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Tuesday, October 28, 2014

Bribery Plot Reveals Dark Underside of Mysterious Money-Printing Industry

Oct 27, 2014 6:00 PM ET
One day in December 2005, a few hours before dawn, employees of the Austrian central bank, dressed in blue overalls, began stacking about 30 million bank notes onto wooden pallets. They loaded the manat bills, the currency of Azerbaijan, into 38-ton trucks, according to people familiar with the shipment. Escorted by police in unmarked BMWs, the convoy rumbled past Vienna’s centuries-old churches and Habsburg palaces, crossed the Slovakian border and arrived at Bratislava Airport. There, the shrink-wrapped pallets were loaded onto a plane destined for Baku, Azerbaijan’s capital on the shores of the Caspian Sea.

It looked like any other transaction in the international money-printing market, where bills are bought and sold amid tight security, Bloomberg Markets magazine reports in its December issue. In fact, Austrian prosecutors say, the sale was part of a corrupt bargain between officials at the Austrian central bank and their Azerbaijani counterparts.

Prosecutors put nine people on trial earlier this year, with charges including bribery and money laundering. The defendants included the co–chief executive officers of Oesterreichische Banknoten-und Sicherheitsdruck GmbH, or OeBS, the printing subsidiary of Oesterreichische Nationalbank, Austria’s central bank.
Wolfgang Duchatczek, former chairman of the printing subsidiary of Austria's central... Read More
Austrian prosecutors said the central bank employees jacked up the price of the currency so the surplus could be used for bribes. A total of 14 million euros ($18 million) was paid through offshore accounts to officials at Azerbaijan’s and, later, Syria’s central banks to win printing contracts, prosecutors say.

Two Acquitted

On Oct. 3, seven of the defendants were convicted in Vienna’s criminal court. Two of the accused, including the former chairman of OeBS and ex–deputy governor of the bank, Wolfgang Duchatczek, were acquitted. By the time of the verdict, the former co-CEOs of the printing firm, Michael Wolf and Johannes Miller, had already pleaded guilty.

The Austrian case affords a rare glimpse inside an industry shrouded in secrecy and mystique. Currency scandals have blown up periodically since the Lydians first minted coins in about 650 B.C. In 1278, an Englishman named Philip de Cambio was convicted of adding more than the legal amount of copper to pound coins; he was hanged and dismembered.

In the 1920s, a Portuguese scam artist, Artur Virgilio Alves Reis, persuaded a British currency-printing firm that he was an envoy from Banco de Portugal, and the company printed and delivered to him several million Portuguese escudos before the fraud was discovered, according to “Moneymakers: The Secret World of Banknote Printing,” by German journalist Klaus W. Bender.
Michael Wolf, former co-CEO of the Austrian central bank's printing subsidiary,... Read More

Tons of Money

Today, the business of printing bank notes is a large and highly technical enterprise. Government agencies and their private contractors produce 165,000 tons of currency annually, and the bills must be adorned with holograms, special inks and raised print so they are as difficult as possible to counterfeit.

The job is beyond the capacity of many countries, so about half of the world’s bank notes are produced by private companies. Three dominate the market, accounting for about 60 percent of sales: Basingstoke, England–based De La Rue Plc, the company that prints the British pound; Germany’s Giesecke & Devrient GmbH; and France’s Arjowiggins SAS, according to a 2011 report by California-based consulting firm Impacts.Ca. The industry was worth about $1.3 billion in 2011.

Saturday, October 25, 2014


Huge, honkin’ gold nugget hits the market in S.F.

Updated 10:33 am, Wednesday, October 22, 2014
Here we go again — what is believed to be the biggest gold nugget found in modern times in California’s historic Gold Country is going on sale Thursday in San Francisco.

This 6.07-pound whopper is being sold by Tiburon coin dealer Don Kagin, the same dealer who is selling the $10 million worth of gold coins that made such a stir this year after they were found in a couple’s backyard in the Sierra.

