When it comes to European bureaucrats, the easiest way to determine if they are lying is whether or not their mouths are open. Yet there are those rare occasions in which even the most hardened of liars let one slip. The Economic Collapse, always the master of compiling impactful bulletins, has prepared a list of just such "slip" quotes that "are absolutely shocking. In Europe they openly admit that the financial system is dying, that the euro is in danger of not surviving and that the EU does not work in its present form." In other words, ignore the ceaseless headlines of promises that all shall be well. Because it won't. Here is all you need to know about the imminent end of the Eurozone, straight from the horses' mouths.
Gold Over $1808 - May Be Poised for `Parabolic' Rise; People in West Not Prepared for Possible Currency CrisisSubmitted by Tyler Durden on 08/18/2011 08:08 -0400
Bull markets almost always end in a mania phase where there is a near universal belief that an asset class or security is going to rise and there is no risk involved. This has been seen throughout history and was seen with the Nikkei, the Nasdaq and more recently with property markets in Ireland, the UK and the U.S. It was also seen with gold in the 1970’s when gold increased 128% in 1979 alone. On January 2nd 1979 gold’s London AM Fix was $227/oz. By the 31st of December, gold’s London AM fix was $524/oz. 21 days later gold had increased another 60.9% to $843/oz. This is parabolic. Today’s 27% rise year to date in dollar terms is very tame in comparison.
Allow me a ramble down history lane to make a point.
Not even minutes after we finished ridiculing Springer/Die Welt's attempt at propaganda spin whereby eurobonds were actually presented as not only good for Germany, but about to be "instituted" (and fully expected the immediate response to be one of refutation via official channels), here comes the FT with the official denial: "Germany and France are ruling out common eurozone bonds to solve the bloc’s current debt crisis, in spite of renewed pressure ahead of a meeting of chancellor Angela Merkel and president Nicholas Sarkozy on Tuesday. Wolfgang Schäuble, German finance minister, made clear in an interview with Der Spiegel, that Berlin remains opposed to such a policy. “I rule out eurobonds for as long as member states conduct their own financial policies and we need different rates of interest in order that there are possible incentives and sanctions to enforce fiscal solidity,” he said. So, uh, Die Welt's prognostication that "The federal government is now willing, if necessary, to accept a Eurobond transfer union" is about, oh, 100% wrong? Oops. As for those expecting an announcement of a eurobond on Tuesday following the latest round of "emergency" Merkel-Sarkozy, we suggest you put down the Eurobong: "Senior French officials also played down speculation that any firm announcement on jointly issued bonds would be issued after meetings when Ms Merkel comes to Paris on Tuesday. “Eurobonds would require a much more determined integration of budgetary policy,” one said. “We do not have that today. It could be a long-term project, but you cannot have eurobonds and at the same time national economic and budgetary policies.” Translation: "there is this thing called elections coming, and some of us career politicians, who have no idea how to do anything actually valuable for society, and still have not plundered enough in the form of bribers, pardon, lobby money, are not insane enough to propose that German and France foot the bill for the entire European bailout." Even though that is precisely what they will do via the EFSF. And we certainly expect yet another round of eurobond rumors the next time the EURUSD tumbles by 200 pips in the span of 10 minutes (which courtesy of the broken FX market as described by Sean Corrigan earlier, is roughly every several hours).
Markets are trading sharply lower this morning after yesterday’s late afternoon rally on the change in language in the Fed statement that will keep short interest rates essentially at zero until 2013. As I have stated before, I believe they will ultimately be forced to keep rates low forever, or at least until the bond market vigilantes eventually rise up and shock the world by demonstrating that indeed you can fight the fed. Which begs the question, who will be the George Soros that breaks the US Fed? We’ll see. In any case, by 2013, it’s highly likely that the US will have over $16tr in debt. If the average rate across the curve in 2013 is only 4%, which is low by any historical standard, then our annual interest payment will be over $600bn, or almost 30% of annual tax revenues. So the Fed faces problems on a number of fronts. They have to be seen as actively trying to do something so they continue to manipulate the price of money to artificial levels which only serves to send misleading signals throughout the economy. QE1 and QE2 have come and gone and yet unemployment remains sticky above 9%. Their balance sheet remains abnormally large and their policy tools to manipulate the market is dwindling. Now add to that the reality of the math of our huge fiscal debt and deficits. No matter which way you spin it, we have some tough times ahead that will involve some asset prices falling (commercial/residential real estate and other levered assets), other asset prices rising (agricultural land, commodities, gold/silver) and the façade that the Fed is all-powerful to come crashing to the ground.
