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Eric Sprott On Unintended Consequences
By Eric Sprott and David Baker of Sprott Asset Management
Unintended Consequences (pdf)
2012 is proving to be the 'Year of the Central Bank'. It is an exciting celebration of all the wonderful maneuvers central banks can employ to keep the system from falling apart. Western central banks have gone into complete overdrive since last November, convening, colluding and printing their way out of the mess that is the Eurozone. The scale and frequency of their maneuvering seems to increase with every passing week, and speaks to the desperate fragility that continues to define much of the financial system today.
The first major maneuver took place on November 30, 2011, when the world's G6 central banks (the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank [ECB], the Swiss National Bank, and the Bank of Canada) announced "coordinated actions to enhance their capacity to provide liquidity support to the global financial system".1 Long story short, in an effort to avert a total collapse in the European banking system, the US Fed agreed to offer unlimitedUS dollar swap agreements with the other central banks. These US dollar swaps allow the other central banks, most notably the ECB, to borrow US dollars from the Federal Reserve and lend them to their respective national banks to meet withdrawals and make debt payments. The best part about these swaps is that they are limitless in scope - meaning that until February 1, 2013, the Federal Reserve is, and will be, prepared to lend as many US dollars as it takes to keep the financial system from imploding. It sounds absolutely great, and the Europeans should be nothing but thankful, except for the tiny little fact that to supply these unlimited US dollars, the Federal Reserve will have to print them out of thin air.
Don't worry, it gets better. Since unlimited US swap lines weren't enough to solve the problem, roughly three weeks later, on December 21, 2011, the European Central Bank launched the first tranche of its lauded Long Term Refinancing Operation (LTRO). This is the program where the ECB flooded 523 separate European banks with 489 billion euros worth of 3-year loans to keep them going through Christmas. A second tranche of LTRO loans is planned to launch at the end of February, with expectations for size ranging from 300 billion to more than 1 trillion euros of uptake.2 The good news is that Italian, Portuguese and Spanish bond yields have dropped since the first LTRO went through, which suggests that at least some of the initial LTRO funds have been reinvested back into sovereign debt auctions. The bad news is that the Eurozone banks may now be hooked on what is clearly a back-door quantitative easing (QE) program, and as the warning goes for addictive drugs - once you start, it can be very hard to stop.
Britain is definitely hooked. On February 9, 2012, the Bank of England announced another QE extension for 50 billion pounds, raising their total QE print to £325 billion since March 2009.3 Japan's hooked as well. On February 14, 2012, the Bank of Japan announced a ¥10 trillion ($129 billion) expansion to its own QE program, raising its total QE program to ¥65 trillion ($825 billion).4 Not to be outdone, in the most recent Fed news conference, US Fed Chairman Bernanke signaled that the Fed will keep interest rates near zero until late 2014, which is 18 months later than he had promised in Fed meetings last year. If Bernanke keeps his word, by the end of 2014 the US government will have enjoyed near zero interest rates for six years in a row. Granted, extended zero percent interest rates is not nearly as satisfying as a proper QE program, but who needs traditional QE when the Fed already buys 91 percent of all 20-30 year maturity US Treasury bonds?5 Perhaps they're saving traditional QE for the upcoming election.
All of this pervasive intervention most likely explains more than 90 percent of the market's positive performance this past January. Had the G6 NOT convened on swaps, had the ECB NOT launched the LTRO programs, and had Bernanke NOT expressed a continuation of zero interest rates, one wonders where the equity indices would trade today. One also wonders if the European banking system would have made it through December. Thank goodness for "coordinated action". It does work in the short-term.
But what about the long-term? What are the unintended consequences of repeatedly juicing the system? What are the repercussions of all this money printing? We can think of a few.
First and foremost, without continued central bank support, interbank liquidity may cease to function entirely in the coming year. Consider the implications of the ECB's LTRO program: when you create a loan program to save the EU banks and make its participation voluntary, every one of those 523 banks that participates is essentially admitting that they have a problem. How will they ever lend money to each other again? If you're a bank that participated in the LTRO program because you were on the verge of bankruptcy, how can you possibly trust other banks that took advantage of the same program? The ECB's LTRO program has the potential to be very dangerous, because if the EU banks start to rely on the loans too heavily, the ECB may find itself inadvertently attached to the broken EU banking system forever.