The “Butte Nugget,” so named because it was found by a gold hunter in the Butte County mountains, will be unveiled at the prestigious San Francisco Fall Antiques Show. The show opens Thursday at Fort Mason.
The owner of the nugget asked Kagin to keep his name and the location of the find secret, a standard practice for anyone afraid of being swarmed by treasure-seekers and thugs. Kagin’s staff is still assessing the worth of the nugget and expects it to carry a price tag of $350,000 or more.

The Swiss Gold Vote: Should Investors Worry?

Bloomberg News
Should the Swiss National Bank SNBN.EB +1.21% buy gold? Lots and lots of gold? The country’s electorate goes to the polls on Nov. 30 to decide.
If it’s a yes, the SNB will need to hold at least 20% of its (pretty huge) assets in the shiny yellow stuff, from around 8% now. It will have five years to get into line.
So, will it vote yes? And if it does, what happens next to gold, and to the Swiss franc?
Will it vote yes?
Probably not.  Supporters’ ability to convince the population that gold is a source of stability is challenged by the recent high volatility of the commodity, said Beat Siegenthaler, strategist at UBS.
In any case, if it does vote yes, “it also would need to be passed by a majority of Swiss Cantons. Given that the SNB and the Federal government are actively opposed to the constitutional amendment, the second step may be an insurmountable barrier,” pointed out Barclays.
Even if official polls on this referendum have not been published yet, the Scottish independence vote is still fresh in investors’ minds. Investors were complacent about this for months in the runup, when it looked like an easy win for the ‘no’ camp, but as the vote drew closer, so did the opinion polls. Cue a nasty shakeout in sterling. And, Mr. Siegenthaler noted, in this case, “the market impact of a yes-vote would likely be quite spectacular.”
What about the gold?
The SNB has about 500 billion Swiss francs ($520 billion) in reserves—an amount that whooshed higher from 2011 when it imposed a floor on the euro’s value against the franc. It will not allow the euro to trade under CHF1.20 under any circumstances, and reiterates as often as anyone will listen that it will buy euros in unlimited quantities to stop that happening. Hence, as a share of GDP, Swiss reserves are some of the biggest in the world.
The SNB currently holds 1040 tons of gold, equating to 8% of its reserves, down from about 20% in 2008. To reach the 20% target, “the SNB would have to buy around 10% of global annual production during  five years in order comply with the initiative by 2019,” said Mr. Siengenthaler. This would be equal to around 1500 tons of gold in total.
It doesn’t take a genius to figure out this could turbo-charge the price of gold, particularly in the immediate aftermath of a shock ‘yes’ vote.
Longer term, “it likely would raise the long-term equilibrium price for gold,” according to Barclays BARC.LN +0.20% strategists, although the bank adds that “spread over five [years, it] is more digestible, given the weakening demand dynamics.” 
And what about the franc?
The key is what happens to the CHF1.20 euro floor.
Barclays reckons an obligation to stock up on gold could reduce the SNB’s commitment to that limit. Even if the central bank would not be prohibited from defending the limit or operationally impaired by the gold-share requirement, “defense of the floor would then come at the cost of reduced future policy flexibility,” Barclays said. In other words, if it needs to buy stacks of euros to defend the floor at any point, then it would automatically need to buy gold too, to keep to the 20% ratio. This would not only be costly, but also permanent as the proposal also limits the SNB from selling the gold it buys. Defending a temporary policy, such as defending the currency floor, would then have permanent implications, making it harder to sustain over time.

Wednesday, October 22, 2014

Then next crisis nobody saw coming: Everyone sees it coming: (except Paul Krugman and Dick Cheney)

John Mauldin and Jim Rickards discuss the Looming Debt Crisis and the Fiscal Abyss! 

 

Peter Schiff: Coming debt crisis will make 2008 look like a Sunday school picnic 

 

Carl Icahn: 'No-Brainer' High-Yield Market Is in a Bubble 

 

(Bloomberg) -- Billionaire investor George Soros talks about the European sovereign debt crisis, the outlook for commodities and the U.S. deficit.

