Proof of Coming Economic Storm

Proof of Coming Economic Storm

 

A keyword search on Google News just this minute retrieved 5,917 results, indicating an active contemporary economic discussion on the issue as it relates to our current trends away from the boom, towards the bust.

 

Click on the text to see source articles where the text was found.

 

I see storm clouds on the horizon.  Economic storms are typically followed by social and political ones.

 

Cheers,

Tate

 

• "China has delivered a qualified vote of confidence in the dollar and US financial markets, ruling out the "nuclear option" of dumping its huge holdings of US government debt accumulated over the last decade." --> OUCH!  The threats of China dumping US currency instruments is indeed a "nuclear option" and one that would put the US into the same class as Argentina and Weimar and Poland and Russia and Zimbabwe and all of the other hundreds of crashed currencies in history.  Just the fact that they are talking about it is a threat.  And the mainstream media is publishing these threats.  It is economic sabre rattling of the highest order.  Watch this space for developments.  Better yet, plan to benefit from this certainty by holding more physical precious metals as soon as possible.
• "Market forecaster Robert Prechter says we're on the verge of the biggest market crash since the 1720 collapse of Britain's South Sea Bubble, with the Dow nosediving to below 1,000 in the next five to six years, from around 10,000 now. Prechter, regarded as a powerful market "guru" in the late 1980s, relies on an esoteric technical-analysis tool that uses past market movements to predict future ones. "If I'm right, it will be such a shock that people will be telling their grandkids many years from now, 'Don't touch stocks,'" he says." --> Yes indeed, all economic analysts of any credibility whatsoever are saying precisely the same thing these days.  Yes, it is really that obvious.
• "Have you ever seen the guys playing the shell game in New York? Shuffling the three walnuts and there's supposed to be a pea under one of them? This is a shell game. Nobody is addressing the issue; there's more debt in the world than money. It's simple. It cannot be paid. It makes no difference who's on the hook for it. There's not enough money in the world to pay down the debt. Greece is bankrupt. Spain is bankrupt. Italy is bankrupt. Ireland is bankrupt. The UK is bankrupt. The U.S. is bankrupt. Japan is really bankrupt. Those are the issues we need to address-the issues for which governments are giving lip service. They're just as effective at solving this financial disaster as they are the Gulf of Mexico oil spill." --> See that, everyone is talking the same language here.  Nobody of any credibility whatsoever is talking different.
• "The recession is just starting, the stock market is set up for the biggest bear market crash ever, the government is going to be shocked when foreign lenders abandon it, and the dollar could devalue suddenly and catastrophically." --> From credible analysts all over the world, the pattern of speech is always the same.  The only people talking different are the dummies and the con men.
• "If the FED keeps funding the Treasury, this will produce monetary inflation. This will go to mass inflation: over 20% per annum. If it continues, this will go to hyperinflation."
• "Throughout first 15 years of the 21st century investors and economists where debating heavily upon the economic environment. Is it deflation, inflation, stagflation or hyperinflation? Eventually, a new term emerged- Yo-Yo depression which describes an economic environment in which the economy moves violently every year or so from inflation to deflation.  Well, below you can the complete list of arguments for a hyperinflationary and a deflationary depression:50 driving deflationary forces"

 

Asymmetrical Capital Markets is another form of  profitable terrorism for the United States of America today.

Interesting to read in the below article about how national security and capital markets are being considered in terms of asymmetrical warfare.  And who are the capital markets terrorists then if it isn't our own SEC and COT and COMEX and CBOT, etc... who are enabling the likes of Goldman Sachs and JP Morgan to make and break markets that they both invent and then corrupt and then short sale?  The pot is calling the kettle black when the US is worried about capital markets based asymmetrical warfare.  I would guess that their interest is purely to keep out competitors.  It is like the drug trade... The DEA and FBI and CIA arrange the arrest of all competing drug lords who don't pay their cut while US military planes fly thousands of tons of the stuff around every year, even getting caught by the media and no investigation.  Just google that for loads of credible proof in the mainstream media and from our own congressmen, and insider whistle blowers etc... .  

Back to the subject of "capital markets terrorism", apparently loads of consultants are rising to the increased demand by various tentacles within US national security interests for dominating / playing upon / raking in obscene profits through market manipulations under the guise of "national security".  At least that is my take on all this.  As the article suggests below, these guys are involved in war gaming scenarios where for example in the below, Russia starts hypothetically trading oil in gold denominated rubbles as a strategy for taking down the dollar.  I say more power to the Russians if they pull off a gold alternative to the dollar and force all energy sales into that currency.  People who trade with Russia would then increasingly keep more and more of their available currency in that gold rouble which isn't hyperinflating and then Iran would be emboldened to follow suit, then China.  That would vacuum the demand for the dollar pretty quickly.  More power to the Russkies if they manage to destroy the dollar with a commodities based currency, because we all benefit world-wide when the private money printer class gets it in the neck. 