The second unintended consequence is the impact that interventions have had on the non-G6 countries' perception of western solvency. If you're a foreign lender to the United States, Britain, Europe or Japan today, how comfortable can you possibly be in lending them money? How do you lend to countries whose sole basis as a going concern rests in their ability to wrangle cash injections printed by their respective central banks? Going further, what happens when the rest of the world, the non-G6 world, starts to question the G6 Central Banks themselves? What entity exists to bailout the financial system if the market moves against the Fed or the ECB?
The fact remains that there are few rungs left in the financial confidence chain in 2012, and central banks may end up pushing their printing schemes too far. In 2008-2009, it was the banks that lost credibility and required massive bailouts by their respective sovereign states. In 2010-2011, it was the sovereigns, most notably those in Europe, that lost credibility and required massive bailouts by their respective central banks. But there is no lender of last resort for the central banks themselves. That the IMF is now trying to raise another $600 billion as a security buffer doesn't go unnoticed, but do they honestly think that's going to make any difference?6
When reviewing today's macro environment, we keep coming back to the same conclusion. The non-G6 world isn't blind to the efforts of the Fed and the ECB. When the Fed openly targets a 2 percent inflation rate, foreign lenders know that means they will lose, at a minimum, at least 2 percent of purchasing power on their US loans in 2012. It therefore shouldn't surprise anyone to see those lenders piling into alternative assets that have a better chance at protecting their wealth, long-term.
This is likely why China reduced its US Treasury exposure by $32 billion in the month of December (See Figure 1).7 This is also why China, which produced 360 tonnes of gold internally last year, also imported an additional 428 tonnes in 2011, up from 119 tonnes in 2010.8 This may also be why China's copper imports hit a record high of 508,942 tonnes in December 2011, up 47.7 percent from the previous year, despite the fact that their GDP declined at year-end.9 Same goes for their crude oil imports, which hit a record high of 23.41 million metric tons this past January, up 7.4 percent year-over-year.10 The so-called experts have a habit of downplaying these numbers, but it seems pretty clear to us: China isn't waiting around for next QE program. They are accelerating their move away from paper currencies and into hard assets.
Figure 1: China Hong Kong Gold Imports vs. US Treasury Holdings
Source: US Treasury, UBS
China is not alone in this trend either. Russia has reportedly cut its US Treasury exposure by half since October 2010 (See Figure 2). Not surprisingly, Russia was also a big buyer of gold in 2011, adding approximately 95 tonnes to its gold reserves, with 33 tonnes added in the fourth quarter alone.11 It's not hard to envision higher gold prices if the rest of the non-G6 countries follow-suit.
Figure 2: Russia US Treasury Holdings ($BN)
Source: Zerohedge.com
The problem with central bank intervention is that it never works out as planned. The unintended consequences end up cancelling out the short-term benefits. Back in 2008, when the Fed introduced zero percent interest rates, everyone thought it was a great policy. Four years later, however, and we're finally beginning to appreciate the complete destruction it has wreaked on savers. Just look at the horror show that is the pension industry today: According to Credit Suisse, of the 341 companies in the S&P 500 index with defined benefit pension plans, 97 percent are underfunded today.12 According to a recent pension study by Seattle-based Milliman Inc., the combined deficit of the 100 largest defined-benefit plans in the US increased by $236.4 billion in 2011 alone.13 The main culprit for the increase? Depressed interest rates on government bonds.14
Let's also not forget the public sector pension shortfalls, which are outright frightening. In Europe, unfunded state pension obligations are estimated to total
$39 trillion dollars, which is approximately five times higher than Europe's combined gross debt.15 In the United States, unfunded pension obligations increased by $2.9 trillion in 2011. If the US actually acknowledged these costs in their deficit calculations, their official 2011 fiscal deficit would have risen from the reported $1.3 trillion to $4.2 trillion.16 Written the long way, that's a deficit of $4,200,000,000,000,… in one year.
There is unfortunately no economic textbook to guide us through these strange times, but common sense suggests we should be extremely wary of the continued maneuvering by central banks. The more central banks print to save the system, the more the system will rely on their printing to stay solvent - and you cannot solve a debt problem with more debt, and you cannot print money without serious repercussions. The central banks are fueling a growing distrust among the creditor nations that is forcing them to take pre-emptive actions with their currency reserves. Individual investors should take note and follow-suit, because it will be a lot easier to enjoy the "Year of the Central Bank" if you own things that can actually benefit from all their printing, as opposed to things that can only be destroyed by it.
