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Art Cashin: "Things Could Theoretically Turn Into What I Call A Lehman Moment"

Tyler Durden's picture




 

Courtesy of Finanz und Wirtschaft, interview by Christoph Gisiger

Wall Street veteran Art Cashin does not fully trust the record levels at the stock market and draws worrisome parallels between the geopolitical tensions over Ukraine and the Cuban missile crisis.   

From the assassination of President Kennedy via the stock market crash of 1987 and the Fall of the Berlin Wall through to the burst of the dotcom bubble, the terror attacks of 9/11 and the collapse of Lehman Brothers: Art Cashin has experienced all the major world events of the last half century at the floor of the New York Stock Exchange. Currently, the highly respected Wall Street veteran keeps a close eye on the geopolitical tensions in the Middle East and on the situation in Ukraine which reminds him of the Cuban missile crisis «The markets are edgy and nervous», says the Director of Floor Operations for UBS Financial Services while constantly checking the quotation board. Like many traders here, he is somewhat skeptical of the huge stock market rally that started in March 2009. «I think it is a question of the extraordinarily low interest rates», he explains.

Mr. Cashin, September is historically the most difficult month of the year for equities. What is your take on September 2014 so far?

It is strange that September still lingers as a particularly weak month. It goes back to when America was more of an agrarian society and we depended on what would happen with the crop cycles. If a cooking factory for example had to buy wheat from the farmers it would send a check out drawn on an account at a city bank and the country bank would then cash it and put the money in the farmer’s account. Before the Federal Reserve was created, there was a wide spread between the time that money was asked for and when it was replaced. For centuries, this caused bank panics around this time of the year, most notably the panic of 1907. You would think that now that we are no longer an agrarian society, those changes would ease up on the financial pressures. But the market has kind of an echo.

So what are traders talking about at the present time here at the New York Stock Exchange?

We are concerned about two questions. First, how will the Fed do in keeping money reasonably easy without causing inflation? Second, where do we stand with the current geopolitical challenges? For now, these challenges seem to be short term concerns. But should we begin to see a financial contagion and pressure building on banks in Europe, perhaps out of the Ukraine situation, things could theoretically turn into what I call a «Lehman moment». That is when markets come under pressure but seem to be under control, and then things change suddenly.

How do you handle these concerns in your daily business as stock market operator?

Having done this over half a century now, the market tends to have recurring cycles of some type or other. For example, at the beginning of the Cuban missile crisis no one thought that it would turn into a major event. Yet, as time went on and neither side relented, it began to look like we might be on the verge of a nuclear war. That had great reverberations in the financial markets. Then, finally the Russian convoy that was going to resupply the Cuban missiles turned and headed back. Immediately, the stock market began to rally on that sense of relief and that rally continued for months. So you can have these theoretical events – whether they are geopolitical or not – and you get two sweeping changes: First, you can get further and further pressure on prices. And then suddenly, when it releases, you can get almost a rocket shot to the upside.

What are the signals you are looking for to stay on top in such a market?

Over the years, we on the floor have taken to look at what we call the risk monitors. For instance, the yield on the 10-year Treasury note is usually an indicator for the flight to safety. People are looking to get over to the United States protected by the two large oceans. You also look at the gold market where people invest who are concerned that things are changing radically and who think they need some currency protection. And then, particularly in situations like this, you look at things like oil because that is inextricably involved with Russia and with the Middle East and what is going on with the Islamic terror organization ISIS.

And what are the risks monitors signaling?

Right now, it almost looks like peace is breaking out. The price of oil is sharply lower, both Texas West Intermediate and Brent. That indicates a lot less stress there. Although traders can be believers in conspiracies too. There is some wonder if perhaps Saudi Arabia and the United States are encouraging downward pressure on oil prices which would in turn put pressure on Russia and limit the availability to finance what they are doing. So there may be either market forces or government forces behind this.

And how stable is the situation on the stock market? Equities have stalled somewhat lately. Nevertheless, at the End of August the S&P 500 closed over 2000 for the first time and so far equities have performed quite well this year again.

I think it is a question of the extraordinarily low level of interest rates. There are very few places that investors can go to and get some return. So some people are using historic yard sticks and they are saying: «If rates are this low and the economy is this okay then the value of stocks should go higher.» But some of us question that since rates are artificially low.

So what is your take on those super low rates?

I think it means that there are still deflationary pressures out there and that the central banks all around the world are fighting off that deflation risk by keeping rates low. Rates are incredibly low in Europe, they are incredibly low in Japan, they are incredibly low in England and in the United States. That drives people to look at some other avenue to get a return and they have been driven into the stock market.

With the looming end of the QE3 program, the stock market soon will have to pass an important test. But surprisingly, in contrast to the end of QE1 and QE2 investors do not seem to be so nervous this time.

But we are seeing a rather similar reaction in the bond market. Perversely, when they ended the earlier QEs, treasury yields went down instead of going up. So we are seeing a little of that. I think the reaction of the stock market has to do with something that is referred to as the Greenspan put, and later as the Bernanke put. Investors believe that the Fed is concerned about its own independence and therefore it cannot let anything drastic happen. Our government has not been able to do anything on a fiscal basis. So the Fed has gone out and developed tons and tons of access free reserves. If that fails the central bankers know that it will be quite convenient for all the politicians to point the finger at the Fed. Hence, not only is the Fed interested in maintaining the economy but also in its own independence.

During your career on Wall Street, you have seen the coming and going of several Fed chiefs. How would you grade Janet Yellen so far?

I think it is a little too early to tell because she has not been fully able to implement her policies. We have not been done with the taper and she has not clearly defined what yardsticks or mileposts she is using. She is a scholarly woman and has done a great deal of studying, like Mr. Bernanke. Also, I have a new person to look at in the Fed and that would be Stanley Fischer. He brings a lot of experience in as vice chairman. As we begin to look at his speeches and comments, we will see that he is going to have an enormous influence and we may be begin to see him helping Ms. Yellen. He is not going to confront her but helping her to, perhaps, understand why things have to change a little.

With the end of QE3 and the return to a somewhat more traditional monetary policy, investors will likely put their focus more on the fundamentals like revenues, profit margins and earnings. In what shape is Corporate America?

That is one of the great debates here. It really breaks down to on what do you view the stock market is based on. On one side, there are the skeptics. They look at macroeconomics like the GDP numbers, the unemployment rate and a variety of other things. Those people tend to have been skeptical all the way through this rally. On the other side, there are the believers in the stock market and the recovery. They have seen the earnings go up and have been spot on so far. But there is a couple of asterisks that you have to put in. Thanks to the low interest rates, companies are finding that they can improve their balance sheets and they are buying back their own shares. So even when you are earning a little less money, if there are fewer shares around, than the price earnings ratio looks pretty good. That is why the critics of the stock market say that it is all part of financial engineering. Nevertheless, the supporters will respond: «Well, here is the earnings and we are at seventeen times earnings and that is very good for us.»

On what side of this debate are the traders here on the floor at?

The view of the traders is a slight degree of skepticism. As I say, having done this over fifty years, traders are always making sure they know the way out. When I go into a room, the first thing I look for is the exit sign. So when things turn bad I know which way to go.

Also, some skeptics argue that you cannot trust this really since it is based on unusually low trading volumes. Especially at the end of August we have seen some of the lowest volume days over the past seven years.

Over the years, I was always thought that volume equals validity. Just as you would not want to elect a president with only ten or twelve people voting. You want to see a broad consensus. Likewise, you would like to see a broad consensus on what is going on at the stock market. But these days, some of that lack of volume is structural. We have new products like Exchange Traded Funds. So you can with one purchase buy the five hundred stocks in the S&P 500 instead of the five hundred transactions that would have taken place in the past. That contributes to a lower volume, too.

How did the trading business change over the last few years in general?

We are going through a transition into automated electronic trading and we are still adapting to that. The new owners of the New York Stock Exchange, the Intercontinental Exchange, said that they would like to revamp what is going on, change some of the rules and perhaps produce a little more visible activity. I for one miss some of the old trading, especially the simple things. When there was a big crowd, noise would tell me things. When the noise level picked up I would know the activity is picking up. And if you are doing it as long as I am, you could almost tell by the pitch of the noise whether they were buyers or sellers: The buyers sound a little more like a Russian chorus. The sellers, on the other hand – I guess because they were nervous – would have a higher pitch when they shout «Sell! Sell! Sell!»