Cheers,

Tate Ulsaker

===========

Chris Whalen Paper Gold vs the Dollar?

Chris Whalen interviewed Jim Rickards for his IRA Newsletter. The discussion dealt with the fragility of the US dollar, and the possibility of the creation of a gold backed currency that could topple the US dollar as the world's reserve currency. Here are some snippets from that interview:

The IRA: Thank you for taking the time to talk with us. We previewed this interview yesterday on CNBC in a discussion with Ian Bremmer of Eurasia Group and Nouriel Roubini. We wanted to talk to you today about the global economy and the dollar. You may have seen our reference last week ("Country Risk: The World According to Robert Rubin (Updated)", June 29, 2010) to the new borrowing rights that the International Monetary Fund has created at the behest of the inflationist tendency in the White House.

Rickards: My day job is working with funds and banks, but by night I focus on the geopolitical implications of the global macroeconomic outlook....The people who can speak to a three-star general about asymmetrical warfare and then turn around and speak to a swap counterparty about collateral issues are few and far between. At Omnis we are finding more and more call for just this type of expertise. When credit default swaps are taking down Greece and you realize that Greece is a NATO ally, the reason for interest in financials by the security community is obvious.

The IRA: As we have said before, we note an increased interest in financial markets by members of the security community. If you go through the contract awards for SEC and the bank regulatory agencies you will see some names that are most often seen in the defense community.

Rickards: ....At the same time the national security community needs to understand capital markets because the security of nations is being undermined by fiscal policies and credit default swaps as we've seen in Greece. My firm is comfortable processing information in both directions; helping the national security community understand markets and helping capital markets participants understand geopolitics.

The IRA: ....But many of the "issues" facing regulators in better attacking problems in the financial markets involve process issues, not decision about the desired result. When our political class becomes so dissolute that their behavior threatens national security, it raises some issues that Americans are not used to dealing with.

Rickards: Agreed. To give you a sense of how much interest there is in financial matters in the national security community, I recently headed a panel at a program sponsored by the Johns Hopkins Applied Physics Laboratory.....The topic of my paper was a hypothetical press release issued by the Russian central bank announcing the creation of a new, gold-back currency. In the hypothetical, the Russians also announce that exports of energy and other natural resources will have to be made in this new "gold ruble." The Russians would become a market maker in gold and effectively control the marginal price of gold transactions. This is basically a plan for taking down the dollar.

The IRA: It is an entirely plausible scenario. The Russians could establish a "gold" price for oil and then the paper currencies would trade at a discount. Thanks to the lack of leadership in Washington by either party, the U.S. is quite vulnerable to the creation of a gold-backed or commodity-backed currency.....As a senior Fed official told us, look at the period since the 1990s. Count how many quarters we have not had either fiscal stimulus or accommodative interest rates by the Fed to maintain the illusion of growth.

Rickards: Precisely. But what is interesting is that a couple of days ago, we saw the arrest of this seemingly hapless Russian spy gang....one subject that got a lot of reaction from Moscow was gold. Whatever these people were collecting for the Russians, the information about gold was of great interest.....The paper I did is getting written up all over the web. But the fact that the information on gold touched a nerve in Moscow confirms my view about their intentions toward the dollar.

The IRA: Well it is so obvious. We interviewed David Kotok of Cumberland Advisers last month, some of which will appear in Chris Whalen's upcoming book. Kotok just published a bullish book on Europe, Invest in Europe Now, and Kotok is even more bullish today. As he puts it, the Greeks gave the Germans a 20% currency devaluation. Kotok thinks that the crisis in Europe will eventually force the EU to fully integrate. But we speak to insiders with precisely the opposite view, who say the Europeans do not have a grip on the financial problems. Does the EU emerge stronger from the crisis?

Rickards: I agree with the view that says the EU gets stronger. I keep reminding people that the European Central Bank and the 16 members of the monetary system have over 10,000 tons of gold. They have more gold that the U.S. Treasury. We have just over 8,100 tons ourselves. If the EU were to go to even a partial reserve coverage with gold, say 20% backing, it would put Europe at an enormous advantage. They have enough gold today to set a target and make a two-way market in gold. I think that the first major currency bloc that goes to gold will dominate the financial world because it will become the only currency anybody will want.....