1 Board of Governors of the Federal Reserve System (November 30, 2011) "Coordinated central bank action to address pressures in global money markets".
http://www.federalreserve.gov. Retrieved February 15, 2012 from: http://www.federalreserve.gov/newsevents/press/monetary/20111130a.htm
2 Jenkins, Patrick and Oakley, David (January 30, 2012) "Banks set to double crisis loans from ECB". Financial Times. Retrieved February 15, 2012 from:
http://www.ft.com/intl/cms/s/0/09ab9542-4b6d-11e1-b980-00144feabdc0.html
3 Telegraph Staff (February 9, 2012) "Bank of England restarts QE with £50bn stimulus". The Telegraph. Retrieved February 16, 2012 from:
http://www.telegraph.co.uk/finance/economics/9071622/Bank-of-England-restarts-QE-with-50bn-stimulus.html
4 Fujikawa, Megumi and Ito, Tatsuo (February 14, 2012) "Bank of Japan Surprises by Easing, Setting Price Goal". Wall Street Journal. Retrieved February 17, 2012 from:
http://online.wsj.com/article/SB10001424052970204883304577222063451464968.html?_nocache=1329249611524&user=welcome&mg=id-wsj
5 Zeng, Min (February 10, 2012) "Fed's 'Operation Twist' Tangles Treasury Trade". Wall Street Journal. Retrieved February 15, 2012 from:
http://online.wsj.com/article/SB1000142405297020331580457721130304241603...
6 Wroughton, Lesley and Hughes, Krista (January 18, 2012) "IMF seeks more funds". Reuters. Retrieved February 14, 2012 from:
http://www.reuters.com/article/2012/01/18/us-imf-resources-idUSTRE80H0VU20120118
7 Mackenzie, Michael (February 15, 2012) "China anticipates Fed quantitative easing". Financial Times. Retrieved February 16, 2012 from:
http://www.ft.com/intl/cms/s/0/27a221be-57e4-11e1-b089-00144feabdc0.html#axzz1mSKyDrxw
8 Hook, Leslie (February 7, 2012) "China gold imports from HK surged in 2011". Financial Times. Retrieved February 14, 2012 from:
http://www.ft.com/intl/cms/s/0/d26cd2d6-518d-11e1-a99d-00144feabdc0.html#axzz1mH8V3yyg
9 Hook, Leslie (January 10, 2012) "China's copper imports hit record". Financial Times. Retrieved February 15, 2012 from:
http://www.ft.com/intl/cms/s/0/e8e76eda-3b68-11e1-a09a-00144feabdc0.html#axzz1mSKyDrxw
10 Bloomberg News (February 20, 2012) "China January Oil Imports Rise to Record 23.41 Million Tons". Bloomberg. Retrieved February 20, 2012 from:
http://www.businessweek.com/news/2012-02-13/china-january-oil-imports-rise-to-record-23-41-million-tons.html
11 World Gold Council (February 16, 2012) "Gold Investment Trends". World Gold Council. Retrieved February 17, 2012 from:
http://www.gold.org/investment/research/regular_reports/gold_demand_trends/
12 Scheyder, Ernest and Mincer, Jilian (January 26, 2012) "Analysis: Pension shortfalls a stark corporate challenge". Reuters. Retrieved February 15, 2012 from:
http://www.reuters.com/article/2012/01/26/us-corporate-pensions-idUSTRE80P03720120126
13 Milliman, Inc. (January 6, 2012) "Milliman analysis: Bad year for pensions ends badly". Milliman, Inc. Retrieved February 15, 2012 from:
http://www.milliman.com/news-events/press/pdfs/pfi-december-2011.pdf
14 Philips, Matthew and Campbell, Dakin (February 2, 2012) "Banks, Pensions are Squeezed as Fed's Low Rates Erode Profits". Bloomberg. Retrieved February 16, 2012 from: http://www.bloomberg.com/news/2012-02-02/banks-pensions-are-squeezed-as-fed-s-low-rates-erode-profits.html
15 Christie, Rebecca and Woodifield, Peter (January 11, 2012) "Europe's $39 Trillion Pension Risk Grows as Economy Falters". Bloomberg. Retrieved February 16, 2012 from: http://www.bloomberg.com/news/2012-01-11/europe-s-39-trillion-pension-threat-grows-as-regional-economies-sputter.html
16 Lawrence, Bryan R. (December 28, 2011) "The dirty secret in Uncle Sam's Friday trash dump". Washington Post. Retrieved February 14, 2012 from:
http://www.washingtonpost.com/opinions/the-dirty-secret-in-uncle-sams-friday-trash-dump/2011/12/28/gIQArtWMNP_story.html
»
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Gotta love Sprott!
