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Thursday, July 31, 2014

Broken Government and Broken Governance: CUI BONO?


GOP-led House votes to sue Obama in first-of-its-kind lawsuit:

GOP leaders

Congress fails the long-term unemployed, once again

Poll: Congress gets record low approval rating in midterm year

(CNN) – A new Gallup survey indicates that the congressional approval rating has dropped to its lowest point ever–16%–in a midterm election year since such ratings were first measured by the organization in 1974.


 High-Speed Traders Need Oversight, Ex-CFTC Economist Says

May 13, 2014 12:01 AM ET


Big Banks and Derivatives: Why Another Financial Crisis Is Inevitable


Lack of adviser oversight is ticking bomb

Jun 22, 2014 @ 12:01 am
+ Zoom
The Securities and Exchange Commission took a hit last week when a House panel denied the agency the funding it says it needs to hire additional investment-adviser examiners.







Wednesday, July 30, 2014


Of the index’s 18 components, seven are measures of interest rates (Fed Funds, Treasuries, corporate bonds, and asset backed securities), six are measures of yield spreads, and five “Other Indicators” are a grab bag of measures that include the VIX volatility index, expected inflation rate (10-year Treasury yield minus 10-year TIPS yield), and the S&P 500 Financials index.

The components – except for the Fed Funds rate – are measures of how market participants perceive financial stress, and how they react to it. In bubble times, when exuberance rules the day, and when nothing can go wrong, and when risk has been banished from the system, and when interest rates are low, perceived financial stress disappears.

But the gauge is a horrible predictor. So horrible that it has become a contrarian indicator. The prior record low of “financial stress” was achieved when the financial system in the US was in the early stages of collapsing under mountains of toxic securities and mega-bets put together and sold at peak valuations to conservative-sounding funds held by unsuspecting investors in their retirement nest eggs. And banks stuffed them into their basements and into off-balance sheet vehicles, and their financial statements spoke of values and profits that didn’t exist, and no one cared. Greed ruled the day. Damn the torpedoes, full speed ahead.

It isn’t that low financial stress caused the Financial Crisis. It’s that low financial stress incited decision makers – from homebuyers to bank CEOs – to make willfully reckless decisions that can only be made and funded when there is money for everything, and when this crap can be unloaded no questions asked. It happened in 2007, and it’s happening now again.

Sunday, July 27, 2014


I've written before about the new divide between European and US ancient coin markets.  This article will attempt to give some idea of what it means for the US collector to attempt to purchase right now in Europe.

Many of the great ancient coin collections are in Europe.  Many of the great ancient coins auctions are in Europe.  But buying coins at auction in Europe now presents an entire array of obstacles and difficulties for the American Collector.

First, most American collectors now prefer to buy graded/authenticated coins.  You won't find these at European auctions.  Each auction house has its own style of photography and coin grading.  Even if you are very familiar with the style of a particular auction house you'll find that coins of dubious authenticity, and coins that have been expertly altered, smoothed, tooled, repaired will be included in many auctions without description.

Furthermore, if you send these coins in to NGC after receipt and discover a problem, then go back to the auction house, you will be told simply that they disagree with NGC.  End of story.  These auction houses have their own experts who defer to nobody.

Of course, if you are a major client of an auction house, and develop a relationship with them over time it is certainly possible to better your odds of acquiring a problem free coin.  But even then, their views of what constitutes a problem free coin may still be different from the views of NGC.

But, let's just say you have a terrific eye, or trust a dealer with a terrific eye and you buy at a European auction, and manage to avoid these obstacles.  You are now faced with the problem of importing the coins from Europe to the US.  You can either trust Registered Mail, which can take up to several weeks, can not be tracked, and can take up to several months or even years to recover insurance payments for lost shipments.  Or you can trust a carrier like Fedex or Amit Malca.  The problem here is that Shipments into the US containing ancient coins are now routinely stopped by Customs.  Once your shipment is in customs there is no time table for release.  It is entirely up to the discretion of the customs officer.  If a coin is seized there is no recourse or second opinion.  Your coin is gone.

