This page has been archived and commenting is disabled.
Please read my latest entry and post your comments here:
http://pensionpulse.blogspot.com/2010/04/second-wave-of-financial-crisis.html
Thank you,
Leo Kolivakis
- advertisements -
Contact Information:
Tips: tips [ at ] zerohedge.com
General: info [ at ] zerohedge.com
Legal: legal [ at ] zerohedge.com
Advertising: ads [ at ] zerohedge.com
Abuse/Complaints: abuse [ at ] zerohedge.com
Suggested Reading:
Make sure to read our "How To [Read/Tip Off] Zero Hedge Without Attracting The Interest Of [Human Resources/The Treasury/Black Helicopters]" Guide
It would be very wise of you to study our disclaimer, our privacy policy and our (non)policy on conflicts / full disclosure. Here's our Cookie Policy.
Look, can someone of you who understands this please explain something to me.
Catherine Austin Fitts says that she has looked at the money flows into and out of the central banks and government and she says that it appears that central banks are purposely pulling the wealth and money out of the country.... in essence an engineered consolidation, or crash. And that the engineered crash also appears to be headed toward a policy of population reduction--through what means she does not elaborate. She says that if you turned the money around and put it back into the economy here at home (I'm assuming that means pull all our bases and military out of the equation) that there would be a SIX FOLD increase in the amount of real wealth (capital) creation within 2 years. Can someone explain this?? Is this true? Does the military and banks really remove this magnitude of money?
Thanks
please email me at smileperfect at earthlink dot net.
Leo
I think the problem coming for Canada in all this mess is that the long end of the curve will be viewed as a safe harbour and the short end will rise due to the BoC resulting in a flat or inverted yield curve spelling disaster, or at least caution, for our banks.
I can't see US rates going much of nowhere so we'll get the double whammy of a $C at 1.10 or so. The net result I suspect will be to take our bubble real estate market down a peg or two. After all, when the US real estate bubble was in full swing the average house price there was only $240,000 or so if I recall whereas Canada is now well north of $300,000.
I have a feeling the Fed might move sooner than people think...call it a hunch.
An inflationary scenario is untenable for the US to manage its debt long-term - surely the Treasury and Fed know this, and will do whatever necessary to prevent rising rates. From what I've read these last 18 months, there are all sorts of machinations that can be used to manipulate the system up, down, left, right, etc. Wouldn't the only plausible trigger event for a hyperinflationary scenario be one that thwarts this manipulation - i.e. large scale natural disaster or a world war?
good stuff. some similar sentiment here. but already opting for deflation- sovereign default asthe outcome.
FMX Editorial- we cast our vote for Global Deflation as the next disaster.
Until recently we’ve been on the fence as to which economic disorder will take hold of us first, Deflation or Inflation. But we are leaning towards deflation now. Our case for deflation can be summed up as of Economic Nationalism.
We are more in that camp now than ever before. Why? Because, despite every effort to reflate economies, fiscal realities are slowing the velocity of money. Interest rates are exploding in countries like Greece, but because of the risk of default, not inflation. Secondly, news like the Goldman Sachs SEC case only serves to further slow down commerce as banks will pull in reins on clients. Borrowers will only do necessary deals, and those will be with “trusted” local names.
We think statements like this by John R. Taylor Jr. today:
And this (also today) by Senator Kaufman who is seeking debt ceilings on lending institutions:
Are harbingers of a changing zeitgeist in capitalism. Welcome to the 1950s; a time when finance was slower, assets had less fluff in them from leverage, and companies with free cash flow were more coveted than pie in the sky growth projections.
And this fresh news as reported by Zero Hedge today
Who is going to borrow to grow a business going forward with this going on? The guy who needs money can’t get it at all now. The guy who can get credit isn’t going to take it because growth prospects are for shit.
It is starting to look like despite best efforts, a deflationary phase of the Economy will hit before we have our hyperinflation debacle. Unless of course you believe what the stock market is cooking.
