Phoenix Capital Research's blog

For months now I’ve been warning of a serious correction hitting the markets. Looking at last week’s action it looks as though it’s begun. And it may very well prove to be far greater than just a mere correction. For starters, the Emerging Markets (which have lead US stocks since the 2008 Crash) have collapsed, breaking below the trendline that sustained them from their 2008 lows…

Over the last 30 years, the US has built up record debts on a personal, state, and national level. Consumers thought they were financially stable so long as they could cover the interest payments on their credit cards, states created program after program few if any of which they could afford, and the Federal Government issued $30-50 trillion in debt and liabilities (counting Social Security and Medicare).

More than any other man, John D. Rockefeller changed the face of American business. His focus on cost cutting, cash flow and balance sheet strength, combined with his unbridled ambition to control not only every level of oil production at his company, but indeed the entire oil industry itself, wrote the playbook by which all multinational corporations operate today.

Entire towns exploded and collapsed based on where oil was discovered. One area only 15 miles from Titusville, Pennsylvania (where Drake first discovered oil) went from being unnoticeable on the map to a booming metropolis of 15,000 people and back again in one years’ time (the fifty hotels and other businesses that sprang up in that time were all gone within 24 months). Parcels of land went from a few dollars in value to $2 million and back again in less than a decade.

In the 1850s, a small group of investors lead by George Bissell, a New York lawyer, and James Townsend, president of a New Haven Bank, launched a venture that most of their contemporaries would deem ludicrous. Their goal: to see if “rock oil” (as oil was originally called to distinguish it from the oils produced from vegetables and animal fat) could be used as an illuminant or fuel for light.

Let’s say that your rainy day jar contains $10,000 to cover any unforeseen problems. Now let’s say that one day I decide that I only need $5,000 to cover unforeseen expenses. Does this random mental calculation mean I’ve made more money and need to report $5,000 more on my tax return that year? NOPE. However, this is exactly how GE, JP Morgan, and Citigroup generated their “stellar” earnings.

One of the oddest things about investment psychology is that people only want to load up on an asset class when it’s soaring. Rarely do they view a collapse as a good thing. In some cases, this mentality is beneficial (buying Tech stocks in 2001 when they began to collapse after soaring would have been a HORRENDOUS move). However, in the case of Gold and Silver today, a collapse right now would be absolutely FANTASTIC for investors.

Bruised, but not defeated, the bankers knew that in order to get their plan put into action they needed support from the very TOP of the US Government: the President of the United States. Consequently, they engaged in one of the most sophisticated lobbying efforts in history, backing all THREE candidates (Taft, Wilson, and Roosevelt) in the 1912 election.

Many investors today, as they learn more about the nature of the Federal Reserve, are asking themselves how the US, the supposed land of the free, permit a non-Government-based cartel to take control of its monetary system? Who controls the Fed? And just how did they attain this unbelievable power to operate with the Government’s approval?

In my last article, I outlined the current financial/ economic relationship between China and the US. In particular I focused on the manner in which China is diverting its money and resources away from the US Dollar and US economy. Indeed, in my opinion, when push comes to shove it is China, NOT the US who holds the trump cards on the major issues.

To be clear, China has proven itself EXTREMELY adept at matters of international finance/ trade. With that in mind, it won’t openly challenge the US regarding monetary policy or diplomatic matters until it holds ALL the trump cards and can openly challenge the US without exposing its economy to a massive downturn (much as it did with Japan during the fishing boat scuffle).

Most folks talk about inflation and think of the images of Weimar Germany where people literally burned money for fuel. They don’t think of starvation and food riots. But that’s exactly what’s occurring in the world right now as a result of Bernanke and his cronies attempts to keep the big banks (all of which are insolvent) in business and cranking out the bonuses.

Our esteemed Fed Chairman, now claims that QE has helped by raising stock prices. That was never a reason he listed for launching QE before. In fact, this is the first time he’s even mentioned this as a benefit (though everyone with a thinking brain knows that the Fed doesn’t give a hoot for anyone other than Wall Street which is why ALL of its moves were intended to help them juice the markets).

Remember, regardless of short-covering bounces, the Euro HAS violated the trendline that support it from July onwards. This technical damage of that move was severe and makes the odds of additional downside significantly higher.

If, at this point, it’s not clear that the entire financial system is not a disaster waiting to happen, then I don’t know what else to say. Indeed, our entire system is built on fraud and managed by folks who don’t know what they’re doing. And if you think they’ll get us steer us to safety, consider that around the globe we’re already beginning to see signs of systemic collapse.