The Final Flush Is At Hand!

Posted September 27th, 2015 at 6:36 PM (CST) by Bill Holter & filed under Bill Holter.

Dear CIGA,
Outright financial collapse, chaos and most probably war is not only in sight, it is imminent and unavoidable now. Normally I try to write and support my conclusions with current or past events via links to news. For this writing, because of the length and scope I don’t plan to do this. It will be assumed that you as the reader have already heard of or read evidence of what is put forth as connectable dots.
This past week, the following article was forwarded all over the internet
http://investmentwatchblog.com/if-deutsche-bank-goes-under-it-will-be-lehman-times-five/ as Deutsche Bank is “all of a sudden news”. Maybe this is a “German thing” with the latest out of Volkswagen? Deutsche Bank is not “all of a sudden”, they have been a derivatives monster for years and were saved in 2008 with part of the $16 trillion the Fed generously sprayed all over the world. The title suggesting DB will be the equivalent of five Lehmans is on the right track but not nearly severe enough. They are tied with JP Morgan as THE largest holder of derivatives in the world. Should Deutsche Bank fail, EVERYTHING FINANCIAL FAILS! It can even be said, “the entire world is Lehman” just waiting for their credit line to be cut 48 hours before complete failure.
What we are looking at now it “the FINAL FLUSH” of the Western financial system. The Federal Reserve has lost all credibility. This has followed both the Bank of Japan and European Central Bank being seen as hopelessly neutered of the ability to support the system. Confidence was THE very last “hope” and the Fed gave even that away last week. Of course the mainstream media chimed in on Friday saying the “market was up in the hopes of a rate hike in December”. Really? Are we to believe a tightening of credit is a good thing for a system buried in leverage and being dogged with liquidity drying up? This is like saying a flame thrower is the best tool for the California fires?
Money Velocity has crashed and so has global trade. Leveraged commodity trades have blown up and left many sectors dysfunctional. Has anyone stopped to think who (other than the sectors themselves) stands to lose with $45 oil? Maybe the lenders? Would this not tighten credit even further? Why do a dozen “advanced” economies already have stock markets in bear (minus 20%+) market territory?
Geopolitically we have watched as West has lined up against East militarily in many spots all over the world. The short list includes the South China Sea, Ukraine, Yemen and of course Syria. Russia began the build up militarily several weeks back along the Ukraine border and more recently inside Syria. Now China is reportedly sending hardware to Syria including http://www.debka.com/article/24909/A-Chinese-aircraft-carrier-docks-at-Tartus-to-support-Russian-Iranian-military-buildup ships. These are not bluffs as active fighting already exists. Can the U.S. actually “win” in any of these arenas in conventional war? It’s OK, you know the answer in your own mind, you also know what the alternative to losing conventionally is.
Before going any further I must ask you this question. Does the rule of law exist in the United States anymore? How many bankers went to jail over the blatant fraud in banking, real estate/mortgages? How many brokers went to jail for stacking MBS securities with guaranteed defaults while betting against the pools? How many exposed frauds within the Obama administration have gone un punished or even investigated? Do we really have three branches of government? Congress (Republicans) has done NOTHING they said they would when the public kicked out the snakes last November…only replaced by new ones apparently. The presidency has purged the armed forces of any conservative leadership and placed “czars” at the top of new and old agencies, what’s up with this?… which leaves the Supreme Court. They now effectively “write law” as they “interpret” ALL law. The Supremes will never see a duck as a duck and will write interpretations declaring the Sun full in the sky at midnight …final ruling and no appeal! “We the People” are screwed!
Speaking of “We the People”, while QE was used to mesmerize the middle class by holding the markets up, it in fact has gutted our real economy and has destroyed any possibility of making money the old fashioned way …by working! We now have one half or more of our population “taking” benefits and the other half “giving” them, any hope of a recovery led by the middle class is now gone as is the middle class.
Is it any wonder there are now shortages and tightness in the gold and silver markets? The East believes gold “IS” money, they also know the dollar is untenable and will not be a store of value. In fact, I believe China and Russia may step in to “help” the dollar fail. I still believe Mr. Putin will come forth with a “truth bomb”, I would love to be a fly (although hidden bugs will probably be everywhere) on the wall at tomorrow’s meeting between Presidents Xi and Obama. I can just imagine how the conversation might go, I cannot believe the U.S. will be barking ANY orders in any fashion. A sad statement but you must ask yourself this, does the U.S. have the power or ability to make demands? Remember, we are the debtor while they are the creditor!
In my opinion we are already well within the jaws of a meltdown/shutdown as liquidity is evaporating. There are a dozen developed countries with their stock markets already in bear markets (down 20% or more). All crashes come from oversold levels just as bank runs come on fast and are a surprise at the time. What is coming should be NO SURPRISE to anyone as we are looking at the end of not only an empire but of a flawed system which has endured for far too many years! This was a solvency problem in 2008 and “liquidity” was the incorrect tool used then. Now it is a bigger solvency problem with an illiquidity kicker attached …while the Fed has already used every tool imaginable and every last ounce of credibility. The loss of confidence in the issuer of the world’s reserve currency would be bad enough in an unlevered world, the loss of confidence in today’s “debt world” will be a DISASTER!
To wrap this up, do not let anything that may happen from here surprise you. The conditions are ripe for global currency crises and a shutdown of credit. The conditions are also ripe for hot war to explode in multiple venues. A meltdown or shutdown of markets will serve as a FINAL FLUSH of what remains left of the U.S. middle class. Without the “wealth” in stocks and homes, psychology will be toast. The U.S. is creating “income” from actual work at a third world level which is exactly where we are headed as our standard of living is “borrowed rather than owned”. My point is this, a market meltdown and credit shutdown will make the U.S. look like 1985 Bombay within weeks as we create nothing and have saved in “nothings” and owe everyone. This is the rosy scenario and assumes that martial law is not instituted (a poor assumption in my opinion!).