It's a RECOVERY!!!! Everything is a big, screaming BUY!!!!!!!!!!!! Nothing is kfuced, not int he slightest....
46% of Americans claimed financial hardship in a recent Gallup Poll because the price of food went up by the largest percentage in 26 years. But that doesn't count. They were lard-aspes.
They needed to go on Biggest Loser anyway! This is your gubbermint making you commit to a slimmer you!
Come on now, you know fuel and food don't count for core inflation; they aren't important. Eating is for wusses.
Everything will be dandy as long as Uncle Ben stays on the razor thin highwire and nothing unexpected happens, I'm totally confident!
Leo, this is garbage. Yes, if rates spike up the economy could slow and the US will have high borrowing costs. We've heard that for 30 years now. It's not investable, and if it finally happens all you doomsayers will just be stopped clocks.
It's equally possible that higher rates will create jobs. The higher return will get investment money out of matresses and money markets. And with a reasonable hurdle rate, the investments might actually be sustainably profitable.
Kina wrote:
"I do have some concern that as people begin to realise that the S-may-HF then it will only keep the price strong or increase. Greece on the verge of default and others, volcanoes #1 and now maybe #2 - loss of confidence in Europe may see more flight to PM."
Greece is going down, period........look for Spain, to be next batter up(makes Greece look like a picnic).
Also, look at the rise in prices in all the Euro Countries, in PM's.
Up, way up, from where they were...........
As an aside, other than ESSENTIALS to live on, what other vehicles do any of you see to preserve your capital?.
I trust nothing in paper, and from no one.
Where does that leave MY / OUR choices?,to invest.............
I am amused that folks buy into the Mkts, betting on the vehicles that will protect their capital.Assuming that the Gv't will not seize those, or tax them into oblivion.
Anyone with suggestions?.
meanwhile the russel and XRT make new highs..i think this hype on debt is getting ridiculous as no one is listening.......the investment community has bought into govt forcing inflation as a way out. I'm tired of the games.
leo i need to ask you something in private about these posts.
don't reply to this because i want to delete it after you answer me.
i am so confused with this ZH site. i had no idea it was so sophisticated.
kinda just learned recently about this tracking. it is much more efficient than my old method.
i made some posts, regret now, about a person i know quite well. i did an internal search on him in ZH and he is mentioned as the very famous powerful man that he is. you even did an article on him. if he reads ZH he will know me right away under my handle velobabe. i need to get my posts taken down, but people replied! HELP.
this isn't good, there could be retribution. maybe losing jobs. i am an idiotic. i know, i need to change my name. can i do that? i am afraid to log out that i can't answer the math problem.
you need to write to TD about that
write to TD what does that mean?
please no one reply directly to these i want to diss them.
where in the hell is leo, when you want him.
Send an email to Tyler and Marla with your concerns and questions:
"Tyler Durden" <zerohedge@gmail.com>, "Tyler Durden" <tyler@zerohedge.com>, "Marla Singer" <marla@zerohedge.com>,
Velobabe, one can go back and edit prior posts as long as no one has replied to yours directly (thereafter it becomes threaded).
yeah thanks, you just that.
Free money isn't free - the true cost of the ZIRP will be born by your kids and grand-kids. Krugman loves himself more than his family and is a danger to common sense (strangely lacking over the past decade).
But - even more dangerous than Krugman are the public sector unions and the pensions they've been able to squeeze from weak politicians (all of them).
Leo: there is still no lending at the "micro" level, and the liquidity tsunami is nowhere to be seen at the U.S. small business level. Businesses are stagnating and living off savings, job cuts, pay cuts, expense squeezes, etc. No hiring is on the horizon. That is where we are now, with no change in that status in sight. Only folks like Jamie Dimon see a V. For the rest, the letter is L.
