Guest Post: The Rats Are Cornered

Tyler Durden's picture

From Mike Krieger, former macro analyst of Bernstein Research, and currently of KAM LP

The Rats Are Cornered

Be the change you want to see in the world.

- Mahatma Gandhi

Back from the Road

I have just come back from a 40 day road trip across the United States of America.  It was without a doubt the single best experience of my life on every level imaginable.  I recognize how hard such a trip is for most people given individual circumstances but at some point in life if possible I would highly recommend doing something similar.  It was a total game changer for me. 

I started Memorial Day weekend and went from NYC to Philadelphia, Pennsylvania then on to  Alexandria, Virginia;  Bedford, Virginia;  Asheville, North Carolina;  Nashville, Tennessee;  Memphis, Tennessee;  Clarksdale, Mississippi; Shreveport, Louisiana (not recommended unless you live on the East Texas border and have a gambling problem); Dallas, Texas;  Sweetwater, Texas; Alamogordo, New Mexico (White Sands);  Santa Fe, New Mexico;  The Grand Canyon;  Sedona, Arizona;  Las Vegas, Nevada;  Mt. Zion National Park, Utah (where my brother got married); Bryce Canyon National Park, Utah;  Salt Lake City, Utah;  Jackson, Wyoming (Grand Teton National Park); Yellowstone National Park, Wyoming;  Bozeman, Montana;  Mt. Rushmore/The Badlands, South Dakota;  Omaha, Nebraska (home of the sellout and recent propaganda mouthpiece Warren Buffett);  Indianapolis, Indiana;  Harrisburg, Pennsylvania;  Montauk, New York.             

For a kid that grew up in Manhattan this was almost too much to handle, but in a profoundly positive way.  The communion with nature, the amazing conversations with random people in far off places about the things I write about in these emails and the new friends I made.  To the new people on this list that I met along the way, thanks for being a very important part of this trip which will forever hold a powerful grip on me.  Now onto the other stuff…

The Rats are Cornered

This email will be pretty brief as I am still getting used to getting back to the fake world.  Although I did work a little every day and kept up with the major news both financial and otherwise I am certainly behind on the details.  This is how I would summarize what has gone on and where we are headed.  The stimulus and gimmicks initiated by a desperate political class prodded on by our Keynesian witch-doctors Summers and Geithner ran their course and at the end of that road was a massive pile of debt, chronic unemployment, a populace that doesn’t believe or trust anything the government says or does and a housing market set to resume its downward spiral.  So basically the forces of deflation have taken over once again. Banana Ben Bernanke knows it and he knows what he wants to do about it.  He wants to print so much money it would make your head spin.  He wants to drop nuclear bombs of QE2 all over this great land.  That is his answer to everything.  The man is 100% insane according to Einstein’s definition.  I quote: “The definition of insanity is doing the same thing over and over again and expecting different results."

There is a major problem however.  Bernanke knows how unpopular he and his fascist institution are right now after all of the crimes they have committed in plain view since 2008.  As such, he knows he needs cover for QE2 and that means some sort of deflationary shock that scares the masses and makes many clamor for help like sad, scared little children (we are being conditioned like animals).  This is why I think the Fed and others have been fine with the recent market plunge.  The only issue for them is they absolutely need gold, silver and other commodities to collapse as well.  Bernanke cannot have the S&P500 at 850 and gold at 1,200 and announce QE2.  Gold would surge to new highs and it would look horrible.  This is why so much emphasis is being placed on getting gold and silver to retreat in a major way via propaganda pieces and also likely surreptitious selling behind the scenes.  While there has been a decent pullback, it is nothing close to what they need and I am particularly impressed with how well silver is hanging in.  I think this is due to a run on physical silver by investors and the dearth of government or central bank stockpiles to sell in the shadows. 

This is what I mean by the rats being cornered.  So far they have failed in decimating the precious metals markets and if they can’t do that in a deflationary scare then they are in huge trouble.  Of course they will never stop trying because they are addicted to power and control and will do almost anything to protect their positions.  I think a key thing to think about now that we must accept that they are in a corner is what is the next move on the chess board.  I read this from Jesse’s Café yesterday (http://jessescrossroadscafe.blogspot.com/2010/07/currency-wars-selling-them-rope.html)

What is disconcerting to me, and you can see it to some extent in Rickards own work, is that the Wall Street financiers clearly have their eyes on the Pentagon budget: opaque, patriotically defensible, and huge. A currency war, with the Wall Street crowd providing tactics and weaponry and mercenaries to both the US and to its adversaries, might make the bonuses taken from the mortgage bubble look like pocket change by comparison. It’s an old idea really, the basis of some legendary fortunes, adapted to the modern world. It produces nothing but misery, while transferring wealth from the many to the few.