Once a coin is in customs. Fedex washes its hands of the entire process.  You'll get no help there.  Amit Malca will try to deal with customs for you.  For this they charge thousands of dollars, so you can add that to the cost of the coin.

Now, most shipments of legal coins - not on cultural property lists, if properly documented, will most often be released in a timely fashion, if seized.  The problem is that establishing provenance for a coin is not always a straight forward process.  And cultural property lists are expanding.

It should be said that there are always ways to navigate difficulties and narrow the odds that there will be problems.  Especially if you have close personal ties to a European auction house.  But the entire importation process is becoming more difficult by the day. The gap between the European and US markets is only widening.

Friday, July 25, 2014

Why this time is never different.

It's been 6 whole years since the economy crashed.  Now somehow things are supposed to be different.

Human beings seem to have an incredible esteem for their own collective wisdom.  There's a raft of new movies out about Sentient Artificial Intelligence.  In other words about human beings creating life.   In these conceits we're so smart we have to fear the fruits of our fearsome intelligence.

The myopia is stunning.  Human beings have only had electric lights and running water for a hundred years.  In the grand scheme of things we're barely out of caves.  Yes, we have computers that can store lots of data.  But 99 percent of it is entirely useless.  Yes, you can look at people you've met on facebook and read what they write about themselves, but your memories of them are just as accurate. 

Sure you can look up anything on Wikepedia with the touch of a button.  But 99 percent of what you read there is entirely inaccurate.  If you want any useful information you still have to track down out of print tomes and take the time to read them cover to cover.

Almost all of the technological advancements have simply allowed us to instantly track - and participate in - our collective pointless blathering. 

By the time we're smart enough to invent a sentient articial intelligence we'll have been long smart enough not to need to bother.

Which brings us to the markets.  Yes, we have super computers that operate in nano-seconds.  We can access graphs, construct models, perform regression analysis - and assemble long reports that nobody reads that all prove whatever we feel like proving. More pointless blather.

All the super computers are really useful for is front running trades.

It's never Different because we're never Different.

We still take every opportunity to game the system.  We still screw everyone else at every chance as long as it makes us a penny richer.  The entire system is still rigged by the top 1 percent to make the top 1 percent ever wealthier at everyone elese's expense.

And the entire construct is still completely unsustainable.

Invest accordingly.

Wednesday, July 23, 2014

Paul B. Farrell
July 23, 2014, 7:44 a.m. EDT

Great Crash of 2016, third $10 trillion loss this century

Commentary: Greenspan’s ‘black box’ syndrome now handicaps Yellen


By Paul B. Farrell, MarketWatch 

Sometime after the Great Crash of 2016, Fed Chairwoman Janet Yellen will be testifying before Congress, just like Alan Greenspan was forced to do in 2008. She will be explaining why America has already had three megacrashes in the 21st Century, each draining roughly $10 trillion, each a direct result of Federal Reserve policy failures. She will be forced to explain why the Great Crash of 2016 was a clone of the bank credit crash of 2008 and the 2000 excesses. 

Getty Images
Former Federal Reserve Chairman Alan Greenspan.
But we already know exactly what Yellen will be forced to admit: That she is a clone of Alan Greenspan, who was a perfect clone of capitalism’s patron saints, Milton Friedman and Ayn Rand, going back decades. To fully understand this self-destructive lineage, simply focus your laser on the one admission Greenspan made to Congress in 2008, eight words that explain why Greenspan’s bizarre capitalism failed and why it will happen again and again under Yellen ... 

“I really didn’t get it until very late.” 

No, you don’t have to be a neuroscientist, psychologist or behavioral-finance genius to understand what Greenspan was saying, in this confession to Congress, to American investors, the whole world:
Greenspan says capitalism was working just fine ... in his head ... for decades ... then suddenly, capitalism stopped working ... capitalism exploded in his face ... capitalism is a bubble machine ... very predictable bear-bull cycles ... and a bad habit of exploding ... just when you hope to get just a little richer ... but instead, capitalism’s bubble explodes ... triggering trillions in losses ... did it in 2000, again in 2008, certain to repeat around 2016 ... 

What was it Greenspan, Bernanke, now Yellen never “get?” 