The IRA: This is the idiocy of the U.S. position. We have set ourselves up as an easy target for our enemies. It is astounding that the Chinese have not been more aggressive in selling dollars. Maybe they are going to manage our downfall gently.

Rickards: ....The Japanese and Chinese are both influenced by Zen which, in Western jargon, is really about optionality.....Instead of committing yourself to a binary decision, you create a fan of probabilities and look for your openings. So in that sense, if you think of it in options space, the Chinese are probably content to play the American paper game with the dollar, but all the while preparing for the day when the dollar collapses completely.

The IRA: Americans are convinced that it cannot happen here, the greatest nation on earth. Reminds us of France after WWI. Same degree of self-delusion. And no reaction by U.S. officials to the Chinese and Russia gold purchases?

Rickards: The Russians do not hide their purchases of gold.....The Chinese have been more surreptitious in their purchases but even they have announced the reserves doubled in recent years....they are buying from internal, captive producers. And they pay below market prices because even paying $800 per ounce still gives their miners a tremendous profit. Between 2004 and 2008, China almost doubled the gold stocks of Peoples Bank of China, but they bought it through other state agencies to keep it off their books.

To read the entire interview with Jim Rickards which is contained in the piece Paper Gold vs the Dollar? CLICK HERE.



To hear the recent King World News interview with Jim Rickards CLICK HERE.



To hear the recent King World News interview with Chris Whalen CLICK HERE.



Eric King
KingWorldNews.com
To return to BLOG click here.

We Are Entering Another Great Depression - UK Telegraph

Here it is, another mainstream news article, the UK Telegraph says we are entering another Great Depression.

 

The big one that we have been watching unfold for 10-years looks to be very close to us again.

 

Will they print more trillions to prolong a few more months (this is called “stimulus”)?

 

Or will the correction actually come in full force this time?

 

The debt is the gauge to follow.  Unprecedented historic never-before seen public /private / corporate debts need to be corrected / cleansed / brought back in line with reality.

 

For the short term, being in precious metals and out of paper is an excellent position to be in when this happens.

 

For the long term, being as self reliant as possible when it comes to food, energy, security is also an excellent position of strength as systems of all kind become unreliable.

 

Cheers,

Tate

 

 

 

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Telegraph.co.uk

 

With the US trapped in depression, this really is starting to feel like 1932

The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation.

 

By Ambrose Evans-Pritchard
Published: 9:33PM BST 04 Jul 2010

135 Comments

People queue for a job fair in New York. The share of the US working-age population with jobs in June fell from 58.7pc to 58.5pc. The ratio was 63pc three years ago. Photo: EPA

"The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."

 

Related Articles

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·         Asia needs to fully wake up to the scale of the West's economic crisis

·         Buy-to-let: rents rise for first time in three months

·         Eurozone falls into deflation as M3 money supply shrinks

·         Wages fall at fastest rate since records began

·         Deflation: workers face more pay freezes as prices fall at sharpest rate since 1933

Ambrose Evans-Pritchard: Comment

"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.

California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.

Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene."

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.

Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weninger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."

Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them "hobos". This really is starting to feel like 1932.

Washington's fiscal stimulus is draining away. It peaked in the first quarter, yet even then the economy eked out a growth rate of just 2.7pc. This compares with 5.1pc, 9.3pc, 8.1pc and 8.5pc in the four quarters coming off recession in the early 1980s.

The housing market is already crumbling as government props are pulled away. The expiry of homebuyers' tax credit led to a 30pc fall in the number of buyers signing contracts in May. "It is cataclysmic," said David Bloom from HSBC.

Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from
a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.

Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a "double-dip alert" for Europe. "The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011," he said.

It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years – as they must, to avoid sovereign debt spirals – then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes.

The Fed is already eyeing the printing press again. "It's appropriate to think about what we would do under a deflationary scenario," said Dennis Lockhart for the Atlanta Fed. His colleague Kevin Warsh said the pros and cons of purchasing more bonds should be subject to "strict scrutiny", a comment I took as confirmation that the Fed Board is arguing internally about QE2.

Perhaps naively, I still think central banks have the tools to head off disaster. The question is whether they will do so fast enough, or even whether they wish to resist the chorus of 1930s liquidation taking charge of the debate. Last week the Bank for International Settlements called for combined fiscal and monetary tightening, lending its great authority to the forces of debt-deflation and mass unemployment. If even the BIS has lost the plot, God help us.