Today, the silent machines of high frequency traders do most of the trading. How do you cope with those superfast computers and highly sophisticated algorithms?

They may be faster but they are not necessarily smarter. Sometimes an old dog can still learn variations of new tricks and get things done. They might get the first step out of the building but you have to think on behalf of your clients what other impact will that have. If they are doing something in General Motors, what does it mean to Ford or someone else? So in this business, your clients expect you to be able to relate something that is happening in a particular stock with something in the rest of the market.

In May of 2010, the Flash Crash made the world suddenly aware of what can happen when robots are in charge in the trading arenas. How vulnerable is the US stock market today to a similar threat?

I am, of course, prejudiced. I prefer the trading system that we have had through the years. Here on the floor, not one stock traded at a penny during the Flash Crash. That was only in the electronic markets. And that was because here were humans who looked at each other and said: «That does not make any sense. There is no news out, there is no event. Let’s slow down and see where things are going.» As a consequence, the prices here on the floor tended not to be distorted in a manner that they were in other places. So as far as market structure is concerned, I think it is very helpful to have humans around. I prefer that somebody is watching the market as trades are being executed – just as I would not want to fly in an airplane with no pilot.

 

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Sat, 09/13/2014 - 15:31 | 5214291 Dien Bien Poo
Dien Bien Poo's picture

who fucking cares what this old cunt thinks and says? He works for UBS, hardly a bastion of original thought. Stop using CNBC walk on characters for advice. This twat cant even see his own shoelaces. 

Sat, 09/13/2014 - 15:42 | 5214306 Pooper Popper
Pooper Popper's picture

Spot on Dien Bien Poo,

Fuck off art, go give steve LIESman his reach around...you fucking old impacted hemorrhoid!

Sat, 09/13/2014 - 15:44 | 5214311 Raymond K Hessel
Raymond K Hessel's picture

Clearly, Bien Poo and Pooper Popper are part of some kind of Poo platoon of the Internet Troll Army.

Sat, 09/13/2014 - 15:49 | 5214318 X.inf.capt
X.inf.capt's picture

I have another question of the fight club

economically we (the u.s.) are going down...BUT...

is it death by inflation

-OR-

death by deflation???

thank you in advance...

Sat, 09/13/2014 - 16:06 | 5214353 spinone
spinone's picture

Inflation in the things you need, deflation in the things you have.

Sat, 09/13/2014 - 16:22 | 5214394 Four chan
Four chan's picture

i like art, f-you guys.

Sat, 09/13/2014 - 17:30 | 5214514 Supernova Born
Supernova Born's picture

This is going down via food price inflation

Fake money can't generate real food.

Sat, 09/13/2014 - 17:34 | 5214527 SWRichmond
SWRichmond's picture

Agree, fake money does not equate to anything real.

OT: has anyone else noticed how the patriotic bullshit has been ramped up in the past few months on television?

Sat, 09/13/2014 - 17:52 | 5214561 hobopants
hobopants's picture

I don't watch tv anymore, but that's not good. Is it like post 9/11 all over again or what?

Sun, 09/14/2014 - 07:18 | 5215643 GetZeeGold
GetZeeGold's picture

 

 

 

platoon of the Internet Troll Army.

 

 

The horror.....the horror.

 

What the hell........let's do this crap. It's not like I was doing anything else today.

Sun, 09/14/2014 - 10:39 | 5215925 PT
PT's picture

Another "Lehman moment"?  Correct me if I'm wrong, but can't they have "another Lehman moment" whenever they like???  Pick a bank, apply some GAAP, Bingo!  Another Lehman moment.  Turn off QE.  Bingo!  Lots of "Lehman moments".

Is this some kind of threat?  "I'm warning you!  We might have another Lehman moment.  And if that doesn't work, we might have another MF Global moment!

Sat, 09/13/2014 - 17:47 | 5214544 Bay of Pigs
Bay of Pigs's picture

Why would anyone care what Art thinks? Seriously, has he ever told the truth about Wall St banksters and the FED?

Read the article. He licks Stanley Fischers balls. Fuck you Art.

Sat, 09/13/2014 - 19:22 | 5214767 Dazman
Dazman's picture

You are a douche nozzle. He's hardly licking his balls, he's saying he's a person to be looking at... which of course could be said for anyone on the FED board. And more explicitly a person that might help Yellen change her mind about currently policies, which I am sure is something you would be happy to see.

Go lick your pigs balls, tool.

Sat, 09/13/2014 - 23:10 | 5215326 Bay of Pigs
Bay of Pigs's picture

Fuck off. This place is done with assholes like you posting such bullshit. I am amazed how fast ZH is going down the tubes.

End the FED. (used to be a rally cry here).

Sat, 09/13/2014 - 23:42 | 5215347 Greenskeeper_Carl
Greenskeeper_Carl's picture

Agreed. I made it most of the way through the article, and quit reading. Anyone who defends the fed loses a lot of credibility with me. It is a corrupt, unconstitutional, and criminal institution that helps no one but big banks, Wall Street, and the govt, and robs the purchasing power from the rest of us. End the fed.

Sun, 09/14/2014 - 10:48 | 5215957 TheReplacement
TheReplacement's picture

Thank you Carl.  It appears we had the same experience with this article.

Sat, 09/13/2014 - 23:45 | 5215351 Greenskeeper_Carl
Greenskeeper_Carl's picture

Agreed. I made it most of the way through the article, and quit reading. Anyone who defends the fed loses a lot of credibility with me. It is a corrupt, unconstitutional, and criminal institution that helps no one but big banks, Wall Street, and the govt, and robs the purchasing power from the rest of us. End the fed.

Sun, 09/14/2014 - 07:23 | 5215646 GetZeeGold
GetZeeGold's picture

 

 

Anyone who defends the fed loses a lot of credibility with me.

 

 

Oh come on.....those guys luv us.

 

 

They only do evil stuff......cause they really care about us.

 

 

The fact they get rich doing it is just kind of a bonus.

Sun, 09/14/2014 - 12:59 | 5216381 GMadScientist
GMadScientist's picture

He may not have been, but you sure as fuck are; lap em up, but watch out for that spray, precious!

Oh, who am I kidding? A fluffer like yourself must know the occupational hazards by now!

Mon, 09/15/2014 - 01:23 | 5217956 frankTHE COIN
frankTHE COIN's picture

I love ART CASHIN ! Fuck those guys.

Mon, 09/15/2014 - 01:23 | 5217959 frankTHE COIN
frankTHE COIN's picture

I love ART CASHIN ! Fuck those guys.

Sat, 09/13/2014 - 16:11 | 5214367 Escrava Isaura
Escrava Isaura's picture

X.inf.capt

Inflation for banks and government.

Sat, 09/13/2014 - 16:14 | 5214372 NoDebt
NoDebt's picture

If the Fed's actions to this point are any indication, they will NEVER allow a deflationary spiral.  Their outright stated goal is inflation, and they own the printing presses (computers).  Helps offset what's owed on the unpayable government (and other) debt obligations.  And for banks betting trillions in the derivatives, interst rate swaps, stock, bond and every other finanical market that is known to exist.

So.....

Sat, 09/13/2014 - 16:54 | 5214456 Bossman1967
Bossman1967's picture

Maybe someone can answer this? How can so much paper have been printed in the last 8 years and gold is going down? I know many say manipulation but wouldn't someone have done something about it that owns the gold. China Russia seem like they bought allot and they just let their PM investments get robbed. Just don't understand I bought at a good time so so far so good but they should be skyrocketing. Now today I went to the fair wow so many sheep there I didn't go in but yet the economy is bad? Is it possible that we are being fed a pile of shit and everything is just fine. Just a thought from and educated middle aged guy that reads alot and on paper we are screwed but like someone said just add more zeros to the debt and all seems to be fine. Thanks in advance for comments

Sat, 09/13/2014 - 17:25 | 5214507 walküre
walküre's picture

What are China and Russia doing with all their excess Dollars when they're preparing to opt out of the Dollar and start something different? They liquidate all Dollar paper including gold and silver paper and convert into whatever is tangible. From physical metals to pipelines to warships. That paper Dollar needs to be spend before it collapses. Fed is keeping the show artificially propped up.