 

Billionaire Paul Singer: The U.S. Has A Big Debt Problem And The Fed Is Making It Worse

Billionaire hedge fund manager Paul Singer warned that rich countries are insolvent, with U.S. debt to GDP levels actually around 500% given the cost of entitlements. 
 

Main risk facing the world is a Chinese debt disaster, warns George Soros

Main risk facing the world is a Chinese debt disaster, warns George Soros

Main risk facing the world is a Chinese debt disaster, warns George Soros

Main risk facing the world is a Chinese debt disaster, warns George Soros

Main risk facing the world is a Chinese debt disaster, warns George Soros

Soros Adviser Turned Lawmaker Sees Debt Crisis by 2020: Japan Credit 

 

Jim Chanos: China’s Debt is Worse than Europe’s 

 

Stanley Druckenmiller is Very Worried About US Government Debt

 

Rothschild, Paulson and Soros All Betting on Coming Financial Disaster

 

Jim Rogers US Government Debt Crisis, Economic Predictions


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Published on Oct 6, 2014
Jim Rogers US Government, Debt, Crisis, Economic Predictions


The Coming Sovereign Debt Crisis

The stats show that the total size of the world stock market capitalizations closed 2013 at $54.6 trillion which was only 25% of the total world market capitalization – the rest being bonds.The bond market is larger than the stock market for various reasons. Whereas only corporations issue stocks, governments and corporations both issue fixed income securities. The U.S. Treasury is the largest issuer of bonds worldwide. Because U.S, Treasury bonds provide the bulk of reserves which are just over $30 trillion.
UBLST-25
This is the real bond bubble. Capital is so accustomed to just hiding in bonds, it knows no other alternative. We can see that debt increased sharply in 1928. However, the collapse with the Sovereign Debt Crisis is what really made the Depression so Great. You can drop the stock market by 50% and you will not create a prolonged depression. Reduce the bond market by 33% and you get a depression.

 This is why Andrew Mellon first boasted during the 1929 that conservatives were not hurt - “Gentlemen buy bonds.” However, soon the Crash of 1929 turned into a serious Depression and that comes NOT by taking stocks down, but by wiping out the bond market.

America’s debt dilemma: A looming crisis

In the first of a series, Robin Harding examines the fiscal challenges that will shape the US in the 21st century

The coming 'tsunami of debt' and financial crisis in America

Forces that caused the world economy to collapse, including income inequality and debt, are again in action, and could drag corporations down in their wake

America's False Recovery: The Coming Sovereign Debt Crisis and Rise of Democratic Plutocracy

 
By Michael Snyder, on September 17th, 2013

The Greatest Debt Crisis The World Has Ever Seen Is Coming

 

 

Wednesday, October 15, 2014

When will the Fed raise rates? Never:

Bond Market Convinced Fed Inflation Goal Elusive This Decade

Bloomberg. Oct 14, 2014 9:09 AM ET

Photographer: Sam Hodgson/Bloomberg
Charles Plosser, president of the Federal Reserve Bank of Philadelphia.
When it comes to spurring inflation in the U.S. economy, the bond market is becoming convinced that the Federal Reserve has almost no chance of achieving its 2 percent target before the end of the decade. 

Inflation expectations have plummeted in the past three months, with yields of Treasuries (BUSY) implying consumer prices will rise an average 1.5 percent annually through the third quarter of 2019. In the past decade, those predictions have come within 0.1 percentage point of the actual rate of price increases in the following five years, data compiled by Bloomberg show.

Even after the Fed inundated the economy with more than $3.5 trillion since 2008, bond traders are showing little fear of inflation. That may help influence U.S. monetary policy and make it harder for Fed officials to raise interest rates from close to zero as global growth weakens and the International Monetary Fund points to disinflation as a more imminent concern.