And how did Treasury paper do following Standard & Poor’s bombshell downgrade of U.S. debt? Why, T-Bonds, Bills and Notes came through unscathed, thank you. Actually, they did much better than that, rallying so sharply yesterday that one might have inferred the U.S. was the last citadel against the panic, confusion and fear that rein elsewhere in the world.
Adam Smith Would Neither Recognize Nor Approve Of Our Financial, Monetary, Economic Or Legal SystemsSubmitted by George Washington on 07/31/2011 00:33 -0400
IMF Chief Warns America on “Exorbitant Privilege”, Brings Back Flashbacks To de Gaulle And The London Gold PoolSubmitted by Tyler Durden on 07/29/2011 07:57 -0400
New IMF Chief Christine Lagarde has warned overnight that the global reserve currency status of the dollar is at risk due to the “worrisome” US debt debate. Failure by the United States to raise the debt ceiling would likely lead to a decline in the U.S. dollar and raise "doubts" among those using it as a reserve currency, Lagarde said. "One of the consequences could be a decline of the dollar as a reserve currency and a dent in people's confidence in the dollar." The U.S. currency has had an “exorbitant privilege because it was the reserve currency that most central banks had,” Lagarde said in an interview on PBS’s “Newshour” yesterday. “If there was a dent in this exorbitant privilege and the confidence that most people have towards the dollar, it would probably entail a decline of the dollar relative to other currencies.” The use of the “exorbitant privilege” phrase by the former French finance minister is important and not an accident. It echoes the former French President, Charles de Gaulle’s comment regarding the dollar being “America’s exorbitant privilege” at a landmark press conference in 1965 that led to the end of the London gold pool or government cartel which attempted to keep the gold price fixed at $35 per ounce.
During 2008, traitors like Hank Paulson were able to con most of us by saying that we risked a destruction of the financial system as an excuse to give the banksters and their allies a blank check. The con wasn’t in the notion that the financial system risked implosion as I believe that statement was most likely true. The con was that since most Americans don’t have a clue how the financial system works they merely became scared and reflexively agreed in their own minds that “well of course the financial system must be saved.” I on the other hand argue that the financial system is a ponzi scheme that enriches only the three enshrined parasite classes that dominate America today. The TBTF Wall Street banks, the military industrial complex and the politicians and lobbyists in D.C. that line their pockets. Everyone else gets sucked dry. I have spent the last three years of my life writing about this so that people understand when the next major crisis happens who is to blame and more importantly I want to instill in people the courage to look outside of this immoral money system to something that can move us forward when this one gets dismantled. I do not claim to have the answers I am just trying to get people to ask the right questions and get educated on how things operate. We the People must own the debate or it will own us.
As we get closer to that point where economic reality and financial fact override/overpower politics & concerted central financial planning that attempts to outlaw insitutional failure, we need to employ fact based strategies backed by research based in realism to not only capitalize, but even last through the coming storm.
Soros To Return $1 Bilion Capital To External Investors To Avoid Registering His $25 Billion Hedge FundSubmitted by Tyler Durden on 07/26/2011 07:29 -0400
Bloomberg reports that George Soros will return client capital, and will focus exclusively on managing his own and his family's money, apparently in an indirect protest against the reporting hedge fund requirement of Dodd Frank. Since the capital in question is only about $1 billion of $25.5 billion, this is hardly the big move some are making it out to be, as the bulk of Soros Fund Management is already primarily funded by his own money. Also notable, is that Keith Anderson, the company's COO, has decided to depart. But yes: for all those who wished they could have given money to Soros to manage for them, it is now too late. As for the reason for the change: "Soros’s sons said they took the decision because new financial regulations would have made it necessary for the firm to register with the Securities and Exchange Commission by March 2012 if it continued to manage money for outsiders. Because the firm has overseen mostly family assets since 2000, when outside money accounted for about $4 billion, they decided it made more sense to run it as a family office, according to the letter." Expect to see many more hedge funds based on family capital, for whom external investors are merely a nuisance, do the same thing.
Proof That Europe Is Primed For A Lehman Brothers-Style Bank Bust, But Likely On A Much Larger Scale!!!Submitted by Reggie Middleton on 07/21/2011 13:24 -0400
Recent history shows us what happens when you borrow short and lend long against assets that have been halved in value, hasn't it? Guess who hasn't been to (very recent) history class...
There is one hedge fund manager who I'll never forget, Ray Dalio of Bridgewater...