An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said, “OK, we will have an experiment in this class on Obama's plan." Here are the 5 key points about such an experiment...
Regardless of what I (or you) do throughout the day we're tracked, logged, profiled and otherwise "identified" in a hundred different ways.
If we’ve learned one thing over the years from following markets, economics, and geopolitics is this: no man can push the Wheels of History. It unfolds in its own time and no other. The waves of human emotion, of optimism and pessimism both long and short term haven’t changed. So why are the markets still going up? Why can’t people respond to warnings of the blogosphere, or warnings of collapsing economies and accounts right before their eyes? Answer: Because they can’t. It isn’t time - yet... Human emotions and behavior run in cycles of set period. Obviously humankind cannot become infinitely more optimistic forever into the future. In the same way trees don’t grow to the sky, at some point human expectation must reverse and become less optimistic, more conservative and pessimistic until it reaches an opposite extreme. And this theory has a lot going for it: if governments truly controlled stock markets, economies, nations, then why would they ever decline? No government or market would ever voluntarily get smaller, less powerful, and prosperous. And yet despite everything they can do to prevent them, markets and economies always, always DO reverse. Always.
Do you think the US will always and forever be able to pay for our over-bloated military-industrial complex and our wars of choice? Do you think the federal housing agencies will always and forever be able to subsidize the real estate industry with money losing, non-economic mortgage loans? Do you think the government will always and forever be able to pay on the promises they've made regarding Social Security, Medicare and Medicade? Do you think the government will always and forever be able to extend debt-enslaving, subsidized student loans to anyone with a pulse? Do you think the fiat ponzi central planners at the Fed will always and forever be able to manipulate the Treasury curve to whatever levels the Oracles of Delphi decide? If you answer yes to the above, ask yourself this: how would all of these things be affected if the average interest rate paid by the US was to rise to 5%? At today's debt level of $15.6 trillion, the interest expense would be approximately $780 billion or about 35% of total government revenues. Welcome to the United States of Greece. Next stop, bankruptcy.
Let's get it all out there. America's dirty laundry that is. Our family secrets. The skeletons in the closet. The goal is to create a list of the many and numerous ways in which our country is deluding itself into believing we are the greatest, smartest, most innovative, freedom loving country that ever was. Don't get me wrong, I'm not some unpatriotic ne'er do well. I love what the Founding Fathers of our country set out to accomplish, faults and all. I love it so much, I was willing to put my life on the line for this country by serving in a US Marine Corps special forces unit for 8 years (your move armchair patriot). But we have drifted so far from the original concepts, I believe our current central planning apparatus more closely resembles the USSR than what most people think is the USA. So I'm going to kick this list off but in no way do I intend this to be exhaustive.
Gold has been trading in a tight box around $1,660/oz today, as eurozone finance ministers meet in Copenhagen to discuss the scale of the permanent “bailout fund” set for July. Gold has been stuck in range of roughly $1,630/oz to $1,700/oz in recent weeks as risk appetite has returned after the latest European debt “solution” which saw the battered can kicked down the shortening road once again. Nothing has been solved with regard to the European debt crisis, and debt crises in Japan, the UK and the US now loom. The misguided panacea of heaping debt upon debt and shifting debt onto government balance sheets, debt monetisation and currency debasement is leading to continuing currency devaluations internationally. Despite this or maybe because of this - risk appetite returned with a vengeance as evidenced in equities internationally rising to multi-month and multi-year highs and the slight weakness in gold in March. So far in 2012, gold has performed well and is set to end the first quarter in 2012 with gains in all major currencies. Gold is 6.3% higher in US dollars, 3.2% higher in euros, 3.1% higher in pounds, 2.25% higher in Swiss francs and 12% higher in Japanese yen which fell sharply in the quarter.