Standing watch with tears in my eyes,
Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@hotmail.com

In The News Today

Posted September 26th, 2015 at 10:27 AM (CST) by Jim Sinclair & filed under In The News.

Jim Sinclair’s Commentary 
Blowback is everywhere over actions not thought out to their conclusions.

‘If we stop training, arming jihadists, the war will end’ – Virginia state senator to RTPublished time: 26 Sep, 2015 04:20Edited time: 26 Sep, 2015 15:32
As the Syrian civil war continues to rage and Islamic State maintains its foothold in the region, Virginia state Senator Dick Black told RT that “if the US stopped training jihadists and arming jihadists, the war will end.”
In a lengthy interview, the Republican state senator connected the crisis in Syria to the actions of countries such as Saudi Arabia and Turkey, who he said have armed extremists like Islamic State militants that are fighting against the Syrian government. He also blamed US meddling in the Middle East for the rise of terror groups like Islamic State (IS, also known as ISIS/ISIL).
“It is my hope and prayer that the United States wakes up and says it is time to end this slaughter. It is time to stop trying to topple regimes, bring order to the Middle East [and] stop the bloodshed. If we stop training jihadists and arming jihadists, the war will end.”
The US has been criticized for its efforts to thwart IS, particularly its plan to arm and train moderate Syrian rebels to battle the extremists. US Central Command said Friday that it learned that the commander of a Syrian rebel group trained by the US to fight Islamic State had “surrendered” a quarter of his unit’s military supplies to the Al-Qaeda-affiliated Al-Nusra Front in exchange for safe passage.
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Jim Sinclair’s Commentary
If you mined and had substantial material in storage would you feel obligated to sell it, or overwhelmed by the desire to hold it?

Gold “Tightness”: When There’s No More To Sell, There’s No More To Buy (At Any Price)Submitted by Tyler Durden on 09/26/2015 16:00 -0400
Submitted by Chris Martenson via PeakProsperity.com,
One of our long-running themes here is that the truly historic and massive flows of gold from West to East is (someday) going to stop, for the simple reason that there will be no more physical bullion left to move.
It’s just a basic supply vs. demand issue.  At current rates of flow, sooner or later the West will entirely run out of physical gold to sell to China and India.  Although long before that hard limit, we suspect that the remaining holders of gold in the West will cease their willingness to part with their gold.
So the date at which “the West runs out of gold to sell” is somewhere between now and whenever the last willing Western seller parts with their last ounce.  As each day passes, we get closer and closer to that fateful moment.
This report centers on preponderance of fascinating data revealing the extent of the West’s massive dis-hoarding of physical gold, for the first time, begins to allow us to start estimating the range of end-dates for the flow to the East.
Here’s the punchline: there’s an enormous and growing disconnect between the cash and physical markets for gold. This is exactly what we would expect to precede a major market-shaking event based on a physical gold shortage.
Stopping the Flows
There are only two outcomes that will stop the process of Western gold flowing East, one illegitimate and the other legitimate.
1. It becomes illegal to sell gold.  This is the favored approach of central planners who prefer to force change by dictate rather than via free markets and free will.   Unfortunately, this strain of political intervention is dominant in the West, particularly in the US and EU.
2. The price of gold dramatically rises. A large increase in the price of gold will (paradoxically) cause greater demand for gold in the West and (sensibly) less demand in the East. This is what should legitimately happen given current supply and demand dynamics. But it may not.
There’s always a 3rd option, we suppose: economically carpet-bombing China and India’s financial systems to scare/force some gold back out. Consider such an approach along the ‘economic hitman’ lines of thinking.
This would be done, for example, by having outside interests sell the Rupee furiously, driving down its value and forcing the Indian monetary authorities to defend it by using up foreign reserves to buy the Rupee. Then wait for India to run out of foreign reserves and then casually ‘suggest’ that its government use gold sales to continue defending its currency.  India’s leaders would have to find ways to somehow ‘coax’ gold from its citizens.  I think we can all imagine the sorts of draconian rules and penalties that desperate governments would deploy in such a situation.
As a side note, I believe this is the same process that was used to ‘coax’ a lot of gold out of the GLD trust since 2012. After enough bear raids on the price of gold, which began somewhat suspiciously almost exactly on the date that QE3 was announced, Western gold ‘investors’ lost interest in the yellow metal, sold their GLD shares in droves, and hundreds of tons of gold were liberated from that stockpile.
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