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Guest Post: The Rats Are Cornered
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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"Glorified version of a pellet gun", feels so manly.
http://www.youtube.com/watch?v=h93ce-oTi34
Do Private Enterprises Need the NSA to Protect Them From Cyber Attacks? Written by Klint Finley / July 8, 2010 10:30 AM / 0 Commentshttp://www.readwriteweb.com/enterprise/2010/07/nsa-perfect-citizen.php
Yes self preparedness. At the same time move your business away from the TBTF's.
Even if you can only do this partially right now, everybody will be better off.
It is much easier to gain power when the scared masses willing hand it over. In this case those with money who are not in control. Scare the hell out of them with a market crash and they will come begging for help. At that point, when everyone is broke (except the insiders) and unemployed, QE 2.0 will look like a great deal to save their fortune. No need to argue or struggle. You are their savior! Wave 3 of 3 is here folks, it is going to be a wild ride down.
Yes! The ONLY way we get out of this self inflicted mess is with a change in consciousness. Helping othersrs, caring about something outside of ourselves, putting others before self. All of these things are really GOOD!! Humans are beautiful and loving beings...don't believe the hype that says otherwise. We've just forgotten how wonderful we are!!
the mexican drug cartels are really beautiful and loving beings... http://projects.latimes.com/mexico-drug-war/#/interactive-map
Phew, almost stayed negative there..
Friday 9th, looks like a good ole' summer crash dash.
The pundits will ask. What happened?
Yes, this political system may fall but they are mere gatekeepers to the real criminals, the Rothschild et al.
Why stop with the politicians they are just the middle managers.
http://www.real-debt-elimination.com/index.htm
Economics is about the relationship between producer and consumer. People need to stop worrying about money, and understand this relationship.
There is always bartering.
"This is because if you are not in a position to help your neighbors then you are no good to anyone..."
god bless mike kreiger!!!
Little OT but the census lady came by today to ask about my form which I only put down 3 and sent back. I told her thats all the need to know. She says " oyu won't give any more info?" How about a phone number? I said no, some one can can come back if they want. She remarks some one will. I say, I'm getting tired of this gov't. She says, Me too but they pay me for this.
Mike,
Sounds like a nice ride. Next time, do it on a motorcycle. You will not return to New York, nor will you care about anything that takes place there. That's the root solution for today's problems - as more and more people just do not care what investors and politicians do, but concentrate on living without them, things can only improve. 40 days "out in the wind" behind handlebars; meeting nature head on rather than from within an air-conditioned car, is a quick way to learn about what is real in this country.
"concentrate on living without them", +100! They need us, we don't need them.
Oh yeah Roll me Away
http://www.youtube.com/watch?v=FoUG1JMNA-s
He lost me at "progressive reforms" (pretty much what got us here), maybe he should have gotten closer to the border in AZ where Mexican Cartels are threatening cross border sniping on AZ law enforcement(took awhile to find an MSM affiliate that covered it)
http://www.abc15.com/dpp/news/region_central_southern_az/nogales/smugglers-threaten-arizona-officers-with-snipers
The Mexican Cartels would have nothing if the US legalized the drugs that US citizens use. Prohibition just makes the "rum runner" rich. Sorta like outlaw guns and only criminals will have guns.
Michael:
As a 50 year old real American who chose to drop out of the rat race and live in Podunk, Texas about 10 years ago, let me say thanks for visiting. I’m sure Sweetwater was glad to meet you. That said, I'd like to clear up a couple of misconceptions in your post.
1. You throw a bunch of disparate towns together as if they’re all the same, and maybe they are to your New York state of mind. Seriously though, Santa Fe, Sedona, Jackson and Bozeman are not the real America. They used to be, long before they were discovered by coastals like yourself. I’ve been to all of them. They’re eerily similar in spite of totally different histories. I can understand why they were on your itinerary. I’d rather stay at Jackson Hole than in some hellhole in Rock Springs, too, but then again I know what I am. Next time, check out Pecos, Kingman, Riverton and Butte. Then you can tell me about what real Americans believe.
2. You mistakenly identify Dallas as being in Texas. Any Texan could tell you it’s not. Hell, Jarrod Birmingham even wrote a song about it. I think you can get it on iTunes. It’s called “I Don’t Live in Dallas, I Live in Texas.” You can listen at http://www.reverbnation.com/artist/song_details/3624808. Dallas is like the Rocky Mountain tourist loop. It used to be a nice place, long ago, before it became Nueva York del Sur.
Small gripes, really. I was transferred to Connecticut years ago. I know it takes real courage for you folk to venture past the Hudson, and balls of stone to make it past the Appalachians. I hope you had fun.
.
onecrazytexican
Many years ago and old GF and I left WA. We slept in some parking lot in Idaho.
It was Thanksgiving morning.
A young woman approached us. After speaking with us for a few minutes we were invited to their dinner.
We couldn't but it was nice to feel that trust and sharing.