Keynesians are strongly of the view that normalizing rates (i.e. Fed Funds above 3%) will cause us to tip back into recession. The first point to say on this is, it is not going to happen. The Fed knows that impact on interest expense will explode the government deficit, unless you dramatically cut spending and raise taxes, so the combination of the three will without doubt out the economy back into recession.
However, leaving ultra low rates could lead to stagflation leading to hyper inflationary collapse.
The point is, the financial system is full of bad debts which we do not have the productivity to repay. You can either inflate the currency or you can restructure the debt, but there will be an economic loss. The problem is, the Fed's policy is placing a huge degree of confidence in the position of the Dollar to remain as the world's reserve currency and that foreign holders of Treasuries will suffer the devaluation of their holdings and not dump them in the markets.
The final point is, the big thing Bernanke cannot control is the price of oil. If demand from developing nations continues to rise, the reliance on foreign imports of oil is something that will creates a huge risk for recovery.
I am very pessimistic about the outlook, because I think the debt levels are unsustainable and I feel the argument about monetary policy is like being on a sinking ship and choosing to shoot yourself in the head, because you don't want to drown.
fwiw Leo, I took a pass on buying a machine tool to see what the utterly corrupt legislature of Wisconsin was going to do at 3:00 AM to enslave us. Some other company couldn't get financing even at the 179k marked down to 116k price. There is no money out there unless the bankster has a direct siphon on the taxcow. That is your "liquidity". I am somewhat confident that the denied borrower has abetter use for the machine than I do as I am mainly interested in the tax break. I'll take it if it is better than paying to your liquidity machine that inhales most of everything now. I don't want it as it is yet another 44 thousand pound (20,000 kilo) anchor around my neck. We can get along with what we have. The upside is that it has a one/two year warranty, otherwise that consideration is dwarfed by the clamor for increased taxes on the dumb bastards that can produce.
I will have to get on Cognitave Dissonance's bandwagon to have the slightest hope that this can turn out any better than disaster.
I have no idea as to whether the displaced purchaser would have added an increment to his permanent productivity. The banks said no to him, but I do have cash and I will use every tax advantage to put another unneeded production tool on my floor, rather than giving it to them. (benighted South Africa allows 100% capital equipment writeoff in the first year so as to avoid tax consequence buying and gaming the system, but they are not as advanced as the USA)
Set up an office in Bejing, set your machine up there and hire Skilled chinese machinests for $1.75 an hour?
This is why I don't trust Krugmann. He says,
He always has that qualifier -- that "out" he can blame on the other guy.
He wants us to plunge deeper into debt to keep the economy rolling, and we can pay it back from the "vigorous" growth. But if that vigorous growth never returns and we sink into permanent debt, its not his fault... its those other guys who disagree with him. The "tight-money" guys.
Notice he never say when it would be OK to tighten the money, or how much debt we can handle... that would pin him down. By leaving it open ended he can always blame the inevitable failure on the Fed tightening too soon.
Its a variation on his standard Keynesian bull... the problem is always "we didn't borrow and spend enough" with no definition of what's enough. No way to ever call him or his policies a failure, they always would work if we did a little more for a little longer.
And in case all else fails, he's working on his blame-China backup excuse.
Krugman is dangerously stupid. I can't believe anyone pays any attention to what he says, other than to get a glimpse of what even more dangerously foolish people think in the oligarchy.
He is the modern day Ellsworth Monkton Toohey.
Spot on. Keynesianism shares that trait with communism, that it just hasn't been done "right". Either it was tried too little, too much, too early, too late, to hot, too cold, too vibrant, too dull. It's like nailing snot to a tree to pin these people down. It's not a dangerous experiment or an adventure into the uncharted; rather, it's a known quantity of abject failure.
Problem is ...
As I have pointed out over @ MY blog, the issue is the relationship between dollars and crude oil.
You know, that black, oily stuff the ENTIRE INDUSTRIALIZED WORLD RUNS ON EVERY SINGLE FUCKING SECOND.