Very simple, the facts. Our Fed leaders not only favor big banks, billionaires, CEOs and insiders, but they simply ignore the facts that capital markets move in predictable cycles. Markets work until they don’t work. Rise to a peak. Explode. Crash. Bears naturally follow bulls. This time is never different. There is no perpetual money machine for capitalist. Facts always trump ideology.

Although the average human knows capitalism dogma is seriously flawed, our Fed leaders will just keep spreading it, till it’s too late to stop capitalism’s kamikaze trajectory. Worse, there are no incentives to change the system Adam Smith invented and Greenspan, Rand and Friedman have distorted. 

Quite the contrary, today’s dysfunctional inequality-breeding capitalism keeps getting stronger: Why? Dodd-Frank reforms are dying as the collective power of America’s too-big-too-fail banks, hedge funds, CEOs and private-equity firms keeps growing, protected by anti-government politicians, do-nothing conservatives, weak Democrats, but most of all, a new capitalism where fewer than 100 billionaires own more than half the assets in the entire world. 

Eight words that define capitalism: “I really didn’t get it until very late” 

Yes, those 8 words say it all: “I really didn’t get it until very late.” That’s capitalism, a game of musical chairs. Admit nothing, till after a collapse. Thanks to the capitalist theories of Friedman and Rand, Greenspan was destined to fail America for 18 long years, is still claiming he didn’t “get it” till too late. Then Bernanke. Now it’s Yellen’s turn. America’s monetary leaders just don’t get it ... and they never will ... until it’s too late ... except next time capitalism implodes, taking American markets and the global economy into a big black hole, forever.

Tuesday, July 22, 2014

Stuff still in demand


16 - 17 January 2014

Lot 112

1958 Ferrari 250 GT LWB 

California Spider by Scaglietti

auctioned on Friday, January 17, 2014

Sold for $8,800,000 


The Daily Mail
$863,000 for Muhammad Ali Boxing Gloves

NEW YORK, NY, USA - Boxing gloves worn by Muhammad Ali during his first Heavyweight Championship title victory with Sonny Liston, in 1964, have sold in auction for $863,000 (£520,000).

Source: The Daily Mail - February 24, 2014

Great Gatsby first edition sets 

new world record at Sotheby's

A first edition of The Great Gatsby made 

$377,000 in a New York auction

A first edition copy of F Scott Fitzgerald's The Great Gatsby has sold for a world record $377,000 at Sotheby's in New York.
The book was the highlight of the sale of the Gordon Waldorf collection on April 1.
Gatsby Sotheby's Waldorf

Bob Dylan’s iconic Newport Folk Festival guitar sells for record $965K, 

more than three times its estimated price

| | Last Updated: Dec 6 3:54 PM ET
More from Associated Press
The Fender Stratocaster electric guitar played by musician Bob Dylan on July 25, 1965 at Newport Folk Festival.
Art Daily
$842,408 for 19th Century Snuff Box

GENEVA, SWITZERLAND - A rare musical automaton snuff box with timepiece (Piguet et Capt à Genève, 1801- 1807) has sold for $842,408. The snuff box was sold by Sotheby’s.

Source: Art Daily - May 14, 2014


Claude Monet 'Water Lilies' 

painting sells for $54 million

An iconic "Water Lilies" painting by French artist Claude Monet sold for £31.7 million ($54 million, 39.7 million euros) at a London sale on Monday, the second-highest sum paid for his work on record.

 Claude Monet 'Water Lilies' painting sells for $54 million

Ancient Egyptian statue's sells 

for £15.8m

This is the latest in a trend of councils looking to raise money by selling their arts collections

The Examiner
$350,000 for Tattered WWII Flag

ALBANY, NEW YORK, USA - A U.S. flag from an Allied (WWII) ship that delivered troops to the Normandy beaches, has sold for $350,000 at auction. The flag was sold by Bonhams auction house.
Pair of turquoise and diamond cufflinks, Cartier, circa 1920
Each hexagonal shaped link millegrain-set with polished turquoise, square and single-cut diamonds, signed Cartier, numbered, case stamped Cartier.