Think EBT cards for the Big Boyz to feed an illusion.

Those people at the fair may be aware what's going on and spending their last bit on some form of entertainment or they have no clue and spend their paycheques and subsidies.

Not everyone will survive the coming storm. It never happened that way before and it surely will not happen this time in a day and age where people should be smarter than any generation before them.

My stack average is still below the current price and I keep buying. It doesn't feel like I'm the one catching a falling knife. The metals will always represent value.

Sat, 09/13/2014 - 23:17 | 5215333 the question
the question's picture

walkure's response is an excellent answer to the question posed, and it sums up the current economic situation concisely. I mean this sincerely.

I too often wonder about how some of the things I see out in the world are inconsistent with what I read. But I think the answer is that a lot of people out there simply aren't planning for their future, they are living for today. Not saying it's wrong, but it certainly is not what the majority of us here at ZH believe is right, or most advantageous.

Sun, 09/14/2014 - 04:37 | 5215580 saveandsound
saveandsound's picture

@Bossmann1967:

the price of gold did indeed explode from 2001 until 2011 (6x). The gold market anticipated much more inflation than we have right now, therefore the prices of PMs are normalizing at the moment.

Gold is money (tm), however it is also a commodity. I.e. one can find a historical correlation between oil and gold prices.

The gold price might come down further, however there will be a point of time when the last speculative investor abandoned the commodity markets and producers are the only ones left to sell. If demand picks up again, prices have to go up as well. There should be plenty of currency on the supply side chasing tangible goods.

Nobody knows the future, however our times could be the eye of an oncoming storm. We'll talk about this again in 2020, 2025 and 2030.

Sun, 09/14/2014 - 11:12 | 5216019 Bendromeda Strain
Bendromeda Strain's picture

therefore the prices of PMs are normalizing at the moment

Bullshit

The correct current inflation adjusted price s/b well north of 2k - normalized.

While nobody knows for sure who what when or how, all someone would need to do is look at a FRED graph of the monetary base to see where physical gold should be measured. Your hand waving metric of anticipated inflation merely means that idiots who listen to that doublethink will be locked out of conversion when paper gold is no longer accepted as collateral.

Nobody knows the future, however our times could be the eye of an oncoming storm. We'll talk about this again in 2020, 2025 and 2030.

Doubtful...

Sat, 09/13/2014 - 17:28 | 5214513 stoneworker
stoneworker's picture

I think it all comes down to what Warren buffet said "I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils." The way that I interpret the current situation is that there is serious inflaiton, but right now through "manpulation" all of it is hidden in the stock market and can only be reflected through the price of stocks. Gold is not for making profit, but for storing value(my opinion). " ...add more zeros to the debt and all seems to be fine." I think it is pretty obvious that a nation simply cannot live by printing money(if the US can we should all just quit our jobs right here and now). What will happen is after the US "defaults"(by wiping out debt through inflation) there will be a period of chaos(may be even some scapegoat heads will roll), but when the chaos calms down the US will be a nation with a large educated population that can once again make competitive products, but living standards will be much lower and there will be no empire... all the pensioners and people that do not understand how inflation works will be absolutely screwed. From this standpoint physical gold seems like a good thing since this is something that the government will simply not be able to "steal" from you. Stocks are more dangerous but can also be considered a safe bet if the company you invested in can survive the chaos. If somebody disagrees please calmly state your case I am very interested in what other people think.

Sat, 09/13/2014 - 17:41 | 5214528 Supernova Born
Supernova Born's picture

Can (drug/currency) police dogs smell .999 gold?

[sorry, just watched a currency asset forfeiture video on the Washington Post website]

 

 

Sat, 09/13/2014 - 20:33 | 5214971 Moe Howard
Moe Howard's picture

Sprinkle pepper on everything. That's what we did in the barrack during 'Nam when they would bring the dogs in to find dope while we were in formation. Bad for the dogs, but they shouldn't be narcing on soldiers.

Sat, 09/13/2014 - 20:53 | 5215033 americanspirit
americanspirit's picture

Yessir - I do like a touch of chile sauce in my underwear and socks. Why do you ask?

Sun, 09/14/2014 - 07:25 | 5215647 GetZeeGold
GetZeeGold's picture

 

 

Can (drug/currency) police dogs smell .999 gold?

 

No....but be careful carrying silver around them.

Sun, 09/14/2014 - 09:46 | 5215811 GMadScientist
GMadScientist's picture

Did you ever try splitting an 1/8th with the puppies?

Warning: keep lots of dog treats handy.

Sat, 09/13/2014 - 18:11 | 5214603 unrulian
unrulian's picture

How safe is all that farmalnd and 7 exxons when it is confiscated for national security reasons...atleast pms can be at the bottom of a lake...(everywhere but Cali)

Sun, 09/14/2014 - 07:41 | 5215657 stoneworker
stoneworker's picture

As I said companies that survive the chaos should be a good investment....I include confiscation as a risk. If you read exactly what I wrote you will see that we are on the same page.

Sun, 09/14/2014 - 09:22 | 5215727 SoilMyselfRotten
SoilMyselfRotten's picture

Not to mention that farmalnd gets taxed year after year as long as you own it(whether you produce anything or not).

I also like Art, you get 50+years experience of his take on where the market is. He doen't strike me as a shill but i still take what he says with a grain of salt.

Sat, 09/13/2014 - 21:21 | 5215089 BeanusCountus
BeanusCountus's picture

Great post in my opinion. Buffet is right on owning productive assets. They certainly can outperform a pile of metal. But he does miss a point or two on gold. Sorry Warren, but it does belong in your holdings. Especially for people that need a little protection from the nutballs that run this country. Its a little like an insurance policy for folks that cant afford to suffer a loss in purchasing power of basic necessities for a couple years or so. And no one ahould be without insurance. Especially for people that need to get out of this country. And that is what the powers that be fear the most. Your ability to leave. Is it worth nothing? Anyone that believes that is a fool.

But yes, they can steal it from you. They did for 35 years or so (private ownership was illegal from the thirties until early 70's). But they can also steal every other asset through tax policy or ownership mandates if they choose to. If they can find it that is.

I think the most amazing thing I ever read was an article where they interviewed jewish survivors of the holocaust. They asked them if gold was something they would own now given how far it has dropped from its peak. To a one, they dismissed the question as coming from an idiot.

Sun, 09/14/2014 - 10:53 | 5215978 BrosephStiglitz
BrosephStiglitz's picture

Stocks are for investors.  Gold and silver (and other durable commodities) are for savers.  Right now, bonds are for idiots, unless you have the financial clout, or the army to back up your claim on debtors.

Sat, 09/13/2014 - 22:39 | 5215276 NoPension
NoPension's picture

First, we are all going to die. And you can't take it with you.

Now, that that is out of the way.

Fuck Warren Buffet. He has done the same thing for 60+ years, in the US, who have had the biggest advantage over the last 60 years. It's just a big fucking game for him. And the question is not Gold or Stocks, or Gold or Farmland. The question Is , gold or cash? Gold or USA funny money or T-bills.

Most of only give a rats ass so we can eat or pay the bills. If Warren wanted or cared to transfer wealth to his progeny, gold would be part of the mix. His kids are fine.
Most of us don't have his "problem" , we just want a decent insurance policy. ( which that prick is ready to sell us, collect the premium, and invest the cash) For our lifetime,a policy or pension, denominated and paid in dollars has been ok. But now, anyone with two brain cells can see we are at the end of the road.

And us little guys just want something we can throw in a bag, and roll, and maybe get a fresh start.

And that would be gold. And we buy it with dollars. And the dollar price is manipulated to make the dollar look better than it is. Just get you some.

Sat, 09/13/2014 - 18:39 | 5214650 r00t61
r00t61's picture

Paper gold derivatives are something like 5 orders of magnitude larger than the physical gold market.

And unlike gold, which has to be physically mined out of the ground, the only thing required to create more gold derivatives is a computer.

Paul Craig Roberts has a series of articles with Dave Kranzler detailing some of the technical aspects of smashing down the gold price.

Paper manipulation can always be covered up with more paper.  The only thing that truly could bring an end to the paper manipulation would be a physical default - e.g., the COMEX being unable to deliver.