The FED is just trying to give Lloyd a hand doing God's work ... I'm sure it will all work out just fine. I mean, it's not like they would do anything to intentionally screw us ...
God is a printer? Damn...You'd think He'd have something better to do than print paper all day.
There is no god.
There are/were many gods.. all invented by man for man.. They all demand faith for their continued existence.
same as fiat.
Good summary; I give you thumb up for this. Should be printed on bumper sticker.
A bumper sticker? It's ON YOUR MONEY ALREADY. "Read it and weep," baby. "Read it and weep."
Face it, where's the KY.......................... Were screwed
We should of took our medicine when it happened, or better yet, the writing was on the wall before it happened "could have been avoided, damn GREED".
There are history books, READ THEM. NOT the first time this has happened....
Maybe there is a reason that phony Jim Cramer drinks cheap Scotch in a fecal position on the cheap linoleum floor.
History teaches us that people don't learn from history. Sorry!
Remember, all the gods demanded the right to tax the believers. Even today the collection plate goes around every Sunday and the church asks a 10% contribution of your income.
God is like government, always hitting up the fools for more money.
The gods demanded the right to tax believers? Ha, that's pretty funny. Did you mean to say, the MEN who claim to be God's servants demand the the right to tax?
Jack Burton
Even today the collection plate goes around every Sunday and the church asks a 10% contribution of your income.
The Tithe(tenth) is not for Christians, it was meant strictly for the Jews.
IF you wish to give 10%, or really tithe,and follow all of the Law then you must follow the Jewish rules and regs( of which there were several, and amount to approx 30%+,not 10%.)
Christians are to give as they are prospered, as God blesses them, 10%-98% whatever you are led to do.
WE are not under the LAW. IF you are, you are not coverered by HIS gift of Grace.(Eph 2:8-9)
God is not hitting you or any man up for money.He doesn't need it.
dupe
10% of my income? f*ck that noise.
I'm going to the church with the pancake breakfast.
The International Church of Pancakes?
There is only one true god - the Flying Spaghetti Monster.
there is no hell,... than, who the heaven is satan
Only when you've experienced Hell on earth, do you believe in its existence.
It's Bernake of course. The proper way to address him is Chairsatan Bernanke.
you went full retard man...
http://www.youtube.com/watch?v=svwGRJA28lY
"There is no god."
There is no printer...
"Know Ye not that Ye are Gods?"
-Jesus
Jesus said that??? Chapter and verse?
Psalm 82-6,1 Cor 3-16, but He was quoting God, and did not assign CAPITOL "G" to this quote.
Men are sons of God, if they are In HIM.(Adopted sons)
Psalm 82 was written by the Psalmist. Jesus was challenging the Pharisees who rejected His claim to be the Son of God by quoting from their own law (John 10:34). But He did not call them Gods, but gods.
But some people are so anxious to deny the claims of a Creator upon them they will happily misquote in order to have back up their belief (or lack of such).
I thought he was referring to the other Jesus, you know, that guy that did his roofing job. Pronounced "Hey-Zeus".
"Know Ye not that Ye are "g"ods?",is scriptural not with a capitol letter.
Using Caps for Gods is taking the place of the I AM, scriptures never assign man as Gods...........There is but ONE GOD.
Pls name the Bible and scripture/verse for this using caps, for Gods.
If you do not mind.
He can't. Because it doesn't exist.
There is no spoon
There is god! She is black!
There is no god.
Spoken like a true believer.
PrintingPress
There is no god.
Small "g", your right, capitol "G"od, yes there is, and you will meet HIM.
I hope you do before you leave this world.
@DosZap
+1 from me.
Although there are many (small 'g') gods around.
Reading ZH, for many it would be Gold, Silver, Money, etc..
Idols. And government is the mother of all idols.
Everybody is born atheist. Until the brain washing starts.
Well, you have some powerful opposition to that statement...