“The longer inflation rates stay below their targets, the longer the Fed’s going to stay on hold,” Gregory Whiteley, a money manager at Los Angeles-based DoubleLine Capital LP, which oversees $56 billion, said by telephone yesterday. “The burden of proof is more on the hawks and the people arguing for a rise in rates. They’re the people who have to make the case.”

Tuesday, October 14, 2014

JOHN MAULDIN ON THE DIRE CONSEQUENCES OF A NEW DOLLAR BULL MARKET:

What if we are at the beginning of another 10-year bull market in the dollar? Is it unthinkable that the value of the dollar could rise back to 120 on the index over that time? Let’s look at that chart again:






From a very long-term perspective, 100 on that index is certainly a possibility, and 120 is not without precedent. But if the dollar rises to those levels, even in the very short-term, volatile patterns of the past, it changes everything it touches. And the value of the dollar touches everything. So let’s think about some of the consequences over the long term of a rising dollar.

Chapter 2 – A Monkey Wrench for the Fed
A rising dollar is almighty inconvenient for a Federal Reserve that would like to eventually raise interest rates. Multiple regional Fed presidents and Fed governors would really like to see inflation in the 2% range prior to raising rates.

A dollar that is rising against the currencies of our major trading partners is inherently disinflationary, if not outright deflationary. (Pay attention to how often that word deflation occurs in this outline.) The current inflation rate is 1.7%. The Dallas trimmed-mean PCE inflation rate was actually negative in August and has been falling for the last five months, more or less coinciding with the rising dollar.
The makeup of the Federal Reserve FOMC voting membership next year is going to be decidedly “dovish.” Dallas Fed President Richard Fisher will retire, and his voice will no longer be present. Yellen and the entire team (with two notable exceptions) have been out and about using the words data-dependent, with Minneapolis Fed President Kocherlakota arguing that raising rates anytime in 2015 would be a mistake.

Look at what Federal Reserve unemployment and inflation-rate predictions are as of September 17:

Fourteen of the 17 members of the Fed (including the 12 regional presidents) anticipate that rates will be raised in 2015.  Most observers think the first rate increase will happen at the June meeting.
What happens if unemployment continues to fall toward 5.5% and inflation drops below 1.5%? Can this Fed – not you or I, but the aggressively Keynesian members sitting on that board – justify raising rates if inflation is only 1.5% and falling? Which is the more important data number, unemployment or inflation? Or do they both need to click into place?

If the dollar were to continue to rise and thus allow Europe and Japan to export their deflation to the US, it is not clear that the Fed would raise rates in June.
A rise in the dollar from its current 85 on the DXY to 120 over the next six or seven years will throw a monkey wrench into the plans of the Federal Reserve.

Chapter 3 – Every Central Bank for Itself
A rising dollar presents all sorts of problems and opportunities for the central banks of the world. Japan has chosen the most aggressive monetary policy in the history of the world and will, I believe, work to see the value of the yen cut in half over time. Notice in the chart below that it was only 20 years ago that the yen was at 250. It touched 150 less than eight years ago. Forty years ago it was at 357. Is it so unthinkable that the yen could retrace half that move? Not to the Japanese. That would take it into the range of 200 to the dollar. I made the case for such a move in Endgame and doubled down on the prospects for Japan in Code Red. Japan is a bug in search of a windshield. The yen is embarked on a multi-year decline.

Europe would clearly like to see a weaker euro against the dollar and other major trading currencies. Ditto for almost every central bank in the world. But a rising dollar creates special problems for China and some emerging markets, problems we will look at in later chapters.
In an important speech on Saturday, October 11, Fed Vice-Chairman Stan Fischer outlined the mechanisms for the international transmission of monetary policy. Fischer says the international effects of monetary policy “spill back” onto the US, and the central bank cannot make “sensible” choices without taking them into account.
[T]he U.S. economy and the economies of the rest of the world have important feedback effects on each other. To make coherent policy choices, we have to take these feedback effects into account.
He ended with an assurance to all that the Federal Reserve would provide liquidity to the world in the event of another crisis. Because it is in our interest, he says. This will be the ultimate test of game theory, where it might take years to find the Nash equilibrium.
The bottom line? It’s every central bank for itself. No matter how much pleading there is from peripheral central banks, there will be no true coordination among the major central banks. (Hat tip to David Kotok for alerting me to Fischer’s speech as I was writing. He also pointed out that the unintended consequences of the feedback effect means that policymaking can be dangerous.)