Given what we know about the London gold fix, about the declassified Kissinger documents that speak openly about manipulating gold prices post-Bretton Woods as a matter of national security, and given the level of manipulation of other financial markets - LIBOR being especially notable - I don't think it's a big stretch to infer that similar forces are at work in the gold markets.  The bank lobby has a vested interest in suppressing the gold price to maintain the appearance of fiat system stability.

Now, making gold artificially cheap does have consequences - like allowing the Chinese/Russians/Indians to buy it hand over fist using paper money. 

 

As far as everything being fine...

Even the government statistics are showing that more and more people are not working.  They show that even as the quantity of the jobs increases, the quality decreases.  Replacing 1 engineering job that pays $100,000 a year with 3 jobs flipping burgers at $20,000 a year is a good thing only in an eCONomist's mind.

Of the people that are working, more of them have to get multiple part-time jobs to make ends meet. And for years now, even before Obamacare started to transform everyone in a 29.5 hr/wk workforce, companies were converting ever-increasing numbers of their staff into 1099 contract employees with zero benefits.

Millenials can't afford to get married, have children or buy houses because their student-loan and credit card debts are grinding them into dust.  Without them generating enough tax revenue, all the boomers that retired on gold-plated municipal pensions could be in a world of hurt.

I could go on, but then it would just turn into a Michael Snyder-like numbered list, and I know we all hate that BS here on the 'hedge.

 

 

 

Sun, 09/14/2014 - 02:00 | 5215506 California Nigh...
California Nightmares's picture

100,000 X ???

I think Jim Willie tops out at about 100 : 1.

Sun, 09/14/2014 - 08:13 | 5215675 GetZeeGold
GetZeeGold's picture

 

 

Never heard of the guy.....and I live in Costa Rica.

Sun, 09/14/2014 - 09:45 | 5215807 GMadScientist
GMadScientist's picture

That is so not fair. Do you think the CFTC corrupts itself?

There are palms to grease, elected officials to install, and the PR campaign of denial to keep up.

Sun, 09/14/2014 - 11:02 | 5216011 BrosephStiglitz
BrosephStiglitz's picture

Well first off, how much paper HAVE they printed?  To my knowledge, unless you are in Zimbabwe, the printing presses aren't seeing the same amount of use as they might of historically.  Most governments use a majority in electronic currency typically these days, paper currency and coins are a rather small fraction of the total money in circulation.

Secondly, money is a pretty vague term.  What is money exactly?  Bank accounts (electronic digits)? Physical cash and coins?  Liquid assets like stocks, t-bills and other financial derivatives?  

Which leads to the third point- where is that "printed" money going?  Is it going into the cash economy?  Stocks?  Bonds?  Loans?

Finally there is typically a few years of time lag between money creation and the actual affects hitting the real economy.  This is why owning the money supply, at its core, is a very sneaky way to own every economic transaction.  It takes a few years for the "behind the curtain" actions to show up for the average guy/girl on the street.

My guess is the majority of the debt monetization has been in financial assets to date.  Although now you are beginning to see the affects within the real economy.  Furthermore, in the instance of the US, their global dollar reserves held by foreign banks and individuals work like a giant sponge.  If people need more dollars the size of the sponge grows and it can absorb more printing, if people start to dump their dollars the size of the sponge shrinks and what might have been a 1/1000 increase in the total money supply held today might be a 1/100 tomorrow. 

Money is actually one of the least understood, and most difficult economic concepts around.

Sat, 09/13/2014 - 21:02 | 5215069 Pumpkin
Pumpkin's picture

Their current model does not put money into the hands of the masses.  Without that, they do not control inflation/deflation.

Sun, 09/14/2014 - 03:20 | 5215544 Four chan
Four chan's picture

wage inflation is all they look at, however we shipped our wage inflation to the slave

nations along with the middle class jobs years ago and none of that is coming back ever.

this gets to the point of the futility and foolishness in the bernanke gamble.

Sat, 09/13/2014 - 20:44 | 5215014 bid the soldier...
bid the soldiers shoot's picture

Actually, it is death by too many seniors and aliens and too little oil.

 

Sat, 09/13/2014 - 23:36 | 5215227 jaxville
jaxville's picture

X.inf.capt.....

 

Sat, 09/13/2014 - 22:20 | 5215240 jaxville
jaxville's picture

X.inf.capt.....

 

   I believe we have been experiencing deflationary pressures since the mid 1990s.  It isn't readily apparent because we are seeing rising prices in many areas and the Fed (and other central banks) have been making up currency like Scotty's making toilet paper.

   The rising prices we are seeing are largely supply/demand issues exacerbated by gov't actions as well as a financial sector thats gone completely amok.  Government often creates artificial shortages through many means at their disposal such as outright legislation, punitive taxes, treaties and tariffs. The burden government places on most industry adds to cost of production and that must be recovered at point of sale.

  The financial sector is extending more credit and lending to less qualified borrowers which keeps retail demand for many products higher than it would otherwise be.  There is also a plethora of financial products (mostly derivatives) that distort the prices of the underlying assets or commodities.

   My point is that prices are so distorted from gov't incompetence/command economy and a "freak show" financial sector that they are a poor indicator of inflationary or deflationary pressures.

   Money (credit) creation has hit huge levels with the bailouts and QE since 2008.  Very little of that currency is fnding it's way into the hands of consumers.  Instead levels of debt are increasing and financial institutions are holding more cash.  You know it's a problem when the CFR is urging central banks to find a means of getting cash into the hands of consumers without creating more debt. 

   As long as our currency is created through fractional reserve banking, levels of debt will always exceed credit (cash) creation.  There comes a point when the levels of debt are too high and the demand for servicing that debt takes up most available credit and cash becomes relatively scarce which should result deflationary  pressures .  That is the essence of our money system and why calling it anything less than a fraud is disingenuous.

   We will soon see another crisis simular to 2008 and for a year or so, cash will be king. The only tool available to the financial authorities will be devaluation of the currency in order to make debt easier to service.  They will need to create credit without adding to debt.  They can monetize much existing debt and even have limited amounts of currency created by various state treasuries and spent into existence (social credit) though central banks will strongly resist that avenue. 

  It is entirely possible we see a deflationary panic as people move into cash and reduce exposure to the financial sector.  How much does the current US economy have to slow down by so that many can no longer service their debts?  What happens to most banks, brokerages, insurance companies etc. when that happens?

   Deflation is a foregone conclusion when you have a monetary system that creates more debt than credit.  Having said that, do not underestimate the resolve of the financial authorities to devalue their respective currencies to make debt servicing easier.  Gov'ts will push for devluation in order to protect export markets as central banks push for devaluation to keep the financial sector afloat.  I suspect they will suceed at some point.

 

 A lot of words to say that I suspect we will see a deflationary collapse in asset values followed by consumer products followed by most commodities. Cash will be king for a year or two until the financial authorities succeed in devaluing the currency.  Prices of essential needs (food, energy etc.) will start to climb though much of the price increases will be a result of gov't caused shortages rather than an inflating currency supply. 

 

Sun, 09/14/2014 - 04:18 | 5215575 LostandFound
LostandFound's picture

So if the US devalues its currency, then the perfect hedge would be Gold? up to that point Cash will be king through deflationary pressures.

I bet on deflation or a correction, then panic by the FED followed by a crack up boom to inflate the currency away.

At the minute cash and gold are good choices for both instances.

Use cash to buy a productive asset through deflation, then have this productive asset work for you during a crack up boom?

Sun, 09/14/2014 - 06:16 | 5215621 jaxville
jaxville's picture

   I don't think gold can get much cheaper.  It is an excellent example of something that is artificially priced and it's price does not reflect the actual supply and demand issues.  The repatriation issue that Germany is seeing should tell you something about actual supply or lack thereof.  You risk not being able to obtain specie in spite of lower prices by waiting.  Retail specie can dry up very quickly especially if gov't mints restrict production.  The only gold dealers will be able to offer is that which they buy across their counter from the public.

 

  You want to have a position in physical before the deflationary panic hits. 

Sun, 09/14/2014 - 10:42 | 5215940 TheReplacement
TheReplacement's picture

Some people say death by inflation then deflation.

Some people say death by deflation then inflation.