"The FOOL hath said in his heart, there is no God" (Psalm 14:1)
Yeap because it is in the bible so it MUST be true. You just made my case.
Sorry, You will need to think for yourself and actually make a rational argument. Break the chains.
Entropy is increasing with more and more variables of control added to the system. Enough is being added that they can't see what unintended consequences will come from all this printing. I think it will be Hyperstagflation and economic implosion.
The section about public and private pensions is something I really wish more people understood. Fed says ZIRP until 2014 and people just shrug. If they knew the full impact of that they would be furious.
I do, and I am. And I'm not even part of a pension plan.
Me 3. Never participated in those "schemes." My house and car are paid for. No debts and some PM at the bottom of a nearby lake.
Fuck You Bernake. Better luck next time.
Sooner or later, they will understand. But by the time they figure it out, they will come to the realization that retirement will not happen.
So what you are saying is buying your own bonds doesn't create wealth? Fascinating.
http://www.youtube.com/watch?v=cFods1KSWsQ
"So what you are saying is buying your own bonds doesn't create wealth? Fascinating."
Does masturbation lead to pregnancy?
Depends where you put the by-product.
of course,... if you are a hermaphrodite
Jon Corzine bitchez!
It's Honorable Jon Corzine, bitchez!
honour amongst thieves
Bumma made a statement yet? ...add another
Don't you see it? We owe most of the FRNs to OURSELVES like the pension fund obligations. There is therefore no possibility of a crises, none. We can definitely keep this up indefinitely because we are The Worlds Greatest Empire (WGE). If those pip-squeak nations of China, Russia, Turkey and- ha ha ha - Iran want to trim out of the safest security on earth, The Bernanke will buy'em. And there's plenty of liquidity in the
G-6'rs. They will play ball with our paper 'til the cows come home. "Click, click!" the steel balls rotate loosely in the Captain's left hand as the First Mate stares in growing disbelief and the crew keeps their heads down as though they know nothing about the stolen strawberries.
Tyler, this should not the right way to represent a chart. Either you go with log or linear, not on a partial scale. This is very misleading.
Here is the response previously posted to just the same comment.
There is nothing misleading about suppressed zero plots, at least when the axes are labeled and show values as these do.
I disagree - Read Mises' The Theory of Money and Credit and Human Action, and then finish with Rothbard's Man, Economy, and State with Power and Market.
That's right. I gave you thumbs up. Also please read "It's different this time", by Rogoff. A study of consequences of financial folly over centuries. I thought this, myself; at once, of course there is an economic textbook, but you point it out just fine. thumbs up refuses to work; ?.
the theory goes, no up/down arrows when post begins with italics.
Appears to be more than just a theory.
It is the block quote, not the italics.
Man, Economy, and State with Power and Market
http://mises.org/books/mespm.pdf
Theory of Money and Credit
http://mises.org/books/tmc.pdf
Human Action
http://mises.org/books/humanactionscholars.pdf
Then there's the intended consequences!!! >=\
ING SAVINGS ACCOUNT
DATE DESCRIPTION
1/20/2009 Interest Rate Change to 2.374% (2.40% APY)
2/3/2009 Interest Rate Change to 2.178% (2.20% APY)
2/18/2009 Interest Rate Change to 1.835% (1.85% APY)
3/3/2009 Interest Rate Change to 1.638% (1.65% APY)
3/21/2009 Interest Rate Change to 1.490% (1.50% APY)
7/3/2009 Interest Rate Change to 1.391% (1.40% APY)
9/9/2009 Interest Rate Change to 1.292% (1.30% APY)
1/8/2010 Interest Rate Change to 1.243% (1.25% APY)
2/4/2010 Interest Rate Change to 1.194% (1.20% APY)
2/18/2010 Interest Rate Change to 1.144% (1.15% APY)
3/2/2010 Interest Rate Change to 1.095% (1.10% APY)
2/23/2011 Interest Rate Change to 0.995% (1.00% APY)
10/21/2011 Interest Rate Change to 0.896% (0.90% APY)
12/3/2011 Interest Rate Change to 0.847% (0.85% APY)
1/6/2012 Interest Rate Change to 0.797% (0.80% APY)
1/6/2012 Interest Rate Change to 0.797% (0.80% APY)
you mean
1/6/2012 Interest Rate Change to -4.797% (-4.80% APY)
This much we do know: "when the USA bailed out the euro-zone it greenlighted the takedown of the Iranian economy." That's why my personal view remains "these actions lead to far too predictable outcomes." In other words "bubbles galore" and "speculations gone wild." It's more than a little disengenuous for the Administration to complain about it. They have done NOTHING to deter these activities. As the Rolling Stone's said "it's just a shot away" and then you'll see all hell break loose.