Paulson & Co. sold a third of the their SPDR holding which is quite a large liquidation. However, Paulson remains bullish on gold as was seen in positive comments he made recently so it would seem likely that this sale may have been an effort to raise cash after his fund suffered sharp losses in the last quarter. Some hedge funds sold the ETF to cover losses during a rout that erased $7.8 trillion from the value of global equities since May. Soros Fund Management LLC held 48,350 in the SPDR Gold Trust as of Sept. 30, compared with 42,800 shares at the end of the second quarter. The increase in Soros gold holdings are meager at some $10 million worth but suggest that Soros is not as bearish on gold as the multitude of news headlines, regarding his comments regarding gold being “the ultimate asset bubble”, would suggest. Soros added 145,000 call options and 120,000 puts in SPDR Gold in the third quarter. This confirms that Soros is not as bearish on gold as some would have us believe. There is also the real possibility that Soros’ fund, like other hedge funds, may have opted to own allocated bullion rather than a gold trust. Some hedge funds have opted for allocated gold bullion due to it being more discreet with a lack of disclosure (no quarterly filings), due to the lower long term costs and due to allocated accounts having less counter party risk than a trust with many indemnifications. Steven Cohen’s SAC Capital Advisors LP and New York- based Touradji Capital Management LP established gold positions in the third quarter. SAC Capital, which manages $14 billion and is based in Stamford, Connecticut, held 184,601 shares in the SPDR Gold Trust as of Sept. 30. Paul Touradji had 45,000 shares compared with none on June 30, the filings show.
The Bernank has already gone too far and there is no turning back. There will be QE to infinity until the point where the system collapses on itself, which is probably not too far off once the next round of official QE is started. What form this may take is anyone’s guess but as I mentioned in a recent email, the whole rate cap idea makes the most sense since it will allow infinite QE to occur without having to announce subsequent iterations. The simple fact that they tried to pretend QE would end and then tried to raid commodities to create the justification for it later on demonstrates to me how much trouble we really are in. If The Bernank had merely gone ahead and continued the program he had a CHANCE of perpetuating Disneyland for a little longer at least. Instead, he is praying that the economy can stand on its own, which of course it can’t and so then when he launches into QE3 after the economy weakens and proves QE1 and QE2 did nothing to create a self-sustaining recovery the entire mindset and understanding going into the next money printing party will be entirely different from a psychological standpoint. QE3 will not lead to confidence or anything even similar to the last rounds. Rather it will be used to basically “keep the lights on.” More than anything it will serve as that proverbial “bell” that will ring and in the minds of the savviest and wealthiest people on the planet to get the hell out of the system while they can. This is inevitable. It is already happening. The stampede is yet to come. But come it will. It is time for everyone to take additional steps whatever that may mean for you personally. I know I am. Don’t get gorged.
"The primary trend I see in the markets is the destruction of the purchasing power of all fiat currencies, with the U.S. dollar having the most to lose as the world’s reserve currency. Nothing throws a population into more of a tizzy than a destroyed currency. Similarly, nothing provides a more fertile ground for power hungry control freaks to take over your lives than economic chaos. What has really started getting my attention in the last several months is how the UN seems to be trying to position itself as a “world government” savior of sorts. First, the UN decided it would be a good idea to launch a war in Libya and Obama decided the U.S. would get involved without ever asking Congress for an authorization of force (which according to George Friedman of Stratfor is a first). What is so pathetic is where are the fake liberals in America? Where are the anti-war protests? We are so successfully divided in the fake Republican/Democrat, Red/Blue, Yankees/Mets paradigm of stupidity that the “left” in this country won’t criticize Obama for starting a new war because he is “their guy.” This is pathetic and dangerous because guess what will happen when we get a Republican thug as president that uses the precedents Obama has set to shed even more blood all over the world. Who will protest then and who will care? "
In case you wondered where the title for this piece came from, it was actually the message that popped out my fortune cookie during a meal on Monday night. It just summed up so many things for me. It summarized why our culture is so damaged. At the core of the malignancy killing the nation is the fact that we possess the world’s reserve currency that can be created at will out of thin air and forced upon goods producing nations (whether manufacturing or resource goods). This means we do not need to produce to consume, which hollows out the entire core of the economy over time and has made us the generally lazy and decadent society we are today. I mean take for example the C announcement recently of a reverse 1 for 10 stock split. I haven’t heard such an embarrassing press release since reading about how U.S. taxpayers are going to make money from the bailouts. So for the last year all I heard on propaganda channel CNBC was how once C’s shares got above $5 it would attract a whole new class of investors and the shares would soar. Well the stock wasn’t able to hold above $5 so look what happened. Magic, they are just going to make the stock trade at $45 with this scheme. Bankers can’t lose, didn’t you get the memo? Oh and they are paying a whole penny a share in dividends. You have got to be kidding me guys. Pathetic.