Conversely one freezing Christmas day my brother and I were driving around getting high before the meal. Up ahead a cop had stopped talking to a family of four. The kids were small, maybe three to five.
Cop drives off and leaves them walking.
We gave them a lift, and regretted they had to huddle in the back of the truck.
Another day, another guy with an argument less, substance less, fact less attack on Keynesianism, as if arguments do not matter, as if it's all self-evident.
That's the way religious sects reason.
There are facts and arguments though, and they're not too kind for your point of view, or should I say, belief.
http://shareholdersunite.com/2010/07/04/keynesianism-zerohedge/
Many of us here are quick enough to know when we're being fucked, whether it's consensual and usually, who else is involved.
While I'm not sure that this qualifies getting fucked as a religious experience unto itself, there have been times when it seemed so.
At least in my experience. YMMV
I read all that and it made perfect sense to me. Every line.
Yeah. Let's do this. Well I already am. And it's liberating.
Why does QE2 need to occur, fomally, given that the Treasury can sell a seemingly unlimited amount of bonds at generational lows in yields? In essence, with a 1 trillion dollar plus buget deficit, funded at uber low interest rates, are we not now in stealth QE2?
You are correct on all counts.
"Why does QE2 need to occur"
Because Wall Street Still Has a BIG Shit Sandwich For You
There are still $$Trillions in worthless assets on the TBTF Bank balance sheets.
The sap Amerikan Tax Payer NEEDS to buy these... courtesy of Bennie Bernank-ster...
Thanks to the suspension of FASB mark to market accounting rules... Bennie has time to accomplish this...
Without mark to market accounting can't we just kind of pretend these "assets" are worth a lot when they're really worthless? Because if we marked them as worthless, wouldn't many financial institutions be, I dunno, insolvent? Broke?
How about we let the banks write them off, at say, 1% a year for 100 years. In 20 years we'll inflate our way out of this anyway.
Sounds Like Good Karma, IK ; )
Let us have Jamie and Lloyd write the rules and set an unbiased policy for the Amerikan public...
Then we sail off into the sunset debt peon hand in bankster hand...
"I see them bloom for me and you,
And I think to myself, what a wonderful world,
Yes, I think to myself, what a wonderful world...
...for JPM & GS"
As part of QE the Fed buys treasuries to support the desired interest rate levels on the various issues. A failed T Auction would send shocks through the system.
Perhaps one of the most useful things that the ZH community could begin doing is to compile a list of the residential addresses of the top people in all of these despotic, thieving institutions, both in the US and in Europe, complete with Google maps, photos of the perps, telephone numbers, gate codes, car licenses etc. so that when the mobs finally begin forming and looking for who to burn, shoot and lynch they will have clear directions for where to go and who to look for. Surely almost everyone in the ZH community has, or knows someone who has this kind of detailed information on at least one of these criminals - maybe ZH could start a rogues gallery that all ZH readers could contribute to. After all, we wouldn't want the mobs to go after innocent people by mistake, or just to hunt down low-level employees.
Yes, who needs data, facts, or even arguments when you have addresses and google maps and the mob behind you to direct...
It might be self-evident to you and your guru, but in the real world it's a little bit more difficult to show that Keynesianism doesn't work. Perhaps that's why Mr. Durden hasn't even bothered to try..
http://shareholdersunite.com/2010/07/04/keynesianism-zerohedge/
Krugman wipes the floor with the likes of you even without having a google map or address at his disposal. He's got something way more effective: data, facts, arguments.
When you're up to your armpits in shit, it's easy to see that the plumbing's broken.
Doc
Your replies here have made me amend my previously hardline policy against ever replying to spammers. As follows:
1) Never reply to spammers.
2) If you must break rule #1, do it with style.
Thanks for the bellylaughs on this thread! You actually made me glad the spammer showed up now; another of life's little paradoxes.
"Keynesian witch-doctors Summers and Geithner..."
Correction: Summers is a Keynesian witch-doctor...
Geithner is the Keynesian witch-doctor's bitch...
Mike hits it out of the park.. Thank you Mike and thank you for posting, Tyler. I for one am glad to see more socio-political commentary here, after all, World War IV has arrived..
so i suppose all your money is in a money market or a bank.
Ever read your prospectus?
Is your money market filled with money? or is it filled with iou's from american express, and chase?
Thanks Mike and I really envy the time you had off. I'm sure a lot here would make the same use of it if given the chance.
Some counter thoughts though.
By answering all these questions, you too may come to the realization that we've been had again. There is no fix and those controlling it do not want any fix but to preserve themselves and that is exactly where they stand today. They have already been made whole. You and I on the other hand don't matter.
Great post!:)) We need more posts like this!
Really appreciate the article, Tyler..Thanks..
Personal slogan (one of many):
'I am responsible..'
Be safe all..
nice piece and sentiment appreciated, but wishful thinking. they aren't going down that easy.
of course, we fight the good fight.
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