Chapter 4 – The Man Behind the Euro Curtain
Was it only a few years ago that Mario Draghi uttered his famous line, “We will do whatever it takes”? Interest rates in Europe have collapsed since then, as the European bond markets believed that Mario had their back. He has not had to do anything of true significance to back up those words, and what he has done has been lackluster.
This week Mario was up on the stage in Washington DC, where he essentially said that the problems in Europe cannot be fixed by monetary policy but are fiscal and regulatory and require actions from governments, not from central banks. The Bundesbank has clearly held sway, at least so far as the prospects for European quantitative easing go. While Draghi hinted that he would like to do €1 trillion worth of QE, it is not clear exactly how he would go about that.
Mario is like the Wizard of Oz. He talks a good game and puts on a good show, but it is soon going to become apparent that he really doesn’t have any magic, at least not until the Germans allow him to open up his trunk of tricks. Right now they’re keeping it safely stowed away in Berlin.
German intransigence is going to precipitate a crisis in Europe. Italy has been in a recession. France is crossing into one. Spain is barely holding on. Even German exports are slowing. France and Italy are balking at meeting the 3% deficit targets mandated by the EU treaty. Germany has drawn a line in the sand; France and Italy fully intend to cross it. This should be interesting; but however it turns out, I don’t think it will be good for the euro.
How long can interest rates in Europe stay at the irrationally low levels where they are today? We touched on that question in past letters, so I won’t cover that ground again, other than to say negative interest rates in Ireland and France are as indicative of dysfunctional markets as anything one might postulate.
When Draghi loses the narrative, or his ability to simply jawbone the market to where he would like it to be, all hell is going to break loose in the European bond market. Exactly what will the safe-haven currency be? The Swiss can’t print enough francs. Even Norway doesn’t have that many kroner. It will be the US dollar. Implications in a later chapter.

Chapter 5 – The Wrong Side of the Trade
Close to 50% of sales and profits for the S&P 500 come from outside the US. A strong dollar will put a strain on those dollar-denominated profits. Not an insurmountable problem, as Japanese businesses have figured out how to thrive in a rising-yen environment for decades. But old US business dogs are going to have to learn new tricks in a rising-dollar world.
But a strong dollar is not just a problem for US exporters. It is particularly a problem for countries that are financed by the dollar carry trade. Multiple trillions of dollars have left the US courtesy of quantitative easing and have ended up financing all manner of trades and investments around the world. As long as the dollar is neutral or falling, that’s a good thing for dollar carry-trade investors.
If you are a Chinese businessman and you can borrow dollars (which you certainly can) and you believe that your government is going to make the yuan stronger over time, you will be able to pay back cheaper dollars and make the difference on the carry (the difference between what US bonds pay and returns that can be earned in China). But what happens if the yuan begins to fall? That trade unwinds swiftly and negatively. And it unwinds at a time that is particularly inconvenient for China. Flood the market with too much money, and inflation becomes a problem. (The Chinese are in a different phase of the monetary cycle than the US is, so the problems are not the same.)
It is not just China. Those dollars have filtered into every nook and cranny of the world; and now, if those trades are unwound, investors and most specifically hedge funds are going to have to buy dollars to unwind their trades. That will force the dollar ever higher against various currencies; and while any one currency is not significant enough to create a structural difference that can impact global trade, together they will have a significant effect.
There is a crisis brewing in emerging markets. Most of the world’s hedge funds and investors are on the wrong side of the dollar trade. Unwinding that trade is going to be a bitch (that is a technical economics term). Worth Wray will be writing about that very topic in a few weeks. You do not want to miss that letter.