Gopher says it might be painful, but then it could hurt a lot too.

Sat, 09/13/2014 - 15:54 | 5214330 Escrava Isaura
Escrava Isaura's picture

Art Cashin (actually thinking):

 

First, how will the Fed do in keeping our Wall Street money reasonably flowing by the tune of trillions of dollars, so we can still have a job, without causing hardship on the rest of America, and the world?

 

Second, where do we, parasites from Wall Street run with the current geopolitical change?

 

 

Sat, 09/13/2014 - 17:40 | 5214471 Kirk2NCC1701
Kirk2NCC1701's picture

Art, and theoretically I could win tonight's Power Ball.

But I'll settle for a nice dinner with a Happy Ending.

Sat, 09/13/2014 - 15:42 | 5214307 Raymond K Hessel
Raymond K Hessel's picture

Art Cashin, a 50 year veteran who just said what ZH has posted consistently

DIEN BIEN POO, a troll with not half the credibility of Art Cashin

 

Those who know Art know from his time on TV would hardly be shocked if it were found out he was a regular poster on ZH.

 

Sat, 09/13/2014 - 15:44 | 5214310 Raymond K Hessel
Raymond K Hessel's picture

Clearly, Bien Poo and Pooper Popper are part of some kind of Poo platoon of the Internet Troll Army.

Sat, 09/13/2014 - 15:50 | 5214322 PAWNMAN
PAWNMAN's picture

I'm guessing you know Art personally? The opinions I hear him voice on CNBS are no different than the idiots on Fast Money. Santelli is the only person on that channel I wouldn't feel comfortable trashing.

Sat, 09/13/2014 - 17:43 | 5214543 CuttingEdge
CuttingEdge's picture

Sedgewick and Cutmore were fine for years for me on SB Europe (early hours over the pond) - especially when Sean Corrigan or Roger Nightingale guest hosted. Then they started toeing the anti-Russia MSM bullshit line when Ukraine kicked off, and sold their credibility down the river.

Stateside CNBC (Santelli and Pisani aside) is utter bollocks.

Sun, 09/14/2014 - 08:15 | 5215680 GetZeeGold
GetZeeGold's picture

 

 

Bien Poo and Pooper Popper

 

How do you even think of names like that?

Sun, 09/14/2014 - 13:55 | 5216516 Pooper Popper
Pooper Popper's picture

I came up with mine watching cnbc....

Sat, 09/13/2014 - 23:58 | 5215369 Greenskeeper_Carl
Greenskeeper_Carl's picture

I agree about santelli. He doesn't go far enough on his rants, IMO, but he is the closest thing to my opinion on most of this they will give a regular TV spot to. But, I believe a little bit of decorum is in order, we can make our points without everything devolving into personal attacks. Cashin is defending the undefendable with all this fed nonsense. He might say some of the right things sometimes, and who knows what his personal, inner feelings are, but he is still thinking and operating within the corrupt and morally (and literally) bankrupt system we have now, rather than trying to change it. But why should he? This system we have now has obviously been very kind to him.

Sat, 09/13/2014 - 16:04 | 5214348 Escrava Isaura
Escrava Isaura's picture

Raymond K Hessel,

 

You don't look too good now.

 

You just showed your dirty hands.

 

Sat, 09/13/2014 - 17:56 | 5214558 Bay of Pigs
Bay of Pigs's picture

Wow....now we're getting FED shills here, calling ZH posters "trolls" when they point out the clear hypocrisy of Art Cashin.

Fuck you Raymond. He supports Yellin, Bernanke, Fischer and FED. He's part of the problem.

Sun, 09/14/2014 - 07:29 | 5215649 GetZeeGold
GetZeeGold's picture

 

 

Wow....now we're getting FED shills here

 

Well hot damn......FINALLY!

Sun, 09/14/2014 - 12:11 | 5216201 Bay of Pigs
Bay of Pigs's picture

"Also, I have a new person to look at in the Fed and that would be Stanley Fischer. He brings a lot of experience in as vice chairman. As we begin to look at his speeches and comments, we will see that he is going to have an enormous influence and we may be begin to see him helping Ms. Yellen. He is not going to confront her but helping her to, perhaps, understand why things have to change a little."

Helping Yellin? Won't confront her? Change a little? Nothing but pure horseshit. Some people around here need to wake the fuck up.

Sat, 09/13/2014 - 16:28 | 5214409 Pooper Popper
Pooper Popper's picture

Wow, check this out!!!

http://nationalreport.net/obama-resign-january-1st-amid-new-benghazi-rev...

 

Maybe Christmas wishes Do come true!

Oh ,and Fuck off ray,go feel up your obama doll,take your troll ass somewhere else.

Sat, 09/13/2014 - 20:37 | 5214989 Moe Howard
Moe Howard's picture

It's bullshit. No way no how never. He will do his term and retire rich, enjoying all the bath houses he can find. I supect he won't ever golf again after he leaves.

Sat, 09/13/2014 - 16:31 | 5214413 Dazman
Dazman's picture

I don't understand why the hate towards this guy. He seems like an old wise man. Negative comments like that reek of jealousy... probably from someone that has tried to be a trader/investor but lost every time. Don't be a hater man!

Sat, 09/13/2014 - 16:50 | 5214441 PAWNMAN
PAWNMAN's picture

I agree that some of the negative comments are over the top. But I disagree that jealousy has anything to do with it. I would speculate that it's more about displaced anger toward anyone thats part of a corrupt system that gotten the benefit of trillions of dollars worth of Fed/Government largesse. And will be the first in line, with hat in hand next time the "market" blows chunks.

Sat, 09/13/2014 - 16:56 | 5214461 Dazman
Dazman's picture

Perhaps you are right, but Art I think has definitely been more a ZH'er / free market type person than anything, which I've sure if the reason ZH posted this interview in the first place.

Sat, 09/13/2014 - 18:03 | 5214571 Bay of Pigs
Bay of Pigs's picture

Did you even read the article?

Fuck me.....what a clueless bunch on here today.

Sat, 09/13/2014 - 18:47 | 5214664 Dazman
Dazman's picture

I read it in full. Did YOU even read the article, dipshit, or have you ever even seen his segments? He is quite bearish and equities and has hinted several times that the FED's policies are manipulative. On most things I believe he would have take the same view as ZH and the people that post here.

Sat, 09/13/2014 - 21:35 | 5215154 RockyRacoon
RockyRacoon's picture

I've watched Art Cashin since the first days of CNBC.  He has forgotten more than the lot of us ZH folk will ever know.  He is very cautious and no fool.  Yes, he does know which side his bread is buttered on, but he's too old and wise to be trashing in a direct manner his means of livelihood.   He's the guy on the floor.  With Art, one has to read between the lines a lot of the time, but his message is clear.  Preconceived bias against anyone who "plays the game" works against true comprehension.  He still has his job because he's good at it.  UBS doesn't pay him to just stay alive, they listen to him.  I'd love to be a fly on the wall when he debriefs his upper echelon people.

Sat, 09/13/2014 - 23:16 | 5215328 Bay of Pigs
Bay of Pigs's picture

You know I respect you Rocky but to think that Art doesnt know the score is just ridiculous. UBS sucks ass, and he knows it full well.

ZH is becoming a joke...

 

Sun, 09/14/2014 - 01:05 | 5215452 RockyRacoon
RockyRacoon's picture

Of course he knows the score!  That's what I'm saying.  For me his messages are quite clear.  "Watch your butt," is in every word. 

Sun, 09/14/2014 - 09:22 | 5215745 Dazman
Dazman's picture

Quit bitching about how bad ZH is becoming then and get out of here!

Sun, 09/14/2014 - 11:59 | 5216137 Bay of Pigs
Bay of Pigs's picture

You wouldnt have lasted a week back in the early days of ZH.

Stanley Fischer? Bank of Israel? That's a good thing to you? GTFO you clown.

Sun, 09/14/2014 - 12:13 | 5216204 Dazman
Dazman's picture

I was here in the early days, if not a joined member until more recently (about 2 years).

Well you can believe in whatever you want. I guess as a trader that's been successfully managing my own money full time for about a decade, mine is not to reason why, mine is but to sell and buy.

I should stick to just reading the main articles. The comments section on here is like trying to the CNN comments section sometimes.