The dollar/crude relationship has been fairly stable since last spring, when the price tanked due to decline of demand/credit flow impairment and trading losses by crude 'investors'. Price stability equals a de facto dollar/crude peg. The peg is fixed by the upper bound price - where any further increase causes demand to fall - as well as spare capacity, which can be fed into the markets from tankerage, unwinding futures positions or bleeds from various 'strategic reserves' and spare capacity.
The outcome is the dollar as a hard currency which explains most of what is happening in credit markets now both in the US and abroad. Hard currency ='s dollar preference and cash preference over credit.
Cash dollar preference is giving China fits; they have dollars that are worthless if they simply sit on them and are worth less (in the aggregate) if they spend them. What does China spend its cash dollars on, now that it isn't buying Treasuries? Commodities, including crude oil- that's why its $84 a barrel. China cannot risk bidding up the price too high or it will crash the world's economy - and its customers - at the same time it needs more and more oil. The outcome is distortions in the dollar/yuan relationship. Dollars are proxies for oil and yuan are proxies for ... poison dog food and worthless crap.
There are questions about credit systemic risks to the economy but no questions about what high oil prices can do - and have done - to the economy since 2004 ... as well as 1973, 1979- 83, etc.
In our new world order, to gain oil one must first gain dollars. Exit the euro, euro debt, pound- sterling, yen, SA currencies, Mexican peso, even oil producing countries' currencies and debt. The Fed can print, but won't (pointlessly self destructive even the irrelevant Fed understands this), the rest must sell what Treasuries and dollar debt they possess.
The dollar hardness phenomenon is new - 6 or 8 months - and hasn't caught the attention of 'dumb money' but the hardness is real. When everyone catches on, the race to sell dollar assets for cash will be on. No dollars, no oil. No oil, no economy. Even the oil producers are trapped. Once the dollar becomes the widely recognized proxy for crude, both will be hoarded. This is already noticeable in the contango- tankerage phenomenon which aims to manifest 'spare capacity' wherever it can be made available.
Welcome to 1931. Like then, the world's economy will become buying and selling money to gain a commodity that cannot be used because it is too valuable. In this case the world will be buying and selling money to buy dollars. It sounds stupid and it is; the problem with basing a so- called 'productive' economy on resource waste. At some point the resource becomes too valuable to waste. This is the inevitable outcome of exponential resource extraction rate increases; here the cheap oil is gone leaving only oil that is too costly to use.
Unlike 1931, there is no escape from the dollar/crude peg and the ultimately massively hard dollar. The only way is to 'go off oil' as countries 'went off gold' in the mid- 1930's. Good luck on that one, mate!
The US will have to cut its oil waste by 65%. to 4 million barrels per day! Keep in mind, use is waste, there is no productive return on oil 'consumption' in the US or in other industrialized countries. Enabling more consumption is not only perverse but mind- bogglingly, stupifyingly self- destructive.
The parallel trend is the exponential increase in debt repudiation ... call it 'repudiationism'. It's hip and cool: look elsewhere on ZH for examples. At some point credit will be absolutely worthless. High yields will be counter- productive as the underlying will be walked away from. Lower yields will be unprofitable as they are right now. Again, this is a manifestation of the hardening dollar and the pernicious dollar/crude peg.
What is the background cause of this, you ask? Simple; the world has been confronted with a choice. On one hand, you can have a job that pays a good wage and provides a future. On the other hand, you can drive a car. People have been and are making the wrong choice.
Too bad ... suckers!
(Disclosure; writer has a long position on one minivan.)
Keep in mind, use is waste, there is no productive return on oil 'consumption' in the US or in other industrialized countries.
You know, that black, oily stuff the ENTIRE INDUSTRIALIZED WORLD RUNS ON EVERY SINGLE FUCKING SECOND.
Can you reconcile the two above statements for me please?
