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Guest Post: Too Much Of A Good Thing Is Not A Good Thing

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Submitted by David Galland of Casey Research

Too Much Of A Good Thing Is Not A Good Thing

I am beginning to feel a bit like one of the French unfortunates stumbling through the fog in the Ardennes, circa 1914. Except that, instead of Germans full of deadly intent coming at me in the gloomy forest, it is a flock of black swans.

As it was for the French in the Ardennes, the number of problems – then Germans, now black swans – is becoming overwhelming.

Consider just a little of what we as investors, and as individuals looking forward to retirement in accommodations more commodious than a shipping box, must contend with:

  • The Euro-Stone. Despite all the bailouts and bluster flying about Europe, the yields in the wounded “piiglets” of Greece, Portugal, etc. have failed to soften to more tolerable levels. Worse, yields in the fatter PIIGS of Spain and Italy are hardening. This is of no small import to the German and French banks, which together are owed something like US$2 trillion by the porkers. At this point, it is becoming clear that the eurozone’s systematic flaws doom the euro to continue trending down until it ultimately takes its place in the pantheon of failed monies.
  • The Yen Has Lost Its Zen. This week the Japanese government again began intervening in currency markets because, remarkably, the yen has been pushed to highs against the dollar. This in a nation with a government debt-to-GDP ratio that is better than twice the also horrible ratio sported by these United States.

That ratio ensures that Japan’s long struggles will continue, burdened as it also is with the aftermath of the deadly tsunamis and the ongoing drama at Fukushima. Adding to its woes are the commercial challenges it faces from aggressive neighbors, and maybe worst of all, the demographic glue trap it is stuck in, with fewer and fewer young to pick up the social costs of the old. Toss in the waterfall plunge in Japan’s much-vaunted savings rate – formerly a big prop keeping Japanese interest rates down – and the picture for Japan is anything but tranquil.

  • China’s Crucible. There are many reasons for being optimistic about the outlook for China, including a large and hard-working populace. But there is one overriding reason to expect a big bump in the path to China’s emergence as the world’s reigning economic powerhouse.

Simply, it’s a capitalistic country with a communist problem.

Now, in the same way that some people believe in leprechauns or any of dozens of other magical beings, some people believe that an economy can be successfully commanded just as a captain commands the crew of a Chinese junk cruising along the coast. It’s a fantasy.

While the comrades in charge have done quite well – largely by getting out of the way of natural human actions – they are fast reaching the limits of their ability to navigate the shoals. As I don’t need to tell you, China is a massive country, with hundreds of millions of people capable of every manner of human strengths and frailties. But if they share one interest, it is in a job that allows them to keep their rice bowls full and a roof over their heads. Said jobs don’t come from government dictate – at least not on a sustainable basis – but rather by the messy process of free-wheeling commerce… and the more free-wheeling, the better.

In the July edition of The Casey Report, guest contributor James Quinn discusses the very real challenges facing China, not the least of which is that in the latest reporting period, official Chinese inflation popped up to 6.4%. Even more concerning was a 14% rise in the price of food.

Scrambling to keep employment high while also keeping inflation low, the Chinese government is throwing all sorts of ingredients into the mix – building ghost cities, raising interest rates, stockpiling commodities, clamping down on dissent, hacking everyone – but in the end, the irrefutable laws of economics must prevail. And so the Chinese government will have to atone for the massive inflation it unleashed in 2008, and for the equally disruptive misallocations of capital that are the hallmark of command economies.

While the blowup in China will wreak havoc in world markets, including many commodities, a bright side for gold investors is that the country’s rising inflation should help keep the wind in the sails of monetary metal. It’s no coincidence that the World Gold Council’s latest data show investment demand for gold in China more than doubling in the first quarter of this year.

  • Uncle Scam. Then there is the United States. Casey Research readers of any duration know the fundamental setup… The political avarice that dominates both parties… The fear and greed of John Q. Public and his steady demands that the government do more… The scam being run by the Treasury and the Fed to provide the funny money to keep the government running… The cynical attempts by certain politicians to stoke a class war… The cellars full of toxic paper at the nation’s financial institutions… The outright corruption and deceit of the various government agencies as they twist and torture the data to fool the people into supporting them in their scams.

But there’s a growing problem: An increasing number of people and institutions are coming to understand just how intractable the problems are. This has resulted in a steady move into tangible assets – gold, especially – that are not the obligation of any government. And it’s not just individuals and money managers moving into gold, but central banks as well. That is an absolute sea change from the situation even a few years ago.

Meanwhile, with the Treasury unable to borrow since May, a backlog in government financing needs has built up. Which begs the question: With the Fed standing aside (for the moment), where is the government going to find all the buyers for the many billions of dollars worth of Treasuries it needs to flog in order to keep the scam going?

If I were a conspiracy theorist, I might look at the sell-off in equities this week, triggered as it was by nothing specific, and see a gloved hand operating behind the curtain. After all, nothing like a good old-fashioned stampede out of equities to send billions chasing after “safe” Treasuries… which has been exactly the case this week.

Regardless, with the crossroads for hard choices now behind us, the global economy finds itself at the top of a long hill… with no brakes.

From here on, it will increasingly be every nation for itself – meaning a return to competitive currency devaluations and, in time, exchange and even trade controls.

And we will see a return of the Fed to the markets. On that topic, I will once again trot out a chart from an article by Bud Conrad that ran in The Casey Report a couple of years back.

I do so because it shows what I think is a very strong corollary between what occurred in Japan after its financial bubble burst and what is now going on here in the U.S. (and elsewhere). As you can see, as a direct result of the Japanese central bank engaging in quantitative easing, the Japanese stock market bounced back strongly. But then, when the quantitative easing stopped, the market quickly gave back all its gains.

(Click on image to enlarge)

If I had the time and the resources to whip up a chart overlaying the quantitative easing here in the U.S. of late versus the equity markets, I would. But I don’t, and so will delve into that fount of all information – the Internet – and grab a chart constructed by someone else (in this case, Doug Oest, managing partner of Marquette Associates – thanks, Doug!)

As one can readily see, the Japanese experience is indeed a corollary to what’s happened here, with QE pushing the stock market higher. Conversely, until the Fed comes back in, equities could be in for a rough ride. Likewise, when the Fed returns with the next round of QE, stocks could put in a very nice rally.

(Click on image to enlarge)

Some conclusions:

  1. The Fed will have to roll out another round of quantitative easing. And it will likely have to once again provide swap lines to the European central banks as it did in 2008 – though this time around, a belligerent Congress is watching the Fed’s every move, so it may not be able to move as quickly as it would have otherwise. In the end, however, given there is less than nothing being done on the front of fiscal policy, it will fall to the Fed to once again ride to the rescue. But it will do so on a lame horse.
  1. A delay by the Fed to act could help the Treasury, at least temporarily. Per above, the U.S. government has to move a boatload of paper by the end of this year. If it wants to avoid the dire consequences of having to pay out higher yields in order to attract sufficient buying, it will have to find a lot of demand in a hurry. Should the Fed sit on its hands a bit longer, especially in the face of the escalating euro crisis, the resulting turmoil in global equity markets could provide the necessary demand to clean up the backlog and keep the U.S. government operating.?(In July’s Casey Report, Bud Conrad dissects the situation and comes to some startling conclusions… and an emerging profit opportunity.)
  1. The return of the Fed may signal the beginning of the end. In the face of broad weakness in the global economy and in most commodities, the fact that gold has held up so well is a clear indication that there has been an intrinsic change in the gold market. Barbarous relic no more, it has clearly been returned to its longstanding role as sound money – unique and increasingly valued when compared to the fiat competition.