(Hammer Price with Buyer's Premium)









Thursday, July 17, 2014

von Greyerz

4444By Greg Hunter’s
Gold and financial expert, Egon von Greyerz, says buckle your seat belts–a replay of the 2008 financial crisis will “soon return.”  Greyerz contends, “What happened in 2008 was expected by us for quite a long time.  The solution of $25 trillion to save banks and financial markets was not a solution.  It was just a temporary deferral of the problem.  The money, as we know, went into the banking system, and it didn’t go into the real economy.  The banks in Europe still have the same problems.  They are leveraged as much as before.  Deutsche Bank is leveraged 50 times.  U.S. banks are slightly less leveraged, but they have the derivatives that are not included on their balance sheets; of course, but if you include that, they have more leverage than the European banks. . . .  

We are now in a situation where every major economy in the world is in a total mess.”  Greyerz goes on to explain, “Japan’s economy is going to disappear into the Pacific.  China is having its problems.  Europe has problems.  The EU will never work and was not supposed to work.  The euro is an artificial currency and, in the long run, will not survive.  The U.S. stock market is at an all-time high, but that has nothing to do with the real economy which is an absolute mess.  So, the world has never been in a situation where all nations simultaneously are having problems that are insoluble.  Every major nation is running a deficit today.  So, right now, I think we are going to revisit 2008; but this time, there is no solution.

On the value of the U.S. dollar, Greyerz predicts, “The problem is it’s not just the dollar.  The dollar is the first one that’s going to fall, but all the currencies are in a race to the bottom.  Since 1913 when the Fed was created, we’ve seen a fall of 97% to 99% of ALL currencies against gold.”
So, what might this next financial calamity look like?  Greyerz, who controls the largest gold vault in Europe, says, “We are specialists in wealth preservation.  Our task is to analyze the risk and take all the measures possible to protect clients from the risk that we see, and the risks are bigger than ever in the world. . . . We are going to see a major financial disaster and possibly collapse.  The world has been living above its means for a hundred years.  It has gradually gotten worse as central banks have printed more and more money. . . . Just in the United States, in the last eight years, the debt has increased from $8 trillion to $17 trillion.  That is an increase of $9 trillion in just eight years.  That is more money than was created in the creation of the United States from over 200 years ago to when Bernanke took over.  That is happening everywhere in the world. . . .

The dollar is going to collapse, and all the other currencies will follow.  It will then be revealed that all these debts can never be repaid.  Will they be repaid with inflationary money?  That’s not repayment.  In the end, there is going to have to be a reset; and I fear that, in the end, there will not be an orderly reset.  I fear we will have a hyperinflationary depression first and then a deflationary depression.”

Wednesday, July 16, 2014


This attractive Hemihekte of 1.32 grams sold for $11,000 in a European auction while
the AU graded Oktadrachm of 27.7 grams sold for the same price in a US auction the same month.

There can be no doubt that graded ancients are now taking the US by storm. 

Heritage has become a leading player  by launching a "Platinum night" of high value Ancients and World coins at the ANA in Chicago next month, that boasts a very high percentage of graded Ancients.  Several major US coin dealers are now offering a full array of graded ancients to their vast clients bases.

Prices are rising as new customers flood the market.   And because of the relative inexperience of many of the new participants, prices are becoming increasingly Grade-based, and at times, erratic.  Sometimes extraordinarily ugly coins with high grades now sell for 3-5 times what they did a year ago.  Sometimes beautiful coins with low grades sell for less. 

It should be said, too, that often the grades do reflect true value, especially for historically important issues and particularly beautiful issues.  Though, without experience, it can be tough to recognize which issues are accordingly important.  Nevertheless, the extraordinary rarity of theses Ancient coins in comparison to what's considered rare in the US market, coupled with the authentication of historical artifacts thousand of years old, provides an obvious value to all theses new participants.  It's clear to all that Ancients are extremely undervalued by all objective measurements.

And in the US it is only because of the grade/authentication process that US based collectors feel comfortable to become involved in the market.