Sat, 09/13/2014 - 22:03 | 5215210 cpnscarlet
cpnscarlet's picture

Yes, let's have a bit of decorum...

But he still talks like every piece of data out of the gov't is sacrosanct, when we all know it's mostly dodo-caca. After watching Art over the years, he's either steeped in a normalcy bias or has a gun to his head.

Sat, 09/13/2014 - 18:52 | 5214679 Semi-employed W...
Semi-employed White Guy's picture

He's just another worthless POS in the financial "industry" with no actual skill.

Sat, 09/13/2014 - 20:10 | 5214918 BeanusCountus
BeanusCountus's picture

What "skill" were you looking for? The ability to predict the future? No one can do that. One's skill is what he/she can produce for other people. I'll wager big $$$ right now that his "skill" has either made more, or saved losses for, other people than you will ever produce in your lifetime. Eat it sport.

Sat, 09/13/2014 - 20:36 | 5214980 PAWNMAN
PAWNMAN's picture

One wonders how many Art Cashin's would still be around if not for all the government interventions in 2008 to present? Remember all those "skilled" people at Lehman, Bear Stearns that were sacrificed while Goldman and JP Morgan were thrown the Feds life raft. Do you honestly believe this man is openly discouraging his clients from buying equities even at these levels? All I ever hear from him is equivacation, similiar to a politician.

Sat, 09/13/2014 - 21:38 | 5215161 RockyRacoon
RockyRacoon's picture

You've just demonstrated your ignorance.  Cashin is the FLOOR MANAGER.  He doesn't deal directly with the firm's clients.  His job is one that you'll never achieve.

Sun, 09/14/2014 - 00:23 | 5215412 PAWNMAN
PAWNMAN's picture

Job classifications aside. How many people would be left working anywhere on Wall Street without the government interventions? Also, how much juice is required to achieved a coveted spot on the floor of the NYSE? I'm sorry but I'm simply not impressed by anyones position. Especially one so dependent on cheap money, bailouts and connections.

Sun, 09/14/2014 - 01:09 | 5215457 RockyRacoon
RockyRacoon's picture

I liken him to Deep Throat in Watergate.  Clues to the puzzle are all you're gonna get from just about anyone who actually KNOWS the score.  They can't stay on the inside unless they appear to be "playing."   I, for one, need Cashin to keep his job and keep doling out the subterfuge advice.  If Cashin is afraid, all of us should be feeling the same.

Sun, 09/14/2014 - 12:12 | 5216206 PAWNMAN
PAWNMAN's picture

I see your point.

Sun, 09/14/2014 - 09:34 | 5215777 Dazman
Dazman's picture

I would argue that there would be even MORE people on Wall St. if it weren't for the FED because you would have a more volatile market and thus more opportunities to make money on both the long and the short side, so more people would be attracted to it. But now the market only goes in one direction with little volatility because of the FED, few opportunities = fewer people.

Sat, 09/13/2014 - 19:49 | 5214870 BeanusCountus
BeanusCountus's picture

Excuse yourself please. He is a fine man. Just making a living, and very good at it I suspect. He controls nothing. Only tries to figure it out.

Sun, 09/14/2014 - 11:08 | 5216023 Remington IV
Remington IV's picture

zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

Sun, 09/14/2014 - 21:27 | 5217582 spz_trader
spz_trader's picture

You sorry ass piece of shit who the fuck are u to call out Art Cashin?

Sat, 09/13/2014 - 15:34 | 5214293 ebworthen
ebworthen's picture

"When I go into a room, the first thing I look for is the exit sign."

"...volume equals validity..."

"... just as I would not want to fly in an airplane with no pilot."

Yup.  Who's the next Lehman/AIG?  Citi?  Bank of America?  Met Life?

Sat, 09/13/2014 - 18:05 | 5214583 Kirk2NCC1701
Kirk2NCC1701's picture

So true.  Jason Bourne types have Situational Awareness, check Points of Egress, and People.

Some of the Basic Rules of Investing* to live by, include...

1. "Never get into ANYTHING you don't know how to get out of -- at Acceptable Exit Consequences"

2. "Return OF Investment matters more than Return On Investment".

3. Never forget or ignore the Laws of Unintended Consequences. 

E.g. No sane guy ever "intends" to get his date or girlfriend pregnant, or pick up STDs.  Mitigating and Managing Risk is harder to do than people realize or admit -- because of human weaknesses and foibles (negative emotions, i.e. our reptilian or monkey brain messing with our clever/rational/wiser brain)".

4.  CFPs and all people looking to borrow or invest your cash or leverage your assets NEVER talk about the above 3 Aphorisms/Rules.  Don't say Kirk didn't warn you.

* Financial, Fiduciary, Personal, Political "Investment"

Sat, 09/13/2014 - 21:08 | 5215084 disabledvet
disabledvet's picture

"Yes...there is a Federal Government put as well."

I mean seriously...we have had a huge surge in prices which has fueled this entire rally. It's just price gouging by another name. Now everyone is back to whining again as prices collapse since "how is this good for all us little people when suddenly the sheeple might ba able to actually afford something again?"

This article makes it all sound so complicated. Bwhahahahahaha. "Geo political events." If "Cashin" were honest he would admit that 9/11 was the greatest scam in history.

Sat, 09/13/2014 - 15:33 | 5214294 PAWNMAN
PAWNMAN's picture

Would a used car salesman EVER tell you that today is NOT a good day to buy a car?

Sat, 09/13/2014 - 21:10 | 5215088 disabledvet
disabledvet's picture

EXACTLY! "Buy stawks you stupid phucks!"

Sun, 09/14/2014 - 07:35 | 5215653 GetZeeGold
GetZeeGold's picture

 

 

Ease your mind with equities.....

 

 

Go to sleep.....all is well.

Sat, 09/13/2014 - 15:39 | 5214298 ekm1
ekm1's picture

Oil price collapse = Margin call on the whole world financial system

 

Do not look at rates, look at oil price. Oil is the ultimate collateral.

ENERGY MARKET IS THE MOTHER OF ALL FINANCIAL MARKETS

 

And of course, all is pre-planned, same as with Lehman or MF Global

Sat, 09/13/2014 - 15:57 | 5214336 debtor of last ...
debtor of last resort's picture

Oil was the mother of growth. So she could be the mother of our fake overstretched excistance, yes. I think you have a point. Peak cheap oil, on the other hand, was not pre planned.

Sat, 09/13/2014 - 18:08 | 5214590 ThroxxOfVron
ThroxxOfVron's picture

"Peak cheap oil, on the other hand, was not pre planned."

However, the response of printing to inflate the price of Oil and cover up the fact that it is no longer plentiful was planned.

The productivity gains that would have been associated with stable Oil have been siphoned off.  Industrial calories cost more and manual calories are being expropriated to pay for it.  The Oligarchy doesn't want to admit that the low hanging fruit of it's industrial era wealth is picked and it cannot continue to enjoy it's standard of living; and their answer is a return to feudalism where Labor is perpetually expropriated to maintain splendor.

Sat, 09/13/2014 - 18:27 | 5214621 debtor of last ...
debtor of last resort's picture

Psychopaths don't plan disadvantedges

Sat, 09/13/2014 - 18:29 | 5214628 ThroxxOfVron
ThroxxOfVron's picture

"Psychopaths"

Well, at least we agree on something.

Sat, 09/13/2014 - 20:34 | 5214973 bid the soldier...
bid the soldiers shoot's picture

Feudalism and Oligarchy by the grace of the Military

Sat, 09/13/2014 - 21:20 | 5215118 disabledvet
disabledvet's picture

I do make a distinction between "militarized police" and the actual military. (Police or otherwise.). And I was thinking "oh, the Splenda!" more than the splendor actually...such being the fear of inflation and "the loss of real sugar in this world" as similar to contracting some type of communicable disease.

This whole post 9/11 "voyage" looks more and more likes reprise of the movie Repoman by the day...where beer is labeled "beer" and bread is "bread" and out there...somewhere...is a 63 Buick worth 30,000 bucks.

Oh the qualitative sameness of it all!

Sun, 09/14/2014 - 01:27 | 5215474 bid the soldier...
bid the soldiers shoot's picture

Check.

Military Police keep members of the military in order.  The Military keeps the rest of the citizens in order.