This role will only become more crucial as the world’s desperate nation-states fire their currency cannons in the war to remain viable. The Fed’s return to Treasury markets will be, in the rear-view mirror of future history, seen to be a seminal event – the beginning of the end of the current fiat monetary system.

Simply put, too much of a good thing is too much of a good thing. And make no mistake, the decades of operating under a fiat monetary system have been a very good thing for the political classes and their pandering cronies.

Those good times are coming to an end.


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Fri, 08/12/2011 - 21:48 | 1556196 km4
km4's picture

terrific post and agree with conclusion

Fri, 08/12/2011 - 22:04 | 1556230 FEDbuster
Sat, 08/13/2011 - 00:02 | 1556445 malusDiaz
malusDiaz's picture

Winter is coming

Sat, 08/13/2011 - 00:19 | 1556463 caerus
caerus's picture

and with the winter come clouds...and patience...and scorn...

Sat, 08/13/2011 - 03:11 | 1556617 Michael
Michael's picture

You would think the Republicans at the debate, were running for President of Israel.
Except for Dr Ron Paul.

Dr. Paul mentioned at the debates last night Israel had nuclear weapons.

And today, in an interview, Ron Paul said; "well, Israel has 300 of them".

Starting at about 3:00 in this video of the interview, you can see and hear those words said by Dr Paul himself.

This is an amazing video.

Ron Paul Trying To Break 100 Years Of Brainwashing 

Sat, 08/13/2011 - 04:44 | 1556697 Pay Day Today
Pay Day Today's picture

I've always been so-so about RP, having assumed that he was just a plant by the establishment to provide a distraction and vain hope to the people who "get it". But now he has my undivided attention.

Sat, 08/13/2011 - 14:42 | 1557357 Prometheus418
Prometheus418's picture

I've been a fan of Dr. Paul for years- but now I'd rather he retired than gain the presidency.  I'd fear for his safety if he was actually elected, and odds are he'd be saddled with all the blame for the mess we're in.    

Better to just have another useless clod to accept the punishment for this trainwreck.

Sat, 08/13/2011 - 17:51 | 1557562 FEDbuster
FEDbuster's picture

I will vote for Ron Paul in the primary.  If he doesn't win, Obama will get my vote in the fall.

Restore the Republic, RON PAUL 2012


Hasten the Collapse, OBAMA 2012

Sat, 08/13/2011 - 10:24 | 1556972 Heroic Couplet
Heroic Couplet's picture

I thought Ron Paul was going to grill Ben Bernanke in front of Congress. Did Ron Paul decide to punt to Dylan Ratigan? Do we have to wait until Alan Grayson runs again and gets elected?

Sat, 08/13/2011 - 15:10 | 1557401 Nathan Muir
Nathan Muir's picture

Ron Paul has grilled Bernanke, and every other FED chairman in the last 30 years.  His consistency and voting record is unparalleled in the US Congress, perhaps in US history.  Ron Paul has done more for the cause of individual liberty and freedom than any other person I can think of.  I volunteered in his 2008 campaign and plan on helping out next year.  Instead of bitching why don't you pitch in for the cause?  Ultimately, it is only the people, the individuals, which can restore our country to what it was intended to be.

Sat, 08/13/2011 - 18:31 | 1557636 Wild tree
Wild tree's picture


But, but, but how about American Idol, and the great job the MSM does on letting us know how peachy-keen things are right now? I'm content to let the "politicians" take care of us, as long as the checks don't stop coming. Now where is that dang remote..... Sarc off

"Ultimately, it is only the people, the individuals, which can restore our country to what it was intended to be." Yes Nathan, that is true. Sadly, most of those that could be counted on to do the right thing are dying off faster than they are being replaced. Individual self-sufficiency and personal responsibility seem to have "Gone with the Wind". I too have volunteered in trying to make things right, but the need is so great and the volunteers carrying the water seem to be old, and few. Keep up the good fight Nathan, in the hope that it does not become literal. I don't see it any other way unfortunately; the fight can't help but get real when the dollar defaults. We are seeing a tame preview in Great Britain right now, and that is only over entitlements. Imagine the color when it is over lack of food.

Sat, 08/13/2011 - 08:53 | 1556901 Long-John-Silver
Long-John-Silver's picture

2011 Seasons of Change: Arab Spring, Euro Summer, American Fall, Winter Reset.

Sat, 08/13/2011 - 04:45 | 1556698 Escapeclaws
Escapeclaws's picture

You make me want to barf!

Fri, 08/12/2011 - 21:52 | 1556200 Cult_of_Reason
Cult_of_Reason's picture

A Six-Point Plan for Ending the Debt Crisis,1518,779984,00.html


Also FoxNews has been reporting tonight about a coordinating action in works between the Fed and ECB that will put an end to the EU crisis and guarantee a soft landing in the US that Clinton incidentally leaked to them -- US will help to bailout EU banks. What's up with that?

Fri, 08/12/2011 - 21:56 | 1556213 Ahmeexnal
Ahmeexnal's picture

World's Taxpayers to bailout EU banks.


Fri, 08/12/2011 - 22:03 | 1556223 Cult_of_Reason
Cult_of_Reason's picture

FoxNews (Nightly Scoreboard) says, US taxpayers (Bernanke using taxpayer money) will help to bailout/backstop EU banks.

They said, it was the reason for the stock market being up today.

Sat, 08/13/2011 - 02:35 | 1556571 snowball777
snowball777's picture

And you believed them? Buahhahaahahaha!

Sat, 08/13/2011 - 06:45 | 1556847 Smiddywesson
Smiddywesson's picture

But don't we already know that the Fed has already done exactly that with $16 trillion, much of it going to foreign banks?  Why should we expect any different behavior in the future?

If any lesson should be clear by now, they will spend anything to kick the can.  No costs are too high.

The only thing the centrral banks are doing that doesn't involve kicking the can is amassing gold.  Hmmm?

Sat, 08/13/2011 - 10:58 | 1557006 snowball777
snowball777's picture

Not to mention the liquidity swaps, but it was the "market going up" causal ponderance that really made the coffee fly out my nose.

I'm not sure on the "return to the gold standard" thesis (I've read your other posts to that effect)...most of them already have plenty of gold (in theory, at least) and while it may be leased far and wide, don't they only need to continue their debasement in order to achieve the goals you've stated for them? Why the need to accumulate more? If its proper gearing to the multi-trillion dollar economy isn't that just a matter of picking a ridiculously high number per toz?

Sat, 08/13/2011 - 15:12 | 1557399 Pegasus Muse
Pegasus Muse's picture

"FoxNews (Nightly Scoreboard) says, US taxpayers (Bernanke using taxpayer money) will help to bailout/backstop EU banks."

So how is this any different than the under-the-table money printing & bailouts the Fed's been doing all along? 

Senator Bernie Sanders:


The Fed Audit


Share This

July 21, 2011

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse.  In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo.  The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."

To read the GAO report, click here.


Fri, 08/12/2011 - 22:35 | 1556286 Cult_of_Reason
Cult_of_Reason's picture

Official US Bailout of European Banks in the Works

Gasparino on Fox Business reports Obama, Treasury and the US government is discussing how to backstop the European banks. That means the US taxpayer guarantees Euro debt. Gasparino says they will be working hard all weekend to get it done.

Fri, 08/12/2011 - 22:51 | 1556302 Caviar Emptor
Caviar Emptor's picture

Told ya 2 yrs ago: Ben will bail the world. It's inevitable. And (best of all) it won't stop. Because a pail with a hundred holes in it needs constant refilling. He'll have to start all over again soon enough. 