MEANWHILE.... over in Europe, there is a real resistance to what is viewed as a somewhat declasse American phenomenon.  The attitude there is that the value of an ancient coin has something to do with the technical grade.... but perhaps much less than an American might think.  In Europe, beauty and historical importance far outweigh the technical grade. I have heard European dealers laugh out loud at the prices some coins with Choice Mint State grades are bringing in US auctions.  To them, these are common coins, fashionable of the moment,  with no real lasting value.  It is not uncommon to see perfectly designed and struck electrum fractions ( coins of 0.5 grams) with complex designs and of tremendous rarity sell for more than higher grade Oktadrachms (coins of 27.7 grams).

Who is right?

Obviously, the market is always right.  And right now there are two markets.  And with the protectionist tendencies on both sides of the Atlantic intensifying it is highly likely that the divide between the two markets will only intensify over time as transportation becomes more difficult, customs laws ever more onerous, and cultural property seizures increasingly prevalent.

The element that unites these markets is that on either side of the Atlantic it's clear to all that Ancients are still extremely undervalued by all objective measurements - whichever you happen to favor.

Tuesday, July 15, 2014

BIS chief fears fresh Lehman from worldwide debt surge

Jaime Caruana says investors are ignoring prospect of higher interest rates in the hunt for returns

Jaime Caruana, General Manager of the Bank for International Settlements, addresses the participants of the XXIII International Banking Congress in St. Petersburg
Jaime Caruana is head of the Swiss-based Bank for International Settlements Photo: EPA
The world economy is just as vulnerable to a financial crisis as it was in 2007, with the added danger that debt ratios are now far higher and emerging markets have been drawn into the fire as well, the Bank for International Settlements has warned. 
Jaime Caruana, head of the Swiss-based financial watchdog, said investors were ignoring the risk of monetary tightening in their voracious hunt for yield.
“Markets seem to be considering only a very narrow spectrum of potential outcomes. They have become convinced that monetary conditions will remain easy for a very long time, and may be taking more assurance than central banks wish to give,” he told The Telegraph.
Mr Caruana said the international system is in many ways more fragile than it was in the build-up to the Lehman crisis. Debt ratios in the developed economies have risen by 20 percentage points to 275pc of GDP since then. 
Credit spreads have fallen to to wafer-thin levels. Companies are borrowing heavily to buy back their own shares. The BIS said 40pc of syndicated loans are to sub-investment grade borrowers, a higher ratio than in 2007, with ever fewer protection covenants for creditors. 

40pc of syndicated loans are to sub-investment grade borrowers
The disturbing twist in this cycle is that China, Brazil, Turkey and other emerging economies have succumbed to private credit booms of their own, partly as a spill-over from quantitative easing in the West.

Their debt ratios have risen 20 percentage points as well, to 175pc. Average borrowing rates for five-years is 1pc in real terms. This is extemely low, and could reverse suddenly. “We are watching this closely. If we were concerned by excessive leverage in 2007, we cannot be more relaxed today,” he said.

“It may be the case that the debt is better distributed because some highly-indebted countries have deleveraged, like the private sector in the US or Spain, and banks are better capitalized. But there is also now more sensitivity to interest rate movements."

The BIS warned it is annual report two weeks ago that equity markets had become "euphoric". Volatility has dropped to an historic low. European equities have risen 15pc in a year despite near zero growth and a 3pc fall in expected earnings. The cyclically-adjusted price earnings ratio of the S&P 500 index in the US reached 25 in May, six points above its half-century average. The Tobin's Q measure is far more stretched than in 2007.

Volatility has dropped to an historic low
“Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally,” it said. 

Mr Caruana declined to be drawn on when the bubble will burst. "As Keynes said, markets can stay irrational longer than you can stay solvent,” he said.
The BIS says prolonged monetary stimulus in the US, Europe, and Japan has led to a leakage of liquidity, contaminating the rest of the world. The rising powers of Asia are no longer able to act as a firebreak – as they did after the Lehman crash –and may themselves now be a source of risk.

Tobin's Q shows the difference between an equity's market value and the cost to replace the firm's assets.
Emerging markets have racked up $2 trillion in foreign currency debt since 2008. They are a much larger animal than they were during the East Asia crisis of the late 1990s, so any crisis would do more damage. “The ramifications would be particularly serious if China, home to an outsize financial boom, were to falter," it said.