Ok, so this fits into a lot of what I have been warning about for some time now.  Namely that once they lose control they will go to the next plan which is pure desperation.  They will single out the two greatest threats to their power and I think those two things are: 1) Gold and Silver (independent money) 2) The Internet (free speech).  If they can’t control the population with inane television and propaganda they will demonize these major threats.  This will probably be sold to public in the name of national security since who could argue with that (if you do argue you will be labeled unpatriotic or a terrorist).  So expect more and more announcements of Russian and Chinese cyber attacks or the like, which will be used as an attempt to censor the web and there will also be more and more news stories related to gold and silver being used by terrorists or those that wish to harm “America” (which is not the Republic but a small group of corporate, financial and political elites from both owned parties that have control via the monetary system).  This group will then use “national security concerns” as a further justification to grab even more power and wield it in the name of protecting us from whatever threat they wish to use, real or fabricated.

What can we Do?

For those that care about real freedom, genuine progressive reforms and this Republic in general there are all sorts of things you can do and they are being done all over the place.  I actually think this group will fail miserably and ultimately be brought to justice.  I simply think too many smart people have woken up to the scam and the entire system will implode on itself.  So as I have written before the key is NOT to be consumed by fear but rather to take action.  Get your finances in order with gold and silver and other real assets but also get mentally and emotionally prepared.  This is because if you are not in a position to help your neighbors then you are no good to anyone.  This will not be about hunkering down in a bunker and emerging rich once the dust settles.  It is about staying intact financially and emotionally so that you can help rebuild a better nation when the current world paradigm comes to an end which should happen swiftly within the next 1-2 years.  Most importantly do not look for leaders to save anything or anyone.  It not about looking outside it’s about looking inside as Gandhi said.  If we become the change we want to see in the world the world will change.  Messianic leaders are a myth and meant to control you and stop you from personal action and independent thought.  Thinking a new leader will change the world just gives you an excuse to be lazy.  

Let’s do this,
Mike

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berated's picture

I gotta problem. After reading this, half my brain says, "Holy shit--this guy's really out there on the lunatic fringe!" Unfortunately, the other half of my brain says, "Holy shit--he's right; it makes perfect sense!"

What to do, what to do....

Gully Foyle's picture

berated

If today were not a crooked highway, if tommorrow wasn't such a long time....

B9K9's picture

What to do, you ask? Here's Buckminster Fuller's recommendation:

"You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete."

My advice is to just (actually or figuratively) walk-away. If you can't do it physically, then do it mentally. Start channeling Maslow: food/water, shelter & security. How will you acquire/achieve these needs absent a governing central authority?

Think high school - you're either with the program, or you're not. Figure out how to be part of the "in-crowd". It's funny how that old adage of "lead, follow or get out the way" is so apropos. If you're not leading, or you're not helping as a cooperative follower, you're gonna get "disappeared". That's how societies have operated for millennia - no one makes a stink, no one says anything. Just one day, the trouble maker(s) is no longer around.

As to the author's belief that the central authorities will initiate progessively more dracionian laws & regulations, forget about it; (the soon to be defunct) Obamacare was the high-water mark.

These slimy snakes are just like the former Soviet leadership. They are cowards - they will slink away in the middle of the night as the entire system goes "poof". One day it was there, the next day, well, it wasn't.

kaiserhoff's picture

These slimy snakes are cowards.

 

+1000  That was exactly my experience in DC.  Yell boo and they will piss their pants.  Couldn't agree more with the substance or stance.  I would only add that this is no time to buy real estate, unless it is farm/ranch land in an area you know really well.

economessed's picture

Not only are "they" cowards, "they're" not as smart as everyone seems to give "them" credit for.  Now I don't really know who we're talking about when we use "they" but I'll just substitute elected members of government (local, state, federal).  Some of the unelected bureaucrats are smart, but they lack power, so they are welcome to join "us."