Sat, 08/13/2011 - 00:00 | 1556433 Cult_of_Reason
Cult_of_Reason's picture

If ECB and the Fed simultaneously monetize (print money) a trillion of debt each (coordinated QE), EUR/USD cross will not change (though gold will go parabolic from two trillion of fiat injected into the system).

Sat, 08/13/2011 - 05:58 | 1556783 CosmicBuddha
CosmicBuddha's picture

Gold is going to $56,000-$60,000 an ounce by the end of this fiat bond bubble nonsense.

Sat, 08/13/2011 - 08:57 | 1556902 Long-John-Silver
Long-John-Silver's picture

This will not be the first time Gold has reached the high plateaus.

Gold Mark in Paper Marks.

Sat, 08/13/2011 - 01:08 | 1556509 macholatte
macholatte's picture

Didn't we read right here on ZH that nearly all of QE2 went to bail out the EU, or did I miss something?

So, if that is correct, what's the big surprise? Isn't the American tax payer the sucker of first resort, the chump who gets his pocket picked, insulted, spit on and still comes back for more?

Sat, 08/13/2011 - 06:12 | 1556788 Moe Howard
Moe Howard's picture

The European Banksters own us. Benjamin Shalom Bernake is their agent. We are a cow to be milked. AIG was used as a funnel for billions of dollars of taxpayer cash to Europe. We the voters control nothing, as seen in the 2010 election, which has had zero effect on economic policy.

They will drain us dry and blame us for the problem. That's how these parasites have worked for hundreds of years. Name one Rothschild who was in a death camp in WWII.

Sat, 08/13/2011 - 23:52 | 1558280 CompassionateFascist
CompassionateFascist's picture

Rumor has it that one of the younger RedShields had to hide out in a haystack in France for awhile. Not surprising that Nazis went EZ on Rothschilds and other rich, Zionist collaborators; 3rd Reich got plenty of finance via Rothschild cognate Mantagu Norman at BOE during 1930s. South African/Brit Zionists also bought Churchill during same timeframe, and there's your World War.

Sat, 08/13/2011 - 00:01 | 1556442 Herbert Philbrick
Herbert Philbrick's picture

Well, if it's on Fox News and reported by Gasparino, it must be true.  

Sat, 08/13/2011 - 03:31 | 1556636 kito
kito's picture

tyler woudve covered something that big, dont know if we should make anything of it.

Sat, 08/13/2011 - 06:48 | 1556849 Smiddywesson
Smiddywesson's picture

Why not?  We can't even guarantee to pay our own debt, why not their's too?  

In fact, I can guarantee we can't pay our debt.  So it doesn't matter who we backstop.  Hell, let's backstop Japan's debts, they could use some assistance.

Fri, 08/12/2011 - 23:14 | 1556353 ViewfromUnderth...
ViewfromUndertheBridge's picture

Did you read those six points?

From (aptly titled) No. 2: " euro-zone officials could even replace those of individual nations to perform duties such as collecting taxes and implementing plans to cut costs and privatize state assets"

They tried a similar arrangement in 1939 (though they called it a different name), it ultimately met with some resistance and had considerable human and social costs.

Despite my more optimistic contribution below, if this is truly the state of their thinking this thing is fucking over.

Fri, 08/12/2011 - 23:49 | 1556419 Cult_of_Reason
Cult_of_Reason's picture

It is surreal. Basically, this German economist proposes, we will lend you more money so you can pay interest on your debt to our bankers, but in return you will allow us to occupy your country.

It just shows how f*cked up this European experiment is.

Fri, 08/12/2011 - 23:59 | 1556436 Spitzer
Spitzer's picture

If you  think the ECB is fcuked up more then the Treserve then you know nothing about central banking.

Sat, 08/13/2011 - 00:13 | 1556458 wisefool
wisefool's picture

+1 Dammned straight. And those who dont realize that ... as much as the EuroTrash are playing out the doughboys with PhDs from universities that were founded by the crown .. better understand that Sun Tzu and Ghengis Khan invented the fork, sold it to the Europeans, and now laugh at them while they eat.

Sat, 08/13/2011 - 06:16 | 1556797 Moe Howard
Moe Howard's picture

Yes, having your mouth in a bowl and using two sticks as shovels is superior. What fools the Europeans are. Now get back in the rice paddy, fool.

Sat, 08/13/2011 - 06:20 | 1556821 Pay Day Today
Pay Day Today's picture

East Asia will have the last laugh.

They've always understood Westerners as mercantile barbarians after all is said and done.

Sat, 08/13/2011 - 17:54 | 1557568 ping
ping's picture

That's great, honey. Now why don't you fish a dollar from your purse and go get me a sandwich?

Sat, 08/13/2011 - 06:52 | 1556850 Smiddywesson
Smiddywesson's picture

German payback for French occupation of the Rhineland.  We are stuck in replay mode.

Sat, 08/13/2011 - 01:38 | 1556522 Mactheknife
Mactheknife's picture

>What's up with that?  It's like this...most Euro banks are owned or controlled in some part by the Rothchild cartel...that's right, decendents and partners of the original father and sons.  They also own a big part of the JP Morgue (they helped JP get his start) which in turn owns the Federal Reserve and they bought out the rest of our government a long time ago. Get it? That's not tin foil stuff, that's history. They would just rather you didn't remember that.

Sat, 08/13/2011 - 02:42 | 1556580 Escapeclaws
Escapeclaws's picture

Horrible plan. He wants to make those EU politicians have even more power. We need to take power away from politicians. I'm convinced that politicians are the worst sort of people. How did we get rooked into trusting them with our welfare?

Down with politicians--the scum of the earth!

Sat, 08/13/2011 - 09:07 | 1556910 slicktroutman
slicktroutman's picture

Consider most politicians are lawyers........scum becomes scum....

Sat, 08/13/2011 - 06:17 | 1556801 Lord Welligton
Lord Welligton's picture

It would be foolish to expect that even a perfect implementation of these six measures could solve all aspects of the debt crisis for ever. There will always be governments that don't keep to what they've agreed to do, as well as others that continue piling up debt. These proposed solutions are practical, but not perfect.

Neither will they be able to prevent the next crisis. But they would help to make it less likely -- and, if worse comes to worst, they'll make it easier to deal with the consequences.

It's all nonsense.

Can only be achieved by Totalitarian Government.

Good luck with that.

In the words of GW Bush. "This sucker's goin down".

Only a matter of time.

Sat, 08/13/2011 - 06:40 | 1556844 Smiddywesson
Smiddywesson's picture

A six point plan to end the debt crisis and a Fed ECB coordinated action to put an end to the EU crisis?

I have a three point plan

  1. kick the can
  2. Buy as much gold as possible
  3. Announce a "gold standard" and ramp gold prices so everyone who doesn't hold gold sees their net worth track inversely to high manipulated gold prices.

Gold, tomorrow's stealth tax for those that don't hold it.

Sat, 08/13/2011 - 10:40 | 1556989 ISEEIT
ISEEIT's picture

You of course do not believe that Fed intervention globally is either new or anything more than a prop right? The effort to support the EUR above 1.40 has been a global (globalist) hot potato for quite some time now. If the E.U experiment were (when it does) implode, with that goes agenda 21 and the whole elitist framework for single, centralized global governance. All the 'generals' have been participating. The IMF bid to hold EUR/USD over 1.42 all of Friday. They are scared as hell (which is likely the origin point of their souls) of the grand design collapsing. This shit has been in the works for a very long time. How long is debatable. The fact that globalist have this agenda and that the agenda has achieved a significant percentage of their goals is not debatable. It is history.