Chapter 6 – The Texas Carry Trade
A rising dollar is going to put pressure on oil prices in particular and on energy prices in general. And falling oil prices have a strong secondary effect on Federal Reserve interest-rate policy. Pay attention, there will be a quiz.
Over at The National Interest, Sam Rines of Chilton Capital writes that Texas has been the engine of growth for the US for the past five years:
Job creation might be a good place to start. Texas has created jobs – there is little arguing that point. For instance, we know the U.S. economy only recently gained back the jobs lost in the Great Recession. This is not true of Texas. While the United States dropped about 6 percent of employment, Texas lost 4 percent and recovered them all by August 2011 – nearly three years before the United States as a whole.
Here is where the numbers get interesting. From its peak in January 2008 through today, the United States has created only 750,000 jobs. Texas created over a million jobs during that same period – meaning that the rest of the country (RotC) is still short 300,000 jobs. During the recovery, job creation has been all Texas or – at the very least – disproportionately Texas.
Choosing a different starting point – for example, in the trough of job losses – changes the extremity of the story. And there are all sorts of reasons for this disparity between Texas and the rest of the country, most of which miss the main point. In a conversation with Worth, Rines called the disparity the Texas Carry Trade. I like that.
The Texas story is by and large an oil story. We are far more diversified that we were in the ’80s, but oil is clearly the driver. Texas has been at the forefront of job creation because our borders happen to contain the mostly inhospitable scrubland known as the Permian Basin in West Texas, not to mention the coastal plays and those in East Texas. Much (not all) of the growth in oil has come from horizontal drilling and fracking. And while there are enormous amounts of energy in Texas, it is not necessarily cheap energy – not like it was in the “good old days.”
Seventy-dollar oil considerably restrains the enthusiasm of Texas oil companies, let alone the banks and individuals that finance them.
And it is not just Texas companies. The Marcellus play in the Northeast is responsible for hundreds of thousands of jobs. And it’s much the same story all over the US. Oil has been a significant portion of the growth of US GDP for the past five years. If you take the massive oil boom away, the US looks a lot like Europe in terms of growth and job creation. Which is to say, anemic.
Seventy-dollar oil starts to show up in the unemployment rate, which makes it more difficult for the Federal Reserve to raise rates.
I was talking with Joe Goyne, president of Pegasus Bank in Dallas. He is one of those entrepreneurial bankers who actually analyzes a loan personally rather than letting some computer determine whether it fits the criteria. (The country would be better off with a lot more Joes running the banking industry, but that’s another story.) Joe’s customers are a who’s who of Dallas. We were discussing my convictions about a strong dollar and what that would do to the price of oil. Joe offered, “You won’t believe the pain in Dallas if oil falls to $60.” We went on to discuss some details. Does $60 oil sound far-fetched? Joe and I both remember $15 oil. Texas has been through numerous oil busts. The running joke in the late ’80s was “Would the last person leaving Houston please turn out the lights?”
The late ’80s was an ugly time for Texas. Will the Saudis ever allow oil to dip below $60 again? Can they afford to cut their production that much? What will happen to Russia if Brent drops to $80, let alone $60? It’s not just Texas. And while the world might benefit from lower energy prices, they would create havoc in a few key regions. And throw another monkey wrench in Federal Reserve policy. And in terms of the oil price, gods forbid that peace breaks out in the Middle East. But, sadly, given current circumstances, it doesn’t look like we have to worry about that.

