability of the Federal Reserve Balance sheet and the impact on the dollar there from.
Let’s review what has transpired and begin to look at what will happen:
1. OTC derivative manufacturers and distributors sold fraudulent paper to almost every entity as clients of the Western world financial system. Inherently the OTC derivatives manufacturers and distributors had part of the transaction on their books. No problem as long as the entire scam was a "Daisy Chain," a connected set of transactions that has the appearance of risk but when all netted out equals almost zero.
2. Until Lehman was flushed, and flushed it was, most all OTC derivatives could have been netted to zero in a derivative resurrection bank. Losers would have rejoiced and winners would have declared war. However when Lehman was forced into bankruptcy it broke the "Daisy Chain" (a chain of near risk-less transactions when netted) of the OTC derivatives scam. At this point winners had won huge and loser had lost huge and there was no longer a means of repair to the quadrillion dollar scam. The problem has no practical solution other than transferring all losing paper to the balance sheet of the Federal Reserve where then it was anticipated no non-government "mark to market" audit would ever occur. It was the perfect hole to stick the junk into.
3. The size of the OTC derivative market stood at one quadrillion one hundred and forty four trillion as reported by the Bank of International Settlement, the counter internationally.
4. The Bank of international Settlements, seeing this outrageous number, changed their computer method of valuation to maturity assuming no failures and reduced the size of OTC derivatives of all kinds to a more acceptable but still huge number of $700 trillion notional value.
5. In the first and second round of QE the Federal reserve purchased OTC derivatives including the variety called securitized mortgage debt to remove them from the balance sheets of the Western world financial system, thereby improving the Western world’s financial institutions balance sheet and preventing an international industry wide bankruptcy. That means the Federal Reserve has impaired its balance sheet in order to repair some of the balance sheet integrity of the Western world financial system. The amount they have purchased is significant, but not compared to total outstanding above more than one quadrillion dollars.
6. The reason for QE to infinity, QE3, is the failure of business activity in the Western world to pick up with early huge monetary stimulation so as to repair the balance sheet of the Western financial world financial system. The unseen crisis is the hidden weakness of the Western world financial system thanks to FASB (The gatekeepers of world accounting) which allows financial institutions internationally to hide their losses by valuing their paper at whatever the bank wants it to be with no reference to seek a market value, primarily because there is none to seek.
7. The crisis not seen by Fed observers is the true balance sheet condition of the loses on the trillions of dollar of worth-less paper fraudulent paper because numbers are given but no independent mark to market audit has been or is likely performed.
8. As QE3 to infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of the USA, the US dollar, continues to expand exponentially.
9. The end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow and the quality of the Federal Reserve balance sheet proceeds to deteriorate further.
Therefore the end game is the perception of the weakness of the lender of last resort, the Federal Reserve’s Balance sheet, as it impacts confidence the US dollar and US interest rates.
Now you know what brings about the end game.
In the future I will do small simple articles dealing with the impact on markets of a to be Bankrupt Central Bank, the US Federal Reserve. The end game could come sooner, but only if there was an independent "mark to market" audit of the Federal Reserve inventory of worthless paper which remains unlikely no matter who wins the election in November.
Those of you invested in gold and silver vehicles of all kinds (with the exception of ETFs and futures) rest well this weekend. $3500 will easily be a place gold trades. The Canadian dollar and blasphemy to the euro snobs, the Swiss franc, remain go to vehicles for cash positions. Yes cash because you to not have to pay to own them as you do with a sovereign paper with negative interest.
Your watchman,
Jim
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