Sat, 09/13/2014 - 16:06 | 5214340 ThroxxOfVron
ThroxxOfVron's picture

Wouldn't cheaper oil allow every printed dollar to buy more on margin?

Wouldn't cheapening of oil imply allowance for increased leverage?

 

IF I have $10 and I can leverage $100, and Oil is $100/bbl; I can leverage 1 bbl.

IF I have $10 and I can leverage $100, and Oil drops to $50/bbl.; I can leverage 2 bbl.

-Twice as much asset can be leveraged for the same fiat.

 

As the price of the assset/commodity in question goes down my real possible leverage ratio goes UP.

Sat, 09/13/2014 - 16:07 | 5214355 ekm1
ekm1's picture

That is an agreement between Pentagon and Saudis.

Scarcity of USD allows saudis to provide oil to USA and gives value to their USD holdings.

 

Saudis are not stupid to allow bank lobby to print USD infinitely so bank lobby can own them infinitely.

 

Saudis want US military protection, not bank lobby extortion

Sat, 09/13/2014 - 16:11 | 5214364 ThroxxOfVron
ThroxxOfVron's picture

Saudis HAVE Pentagon protection.  Even on 9/11 the Saudis got exacuated while US airspece was closed to ALL but Pentagon traffic.

 

What does margin trading of Oil have to do with Pentagon their end of a deal to keep Saudi oligarchs safe from their own serfs?

Sat, 09/13/2014 - 16:14 | 5214371 ekm1
ekm1's picture

This is the deal:

 

Saudis sell oil in USD only and supply USA with oil, hence they keep USD as reserve, and create world demand for USD

 

Pentagon in return defends them. It is a win-win deal for US citizens, western world and saudis, ..........until Obama backstabbed them and wanted alliance with Khamenei of Iran.

 

Pentagon is furious

Sat, 09/13/2014 - 16:47 | 5214438 bid the soldier...
bid the soldiers shoot's picture

Pentagon is furious

 

How furious can the Pentagon be if Obama still has a pulse?

Sat, 09/13/2014 - 16:48 | 5214448 ekm1
ekm1's picture

As furious as anonymously accusing Obama of treason

 

http://dailycaller.com/2014/08/01/pentagon-official-the-facts-are-in-and...

 

There is civil war between Pentagon, Military complex and White House, bank lobby

Sat, 09/13/2014 - 16:52 | 5214452 ThroxxOfVron
ThroxxOfVron's picture

At least half the Repulican Party thinks Obama committed treason.

It's one of the only things I can actually agree on with those corrupt fascist whores.

Sat, 09/13/2014 - 17:00 | 5214467 bid the soldier...
bid the soldiers shoot's picture

Tut.  

"Anonymously accusing" is like yelling at the wife because she put too much salt in the mashed potatoes.

Those others aren't anywhere near the same strength as the Pentagon.

And remember the song:  "Whatever Lola wants, Lola gets."

The Pentagon is running the show.  And they have been for some time.

Sat, 09/13/2014 - 17:04 | 5214474 ekm1
ekm1's picture

I noticed that. But obama and bank lobby are resisting.

That's why I say there may be assassinations on bank lobby which saudis would execute

Sat, 09/13/2014 - 17:25 | 5214505 bid the soldier...
bid the soldiers shoot's picture

Before 2008, the Pentagon willingly cooperated with the other players.

Since Bernanke and QE, it looks like they've assumed their role as the US foreign policy maker.

It's just a matter of  waiting for the bottom fall to fall out of our economy and the Pentagon getting all of its "oil" ducks in a row

Then the junta.

Sat, 09/13/2014 - 17:34 | 5214531 ekm1
ekm1's picture

agree

Sat, 09/13/2014 - 17:57 | 5214568 ThroxxOfVron
ThroxxOfVron's picture

"Before 2008, the Pentagon willingly cooperated with the other players.

Since Bernanke and QE, it looks like they've assumed their role as the US foreign policy maker."

I'm sure they were sitting around the big table waiting for the Dept of Agriculture to speak on 9/12...

Have any of you ever heard of this Iran Contra thing that North and Clinton worked for?-It predated 2008 by a few months...

Sat, 09/13/2014 - 20:30 | 5214939 bid the soldier...
bid the soldiers shoot's picture

Well, I could go back to November 1963, but that's more work than I had planned on. 

All the proof there will ever be is evident now.  Who is left to convince?

http://www.jfklancer.com/Krock.html

read Anthony Frank writes: A "Washington Post" article on September 22, 1963

If the CIA was that powerful 50 years ago, imagine.....

Sat, 09/13/2014 - 19:03 | 5214715 ThroxxOfVron
ThroxxOfVron's picture

"Obama and the bank lobby are resisting."

WHY would the Bank Lobby be resisting, IF as You have stated, it is Saudi Oil which gives the US Dollar value?

WHY would the entire Bank Lobby want to destroy itself decoupling(?) their credit fiefdom from it's value predicate? 

Sat, 09/13/2014 - 20:43 | 5215010 Moe Howard
Moe Howard's picture

That guy bitching about defense cuts.

Stop the treasonus wars! The pigs just want moar money.

Sat, 09/13/2014 - 17:53 | 5214562 ThroxxOfVron
ThroxxOfVron's picture

I am begininng to think you are a another deluded acedemic or an agent of disinformation.

 

STOP avoiding my question:

 

"Wouldn't cheaper oil allow every printed dollar to buy more on margin?

Wouldn't cheapening of oil imply allowance for increased leverage?

 

IF I have $10 and I can leverage $100, and Oil is $100/bbl; I can leverage 1 bbl.

IF I have $10 and I can leverage $100, and Oil drops to $50/bbl.; I can leverage 2 bbl.

-Twice as much asset can be leveraged for the same fiat.

 

As the price of the assset/commodity in question goes down my real possible leverage ratio goes UP."

 

You have asserted quite the opposite.  

You have asseted that the Banks are LONG Oil in an attempt to somehow back TRILLIONS of Dollars in Derivatives.  How high do the Banks think Oil can go before the rest of the economy falters.

You have asserted that the Saudis do not want inflation even though their Oil is probably one of the prime beneficiaries of inflation in the world...

Sat, 09/13/2014 - 20:01 | 5214903 malek
malek's picture

That must be a new record for self-contradictions in 3 lines!

Scarcity of USD allows saudis to provide oil to USA and gives value to their USD holdings.

But otherwhere you state only energy is value. So if the Saudis are sitting on oil, what do they care about their USD holdings "value"?

Saudis are not stupid to allow bank lobby to print USD infinitely so bank lobby can own them infinitely.
Saudis want US military protection, not bank lobby extortion

Rrright, and if the bank lobby extortion becomes too much for the Saudis, they're going to do ...exactly what?

Maybe for starters you should reflect a little on what the Saudis did in the 1973 "oil crisis",
and why they cannot do that again in these days.

Hint: it would take the US 3 weeks to invade Saudi Arabia - or if they want to do it less obvious it would take 3 months to have a sudden, surprisingly well organized "revolutionary movement" to topple the Sheiks.

Sat, 09/13/2014 - 16:08 | 5214356 ThroxxOfVron
ThroxxOfVron's picture

Seriously, ekm1: what am I not understanding about what you have posted?

-Please enlighten me.

Sat, 09/13/2014 - 16:09 | 5214359 Escrava Isaura
Escrava Isaura's picture

ThroxxOfVron,

 

I think ekm1 is in a propaganda mode.

Sat, 09/13/2014 - 16:11 | 5214365 ekm1
ekm1's picture

I'm sure you have better things to do in life than to read my comments

Sat, 09/13/2014 - 16:15 | 5214374 Escrava Isaura
Escrava Isaura's picture

ekm1

I actually find myself agreeing with you many times.

 

But, on the oil posts that you are posting, it disturbs me.

Sat, 09/13/2014 - 16:18 | 5214385 ekm1
ekm1's picture

One solution for that.

Don't read my comments

Sat, 09/13/2014 - 16:42 | 5214422 Escrava Isaura
Escrava Isaura's picture

ekm1

Sorry. It's too late. I read below that you said:

"Obama ordered military cuts and fired many generals."

 

However, if you go to the link below, it's by US Treasury, look at government outlays and they keep going up.

So, where are these cuts?