DosZap's picture

kaiser,

" I would only add that this is no time to buy real estate, unless it is farm/ranch land in an area you know really well."

Ageed, BUT, until we see if ALL THESE AGENDA's are basically neutered, I suggest buying NO Property.

The more liquid, less encumbered, the best chance you will have to maintain.

Property owners, IF the new idiology is allowed to go full speed ahead, unencumbered,will likely LOSE that land............one way or the other.

We are being driven by these new progs into a Caste system.........Uber Wealthy(Control), and working class poor.

Gully Foyle's picture

DosZap

"Property owners, IF the new idiology is allowed to go full speed ahead, unencumbered,will likely LOSE that land............one way or the other."

No, that's crazy talk.

By now everyone knows an Army travels on it's stomach.

Besides you need land owners to be taxed. Hobo's will wind up in camps, work crews or dodging bullets from or brothers of another color.

 

kaiserhoff's picture

I see your point.  We really are in uncharted waters, and real estate taxes alone leave you vulnerable to the kleptocrats.  Still, if you have the bucks, owning some land in the less oppressive states works well with a general theme of self-reliance. 

I think barter, and the general ability to brew beer, grow tobacco, or do something of unquestioned value to your neighbors will help weaher whatever storms are coming, but liquidity and mobility are also important until we see how the big picture breaks.  We are living in interesting times.  Guns and ammo are basic needs.

I look at farm land this way.

1 Can you handle the cash flow in the short run?

2 What will fiat currency be worth in the long run? 

Have your tried venison chili? 

 

Gully Foyle's picture

kaiserhoff

"real estate taxes alone leave you vulnerable to the kleptocrats."

I think Detroit taught government a deep lesson. If you want acres of empty space no one will buy you screw yourself.

I just read that WA state was polled and the majority want income tax on those making 250k instead of raising property taxes.

BIGOV is starting to catch on.

Empty houses and vacant land is virtually useless when they need to pay salaries.

 

I would say if you wish to choose a skill learn to use a forge. Few people know how to use one, like welding. At some point if there is a massive collapse people will need metal work done. One knife is worth more than hundreds of bullets.

 

I would avoid Venison, that whole disease thing scares the shit out of me. I do consider Tilapia and Aquaponics, or stocking a pond.

Funny the first thing people think of is hunting and never fishing.

Cistercian's picture

I love the comment about the forge.My grandfather was a tool making blacksmith in a steel mill.I have his solid nickle toolmaking anvil.Yes, I can make parts and tools.And I am hoarding metal.I have few worries about being useful in a post apocalyptic setting...but I would much prefer we not let it go that far.As the days pass it seems less and less avoidable.

  And I can weld and braze too.And fix anything around the house/farm/industrial environment.

  I really don't want to fall back on it.But I can.

jdrose1985's picture

Ditto,

I built an ornamental sign, gate and lighting company with less than $3000, own a plasma cutter and welder, both 120v systems, almost zero overhead. Been stockpiling consumables like a mother, extra everything, going to start putting together 55 gallon drums of gasoline for the generator, already have years supply of wheat, etc. Rolling blackouts could be a problem..Just today started researching ancient metal working techniques, think my next project is a forge and some propane tanks. A lot of propane tanks.

Oh and the fishing comment above you was spot on...i wondered that when reading Grapes of Wrath...why were people starving instead of fishing? Kayaks with fishfinders mounted, plenty of batteries, tons of lures, rods, etc.

People think I'm nuts so I don't really mention anything. Tell you something I've noticed though...people are really starting to ask questions instead of just blowing me off like they did back in '08; people are starting to wake up.

New_Meat's picture

Gully--learn a skill, use a forge.  Yes, directly usable tools like chisels, knives, nails.  I'm near a New England foundry (now defunct) that mined bog-iron and forged nails, hinges, implements.  But us old farts (perhaps you excluded) can't hack it over 2000+ DegF iron day after day.  Besided, I can't run faster than a lamed blacksmith (yes, the skill was that prized) anyway.

But yes, learn a skill, any skill: weaving, sewing, patternmaking, woodworking, shooting various aimed devices.

There is more.  We'd need to pass on a lot of history and practice.  The old FoxFire series.  The Carolina guys who can make a chair with a drawknife (I'm in awe).  Dynamite Payson makes a Dory.

Keep the faith, we need to pass it on.

