There can be little doubt from recent actions that China is preparing herself for the demise of the dollar, at least as the world’s reserve currency. Central to insuring herself and her citizens against this outcome is gold. The West selling its stocks of gold has become the biggest strategic gamble in financial history. We are committing ourselves entirely to fiat currencies, which our central banks are now having to issue in accelerating quantities. In the process China and Russia have been handed ultimate economic power on a plate.
Across the entire curve, credit spreads on JCPenney are exploding. The curve is inverted with the market indicating an almost 50% chance of default within the next 2 years (specifically in 2014 as opposed to pre-2013 Xmas). The stock price is collapsing further (though we suspect a gaggle of analysts calls to catch the accelerating knife - just as we saw last time). At $6.30, this is the lowest stock price since March 1981, on the back of yet another downgrade (this time with a $1 target) by none other than the same Mary-Ross Gilbert who proclaimed the most recent quarter a success and suggested buying the debt in just August.
Several hours earlier, news broke that a bomb had exploded on a bus in the southern Russian city of Volgograd, a few hundred kilometers from Sochi where the winter Olympics will be held. Russian investigators announced they suspect a female suicide bomber was responsible for the bombing which killed at least five people according to Interfax. Citing a source in the regional Investigative Committee office, Interfax said identity documents belonging to the suspected bomber were found near the site and that she was believed to have been the wife of an Islamist militant. Below, we show the dash cam video which caught this terrorist act in process.
Israel Central Bank Follows Fed With First Woman Chairman Appointment After Larry Summers' RejectionSubmitted by Tyler Durden on 10/20/2013 07:45 -0500
We can only imagine to what depths of misogynistic hell Larry Summers' ego must have tumbled after women ended up overtaking him as heads of not one but the two central banks he was slated to head within a month.
Public corruption, based on all the evidence, appears rampant. And the ranks of those convicted in office have swelled to absolutely unacceptable levels. State Senators as well as State Assemblymen; elected officials as well as party leaders; city council members as well as town mayors; Democrats as well as Republicans.
- Preet Bharara, U.S. Attorney for the Southern District of New York
It’s no surprise that New York is exceedingly corrupt. It’s a huge city, with a ton of wealth and massive income inequality. That’s basically the primary breeding ground for wide-scale corruption. However, it also comes as no surprise that the situation has gotten a lot worse in recent years. After all, NYC is the headquarters of some of the largest financial institutions in the world. As such, some of the worst actors in the recent financial collapse call the city home. The whole world watched as these criminals and shysters not only evaded criminal charges, but were also rewarded trillions of dollars of public support for their efforts. The example was set. Crime pays, and now the entire city seems to be following their lead.
In this exclusive interview with Birch Gold Group, former Congressman Ron Paul shares his opinions on a number of topics, including investing in physical gold and silver, the future of the U.S. dollar and the role of the Federal Reserve.
“The longer [Quantitative Easing] lasts, the worse the correction will be when eventually people give up on our dollar and give up on our debt.”
JPMorgan Chase has had a bad year. Not only has the bank just reported its first quarterly loss in more than a decade; it has also agreed to a tentative deal to pay $4 billion to settle claims that it misled the government-sponsored mortgage agencies Fannie Mae and Freddie Mac about the quality of billions of dollars of low-grade mortgages that it sold to them. Other big legal and regulatory costs loom. JPMorgan will bounce back, of course, but its travails have reopened the debate about what to do with banks that are “too big to fail.” We now have a global plan, of sorts, supplemented by various home-grown solutions in the US, the UK, and France, with the possibility of a European plan that would also differ from the others. In testimony to the UK Parliament, Volcker gently observed that “Internationalizing some of the basic regulations [would make] a level playing field. It is obviously not ideal that the US has the Volcker rule and [the UK has] Vickers…” He was surely right, but “too big to fail” is another area in which the initial post-crisis enthusiasm for global solutions has failed. The unfortunate result is an uneven playing field, with incentives for banks to relocate operations, whether geographically or in terms of legal entities. That is not the outcome that the G-20 – or anyone else – sought back in 2009.