Of course the Fed is propping the EUR. Even the Chinese elite have been brought into this game, although it does appear that they may be ready to pause for a bit and reconsider an alliance with the western bankers.

My skin in the game is that ultimately this EUR/USD battle is lost. EUR takes a hit to near parity. Just a battle though. The war will go on.

Fri, 08/12/2011 - 21:53 | 1556202 Ahmeexnal
Ahmeexnal's picture

And now, the Chi-Chi riots.




Chile's government is about to collapse. Fascist Pinera is already less popular than Pinochet.

Fri, 08/12/2011 - 22:08 | 1556238 kito
kito's picture

whaaaaaat!!! chiles govt is about to collapse?!?!? simon black told me its the greatest place in the world to live!!! a house for $100 with mermaids in the swimming pool!!! the police give children lollipops!!!!chilean inflation protection bonds!!!!!! i poured every dollar into the country through all those nice people that simon introduced me to!!!!! it cant be!!! NOT chile!!!!!

Sat, 08/13/2011 - 03:42 | 1556643 Vic Vinegar
Vic Vinegar's picture

Way to bring it as you usually do dude.  Good stuff here.

Sat, 08/13/2011 - 06:24 | 1556833 Moe Howard
Moe Howard's picture

Hey, I didn't hear about the mermaids in the swimming pool! Is it too late to get in on Chile?

Sat, 08/13/2011 - 11:49 | 1557088 Rodent Freikorps
Rodent Freikorps's picture

The bottom half is a fish, you know.

Sat, 08/13/2011 - 22:21 | 1558158 kito
kito's picture

so thats why the house was only 100 bucks!!

Sun, 08/14/2011 - 15:42 | 1559358 Lower Class Elite
Lower Class Elite's picture

Hey, fish need lovin' too.

Sat, 08/13/2011 - 09:03 | 1556905 SamuelMaverick
SamuelMaverick's picture


Fri, 08/12/2011 - 22:32 | 1556284 Spitzer
Spitzer's picture

I am sure a 40% rise in the Yuan would calm them down. Deflation in everything they need.

Fri, 08/12/2011 - 22:55 | 1556308 Caviar Emptor
Caviar Emptor's picture

And it ain't just's here at home: (get yer helmet)

Teen Mob Violence Sparks Curfew in Philadelphia


Bay Area Transit Police Cut Mobile Service to Thwart Protest

Fri, 08/12/2011 - 23:21 | 1556364 JW n FL
JW n FL's picture


Police / Nazi Pigs with now License to harass young black men or children?? this should go well!! LOL

Great INFO!! Thanks!!!

FaceBooked and Tweeted!

Fri, 08/12/2011 - 23:29 | 1556378 Caviar Emptor
Caviar Emptor's picture

Yup. They conveniently soft-peddled it so citizens wouldn't notice. 

WHen was the last time we had a curfew here in the US of A? The Molly Maguires? 

Fri, 08/12/2011 - 23:41 | 1556405 JW n FL
Sat, 08/13/2011 - 00:22 | 1556468 Kali
Kali's picture

last I can remember was the 70's.  Where I grew up in the Midwest, and most of the midwest for that matter, anyone under 18 could not be out on the street without a parent or guardian.  The cops would pick you up, but they usually didn't arrest you.  They would call your parents to pick you up at the station and then you would get your ass kicked when ya got home.

Sat, 08/13/2011 - 06:33 | 1556841 Moe Howard
Moe Howard's picture

We have a curfew for those under 18 right here, right now. It never went away. I grew up in Chicago, guess what, teenagers did not roam the streets after midnight back then. The cops would bounce a nightstick off your head if they saw you. I know, they did it to me.

Sat, 08/13/2011 - 06:23 | 1556832 Pay Day Today
Pay Day Today's picture

A timely reminder as to what the authorities can do to your mobile and internet coverage any time they choose to. Old fashioned comms people.

Sat, 08/13/2011 - 06:58 | 1556855 Smiddywesson
Smiddywesson's picture

Don't worry, the kids of New Orleans will resort to signal fires, big ones.

I love this city, so creative.

Sat, 08/13/2011 - 02:46 | 1556590 Escapeclaws
Escapeclaws's picture

That's what we need in the US: pot clanging.

Sat, 08/13/2011 - 11:03 | 1557010 ISEEIT
ISEEIT's picture

Give me a break dude! You don't think this is a CIA op or banker/leftist alliance? Can't have true free markets. True free markets don't tolerate leftist looters for long.

Growing up is hard to do. Being free is even more difficult. The default position is becoming a mindless mercenary/useful idiot/whore for some charlatan who promises you an easy life.

That is crap.

That is the formula used to get us to where we are today.

The left sure does have it down to a science though eh? Give the idiots enough to survive, steal the rest. When they ask for more, tell 'em they are greedy.

The political left represents parents who have 30 year old children living rent free in their basement.

Pretty creepy really.

Fri, 08/12/2011 - 22:06 | 1556217 Spitzer
Spitzer's picture

The Euro-Stone.

Up from 1.20 to 1.45 since it made the cover of TIME magazine.

Stayed above 1.40 as the DOW fell 600 points

Stayed above 1.40 as SocGen fell 18%

And Casey Research goes with consensus of the rest of the financial community saying "the dollar is the best of the worst fiat currencies"

Even though the Euro is a net creditor with no trade deficit, even though the Euro is the first non nation state currency, even though the ECB has 10,000 tons of gold and the fed has none. Even though countries still want to join the Eurozone and hand over their gold to the ECB.

I guess even Casey Research didn't do their reseach

Fri, 08/12/2011 - 22:06 | 1556231 snowball777
snowball777's picture

And if the EFSF is to save the FIBS?

What will they buy all those bonds with again?

And if they don't?

I'd wait a little bit before taking that victory lap, least until...October.

the trees are stripped bare
from all they wear
What do I care?

kingdoms rise
and kingdoms fall
but you go on
and on
and on...

Sat, 08/13/2011 - 00:16 | 1556256 Spitzer
Spitzer's picture

The ECB can print Euros and redistribute purchasing power via devaluation but it is not a debtor in itself.

In the dollar world, the treaury is not only the biggest debtor, but it is also the biggest printer.(via the Fed) Call it the Treserve

See the diffrence ?

The ECB is a central bank.     

About 27% of the record $5.3 trillion held in foreign currency reserves by central banks is now in euros. I see a new reserve currency coming.....

Sat, 08/13/2011 - 02:03 | 1556548 snowball777
snowball777's picture

And how does that devaluation play out across the heterogenous 'union'? What's good for good for Germany?!

Does that 1.40 hold in the face of the printing required to keep the PIGS from sinking into the Med (or Channel)?

The ECB is a central bank with MPD and getting consensus on either beefing up the EFSF
or at least accepting non-AAA collateral will be even more fun to watch than Special Olympics: Debt Ceiling Edition.

Yes, many dollar reserve holders are dropping it like it's hot; a new reserve currency may be coming, but if it does,
it will be from the IMF, not the ECB, and most likely in the form of SDRs with the Yuan and Gold added to the basket.


Sat, 08/13/2011 - 03:46 | 1556649 AnAnonymous
AnAnonymous's picture

US states have also divergent economic conditions.

Comparing Europe to the US is moot. They are different gangs driven by the same ideology: US citizenism.

US citizenism is what has pushed the world into the current situation, a quagmire with no future perspectives save even more US citizenism.