- Ned

ExistentialSkeptic's picture

I can sew, patternmake, drape on the form, do alterations -- I even have a degree -- and got out of school just in time for all that stuff to be transferred overseas.  We can't even get decent fabric here -- the "bored housewife" stuff they sell in the "sewing" stores is total crap.  If I drive for an hour I can get to a place run by a lady who is, essentially, stockpiling fabric -- she buys what's leftover in factories when they close down for pennies on the dollar.

My skills, such as they are, are pretty much worthless without a source of decent fabric & thread.  That's why I'm focusing on four-season gardening and my husband and son are learning to fish.

Dantzler's picture

This breaks my heart about my fellow WA residents not recognizing the Trojan Horse of a new tax on the "rich".

I also hope I never have to fall back on my less technologically intensive skills, but I agree that being able to use a forge as well as weld, braze, and otherwise fix or fabricate stuff could come in handy in a pinch.

Lucky Guesst's picture

Have your tried venison chili? 

 

I was thinking about all those wild hogs everybody is complaining about, aren't they edible?

Also, maybe buying both my kids a meat rabbit in opposite sexes and keeping them apart. They could always be breed later..... just couldn't eat the originals (unless we get really hungry)

hbjork1's picture

During this time or any time, it is a good idea to get input from local sources before purchasing land to be used in growing crops.  Even within a given general local, land is not all created equal.  If I really don't know the territory, I would check with the nearest state university with an agricultural faculty.  They should at least make a consultant recomendation. 

And sometimes, the neighbors will express opinions frankly. 

Gully Foyle's picture

B9K9

"My advice is to just (actually or figuratively) walk-away. If you can't do it physically, then do it mentally."

Ladies and gentlemen, and posers ( you know who the fuck you are) we have a WINNER!

You can't win playing a rigged game. You can win by not playing.

 

 

Trailer Trash's picture

Gully, you are so right.  You have to know when to hold 'em and when to fold 'em.  And, it's time to fold 'em and walk away.  Just walk away from the table. 

Gully Foyle's picture

Trailer Trash

Every mystic and religion in the entire fucking world, except maybe Scientology, says the same thing. You can not find peace being Marleys Ghost.

 

suckapump's picture

Damn! You beat me to it!

How about this one instead?

MADinMelbourne's picture

the winner stands proudly with sash and medal chest all puffed up.  Shame there's empty sound in the empty stadium.

island's picture

Bucky - one of my favorite people of all time. 

Great quote. Thanks.

Gully Foyle's picture

island

I interviewed him as a college journalist in the late seventies. I was tripping balls to.

Good times, good times.

aaronvelasquez's picture


"As to the author's belief that the central authorities will initiate progessively more dracionian laws & regulations, forget about it; (the soon to be defunct) Obamacare was the high-water mark."

 

Maybe not yet the high-water mark:

$600 coin purchase or sale will require tax form in U.S. in 2012

http://www.gata.org/node/8801

Oracle of Kypseli's picture

Not a problem unless you have to pay sales tax when you buy.

Not a problem, if you sell.

Not a problem if the gold is in a friendlier country.

unemployed's picture

 

 Is that not the stimulus paperwork explosion law for all transactions everyone has to file a 1099?

 This will establish a cost basis and taxable event record for converting all PM profits into ordinary income taxed+Medicare tax.   In fiat explosion or inflation will make all assets partly owned by the government the next time you transfer them.

 

 

DosZap's picture

B9,

"they will slink away in the middle of the night as the entire system goes "poof". One day it was there, the next day, well, it wasn't.

 

Then, they will have suceeded............if you mean , the SYSTEM prior to these rabid leftist's.

dussasr's picture

"As to the author's belief that the central authorities will initiate progessively more dracionian laws & regulations, forget about it; (the soon to be defunct) Obamacare was the high-water mark."

If you think that the most draconian action that can be taken by central authorities is Obamacare you don't have much of an imagination.  Just look at how Chavez keeps making things in Venzuela worse and worse every day in the name of helping the common man.  Why couldn't this happen in the US?  A Populist message is very appealing to the uninformed masses in the midst of lean times. 

B9K9's picture

Have you ever spent any time in Mexico, central or south America (besides Argentina/Chile)? Those countries are 3-5% European and 95% Mestizo/African.