"Unintended consequences." Right.
Yes no idea why we're focussing on the unintended consequences
The intended consequences of all this QE, to prop up shit bankers and crumbling asset values, are quite bad enough
Yeah... Why is Sprott calling intended consequences, or maybe consequences they don't give a fuck about, "unintended consequences"?
Snake pit.
But let me guess, we are going to muddle through?
The only thing missing is the imploding organic dollar supply chain; q the chart of the Japan trade balance
Responsibility to Protect (R2P) - First Bank Stocks, Then Libya, Now Syria Then....
Sprott just received 10 trucks full of silver. They dumped the silver in front of Sprot house as they were dumping mulch or top soil. Now, Sprot has to find buyers.
The buyers are out there....what is your other choice? dollars. euros .yen, crack cocaine?
That'll be really difficult.....thbpppp
"There is unfortunately no economic textbook to guide us through these strange times..."
Sure there is, right here: http://ebid.s3.amazonaws.com/upload_big/1/0/6/1302396386-10780-0.jpg
The unintented consequence of SENDING SEARS STOCK UP 60% SINCE DECEMBER!!!!
Seriously I give up. Sears FUCKING SEARS!!!!!!
What other fucked up, billion dollar losing, bankrupt company can we strap to an equity rocket sending millions of dollars directly into the pockets of FUCKING GARBAGE HUMANS LIKE THE EXECUTIVE DIRECTORS AT SEARS!!!!
Who is buying these stocks? Who can be that stupid? It boggles the mind. I'm not living in reality anymore. Somebody slipped me some bad drugs and I am having a nightmare trip.
They make a kick ass car battery, Tools and oven. Kenmore, Diehard and craftsman have been around a long time and a trusted name in my household for years, But also for my father rest his soul . I can remember that colossal craftsman tool cabinet when i was a kid . At my height back then, It seemed bigger than life. My father loved his Craftsman products. . Sears is a great fucking company. As far as the stock, I am also as puzzled as you. When this company goes, It will be a sad day.
But those tools all said Made In U.S.A. on them.
Some people on here probably don't use tools enough to appreciate the differences between craftsman, snapon etc and garbage from HarborFreight. It really is more than just a name. Now granted craftsman has built some cheesy shit over the years in other areas but it pretty much amounts to the old saying you get what you pay for. Wife just don't understand why id buy a $100 wrench set when I get one from HF for $20bux. Well darling.........when your upside down under the car and your cheap import rounds off the bolt head you might start to get a glimpse of my frustration using this garbage. I've even worked for contractors that buy this crap. I needed a sawzall one time, he went and bought 3 china equilvalents. 2 burnt up immediately. The other one didn't last long. Oh......and if you have success with one of those $5 angle grinders you are not a true metal man. I literally pressed down on one hard enough to bring the wheel to a complete stop and flames burst out the sides of the motor and was ruined not 3 seconds out of the box. I didn't even press down that hard. I have a 6" grinder/cutter called a Metabo from Germany and that SOB kicks ass ill cut your fucking car in half with it. That is if the car is a 2000 or newer model.
Craftsman is a good brand for tools but sadly there is still 80% of a Sears store filled with garbage. Not all Craftsman is created equal as well. Some is quality, some is made in China crap.
That is because they went into a stupid scheme of tool use. Therefore, they offered regular, craftsman and something like heavy duty.
They were trying to leverage their brand, but in the end they end it up destroying it. Just like the idiots at Micron computers in the 90s.
Sears was a great company. Sadly they have been led down a very dark path to the bottom of the abyss.
I'll tell you a short story. My dad ordered $10k wrth of kitchen appliances from Sears. He waited three weeks after the stuff was supposed to be in. He went to the store, didn't get anywhere. He called the store, didn't get anywhere. He did finally get in touch with the store manager. He told him, I bet you could call your own store and ask for my stuff and not get any answers. The manager says, I run a great store and we are a great company. I'll call you back with the status of your order. In an hour my dad got a call back, Sir you were right. I called my store and got the runaround from my own employees. I'll personally add a new order for you.