Sat, 08/13/2011 - 03:57 | 1556658 DaBernank
DaBernank's picture

Agreed snowball, I've tried to tell spritzer about this before, the ECB does not have 10,000 tons of gold, it has only 550, the rest of Europe's gold belongs to and remains with the nations. Nationalism runs strong here and there will be blow back from the European electorate against the EU project. This does not excuse the FED.

Sat, 08/13/2011 - 09:17 | 1556920 Spitzer
Spitzer's picture

100% dead wrong


Line one of the ECB balance sheet - 10,000 tons of gold.

Sat, 08/13/2011 - 09:15 | 1556919 Spitzer
Spitzer's picture

I don't have time for details but mark my words.


The SDR is a product of Bretton woods. You are just speculation on bullshit.

Sat, 08/13/2011 - 11:05 | 1557014 snowball777
snowball777's picture

I'm not speculating on was suggested by the PBoC themselves, Spitzy. The EU can't even agree on whether they want to keep using the damn will the entire world?

I've placed my bet on the fate of the Zooro. Time will tell, and not much time at that.

Fri, 08/12/2011 - 23:30 | 1556386 Goatboy
Goatboy's picture

Why havent you rated article accordingly?

Sat, 08/13/2011 - 02:49 | 1556600 Escapeclaws
Escapeclaws's picture

Isn't the ECB owned by the Rothschilds and the Warburgs, like the Fed?

Sat, 08/13/2011 - 06:39 | 1556842 Moe Howard
Moe Howard's picture


Sat, 08/13/2011 - 07:03 | 1556859 Smiddywesson
Smiddywesson's picture

The ECB may have 10,000 tons of gold, but we have freedom fries.

If they are telling you they have 10,000 tons, it is probably closer to 20,000.

The Fed and the Treasury have had 4 years to replace that gold, do you really think they have been idle while all the central banks have been buying?

Does anyone think central banks buying, all at once, is a coincidence?  Or that the price of gold and silver is the real, unmanipulated price?

Then why do people think at the heart of the conspiracy they are not stacking gold like crazy?  

Fri, 08/12/2011 - 22:02 | 1556221 JW n FL
JW n FL's picture


Amidst a financial and economic crisis, Congress has reached its summer recess and many representatives are going to Israel.

Altogether, 81 Congressmen and women have announced their one-week trips, paid for by the American Israel Education Fund, a non-profit affiliate of the American Israel Public Affairs Committee.

Fri, 08/12/2011 - 22:07 | 1556233 disabledvet
disabledvet's picture


Fri, 08/12/2011 - 23:48 | 1556417 JW n FL
JW n FL's picture

when the Hippies start voting with bullets instead of sitting around getting stoned all day! then we will have some real change!

Fri, 08/12/2011 - 22:02 | 1556222 buzzsaw99
buzzsaw99's picture

Should the Fed sit on its hands a bit longer, especially in the face of the escalating euro crisis, the resulting turmoil in global equity markets could provide the necessary demand to clean up the backlog and keep the U.S. government operating...

It won't be that easy. There are a bunch of people who will sell bonds and buy stocks in that case. The end may be closer than even the author believes.

Sat, 08/13/2011 - 03:25 | 1556629 kito
kito's picture

@buzzsaw--the end may not be as close as you think based on actions, not words by european banks

shockingly, nobody ran to the fed this week

Fri, 08/12/2011 - 22:03 | 1556226 disabledvet
disabledvet's picture

I farted and i can't get up.

Fri, 08/12/2011 - 22:07 | 1556234 snowball777
snowball777's picture

Sarin? I told you not to eat Chipotle.

Fri, 08/12/2011 - 23:07 | 1556333 Shirley Wilfahrt
Shirley Wilfahrt's picture

This chocolate starfish has been singing the blues all day....


Sat, 08/13/2011 - 00:24 | 1556472 Kali
Kali's picture

Cheesy Bastard!  Is this you? 

Sun, 08/14/2011 - 00:03 | 1558296 CompassionateFascist
CompassionateFascist's picture

"Hoster Wilfahrdt and his band will play." Google him. He wuz for real.

Fri, 08/12/2011 - 22:06 | 1556232 PulauHantu29
PulauHantu29's picture

The French are staring at anotherAgincourt in the face:

Fri, 08/12/2011 - 22:10 | 1556235 Tejano
Tejano's picture

Thanks, Doug, Inc. But you lost me with the 'black swan' part. If I remember my Taleb, the black swan is unpredictable; small probability and huge consequences (could be good or bad). Then you present another laundry list of very predictable sure-things. You won't see the one that gets ya'.

Your time is better spent  pumping and dumping gold miners.

Fri, 08/12/2011 - 23:24 | 1556369 mayhem_korner
mayhem_korner's picture

Nuance - Taleb presents the black swan as wholly unforeseeable from the standpoint of those conditioned in Mediocrastan.  If one understands the concept of Extremistan, and (Taleb's view of) the fractal patterns of events, then black swans are not unexpected, even if the precise triggering events are unforeseeable.

This article would be viewed by those in Mediocrastan as an obscure and radical analysis.  But in Extremistan (reality), it is as you say a laundry list of predictable things.

So I agree nominally that black swans are unpredictable, but suggest that perhaps you and others here are viewing things with a far more informed view of what reality is.

Sat, 08/13/2011 - 00:17 | 1556464 Tejano
Tejano's picture

The list makers (whatever their motivation) are, at best, pointing toward some of the fragility that makes a complex, leveraged and non-robust 'system' so vulnerable to the shocks delivered by those pesky cygnets.

Sat, 08/13/2011 - 01:51 | 1556532 Pay Day Today
Pay Day Today's picture

Indeed. The MSM is the purveyor of Mediocrestan in this instance. How shocked and indignant they were that there could have been a downgrade. How greatly relieved that Congress came to an agreement on the debt ceiling. Ratigan screaming and yelling at the shor termist insanity of the political leadership.

And here at ZH it was just another day at the local Extremistan office.

Sat, 08/13/2011 - 02:52 | 1556604 Escapeclaws
Escapeclaws's picture

I could use a few more white swans at this point. White swans are the black swans, these days.

Sat, 08/13/2011 - 07:13 | 1556863 Smiddywesson
Smiddywesson's picture

A lot of people don't see the one that will get them.

Central banks are buying gold and literally ruining their balance sheets to kick the can.

Soverign nations are doing the same thing.

Probably nothing....go back to sleep America

The world's most ruthless people amassing huge hordes of gold and destroying their paper health doesn't alarm mom and pop, but it scares the hell out of me.  It probably won't end in tears for anyone not holding gold, there will be a better tomorrow I'm sure.  They do, after all, have our welfare in mind, with an uppercase W, for Welfare.

Fri, 08/12/2011 - 22:10 | 1556239 baby_BLYTHE
baby_BLYTHE's picture

Pretty much everything is bullish for gold. The market has continued to call bullshit on Benocide's claim that "gold is not money"

Negative-real interest rates through 2013 guarantees gold (at least) $3000k by 2013. 

We are in very dangerous territory here, the Federal Reserve and Federal Government care nothing about the currency nor the savings of the average American. 

We must stop the FED before they totally collapse the dollar and wipe out the purchasing power via Hyper-Inflation of every man, woman and child in this nation. Dangerous times indeed.

Fri, 08/12/2011 - 22:34 | 1556285 Mike2756
Mike2756's picture

There has to be a monster dollar rally coming with this type of sentiment out there.