Chavez is (temporarily) getting away with what he's doing because he's simply utilizing the same control techniques initiated by the original conquistadors & colonialists on a conditioned & long defeated people.

Haven't you ever been to an air show, NASCAR race or sporting event? Didn't you look around @ your fellow citizens this 4th? Yeah, the drunken, fat slobs with 90-95 IQs chanting "USA!" might be overweight & out of shape, but they're typically descended from a long line of Scots-Irish who prefer to fight when it comes down to it.

This is our heritage; it may have been diluted, but you can't (yet) change the core DNA structure.

 

Noah Vail's picture

"Let's do this," Let's do what? Buy gold and silver, that's it? Already done that, so what's next Mike? Nice words, short on vision. Do WHAT?

WaterWings's picture

Obviously you are one of those that will starve to death. If you make it that far.

WaterWings's picture

If you have to ask you are dead.

Ripped Chunk's picture

Buy many guns and the equipment and supplies to make you own loads.

Or be killed

Any more questions?

Gully Foyle's picture

Ripped Chunk

Hey, that's how cannon fodder thinks.

I prefer thinking like a thief, or Daffy Duck.

Choose life bitch, choose life.

cougar_w's picture

The survivors will be fast and will know exactly where the exits are.

At the end of the world you must move out of the way of history, or else be crushed by it.

Ripped Chunk's picture

+ 1000

 

Be one of the extras in the background. The one hiding in dense shrubs or a camouflaged cave

Lucky Guesst's picture

Live near a state park? Dig down and build yourself an underground bunker. Hmmm, is there a such thing as clothing to hide from heat-seaking vision/camaras?

Ripped Chunk's picture

Cover yourself in mud like Arnold did in "Predator"  In fact he will probably do that again to ride out the remainder of his term in CA............

Ripped Chunk's picture

Walk around in the open acting like Daffy and you will get plugged by Elmer.

Temporalist's picture

Elmer never bagged a damned thing.  I'd take my chances if that were only the real situation.  Sometimes the crazies are overlooked first. 

 

 

SMG's picture

1.  Help as many people in the world learn about the eyeball triangle cult that has infiltrated the world's power structure.  Clues are all around you, the symbols on the dollar bill, the painting of the Apotheosis of George Washington in the capital, the federal reserve.    Be patient when explaining some people take more time.   Just to get the truth into the public conscienceness would be huge progress.

 

2.  Help people in the eyeball triangle cult who feel bad about what they are doing and want to change, get out of it.   Faith Hope and Love, is a much better philosphy that the ruthless abuse society they currently belong to.

 

These are two places to start...

scratch_and_sniff's picture

Down with the (ahem) eyeball triangle cult!! Down with the buggers!

scratch_and_sniff's picture

"Lets do this"

Right Mr, you show me your cock and i will show you mine. How much did you smoke on that road trip again? Seriously, what do people read this shit for? Personally, when i started visiting this site, i thought it would be good to have a healthy and casual bearish slant to my trading ideas. Note the words "healthy and casual" because you wont find the meaning of them anywhere on ZH. Its one pile of shite after another... Its not that the elite are pulling the wool over your eyes, the real BS is happening here right infront of your eyes my stressed-out little trader friends.

Seriously, how are you meant to have a neutral mind to go into the market after reading this crap? People always tell others to look into their history on this site, has anybody ever looked into the long history of the feckless bullshiting quack and his extended and constant participation in American society? America is full of bullshitters, it always has been. And you can all kick and scream about how we are all going to hell in a handbasket, and how you can prove it and see it clearly now, more so than ever...join the fucking que, its quite a long one.

When i was 17 i took mescaline one night and had a very bad experience too. I sat in my room and watched the door handle expecting it to open any second, and for a squad of hairy men to come in and kick me and beat me to death with baseball bats and hammers. I sat there for like 8 hours hearing people running up my stairs with the intent to murder me, sat there for 8 hrs waiting on that handle going down, any second now...any second now...

 

WaterWings's picture

Seriously, how are you meant to have a neutral mind to go into the market after reading this crap?

Neutral! Hahahackhackhaha! Is that how you invest? Is that your strategy? Have you made any money in the markets? At all?

scratch_and_sniff's picture

Are the algos bearish? Is that their strategy?

WaterWings's picture

Why are you in the market at all with the algos? Swimming with piranhas is more prudent.