Archive - Apr 20, 2013 - Story

It has been a tumultuous and terrible week with every emotion being played out in public, real-time across every social media source. This is an attempt at visually preserving and memorializing this week's events.

Instead of frightening people away from gold and silver, the takedown of paper gold seems to have had just the opposite effect.  People just can't seem to get enough. The crash of the price of paper gold on Monday has unleashed an unprecedented global frenzy to buy physical gold and silver.  All over the planet, people are recognizing that this is a unique opportunity to be able to acquire large amounts of gold and silver at a bargain price. Will this massive run on physical gold and silver soon lead to widespread shortages of those metals? Premiums over spot prices are rising everywhere already. And once reports of physical shortages of gold and silver become widespread, it is going to absolutely rock the financial world.  But this is what happens when you manipulate free markets - it often has unintended consequences far beyond anything that you ever imagined. The following are 10 signs that the takedown of paper gold has unleashed an unprecedented global run on physical gold and silver...

The existing (and ongoing) massive expansion of base money into the banking systems of the US, England, and Japan is without precedent. As Nomura's Richard Koo notes, at 16x statutory reserves, the liquidity 'should' have led to unprecedented inflation rates of 1,600% in the US, 970% in the UK, and 480% in Japan. However, it has not, yet. In short, Koo explains, businesses and households in these economies have stopped borrowing money even though interest rates have fallen to zero. There is little physical or mechanical reason for the BOJ’s easing program to work. But the program could also have a psychological impact - and Japanese media is on an 'inflation' full-court press currently. The risk here is that not only borrowers but also lenders will start to believe the lies. No financial institutions anticipating inflation could ever lend money at current interest rates. No actual damage will be done as long as the easing program remains ineffective. But once it starts to affect psychology, the BOJ needs to quickly reverse the policy and bring the monetary base back to 'normal'. If the policy reversal is delayed, the Japanese economy (and inflation) could spiral out of control.

Since 2009, Jim Chanos has been warning of the real estate bubble in China and he is as concerned as ever given the new government's actions (and likely inactions). The presentation (from last week’s 2013 Wine Country Conference) below lays out his thesis in gruesome detail and is unreasonably factual. With capital gains tax impositons and curbs on real estate, he is still not optimistic that the new government will enact any of the major reforms that are required - and will be unable to without blowing it all. Simply put (as Yahoo notes): China is adding the equivalent of $2.5 trillion of new debt annually; 30% of China’s GDP growth depends on new credit creation - half outside of normal banking circles; China’s excessive credit creation is invested in the wrong sectors; and every new dollar of debt created is yielding less growth in GDP. "There are myriad ways... to be short the Chinese property bubble," he adds, noting that, "the new [government]... has no incentive to change the system."

Massachusetts State Police have just released these stunning images of Dzhokhar Tsarnaev's 'heat signature' as he hid in the boat...

Last night we showed what turned out to be Dzhokar Tsarnaev's 'getaway' vehicle from images on his twitter feed. It turns out that in one of those images was another car - a black BMW 330Xi - that has become very important to the ongoing investigation. As The Daily Mail reports, last night two young men (light-skinned, thin, and short) described by neighbors as "nice boys" and their girlfriend were arrested in connection with the Boston Bombings. They are thought to be frtom Kazakhstan, and had not been since the bombings until the FBI raided their home - based on suggestions that Dzokhar had lived there. Despite the 'nice boys' comments, neighbors claimed the men had stolen the BMW but Azmat and Diaz, students at UMass, "who used to party til 3 or 4 in the morning," had one more unsettling surprise up their sleeves... the license plate of their car... "Terrorista#1".

Yesterday we reported that the initial, and largely expected, response by the father of the Boston bombing suspects, Anzor Tsarnaev, was that they had been set up by US secret services. As RT reported further, in an interview with Russian television the brothers’ father Anzor Tsarnaev also claimed that they are innocent and somebody might have set them up. "I’m sure about my children, in their purity. I don’t know what happened and who did this.  God knows and he will punish them,” he told Zvezda channel. “Somebody might have set them up. I don’t know who and because of their cowardice killed the boy." It was not unexpected that the mother also decided to go the conspiracy route, and allege the boys conduct was "set up" and that the FBI had been following them for years.  “They used to come [to our] home, they used to talk to me…they were telling me that he [the older, 26-y/o Tamerlan] was really an extremist leader and that they were afraid of him. They told me whatever information he is getting, he gets from these extremist sites… they were controlling him, they were controlling his every step…and now they say that this is a terrorist act! Never ever is this true, my sons are innocent!” More deranged appeals to some conspiracy theory involving the FBI? Possibly. But then we learn that the FBI did indeed interview Tamerlan nearly two years ago

Having been denied the ability to control guns by the democratically-controlled Senate last Wednesday in the biggest slap to the administration's face in a long time, Obama decided promptly to put as many guns as he possibly can in the hands of US soldiers and various non-Americans. First, it was the announcement that Obama would send more troops to Jordan to prepare for "stability operations" which is a euphemism for Syrian rebel support (much of it controlled by the otherwise dreaded Al Qaeda), and now we learn that Obama is set to announce the sale of $10 billion worth of weapons to Israel, Saudi Arabia and the United Arab Emirates. It appears that Obama, like a true expert of Sun Tzu, is well aware that the only way forward to a Nobel prize winning global peace, is under the barrel of a gun, or on the receiving end of a hot AGM-65 Maverick missile.

Update: 87 year old Giorgio Napolitano has been reelected as president of Italy during the 6th consecutive vote. He becomes the first Italian president to serve two terms.

Earlier today the fifth consecutive round of presidential voting in Italy failed to produce the sufficient majority for the country to elect a president courtesy of its fractured political system, especially following the announcement last night from the PD's leader Pier Luigi Bersani that he would quit his post after a president is elected.  More than 440 blank ballots were cast in the fifth ballot today, with the leading vote-getter Stefano Rodota -- the candidate of Beppe Grillo’s 5 Star Movement -- at 210. Shortly thereafter an ingenious solution has emerged: reelect the current figurehead president Giorgio Napolitano for a second consecutive 7 year term so if not a prime minister, Italy, which has devolved into total political chaos since the February 25th inconclusive elections, would at least has a president. There is one problem: Napolitano is 87 years old.

The ever-encroaching 'might' of the government - or perhaps, put another way, the ever-decreasing need to be gainfully employed or productive...

In all the jubilation last night following the capture of the 19 year terrorism suspect, virtually everyone missed news that a massive 7.0 magnitude quake according to the China Earthquake Administration (and 6.6 according to the USGS including countless aftershocks) hit China's Sichuan province, leaving at least 156 dead and over 2200 injured according to the latest estimate from Xinhua. The epicenter was not too far from the infamous earthquake five years ago when 70,000 people died, and millions were left homeless as a result. The earthquake occurred at 8.02 a.m. (0002 GMT) in Lushan county near Ya'an city and the epicentre had a depth of 12 km (7.5 miles), the U.S. Geological Survey said. The quake was felt by residents in neighbouring provinces and in the provincial capital of Chengdu, causing many people to rush out of buildings, according to accounts on China's Twitter-like Sina Weibo microblogging service.