 

Tracking the Crash this Week with Eric King

Financial events are happening at a rapid clip right now.  The US Dollar looks to be at some stage of dying.  There was never any serious debate over IF the dollar would die.  All fiat currencies devalue over time until they arrive at zero value.  The only question is WHEN the dollar will become worthless.  I would suggest that the death will be rather sudden, taking most people by surprise.  That is how it always happens.  - Tate Ulsaker

Here is a quick roundup of select financial collapse related issues mostly sourced from Eric King's excellent blog over the past week -

• The Fed, Debt and Systemic Collapse of the US - Eric King wrote after interviewing both Ron and Rand Paul, "Having a discussion about the Fed, massive debt and the systemic collapse of the United States with two of the most qualified individuals in US politics today cemented in my mind that we are in a depressionary cycle, and their is virtually no way out for a variety of reasons. This is why it is so important for readers to protect themselves and their families from the next wave down."  To hear the interview with Dr. Rand Paul and Congressman Ron Paul on King World News CLICK HERE.
• Unemployment at 16.6% + Home Prices To Fall 50% - Eric King points out "Some may call it a recession or the "Great Recession" but a depression by any other name is still a depression and in the end the real numbers don't lie." 
• Brett Arends, WSJ.com and MarketWatch says - "There is no double-dip, just a continuation of the Great Recession. I have been calling this "The Great Credit Crunch". On April 26th predicted the beginning of the second leg of the multi-year bear market which is again led by housing and financials. read more...."
• Widening US Deficit To Collapse the Dollar - The graph on this article says it all... the current snapshot is horrendous and yet the government prediction for future spending just gets worse.  Hey, we are already beyond anything close to historic levels of debt-to-GDP ration, exceeding Great Depression levels by twice currently and widening. What are they thinking?  Projections for revenues are a pipe dream.  As Eric King correctly says in the article - "As the chasm increases in size between spending and revenue, faith in the US dollar will evaporate. This will lead to a significant devaluation of the dollar, or an outright collapse."
• Strength In Gold A Surprise To Many Traders - Eric King reminds us of investing basics that we need to remember as this gold boom turns into an outright explosion in precious metals prices to historic significance - "Remember that bull markets always surprise on the upside, so never give up your position. If you are afraid of your positions because you think gold will fall you have missed the point and probably will never make any money in the markets. Buy and hold during secular bull markets and stop worrying about gyrations in price."

 And then the following article just appeared today, quoting in full -

Jim Rickards - Financial Equivalent of the Atomic Bomb

 

There are legitimate concerns over the safety of citizens in the event of a financial collapse in the United States where confidence is lost and the dollar plunges. We are mired in a depression, and the central planners continue to look for solutions to keep the monetary system from completely buckling. In his latest interview, Jim Rickards warned of a coming financial catastrophe and civil unrest. This was a portion from that sobering interview:

Jim Rickards:  "But that could be a very chaotic process...Some people did die, there were riots in the streets. I mean people think that this is far fetched, and there is always the attitude that it can't happen here. But I know in my own lifetime you know in 1970 and '71, I mean I saw armored personnel carriers with armed troops in the streets of Georgetown, tear gas on the mall, civilians rounded up, and there weren't enough jails to put them in, so they herded them into RFK Stadium. I mean this sounds like scenes from Allende's Chile, but they were actually scenes from the Nixon administration from Washington in the early 70's."

Eric King:  "Those people that were rounded up, that was in the tens of thousands wasn't it?"

Jim Rickards:  "Correct, right, this is not fantasy, this is not fringe thinking. These are concrete facts. I mean I saw them with my own eyes, I don't need a historian to tell me what happened. I was there, and when you tamper with very fundamental things such as the value of your currency which everyone uses to make all of their investment decisions, all of their economic decisions, all of their job decisions, people are basing all of that on a unit of value and when you undermine the unit of value you undermine the entire economy, and from that you can very easily slip into civil disorder. It's fair to give people warning about that."

As mentioned in Jim Rickards interview with King World News, this week, here is the promised link to his 40 page piece "Economics and Financial Attacks" - (Attacks in this line of operation include targeting or acquiring sensitive financial, trade, or economic policy information, proprietary economic data, or critical technologies, and the potential impact to national security.)

Jim was asked not only to attend, but also to put together the above piece, be a speaker, and to sit on discussion panels at the high level Unrestricted Warfare Symposium. This was a gathering of the leading figures from the military intelligence community.

Jim gives a hypothetical description of the Russian Central Bank introducing a gold backed currency which would cause an overnight massive devaluation of the US dollar. Jim described this as the financial equivalent of the atomic bomb.

To hear the recent in-depth interview with Jim Rickards on King World News CLICK HERE.

Eric King

KingWorldNews.com

To return to BLOG click here.