I assume he's making a distinction between Escalade-type consumption and less unsustainable uses. It's unclear, I agree -- but his overall analysis is very persuasive.
Sounds reasonable to me.
If the US military were a publicly traded company, what would be the secular trend for its shares in the face of peak oil?
If you sat on the BOD for such a company and were aware of the trends, what would be your attitude towards issuing debt or selling new shares of stock?
What would happen to the price of the "shares" of the other military forces around the world?
What would M&A look like -- both the friendly and hostile versions?
Very salient points.
Two points of rebuttal:
1). There is no hard dollar/oil relationship as long as the supply of dollars is infinite. So long as the fed is able to maintain ZIRP or something close to it, there is no reason to presume dollars for oil as fixed, and no reason the world won't choose to find different measures for the value of oil.
2). For a long time yet, on the downward slope, there will still be a tremendous return on the burning of oil. The utility of the energy density and portability of fossil fuels can't be matched with current or near future technology. The productive return depends entirely on what the product is -- could be driving to the mall (no return) or it could be firing the silicon furnaces to make solar cells.
Nobody gets this.
And when they give it any thought they'll tell you that their freedom to travel in their personal vehicle of choice is sacred.
Sacred.
Like food or heating isn't. Like the future isn't.
We're not the smartest bunch of monkeys.
She is smart. Always best to take a nice bite out of the side of the curve than wait for the top. As long is there is no inflation around, and even deflation, holding cash is fine.
The first wave ever ended?
I've been doubting my sanity lately...however, an anecdotal piece of info...
Mother in law cashed in the IRA and 401k last week and took the tax hits. Said she doesn't want her money in there anymore. I thought she was never going to do it. The bitch at Edward Jones practically told her how stupid she was and that she's making a huge mistake.
The only mistake I see is putting it all in the bank (FITB). Progress is a process.
The first wave ever ended?
That was my response. No, it didn't end. It's on vacation, but is about to get back to "work".
Glad to hear your MIL cashed out. She made a good move.
I have a fairly well off relative who is quite ignorant in financial matters. Pretty typical American I suppose. Anyway, she was pretty panicked in March of 2009 and very seriously thought about getting out of her mutual funds she's had for 20+ years. I told her to sit tight. She reluctantly did.
Now I'm imploring her to seriously consider lightening up having made back a fantastic sum in the last 13 months. One of her funds has nearly doubled off the lows. Her response, no, I'll let it ride.....
Fear & Greed (ie- stupidy) never changes with people..........
Exactly!
With 83% or 85% of the GDP composed of leveraged speculation, how could anyone think anything else?
What economy???? What recovery????
Find out the specific office or department within JPMorgan Chase to bug about those gold and silver market manipulations.
I will be adding to my silver tomorrow while it seems cheap.
You may be on to something.
It is suffice to say that we are on the threshold of a major upward move in gold and all things gold.
Respectfully,
Jim
http://jsmineset.com/
----------------
and
I am so confident of my gold and silver analysis that I offer to refund your money should gold not hit $ 1300 dollars by 31 July 2010 or Silver $21.50 also by 31 July 2010.
May God bless you.
Hubert Moolman
http://www.silverbearcafe.com/private/04.10/silverbull.html
also,
Mike Maloney
http://goldsilver.com/newsletters/newsID/7835/
and...
Bob Hoye
Bob Moriarty
all calling for an immanent, right f'n now, big rise
do these guys know something?
a prediction of martin armstrong... of april 16 2010 a timeframe
the only logical conclusion I come to is: TPTB will now make the metals tank to make these guys look bad
or they are part of TPTB and it will all come true
Ha!
Maybe Andrew Maguire let em on to something
maybe a reverse sting within a sting
lol
Disclosure: I have long nose hairs. Also, long wiskey atm. Or am I short whiskey?
Fuck, pour it in a derivaitive and take the other side ha!