Fri, 08/12/2011 - 22:42 | 1556292 baby_BLYTHE
baby_BLYTHE's picture

hmmm, not sure about that. This is clearly not a repeat of 2008.

Before when we had this type of market volitility to the downside the dollar would rally hard and the PM complex would be crashing hard. That is not happening anymore. 

Gold is now the "de-facto" reserve currency and viewed as a safe haven in the same vain as government bonds.

The FED has made their point, in the face of Deflation they will print and print and print and print some more. That is why the dollar has barley moved, the market is slowly beginning to discover the fact the US dollar is not a safe store of value in these uncertain economic times.

Of course I could be dead stinkin' wrong, I have only been studying and learning about this stuff for the past two years or so. I am just giving an opinion. 

Fri, 08/12/2011 - 22:58 | 1556312 Caviar Emptor
Caviar Emptor's picture

Before when we had this type of market volitility to the downside the dollar would rally hard and the PM complex would be crashing hard. That is not happening anymore. 


Fri, 08/12/2011 - 23:50 | 1556420 LongBalls
LongBalls's picture

And double checked.

Sat, 08/13/2011 - 06:11 | 1556786 CosmicBuddha
CosmicBuddha's picture

IMHO I think you are dead right. With the completely reckless and irresponsible behaviour of all the central banks, we can only expect one outcome: gold is going into the stratosphere. Expect some serious manipulation by TPTB along the way though. Buy some of the yellow stuff and hold onto to your hat. Yee Haaaa!  

Sat, 08/13/2011 - 07:29 | 1556870 Smiddywesson
Smiddywesson's picture

Dead on BabyB

None of the actions of TPTB make any sense at all unless we accept gold as the answer.  Everything they have done has just bought time, but at an incredible cost to the banks and nation state's balance sheets.  The only thing central banks and governments are doing that does not involve buying time is amassing gold, and they are all doing it at the same time.  They would have to be insane to be plowing money into gold at the very time when they need liquidity unless they know that gold is going to be very, very valuable and necessary in the future.

All they have to do is to kick the can, buy up all the gold, announce a new "gold standard" whatever that means, and ramp the price of gold to the sky.  Instant solvency. The reason the Fed is willing to destroy its balance sheet to bail out foreign banks is because it either knows the sums involved will be dwarfed by the profits they stand to gain when we institute a new financial system, or they know those sums will never be paid.  The same goes for the government.  Ramping the value of gold digs them out of the debt situation they have created, and it also serves as a stealth tax on the little guy,  because a bigger measuring stick means the currency you have in your pocket that is backed by gold shrinks accordingly.  This will be an instant stealth tax, just the reverse of the inflation stealth tax used for 100 years to rob us.  They will slowly let that gold go out onto the marketplace, deflating the value of everything else and putting that value in their pockets.

As for gold crashing, that's a pipe dream.  If it drops, rogue entities that have promised this conspiracy not to buy more than their allotment sneak in and buy up the excess.  My guess would be China.  Leaving the old system behind must really infuriate them.  We just had two margin drops and an incredible amount of manipulation and gold finished the day only $60 off its low.  They can't stop it.

Sat, 08/13/2011 - 00:12 | 1556459 ViewfromUnderth...
ViewfromUndertheBridge's picture

Thanks Mike... people selling inherited jewelry, that must be the smart money crowd.


Sat, 08/13/2011 - 02:06 | 1556551 snowball777
snowball777's picture

Nobody said it was the original owners who were "cashing it in".

Fri, 08/12/2011 - 22:55 | 1556307 WonderDawg
WonderDawg's picture

We're entering a new phase in a deflationary depression. We have much terrain to cross before hyperinflation appears on the horizon. Gold will see $1000 again before it hits $3000. At least, that's what I'm preparing for.

Sat, 08/13/2011 - 00:24 | 1556470 baby_BLYTHE
baby_BLYTHE's picture

if you are placing any bets on Gold hitting $1000 before rising to $3000/oz, prepare to have your head handed to you in a paper bag.

We have been hearing the imminent deflation thesises for years now, yet it never happens. The FED just keeps printing destroying our currency, purchasing power and causing all life essentials to rise significantly in price. This is not say I don't welcome deflation- an increase in purchasing power. Obviously inflation is far worse and punishes those who have been responsible. The FED just won't let it happen

Sat, 08/13/2011 - 00:51 | 1556494 WonderDawg
WonderDawg's picture

You know, I appreciate the fact that you're interested in what's going on at such a young age, and it sounds like you've taken some steps to educate yourself. But, your perspective is somewhat limited by your lack of experience, and you evidently haven't looked at the history of the markets any further back than when you started studying it 2 years ago. You'll learn, if you keep an open mind and seek out different opinions and examine different perspectives. You have a ways to go yet.

Your confidence in making such pronouncements betrays your lack of true understanding. No one knows what's going to happen with any certainty, and I study the perspectives of a lot of people who know a lot more than you do. I've studied both sides of the argument for inflation/deflation. I happen to believe that this bubble can't be reflated, and there will be liquidations across just about every asset class, including PMs. Time will reveal the truth.

Stating an opinion is one thing, but couch it as an opinion, rather than fact. Your habit of stating your opinion as a certainty grows tiresome. But, seriously, I'm glad you're here and learning, because we're going to need people like you to be on the forefront of the rebuilding effort. My one suggestion to you is keep an open mind.


Sat, 08/13/2011 - 00:59 | 1556499 slewie the pi-rat
slewie the pi-rat's picture

jeeez, dawg!  she's no better or worse than you, altho you are less edgy these past coupla months since the silver psychoses.

you and i have gone round 'bout this b4:  some people do not trade PMs.  they are simply not for now.  The End.

Sat, 08/13/2011 - 01:01 | 1556502 slewie the pi-rat
slewie the pi-rat's picture

oh~~you have made some great call, btw, dawg. you are a batting champ, right now.  i'll give you that!

but, you're no baby_B!

Sat, 08/13/2011 - 01:06 | 1556508 WonderDawg
WonderDawg's picture

Thanks, Slewie, but I'm not trying to dis her. She's going to be a leader one day, just trying to provide a little perspective. Anyone who states their opinion as fact grates on my nerves, though. I try to always offer my opinion as just that, opinion, though I'll admit I can be passionate. I enjoy b_B's posts, and yours as well. We're all just trying to figure this shit out, right?


Sat, 08/13/2011 - 01:13 | 1556514 slewie the pi-rat
slewie the pi-rat's picture

yep!  but people who don't trade don't really care about the prices.  unless they want to buy more.  but i have the same peeve, and have gone ape-shit more than once asking people why~~ if they can tell the damned future~~why arent they at the race track?

people have made fortunes fading my calls!  L0L!

Sat, 08/13/2011 - 01:25 | 1556518 WonderDawg
WonderDawg's picture

That's exactly my thing, I want to buy more, so I'm watching the price. I have some physical and could make a tidy profit if I sold, but that's not what I bought it for. I'm keeping my powder dry for the right time. Gold might not have topped yet, it may jump up over 2K before it drops, but I don't think it will make it to 3K. But of course, that's just my opinion, right? Ha! I've been wrong before but I'm pretty confident in the scenario I've drawn up. But if I knew for certain what was going to happen, I'd be typing from my yacht in the Keys while getting a rubdown from a pair of blonde Swedish twins with immaculate racks. Instead, I'm going out on the lake on my waverunner tomorrow with a semi-cute middle-aged dame. Ah, hell, could be worse I guess. Next week should be interesting though, eh?