In what is the most remarkable news of the day, which has so far passed very quietly under the radar, Fosun International, China's largest private-owned conglomerate which invests in commodities, properties and pharmaceuticals also known as "Shanghai's Hutchison Whampoa", announced in a statement filed just as quietly with the Hong Kong stock exchange, that it had purchased JPM's iconic former headquarters, the tower built by none other than David Rockefeller, at 1 Chase Manhattan Plaza for a measly $725 million. None of this is particularly newsworthy What is, however, is what Zero Hedge exclusively reported back in March, namely that the very same former JPM HQ at 1 Chase Manhattan Plaza is also the building that houses the firm's commercial gold vault: incidentally, the largest in the world. Why? We don't know. We do know that China's gross gold imports from Hong Kong alone have amounted to over 2000 tons in the past two years. This excludes imports from other sources, and certainly internal gold mining and production. One guess: China has decided it has its fill of domestically held gold and is starting to acquire gold warehouses in the banking capitals of the world. For now the reason why is unclear but we are confident the answer will present itself shortly.
The whole fulcrum of the bloated American state is beyond ready for a radical deconstruction. The same goes for most nation-states in the West. The continual borrowing, serviced indiscreetly by an accommodating central bank, has made an entirety of the populace fat and happy off of debt. This is no realistic method for operating any institution. Something has to give eventually. Any conservative who places high value on civil society over the intrusion of government should balk at the prospect of a higher debt load. It makes certain that the ruling political class will not cease in their effort to infiltrate private life. Unfortunately it appears as if some otherwise sharp minds have fallen prey to the liberal device of alarmism.
People need to be aware that worsening the situation of one class of tax payers is never going to improve the situation of another. The particular wealth tax proposal mentioned by the IMF en passant is odious in the extreme, especially as the wealth to be taxed has already been taxed at what are historically stratospheric rates. It is noteworthy that the alternatives discussed by the IMF for heavily indebted states which are weighed down by the wasteful spending of yesterday appear to have been reduced to 'default' (either outright or via hyperinflation) or 'more confiscation'. How about rigorously cutting spending instead? Lastly, a popular as well as populist target of the self-appointed arbiters of 'fairness' are loopholes, but as we have previously discussed, they are to paraphrase Mises 'what allows capitalism to breathe'. Closing them will in the end only lead to higher costs for consumers, less innovation, lower growth and considerable damage to retirement savings.
Despite the onslaught of confidence-inspiring flim-flam from leadership in Europe and a Spanish Prime Minister (and finance minister) desperate to distract with "soft" survey based data, the hard numbers keep coming in and keep getting worse and worse. The latest, seemingly confirming the IMF's fearsome forecast that European banks face massive loan losses in the coming years, is Spain's loan delinquency rate. Bad loans across Spanish banks amounted to $247 billion in August - a new record-breaking 12.12% of all loans outstanding (now 30% higher than any previous crisis in the history of Spain). Credit creation continues to implode with a 12.3% plunge in total loans outstanding but of course, none of that matters (for now), as Spanish bond spreads (and yields) press back towards pre-crisis lows...
While Ben Bernanke would prefer not to discuss the barbarous relic, having noted in the past that "nobody really understands gold prices," it would seem his European brother-in-arms has a different opinion. When asked this week, by the ironically named Tekoa Da Silva, his thoughts on precious metals as reserve assets (and central banks around the world increasing their allocations), none other than the ECB head himself Mario Draghi explained "I never thought it wise to sell [gold], because for Central Banks this is a reserve of safety." But Draghi did not stop there, and perhaps enlightened by the farce in Washington this week, the unusually truthful central banker explained, "in the case of non-USD countries, it gives you good protection against fluctuations of the USD." Perhaps that is why China continues to import gold at a record pace? Oh, and don't fight the ECB...
"Now that the government has reopened and this threat to our economy is removed, all of us need to stop focusing on the lobbyists, and the bloggers, and the talking heads on radio and the professional activists who profit from conflict, and focus on what the majority of Americans sent us here to do, and that’s grow this economy, create good jobs, strengthen the middle class, educate our kids, lay the foundation for broad-based prosperity and get our fiscal house in order for the long haul."
A broad look at the political and economic consequences of the govt shutdown.