Two weeks later the appliances came. What never came was a bill. Good for my dad, but Sears lost $10k.
My rant was mainly tools, I pretty much share your thoughts such as why people would buy this crap stock. Probably just another bastard step child of Fed not wanting anymore bad headlines about one of the US longest lasting stores folding up. There is no making any sense out of any of it when it's out in the open these markets are being manipulated. As of yet, no market in human history that has been manipulated heavily ever survived. Do you think we set a precedent here? I highly doubt it.
Many people now a days don't believe me when I tell them that sears used to sell houses. One would order the kit which was sent to the property ready to be assembled. Many of those houses still around. Receiving a Sears catalogs was an event. Well, retail IS a cut throat business for sure.
I have fond memories as a kid in the early 1960's looking through the thick Sears catalog. Sears also used to sell 16'- 19' ski boats. Boat, motor and trailer sets as well as individual items. I really wanted my parents to buy a ski boat - never happened of course. But flipping through each new Sears catalog was quite an event.
Did anyone else notice Sprott sourced their chart of US Treasury exposure in Russia from Zerohedge?
ZH has often been right, but now ZH is a player, and Tyler should probably anticipate attacks on his credibility from political quarters rather shortly. He may not get the Full Assange treatment, but the pattern will be to scandalize or/then discredit, isolate, dispatch.
Tyler and team: don't be crossing any borders with a laptop, since they don't actually have to find anything to make an allegation that will destroy you. They could just launch an investigation into alleged unlicensed financial advice and leave it hanging over your heads, the IRS could come knocking, and that's the easy ones. Careful who you go home with, and don't allow yourself to be alone with any hotel maids either.
fuck off!!!
Just because you're NOT paranoid, doesn't mean they're not out to get you (or Tyler, for that matter!)
ZH has been referenced as a source by Santelli in one of his CNBC rants.
The Intention is Total Ruin of the USA fomenting nuclear war and depopulation of earth by 95%.
"Consequences? We don't consider no steenkeng consequences! Now geev us your money and your gold... Oh and "how much for the weemin?"
Sometimes when I'm sitting in a room full of people I'm overwhelmed by: a) the concept that we are all living creatures that will soon perish...forget about one's belief in God - awareness of death is a uniquely human experience and b) the triviality of the things we talk about.
Then I just wanna scream at them: WE only got one life to live. Let's make it count.
But then I realize that most people are motivated by fear (absolutely the #1 driver of mankind) and don't want to rock the boat. I probably fail to act because of this fear, too.
It's pretty pathetic. Wouldn't you agree, Lester?
At times I want to believe in a society worth saving, and want to give greens to the likes of Truth in Sunshine and Redpill until the cows come home.
Then I see comments from you and people of your ilk, and it just doesn't seem worth it. Unintended consequences of reading your nonsense, no?
The Doc at SilverDoctors interviewed Sprott on Sunday in which he stated Silver would become a currency again and
One of My Aims in Life is to Have a Silver Issue Where I Can't Source the Last Bar!http://silverdoctors.blogspot.com/2012/02/eric-sprott-one-of-my-aims-in-life-is.html
This article does a good job at painting a picture of "collapse under it's own weight".
Can all those pensions really be paid? This entire planet could burst into a riot.
I think most retirements are going by by. My 15 years of pension credit for a private industry are already in critical status. I had to cash out my 401k after being laid off 4 years ago. My house is paid off. Unless you actually did something on your own the majority of us will just go until we can't any longer and that's the end of the road.
I don't know you tell me.........but if the statistical whiz kids already project massive deaths due to the government trying to take care of us for decades and now suddenly can't, among other things, it seems another big war is in the cards. That's my opinion anyhow.
Hell I think nationwide $5gas could be enough to start using NDAA,let alone all the other shit that can happen. I don't care what the optimists say there's just too much evidence saying we're screwed.
You know what burns my butt? No matter what Clinton was or wasn't. We had the money in the 90s to privatize social security and send it on its way. Instead, they used the money to wage war. What an absolute waste.
Everything can be paid via Inflation. They will try for sure. If they succeed, they will pad each other on the back and call it a job well done. They will destroy the savers, investors, and all those Baby boomers who worked like a horse only to get the shaft at a time in their lives when they can least afford it. Talk about a harsh lesson.