Sat, 08/13/2011 - 04:06 | 1556664 slewie the pi-rat
slewie the pi-rat's picture

i love the keys!  when that shit went down in the gulf, i was physically ill, thinking about it!  hemingway's islands in the stream?  Yay!

once, when i was in a coin shop, a 70-ish woman walked in w/ a suitcase full of gold coins.  the dealer started counting the rolls of ounces in the nice plastic "shells".  i was stupified, pretending to look at proof sets down the line from them, only the 3 of us in the store.  i figured 25-30 pounds, conservatively.   gold had just hit $700

within a few months, a dealer who was letting me cherry-pick his boxes of walker halves, suddenly cuts me off, saying he sold all his US "junk" silver coins, including the walkers. 30 years' worth!  he has a hand-truck with boxes stacked on it, and some others by his feet.  he tells me, sorry, the truck will be by in abt ten minutes to deliver to the buyer.  silver was @ ~$13.00

both these people had met their "investment" goals and were making decisions about the future.  they were both intelligent, experienced PM mofo's and they each did what was right, for that person, that day. 

but, a semi-cute middle-aged dame on a wave-runner?  wheeee!

Sat, 08/13/2011 - 03:02 | 1556607 Escapeclaws
Escapeclaws's picture

Actually, bB is well-informed and seems to be in some kind of relativistic time warp in terms of the speed at which he has even assimilated the way he expresses himself on this blog. As for me, I'm still in my training <|.

Sat, 08/13/2011 - 03:45 | 1556646 Vic Vinegar
Vic Vinegar's picture

Didn't see this comment before I ran my mouth/fingers off re: BB...nice work Escapeclaws.

Sat, 08/13/2011 - 04:06 | 1556659 Escapeclaws
Escapeclaws's picture

Thanks mucho, Vic. I'm hoping it will give me its avatar in its various poses on leaving ZH. Of course, I'd probably change the name to Turingperson or suchlike.

Sat, 08/13/2011 - 09:04 | 1556906 DonnieD
DonnieD's picture

"I happen to believe that this bubble can't be reflated, and there will be liquidations across just about every asset class, including PMs."

What will they be liquidating their assets into?

Sat, 08/13/2011 - 09:44 | 1556941 WonderDawg
WonderDawg's picture

Dollars, to pay off their dollar-denominated debt.

Sat, 08/13/2011 - 03:43 | 1556645 Vic Vinegar
Vic Vinegar's picture

I thought you were quitting Zero Hedge BB...what is your boyfriend doing as you continue to enlighten us with these comments?

Sat, 08/13/2011 - 15:55 | 1557443 baby_BLYTHE
baby_BLYTHE's picture

I never said I was going to leave, only that I was thinking about it due to the lack of quality comments that once graced ZH pre- Flash Crash 2010.

My boyfriend is not around. He is touring with his band and will be on the road for the next three weeks. 

Fri, 08/12/2011 - 23:11 | 1556346 Diogenes
Diogenes's picture

If gold is not money maybe that is why it is valuable.

Sat, 08/13/2011 - 02:08 | 1556554 snowball777
snowball777's picture

If the things you say are heard by others, maybe that's why they're not.

Sat, 08/13/2011 - 12:20 | 1557148 toady
toady's picture


That should have been the retort when the bernak said gold is not money.

Sat, 08/13/2011 - 00:27 | 1556476 Seer
Seer's picture

So, you're saying that we should protect the fiat USD?

Why is failure a bad thing?  It's going to happen no matter what.  There is NOTHING backing the USD!  It's all fantasy land.  Thing will come clean.  No reason to attempt to put lipstick on the pig.  Pensions, savings, poof! and it's gone!  Let a tear go and move forward...

Fri, 08/12/2011 - 22:11 | 1556240 williambanzai7
williambanzai7's picture

The expression "Black Swan" is misunderstood and overused.

What we are seeing now is not unexpected. If there is any Black Swan at this moment, it is the magnitude of stupidity in leadership. But then again, that is no surprise either.

Black Swan has been twisted by TPTB into a fancy excuse for their myopia.

Fri, 08/12/2011 - 23:39 | 1556403 lawrence1
lawrence1's picture

Good point.  These are not even gray swans.  A black swan would be the discovery of a cheap way of making gold, a political candidate who would address the real problems and survive and be elected.  No one really reads Taleb, one of the most provocative minds around... and he acknowledges the prredecessorss of his ideas.  I would really be interested to know how he has influenced some of the readers here.

Sat, 08/13/2011 - 00:06 | 1556450 Kynortas
Kynortas's picture

The take-away point I got from Taleb was not to assume log normal distributions in returns. However, it's not easy conducting statistical analysis on a non-normal basis. Econometrics forces everything into a normal distribution!

The second interesting observation I made after Taleb was volatility clusters. High volatility cluster in short duration periods. Usually but not always outlier 'black swans' occur in these clusters.

Sat, 08/13/2011 - 00:18 | 1556465 ViewfromUnderth...
ViewfromUndertheBridge's picture

That our historical narrative is goal-seeked with hindsight, fractal nature of markets and bad shit is gonna happen!

Sat, 08/13/2011 - 00:00 | 1556435 slewie the pi-rat
slewie the pi-rat's picture

i see what you mean, _7, and the point is well made.

however, there hasn't been too much that has come down that hasn't been predicted by someone, including the birth of christ.

d.g. seems to be using the black swans in the fog of the ardenne forest to develop the idea of unintended consequences everywhere, i think. and i like what he does with the idea of this incredible battleground, almost like the battle of the wilderness in the US civil war.  it's pretty difficult to defend oneself, when you can't see what's going on!  where's your platoon or squad?  strange noises.  people tossing severed heads around.  explosions.  wounded and dying.  who knows?  and everybody on both sides is in the same mess, too!

i read this earlier on another site, but i did not notice that his conclusions abt the FED were numbered 1, 1, and 1!

1) The Fed will have to roll out another round of quantitative easing.
1) A delay by the Fed to act could help the Treasury, at least temporarily.
1) The return of the Fed may signal the beginning of the end.

pretty good, and kinda like black swans, too, maybe~~the dynamics of these "choices" for the FED

the last piece i saw that tyler put up by marc faber~~he too, stressed the FED's balance sheet, and the fact that it's pretty "far out there" right now, after the last 3 years, and the chairsatan, like everyone else, is starting to wonder wtf?, realize his mojo ain't what it usta be, and that there might be unintended consequences to trying to do too much, too fast, here.

Sat, 08/13/2011 - 00:33 | 1556482 Seer
Seer's picture

"there might be unintended consequences to trying to do too much, too fast, here."

No, it's about uncontrollable consequences.  And, just what is being done, really?  I'd argue that the ONLY thing that can do anything is time, but sadly demographics ain't going to pull through on this account: not going to generate enough young ones to pay for the future that we overbought... and then there's the issue of depleting natural resources, the things that economics really doesn't want to admit it's part of (and ultimately constrained by).

Sat, 08/13/2011 - 01:27 | 1556519 slewie the pi-rat
slewie the pi-rat's picture

or, you could also have said, perhaps:  yes, it is about uncontrollable consequences. 

what is being done = muddling thru = we are doomed

so what?  why get too down about it?  enjoy the java & weed;  the flowers;  the fights

a few years ago, it broke.  and it ain't fixed, yet.  people began to realize we had had one heluva run, since WWII, say, overall.  and that we couldn't go back.  but even tho the damned glass obviously isn't even half full, right now, it's not empty, either.

small is beautiful
do more with less
may the circle be unbroken
grow (in the best meaning of the word, not the profane)
or die

Sat, 08/13/2011 - 12:37 | 1557167 toady
toady's picture

More young ones, more growth, more of anything just ain't gonna work.