 

http://fms.treas.gov/mts/index.html

 

Sat, 09/13/2014 - 16:48 | 5214443 ekm1
ekm1's picture

read military media

Insane drastic cuts

Sat, 09/13/2014 - 16:51 | 5214451 ThroxxOfVron
ThroxxOfVron's picture

...But the Black Ops. are still off the books as you have admitted recently; so some small bureaucratic chair shuffling matters WHY?

Obama doesn't need authorization and financing via Congress: He is just handing out money to the Pentagon via the ISIS scam with the hand we see and the hand we don't see..

Sat, 09/13/2014 - 16:54 | 5214454 ekm1
ekm1's picture

Peanuts

Sat, 09/13/2014 - 18:31 | 5214630 ThroxxOfVron
ThroxxOfVron's picture

No.  She really does not.

Sad but true...

Sat, 09/13/2014 - 16:09 | 5214360 ekm1
ekm1's picture

Collateral exists, money does not exist.

Money simply claims collateral.

 

Oil is used as collateral for derivative gambling.

 

Saudis are not stupid

Sat, 09/13/2014 - 16:13 | 5214370 ThroxxOfVron
ThroxxOfVron's picture

Nothing about the collateral -OIL- is changing.  Only the value of fiat or the level of leverage is changing.

Saudis are safe and cozy in their Wahabbist sandbox and OIL has exactly as many calories in it as it ever did.

Sat, 09/13/2014 - 16:14 | 5214376 ekm1
ekm1's picture

Not so.

Obama ordered the Fed to print $4 trillion which has ALL OF IT gone to bank lobby which is buying oil and storing it as collateral for derivatives.

 

In the meantime Obama ordered military cuts and fired many generals.

Sat, 09/13/2014 - 16:23 | 5214396 ThroxxOfVron
ThroxxOfVron's picture

"Obama ordered the Fed to print $4 trillion which has ALL OF IT gone to bank lobby which is buying oil and storing it as collateral for derivatives."

1. That $4 trillion used by the bank lobby to BUY Oil has ipropped up the price and gone to some large extent into Saudi bank accounts!

2. There is not enough Oil on Earth to collateralize the trillions of unbacked/fraudulent leverage pyramided in the derivatives stacks -and you damned well know it.

 

"In the meantime Obama ordered military cuts and fired many generals."

This is inconsequential.  Pentagon is still the 800lb Gorilla ruling chimp island.

-Then there are enough nuclear warheads commanded by Pentagon to sterilize the whole fucking planet and a few more like it...  WHo gives a fuck if a few hundred old white .MIL bureaucrats are put to pasture?

Sat, 09/13/2014 - 16:27 | 5214406 ekm1
ekm1's picture

Ok. Let me explain this again:

 

Nobody cares about collecting US dollars in exchange for real stuff, unless Pentagon provides the service of world police in exchange.

 

Is that clear?

Sat, 09/13/2014 - 16:37 | 5214427 ThroxxOfVron
ThroxxOfVron's picture

Have the Saudi bases been evacuated or closed?

WHO are the Saudis afraid of more than their own serfs and what makes you think that no one else -such as China- would protect them in return for reserve currency hedgemony?

Sat, 09/13/2014 - 16:40 | 5214432 ekm1
ekm1's picture

IRAN

Sun, 09/14/2014 - 08:20 | 5215683 GetZeeGold
GetZeeGold's picture

 

 

 

Probably gonna have to do something about those guys.....you know.....someday.

Sat, 09/13/2014 - 16:39 | 5214430 debtor of last ...
debtor of last resort's picture

Yes. Since 1971.

Sat, 09/13/2014 - 16:57 | 5214458 ThroxxOfVron
ThroxxOfVron's picture

http://militarybases.com/overseas/saudi-arabia/

 

"

http://militarybases.com/images/common_title.gif); background-color: #f6f5f0; font-family: Bebas; color: #333333; text-transform: uppercase; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: #fbfbf9; line-height: 1; background-position: 0px 0px; background-repeat: repeat no-repeat;">AIR FORCE BASES

Eskan Village Air Base

http://militarybases.com/images/location_tag.gif); background-position: 0px 0px; background-repeat: no-repeat no-repeat;">Riyadh, Saudi Arabia

http://militarybases.com/images/comment_bg.gif); background-position: 0px 2px; background-repeat: no-repeat no-repeat;">Comments (10)

While US military sites are scattered throughout various part of the globe, the country of Saudi Arabia does have the Eskan Village Air Base Saudi Arabia as a functioning and welcoming army base that serves both as long-term resid...

King Abdul Aziz Air Base

http://militarybases.com/images/location_tag.gif); background-position: 0px 0px; background-repeat: no-repeat no-repeat;">Eastern Province, Saudi Arabia

http://militarybases.com/images/comment_bg.gif); background-position: 0px 2px; background-repeat: no-repeat no-repeat;">Comments (1)

King Abdul Aziz Air Base is a Royal Saudi Air Force operated military installation. It is named in the memory of King Abdul Aziz, also referred to as Ibn Saud among the citizens. He lived between 1876 and 1953 and was the first mo...

King Fahd Air Base

http://militarybases.com/images/location_tag.gif); background-position: 0px 0px; background-repeat: no-repeat no-repeat;">, Saudi Arabia

http://militarybases.com/images/comment_bg.gif); background-position: 0px 2px; background-repeat: no-repeat no-repeat;">Comments (1)

King Fahd Air Base in an inactivated military airfield that currently serves for commercial and civilian flights. It holds the record for the largest and widest airport in the world, covering over 780 square km. It is located in t...

King Khalid Air Base

http://militarybases.com/images/location_tag.gif); background-position: 0px 0px; background-repeat: no-repeat no-repeat;">Khamis Mushayt, Saudi Arabia

http://militarybases.com/images/comment_bg.gif); background-position: 0px 2px; background-repeat: no-repeat no-repeat;">Comments (5)

King Khalid Air Base – also referred to as the King Khalid International Airport – is one of the closest airports to the Arabian capital Riyadh. It was designed and built by HOK, an architectural company that holds the credits...

Riyadh Air Base

http://militarybases.com/images/location_tag.gif); background-position: 0px 0px; background-repeat: no-repeat no-repeat;">Riyadh, Saudi Arabia

http://militarybases.com/images/comment_bg.gif); background-position: 0px 2px; background-repeat: no-repeat no-repeat;">Comments (8)

Riyadh Air Base, Saudi Arabia is one of the most important American bases due to the strategic location. It is right in the Middle East, giving the American troops the chance to easily support their potential invasions in the area..."

Sat, 09/13/2014 - 17:07 | 5214479 ekm1
ekm1's picture

Good for nothing if obama vetoes the order to defend

Sat, 09/13/2014 - 18:09 | 5214598 ThroxxOfVron
ThroxxOfVron's picture

Saudi paid fucksticks have learned to pilot planes before so I am told.

They probably know how to use all sorts of US supplied weapons.

ISIS and the 'moderate' Syrian Rebels certainly seem to catch on fast...

Sat, 09/13/2014 - 18:24 | 5214619 ekm1
ekm1's picture

again.......................IRAN

 

They fear Iran, which is 1000 times more dangerous than ISIS and wants to control oil flow in the middle east

Sat, 09/13/2014 - 18:38 | 5214647 ThroxxOfVron
ThroxxOfVron's picture

Iran?

What a paltry boogie man.

Saudi Arabia threateded nuclear-armed Russia with islamist insurgents around the time of the Olympics and you think that the Saudis are afraid of Iran?

Israel will shit on Iran FOR the Saudis.  They bombed the crap out of the ir centrefuges last year and will again if they think Iran is having any progress.

Sat, 09/13/2014 - 18:42 | 5214656 ekm1
ekm1's picture

Again.

We are down to INTERPRETING reality.

 

Iran is very powerful and wants to rule middle east.

Sat, 09/13/2014 - 19:13 | 5214744 ThroxxOfVron
ThroxxOfVron's picture

Iran has less than half the GDP of Saudi Arabia, little to negative real growth, and is purportedly experiencing domestic inflation of around 30%.  They are supposedly spending less than 3% of GDP on .MIL.

Saudi Arabia has more to fear from radicals seizing power in Pakistan or the nutjobs running North Korea.

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