Ur butt got burned? Say it ain't so!
Baby boomers - aka The Greatest Generation - are getting shafted sez xela2200. Get angry spacemonkeys!
LOL
http://www.youtube.com/watch?v=98WtmW-lfeE&ob=av2e
We are ALL getting shafted to different degrees and politicians are pining us against each other. You can't expect them to take responsibility right?
"In Europe, unfunded state pension obligations are estimated to total $39 trillion dollars..."
They are going to print like crazy. Better brace yourselves.
Yup. I've fully braced myself for America's Got Talent with Howard. I am looking forward to the show:
http://www.nbc.com/americas-got-talent/
Tyler - you let assclowns in right and left like the one above but you ban RobotTrader? Not cool dude.
Gentlemen, I do not understand what is the problem here... All right, the G6 central banks are printing money, devaluing their currencies. I get that. As nominal currencies are devalued the remaining real values such as gold, oil, natural resources can bought by anyone at the open market, so you will have to cancel those out in looking at G6 vs. not G6 problem.
If the things will get real bad and they will come to G6 countries vs. not G6 countries, whose military power do you think is greater? I'll easily bet on G6. In fact I can bet on US alone as its military bugdet is greater than the next 5 or 6 countries combined. So, what is the problem here? At the end of the day, if the G6 sovereign status quo needs to be enforced by the military power, I am sure that the status quo will prevail and the show will go on.
So, what is the problem with all that G6 debt?
So, what is the problem with all that G6 debt?
*************
If you think that military power has anything to do with human psychology regarding monetary trust-you are mistaken-
There were only two things that destroyed the empires of the past-
Debasing the currency (clipping) and military overreach-
At some point-should this bailout fiasco/secret little bastard wars continue-a major bond market will puke and then a currency crises will erupt-perhaps the JPY with 230% debt to GDP first?
All paper currencies are related--joined at the hip-
Should that happen-there is only one thing that can stop the currency contagion from spreading and that is not military power but a gold weighting and if that ever starts-you wont want to be on the sidelines-
The unintended consequence of Sprott selling PSLV is that it's more silver that exists as e-digits and another opportunity for the pigmen to play games with.
Nice to see Eric Sprott is an inspired reader of Macronomics:
http://macronomy.blogspot.com/2012/01/markets-credit-european-overdiagnosis.html
"The Year of the Dragon should be rebranded the Year of the European Central Bank, given the significant tightening in credit indices which we have witnessed in Europe since the beginning of the year as indicated by Bank of America Merrill Lynch research - The ECB trade - 17th of January"
Unintended consequences:
http://macronomy.blogspot.com/2012/01/markets-update-credit-law-of-unintended.html
http://pragcap.com/credit-update-the-law-of-unintended-consequences
You know it Martin T.
The first thing Sprott does in the morning is scour the web for your thoughts.
Fuck man, I'd almost read your blog if I thought it would get me anywhere but...
My comment was a tongue in cheek. ;-)
It is always nice to see important players like Sprott sharing the same analysis on the LTRO effect, FED swap lines and FOMC decision and thinking about the "uninted consequences" about these actions. It comforts one's opinion in this sea of "bullishness".
But you are right, reading the blog won't get you anywhere. It seems you lack basic skills such as picking up ironic comments.
Regarding federal pensions, they are considered an explicit liability, along with debt held by the public - the highest level of 4 obligations for the federal government to fulfill.
It is listed as a liability on the balance sheet at $5.8 trillion.
Does this mean that almost $6 trillion is needed today, to fully fund these pensions in perpetuity?
Also, does anyone have a handle on whether the cash outgo exceeds the cash income, as is the case with Social Security?
Don Levit
Don Levit,
Also, does anyone have a handle on whether the cash outgo exceeds the cash income, as is the case with Social Security
No idea, on Fed Pensions.I know 35,000 lucky souls are losing their cushy LIFETIME insured jobs w/the USPS though.
Also, The PoTUS,cutting the SS witholding tax rate from everyones paycheck to give everyone a few dollars more.HOW many here thinks that sucking even more dollars out ,that should go in, was a maganimous gesture in Kindness of Fiscal sanity?.
I believe it was another pre-planned way to make it even more insolvent,faster.
You can read more views of Eric Sprott in his tracking blog
http://ericsprottblog.blogspot.com