So here we are, waiting for the “event” which triggers a loss of confidence across the system. Will it be a sovereign, a US state, a bank, QE3 or QE5, the oil price, Chinese fixed investment, a false flag event (a convenient distraction/excuse) or a revolution? When it happens, the speed at which capital will move in today’s over-liquefied world will take people’s breath away. Where will it go? This is the global end of normal (baby) so that, first and foremost, it will go into the strategic assets - gold/silver, energy, food/agriculture, rare earths, etc, (as well as the equities of the financially strongest economies). Bernanke’s QE2 is nothing short of economic warfare, in the form of a wave of inflation, directed at the rest of the world and even his own population (at least anybody without a large stock market, commodities or precious metals portfolio). This inflation is not temporary, as per the false reassurances, it’s baked in. In response, creditor nations have no other choice than to cut purchases of US Treasuries (China is selling), leaving the Fed increasingly standing alone. Rampant or hyperinflation results from the complete loss of confidence in a currency and we are being steered in this direction by the gentlemen above. Sure, they are smartly dressed, well educated (kind of) and pretend to know what they’re talking about with their carefully worded “policies”. It’s all NONSENSE. All they’re doing is leading us down a well-trodden path which has happened time and again throughout history.
I wasn’t going to write this week so this will be extremely brief. The entire charade that has been propagated on humanity is coming completely unglued and there is absolutely no stopping it. I have only one request to those that are reading this. If you know of specific incidences of corruption or serious wrong-doing come forth and tell everyone now. This is your last chance. When this things breaks the 99% of people on this planet that have been unwilling victims of a very small group of elitist political and corporate players and others will be so completely destroyed they are going to go after people and in a very serious way. This must be done calmly and without violence but it must be done and it will be done. At that point the backstabbing and selling out by people that previously held alliances with one another will be so chaotic it is going to be tough to separate those did the most harm from those that were willfully ignorant. I fear that being willfully ignorant will not be a defense that will appease many so it is best to come out before that point is reached. For those that have read A Tale of Two Cities or just generally know your history remember what happened in the aftermath of the French Revolution. There was illogic and indiscriminate punishment applied in many cases. I hope this never happens and I will fight to prevent it all the way but the best thing one can do now is come clean if there is anything you need to come clean about. Bob Dylan said it best in the quote at the top. This is the chance. Do not let it pass you by because of fear or greed. Truth is all that matters. - Mike Krieger
"Last year I wrote about how the leaders in America were essentially fiddling as Rome burned. This fiddling has become an all out dance party and many investors have been dragged onto the floor one more time due to money printing, an inherent desire to be optimistic, a plethora of propaganda and rising asset prices. However, this is the last dance folks. Our corporate and political leaders have destroyed us. Chuck Prince would be proud." Mike Krieger
" What took 140 years for the emerging market in America to displace Europe, China will do in 26 years [~] 1989 - 2015, will displace American Economic power. The Yuan is undervalued since paper currency is merely a share in the nation just as in a corporation. As the $ rose in 1929 - 1932, the Yuan will rise during any economic decline. Investing in China packs capital gains + eventually currency appreciation. [T]he Yuan would rise during sovereign defaults as [a] currency hedge. Welcome to the Decline & Fall of America where stocks, interest rates & gold can rise together. "
" We have taken testimony from dozens of witnesses and reviewed tens of thousands of documents .... We have looked at the silver market like we never have before and I think there is a window of success that has been opened for understanding about what has been going on and why .... In 35 years, there has been only one successful prosecution for manipulation. So if you ask me if the manipulation standard in the law is working, I'd have to say no .... We need to be more like the police department and less like the fire department. We need to deter and prevent things from happening, rather than merely responding. "