The BIS is the doyen of world’s financial institutions, created in Basel in 1930 to clean up the mess left by German reparations payments under the Versailles Treaty. It has since evolved into the bank of central banks, and lately the bastion of monetary orthodoxy. It issued a crescendo of warnings in the build-up to the Lehman crisis, implicitly rebuking the US Federal Reserve and others for holding interest rates too low, which in their view robs economic growth from the future.

The BIS was vindicated, though not everybody agrees that it was right for the right reasons. Monetarists argue that the Great Recession was due to over-tightening into the downturn. This caused M3 broad money growth to collapse months before the banking crisis.

The BIS backed QE as an emergency measure in early 2009 to avert a deflationary spiral but has long since called for a return to sound money, and even rate rises. "The predominant risk is that central banks will find themselves behind the curve, exiting too late or too slowly," it said.
This has earned BIS a reputation for Austrian School ideology , accused of encouraging crude liquidation. The bank denies this, tracing the bank’s doctrines to the pre-Keynesian Swedish economist Knut Wicksell.

Wicksell posited a “natural rate of interest”. Holding rates too low creates a host of problems. While his model looks like the modern “Taylor Rule” used by the Fed and other central banks, it is different in crucial respects.

Confident in its cause, the BIS more or less indicts the central bank establishment of malpractice. "Policy does not lean against the booms but eases aggressively and persistently during busts. This induces a downward bias in interest rates and an upward bias in debt levels, which in turn makes it hard to raise rates without damaging the economy – a debt trap."

"Systemic financial crises do not become less frequent or intense, private and public debts continue to grow, the economy fails to climb onto a stronger sustainable path, and monetary and fiscal policies run out of ammunition. Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent," it said.

Basel's lonely call for discipline pits it against the Fed, the Bank of Japan, the Bank of England, and even Frankfurt these days. It prompted an unusually piquant riposte from London earlier this month. "Has monetary policy aided and abetted risk-taking? I hope so. That's why we did it," said the Bank of England’s chief economist Andy Haldane.'

"It is good to have the debate,” said Mr Caruana gamely. Yet he refuses to back down. “There is something strange about fighting debt by incentivizing more debt."

He is now skirmishing on a fresh front, questioning the Fed's new enthusiasm for macro-prudential curbs as a first line of defence. "On their own there is little evidence that they can constrain financial imbalances. We don’t think macro-pro can serve as a substitute," he said.

Mr Caruana said the US recovery is not a vindication of monetary stimulus, but evidence that the best answer to "balance sheet recessions" is to clear away the dead wood and unlock resources for new technologies. “The Americans were quite aggressive in forcing recognition of losses and there was a very rapid recapitalisation of the banks. This is why it was successful. The role of quantitative easing is an open question.”

Mr Caruana dismisses the global deflation scare as alarmist, even though Sweden's Riksbank has just abandoned his camp and slashed rates to near zero to avert a Japanase-style trap. Deflation is very unlikely to happen in the West, he insists. Gently falling prices are typically benign in any case. "We should not exaggerate the role of deflation in history," he said.
The Great Depression is the exception, not the rule. Welfare systems and unemployment insurance now make such an outcome almost impossible. "In the 1930s the stabilizers were very different," he said.

Critics are unlikely to accept this assurance since Spain, Greece, Portugal, Ireland, and Latvia have all gone through depressions over the last six years, and Italy, France and Holland are all close to debt-deflation. The concern is what would now happen to parts of Europe if there were a fresh downturn or an external shock. Debt ratios are higher than they were in the 19th Century. The "denominator effect" of deflation is therefore more destructive today.
The International Monetary Fund has hinted that it might be best for the world to chip away its debt mountain with a few years of inflation, as the US did in late 1940s and early 1950s, armed with financial repression.

Asked whether he would support this form of loss recognition for creditors, Mr Caruana came close to choking. “It must be clearly resisted,” he said.