There needs to be a move to sustainability and away from consunption(growth).

Sorry to go all eco-friendly... I haven't had my coffee yet...

Sat, 08/13/2011 - 03:14 | 1556619 Escapeclaws
Escapeclaws's picture

Too bad Bernanke is still the Fedhead. Just think, if he were not, we would know what he really thinks. You know,it's the fashion now for former Fedheads to try to make amends for all their serving of the light-bearer during office.

Sat, 08/13/2011 - 00:11 | 1556449 dwdollar
dwdollar's picture

Still, the analogy is very amusing (to me anyway).  I envision a giant flock of black swans flying swiftly through the trees and fog.  Determined, with beady black eyes, they honk incessantly and it echoes for miles around them.  With each second they draw nearer to their target.

Meanwhile, in a village called Sunshine, Uncle Scam is too busy stealing candy from little kids to notice the fog rolling in.  Your time is almost up, you old thieving bastard.

Sat, 08/13/2011 - 00:30 | 1556478 Kali
Kali's picture

Angry birds?   Isn't that an app?

Sat, 08/13/2011 - 02:12 | 1556556 snowball777
snowball777's picture

Do note the Orwellian subtext of the pigs (just look at that shoddy socialist construction!).

Fri, 08/12/2011 - 22:10 | 1556241 kito
kito's picture

im tired of hearing about japan japan japan!!! apples and oranges!!! dumplings and hot dogs!!!!!

Fri, 08/12/2011 - 22:24 | 1556267 Spitzer
Spitzer's picture

I agree. Japan is a creditor export nation.

So that makes the Yen second to the Euro. So not only is the Euro fundamentally better then the dollar, but so is the Yen.

Fri, 08/12/2011 - 23:45 | 1556407 Falcon15
Falcon15's picture

I respectfully disagree. No fiat currency is fundamentally better than any other, period. Gold is money. Fiat is unicorns and skittles.

Sat, 08/13/2011 - 01:59 | 1556543 Pay Day Today
Pay Day Today's picture

Be that as it may, a fiat currency backed by a highly productive high-tech real economy experiencing trade surpluses is going to be better than a fiat currency backed by financial fraud and expensive weapons.

Sat, 08/13/2011 - 02:19 | 1556560 snowball777
snowball777's picture

Then why haven't those awesome trade surpluses helped them grow out of their liquidity trap?

And someone needs to stage an intervention on their addiction to (ill-fated) interventions on behalf of their 'better' fiat currency.


Sat, 08/13/2011 - 06:34 | 1556840 Pay Day Today
Pay Day Today's picture

IMO Japan fell into the same trap of bailing out TBTF. They should have applied extensive debt moratoria. Some of the mortgages still being paid off have 100 year terms. Crazy stuff, echoes of a massive asset bubble popping.

One thing with Japan however - they never allowed their GDP to collapse and they never allowed their unemployment rate to reach crisis or chronic levels.

In other words, they secured the basis of their society even if they have not been able to secure a basis for renewed economic growth.

(Mind you, I think that being able to hold out against a rapidly modernising industrial China and South Korea over the last 20 years is a magnificent achievement in itself).

Sat, 08/13/2011 - 11:13 | 1557025 snowball777
snowball777's picture

Agreed, they did whatever was necessary to keep a lid on it...the monetary equivalent of their handling of Fukushima, in a sense, but they've gotten away with their debt to GDP ratio only because of how much public debt is held internally, but sitting on a growing powder keg is not equivalent to safety.

I have some admiration for the investment Japan made in re-training workers and such (analogous to the work-sharing schemes in Germany that have made them resilient to the GFC), but kicking the can is still avoiding the core problem of the debt just like the TBTF in the US and their mark-to-myth balance sheets.

Chickens will come home to roost. It's when, not if.

Sat, 08/13/2011 - 13:03 | 1557218 toady
toady's picture

Very good, right up till the last two words.

Those 'expensive weapons' will win out in the end. That is, if the US actually has the balls to use them.

Depopulation is good for sustainability.

Sat, 08/13/2011 - 00:26 | 1556475 Oh regional Indian
Oh regional Indian's picture

The Yen has been nothing more than the hand-maiden to the Dollar since WWII.

It (carry trade) has been as much a fulcrum of global ponzi-finance as the petro-dollar.

It's definitely Appres to Appres.



Sat, 08/13/2011 - 01:52 | 1556529 slewie the pi-rat
slewie the pi-rat's picture

well, i see your point, in the relative economies and the political & monetary situ's since '45 or so. 

but, if i can tear people away from your link to crop circle craziness, you, especially, pls consider this:  when you trade, you trade:  you give something to get something.  this, in itself, is not a ponzi scheme.  you can trade whatever's in your pocket (rupees?) for what you want to buy.  or, you can pledge the rupees at the broker's and trade yen for what you want.  or milk. 

i don't get the moral issue, here;  but, maybe it's a cultural thing, my blindness.

imho, the yen was a very stable currency and well-suited to be the short.  till things changed.  you can pledge your rupees, sell an ETF, and use the proceeds to buy a milk contract.  fungibility?  you decide what to trade for what, based on your research. or needs.  or  whatever.  who cares? 

there is a market (herd+/herd-) mentality to these choices, but if you're gonna trade, you hafta trade something for something.  i don't think that trading the assets is quite the same as earning them or creating them, or ponzi-ing them, and the carry trade is...a trade. 

other than that, i guess you're right:  ain't it just awful!

Sat, 08/13/2011 - 03:18 | 1556622 Escapeclaws
Escapeclaws's picture

Are you dissing crop-circles?

Sat, 08/13/2011 - 03:30 | 1556632 slewie the pi-rat
slewie the pi-rat's picture


why don't you read it again, and decide for yourself.  (hint:  i have been known to chide people abt the amount of fuking advertising and self-promotional spam they deposit outa their digestive systems onto zH;  why don't you look @ ORI's last 20, 50, or 100 posts, and see for yourself how you like the constant links to...himself!  i like ORI and think he has some great posts, but i also think some of the stuff he puts up is just an excuse to spam, is not well-thought, and comes outa the same place as the constant links to...himself!)

Sat, 08/13/2011 - 04:16 | 1556666 Escapeclaws
Escapeclaws's picture

I used to go to his site. There was a good prophesy by Cathartes Aura there about Fukashima or something before it happened last March. However, I got kind of disenchanted with Ori's pooh-poohing of science. I don't believe he's a Luddite, but killing science is killing the human imagination as far as I'm concerned. Might as well go after music and art while yer at it.

Sat, 08/13/2011 - 05:23 | 1556728 slewie the pi-rat
slewie the pi-rat's picture

ORI made a heluva call a short while ago based on mercury going retograde!  and, he nailed it! 

joe's spouting charts, mary's spouting macro, we're in a "debt crisis" and ORI waltzes in with an astrology call and wipes out the whole freaking table!

i was here, i saw it, and it happened!  after ORI made the call, tyler comes up with a nice  analysis of doom in one of his intro's and i blogged that what he said was fine, but had he considered mercury going retrograde, too?  and then the bottom fell out!

what a universe!!!

Sat, 08/13/2011 - 13:49 | 1557292 Bananamerican
Bananamerican's picture

"killing science is killing the human imagination as far as I'm concerned. Might as well go after music and art while yer at it."

Music and Art provide a counterbalance to science....

Science seeks to resolve the Mystery

Art conjures It....

Do NOT follow this link or you will be banned from the site!