Id rather discredit myself than have someone else do it later.
two times ___ equals four
:)
Bob Hoye was a favourite read on the metals, commodities and things financial in general until he started getting things really wrong last year. He was sure the stock rally was over at 950, oil would never get past 60, silver would never see its previous highs (21ish?), the long bond would hit new lows and the US Dollar would rally and kill the apetite for risk assets. I don't know about the track records of these others but there are very few in either camp who have not been proven wrong (occasionally spectacularly so) since last spring. As a result I do not permit myself to become too excited or enthralled by any of these predictions anymore but will persist in my belief that anything other than the very near term future is largely unknowable. Anyone who tries to tell you otherwise should be taken with an extra big grain of salt.
Pan out and look at some monthly charts.
HUI recently completed double top and is on the cusp of total breakdown to the 150 level.
Gold headed back to $850 area
Silver likely headed below $8.
Few are more long-term bullish on precious metals and bearish on FRN's than myself but if these last couple of years have taught me anything it's that we are not to apply simple logic to a world which is neither simple, nor logical.
Disclaimer...long USD hedged with Silver since October '09
Below 8 huh? You mean paper/vapor or real live, stub-your-toe-on-it metal?
Personally I will be quite pleasantly surprised if I ever obtain another ounce of silver for less than FRN14.
At this moment PMs seem fantastically overvalued compared to what one can buy with them.
If you want the end of world scenario, why wouldn't you take three ounces of gold to secure Costco (free UPS delivery) of long term storage food that will last a couple for a year? It may not be Four Seasons, but it isn't anywhere near the bottom of the barrel.
I can see where the interbank payment system breaks down as it did less than two years ago. We all know that a massive intervention via the FED will not work anywhere nearly as well as it did the last time. The gigantic banks that clear 60% of CC and a majority of the rest of the day to day transactions are functionally insolvent. Their profits come from their gamble on under reserving for the filth on their balance sheets. If you are so convinced that your siver slugs are going to be some magic money as soon as TSHTF, you had better think again. In a payment lockup the essentials in hand trump anything else.
The essentials are cheaper now in terms of gold and silver prices than ever before in history. If you truly believe that there is to be a monetary change and all that an event like that entails, you would be literally focussed on your gut needs.
But.. If the scenario you describe does happen, gold will no longer be 1K it will be 3K or more and will buy more essentials than you can buy now.
But the point remains the same. Survival. How about doing more than one thing. Stock on essentials, cash in USD, cash in Euro and Canadian and of course Gold and silver?
Al of the above is to call attention to the logic of the metal bugs. I do not advocate much more than covering your butt in the case that there is a mass awakening to the possibility that something big could go wrong. The herd will be there to buy out anything that you have been meaning to store, but put off. There are anecdotes on how touchy people are with the Icelandic volcanoes. You read of surveys that show the sheeple being wary and untrusting of governments. If that mood gets real traction...you know the rest.
Yes it does concern me a bit that Gold and Silver are relatively expensive now as an investment, I have it as insurance policy on SHTF when its value will be much more than it is now, and that will be the point (or so they say).
I do have some concern that as people begin to realise that the S-may-HF then it will only keep the price strong or increase. Greece on the verge of default and others, volcanoes #1 and now maybe #2 - loss of confidence in Europe may see more flight to PM.
I could wait for a drop in PM prices in the normal course of things, but things may not remain normal long enough for the price to drop significantly.
I will probably lose or have less than stellar performance on my PM if the SHTF never happens. But that is the cost of having insurance. But if it does happen the price should be much than whatever I pay for it now.
Disclosure:
I have 20oz gold and 440 oz silver. Looking to increase that to 600oz
"I will probably lose or have less than stellar performance on my PM"
Just out of curiosity, since gold has been the best asset class of the last ten years, how is that possible? (unless you just got in in the past year or 2).
Man, I hope your right. I would love to acquire a few gold maples for less than a 1000