Wednesday, July 9, 2014

70 Million People Would Be Starving in the Streets Without Government Welfare Programs

Shock Report: 70 Million People Would Be Starving in the Streets Without Government Welfare Programs

Mac Slavo
July 9th, 2014

the-american-dream-is-overAmid all the talk of recovery by politicians, economic officials and big business leaders, the fundamental numbers behind all the propaganda tell a starkly different story.
Home sales have dropped to record lows, more people are out of the workforce than anytime in the last 50 years, and cash-strapped consumers have run out of money to fuel economic growth.
By all meaningful measures the American boom times of old are gone.
A recent report from the Department of Health and Human Services suggests that we may have already reached the tipping point and that things are only going to get worse going forward.
According to the HHS, nearly half of all Americans are now dependent on some form of government benefit just to put food on the table. And of our population of 310 million, nearly one in four receive welfare benefits.
That’s over 70 million people who, if the government safety nets broke down due to lack of funding or a monetary crisis, would be starving on our streets right now.
The sheer magnitude of the numbers is shocking. What’s worse is that they are indicative of a continuing down-trend that won’t be improving any time soon.
According to the 2014 version of a report that the Department of Health and Human Services is required by law to issue annually, the percentage of Americans on welfare in 2011 was the highest yet calculated. The data for 2011 is the most recent in the report.

By this measure, according to the report, 23.1 percent of Americans were recipients of welfare in 2011. Since 1993, the earliest year covered by the report, that is the highest percentage of Americans reported to be receiving welfare.
A startling 38 percent of all children 5 and under in the United States were welfare recipients in 2011, according to the report.

When recipients of non-means-tested government programs (such as Social Security, Medicare, unemployment, and veterans benefits) were added to those receiving benefits from means-tested programs, the total number receiving benefits in the fourth quarter of 2011 was 151,014,000, according to the Census Bureau. That equaled 49.2 percent of the total population.
CNS News via Infowars
Of critical importance is that this particular report looks only at 2011. Since then we’ve seen even more people taken out of the labor force. Moreover, we’ve seen prices for all consumer goods rise during that time frame and incomes either stagnate or drop to inflation adjusted levels not seen since the 1960′s.
Thus, in all likelihood, we are well over the 50% mark. This means that without government assistance that may include social security, welfare, unemployment or other social services, at least one in two Americans would not be able to pay their rent, buy food, or keep their utilities turned on.

The end of the world as know it is happening right now.

Sunday, July 6, 2014

Employment "Boom" VS GDP Crater. How can both be true?

A) The government has simply changed employment metrics:

Shadow Stats: Alternate Unemployment Charts

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
B) Meanwhile Government Birth Death model adds 560,000 Fictional Jobs out of the last 600,000 jobs "Created."  This is the figure that appears in no surveys.  It is simply the government guestimate of how many extra jobs must have been created, for which we have no evidence:

2014 Net Birth/Death Adjustment, not seasonally adjusted (in thousands)
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mining and logging
1 1 1 2 2


8 19 32 36 23

4 4 -1 6 4

Trade, transportation, and utilities
11 12 17 25 12

5 -3 1 5 -1

Financial activities
7 3 6 8 3

Professional and business services
36 4 75 21 3

Education and health services
17 -5 18 17 -15

Leisure and hospitality
31 35 75 79 84

Other services
4 5 10 6 6

Total nonfarm
birth/death adjustment
124 75 234 205 121

Saturday, July 5, 2014

What will replace the dollar?

Nobody doubts that since the creation of the Federal Reserve Bank the dollars has lost 99 percent of its purchasing power.

Nobody doubts that the dollar's reserve status is under attack from most certainly China and Russia., and from all appearances the rest of the BRICs nations: India and Brazil and South Africa.

Nobody doubts that during the next crisis the dollar is bound to suffer a tremendous loss of value.

Yet, nobody agrees on what will eventually replace the dollar as the world's reserve currency.

There are three options:

A) Another fiat paper currency.

B) An entirely electronic fiat currency.

C) A gold backed currency.

As for the dollar being replaced by another fiat currency, while certainly a possibility, it would necessarily have all the same problems as the dollar, as every country has its own central bank to function as a money printing machine. 

The real choice as the global economy moves forwards, is between a gold backed currency and an entirely electronic currency.

The problem with an electronic currency is that whereas it can certainly operate efficiently as a medium of exchange it can never fulfill its function as a store of value.

The reason is twofold.  First, like a fiat paper currency it has no intrinsic value.

Second, and even more dangerous, there is no way for a private citizen to own the currency.  It exists only as an idea.  The private citizen can lease the idea for private use.  But the idea can be stolen, confiscated, or reassigned by anyone with access to the language in which the idea is described.  In this case a computer language.

If we take Bitcoin as a model, the examples of hacked Bitcoin accounts are legion.  There is no way to safeguard against the theft of something that has no corporeal form.

It is no different from simply giving your word you will honor a verbal contract.  Without a corporeal written contract there is no way to prove ownership.

It's fun to imagine a future One World Government that puts micro chips in its citizens wrists the monitor every electronic transaction.   But the fact is any MIT PHD will still be able hack the system.

This leaves gold backed currency as the only functional option.

There is ample evidence that China and Russia have already accepted this conclusion are working jointly towards this inevitability

Bitcoin bank Flexcoin closes after hack attack - The Guardian

A history of bitcoin hacks

The alternative currency has been plagued by hacks, ponzi schemes and increasingly professional thefts since 2011, explains Alex Hern

Silk Road 2 Hacked, Over 4,000 Bitcoin Allegedly Stolen ...

Bitcoin Thefts Surge, DDoS Hackers Take Millions

Cryptographic currency's massive rise in value leads to a corresponding increase in online heists by criminals seeking easy paydays.

Mt.Gox Hack Allegedly Reveals Bitcoin Balances, Customer ...

Tuesday, July 1, 2014

The Roman Model: A do-nothing Senate leads to Civil War

In pre civil war Rome, every Roman politician talked about the the  Res Publica; the "Republic" that which was for the benefit of the Public as imagined by Rome's Founding Fathers: the original Senate.

This conception of the Res Publica was modeled after the Greek Demos Kratia: which translates as Power to the People or the Demos: which is really the citizenry.

But for all the Roman talk about serving the Res Publica, no substantive legislation was passed over the period of several decades because the Roman Senators didn't want the credit for good legislation to fall upon rival Senators or factions.  So there was total gridlock.  It was a do nothing Senate.

Sound familiar?

Really what each and every Senator wanted and fought for with all their might was to rise to the top of a political faction so they could receive support to become Consul for a year (sort of like Party Head).  Then after their year was up they would be made Pro Consul and serve in a lush province which they could rape for a grand personal fortune.

Sort of like out polilticians who do nothing for the people but then retire - or simply use their political clout to reap personal fortunes by repping (consulting, lobbying) for our lush provinces: the multi-national Corporations.

So?  We're like Rome?  Big deal!

Eventually the Roman Senate was so despised by the Roman people that Rome was ripe to be taken over by some charismatic tyrant.

Well, that wildly charismatic figure appeared in the form of Julius Caesar, a populist war hero from an old aristocratic family.  Every thing Romans loved.   Caesar, backed by his army and with the full embrace of the Roman people, took over the Republic and ruled as a Tyrant.  The funny thing is, this tyrant, Julius Caesar, actually tried to use his power to help the Roman People through much needed building projects for the mass unemployed, and through long promised land settlements for the vastly overextended army.

Things that were greatly needed at the time.  Sound Familiar?

But these projects, which were wildly popular with the Roman Citizens, were deplored by the do nothing Roman Senate.  Not because they were against them in principal, mind you, but because they were hastily enacted without the proper oversight, and without going through traditional channels. Every senator was pro-military and pro the Roman People, of course.  But these things had to be done in the proper way and at the right time.

Sound familiar?

"Populist Senators" got together and plotted to murder Caesar, figuring the citizens would hail them as liberators from the Tyrant.


The Roman Citizens rioted at the loss of their Hero Tyrant.  Rome was plunged into an extended and horribly bloody civil war.  Which ended with the Advent of a new era - of Hereditary Tyrants.

But don't worry, that was a long time ago.  We're way too sophisticated now.  It could never happen here, right?