Chapter 7 – The Bond Bull Comes Stampeding Back
Many of us in the US look at Europe and wonder how interest rates can fall to such insane levels. And the answer is that bond markets have rationales all their own. The unwinding of carry trades means the demand for dollars will rise just as the Federal Reserve cuts off the spigot. Some people look at Japan’s flooding the market with yen as an antidote and hope that the ECB, too, will soon start printing; but that is not going to reduce the demand for dollars to unwind the carry trade.
Whatever Japan and Europe do, the growth of global liquidity is still likely to fall over the next few years; and that is an inherently deflationary event, especially in dollar terms.
In addition, when – not if – there is a renewed crisis in Europe, the flight to safety is going to put pressure on the dollar and further downward pressure on US interest rates. While it is not altogether certain that China will have a major crisis – although reasonable economic historians would suggest that is the probable case – if it happens it will put further upward pressure on the dollar as a safe-haven currency. God forbid those two events – crises in Europe and China – happen at the same time. Our necks would snap at the severity of the acceleration in the value of the dollar. The convergent crises would also trigger a global recession.
We’re going to see a return of the bond bull market with a vengeance. Almost the entire world has hedged its bets for a rising interest-rate environment and assumes a benign dollar market. Almost no one expects a falling interest-rate environment, yet that is precisely what we will get if the dollar continues to rise and we have a crisis or two.

Chapter 8 – The Third Leg of the Secular Bear Market
I was writing about secular bear markets in 1999. I was early to the party, as usual (although my friends will note that I’m often late to real-time, real-life parties). I noted in Bull’s Eye Investing that it typically takes three events to completely wash out a trend. We have had two significant corrections since April 2000, accompanied by two recessions. I think the next recession will give us that final third leg of the secular bear market, hard on the heels of another correction that tests (but maybe doesn’t quite touch) the lows of 2009.
At that point I will trade my secular bear beret for a snappy new secular bull Panama. And while we may see a significant correction out of the current volatility, I don’t think the final dénouement of the secular bear will come without a global recession.
Since most of you have been through this before, you can probably figure out what strategy you should choose; but I would suggest at least thinking about having some type of hedge/moving average/risk-dispersion strategy in your toolkit.
The point is to get through this next crucial phase with as much of your capital intact as possible, in order to be able to take advantage of the coming secular bull market, when it will be anchors aweigh. Remember, we always get through these things. It is almost never the end of the world, and betting on the end of the world is a losing proposition anyway. Specifics to come later (maddening, I know, but there are space limits).

Chapter 9 – Commodities in a Dollar Bull Market
This book outline is running a little long, but a quick word on commodities. In general, commodity prices are going to face downward pressure, at least in dollar terms. That includes copper, most of the base metals, oil, etc. Silver has clearly been in a very ugly bear market. I would continue to accumulate insurance gold, but I would invest in gold only in terms of yen or another depreciating currency. Bear in mind that precious metals – along with other commodities – can and will fall precipitously in the event of a deflationary shock… although the inflationary effects of an aggressive central bank response may ultimately drive the yellow metal far above its current price.

Chapter 10 – The Return of Volatility
The final chapter and conclusion pretty much end as you would expect: the demise of monetary policy’s ability to soothe the soul of the markets and the return of volatility. We hopefully get a full-fledged restructuring of the sovereign debt markets. The Fed and sister central banks will try the same tired tools they have been using. Except they have already been to the zero rate boundary and have wasted the opportunity they had to increase rates so that they could lower them later. Another round of quantitative easing? Quite possible if we get a true deflation scare or a global recession. But I don’t think it will have the same results. The unintended consequences and the unknown spillovers will only increase eventual volatility.

For new readers, I invite you to read my books (co-authored with Jonathan Tepper) Endgame and Code Red. They pretty much lay out the background you need in order to understand what will be happening in the future. We are seeing the end of the debt supercycle and the beginning of currency wars. We’ll experience the throes of hyper-indebted nation-states trying to survive what they will see as irrational attacks by a bond market. “How can you not have faith in the government? We are doing our best to try to make everything work out just fine. As long as you cooperate.” Which bond markets have a nasty habit of not doing. Oh, you can placate them in the short term, but ultimately they want to be paid back in risk-adjusted buying power. And that is the one currency that many nation-states will no longer have. Now without major reforms and a significant restructuring of the social order.
A final thought. Businesses will keep on doing what they do, in spite of the machinations of governments and monetary authorities. Entrepreneurs will adjust. New inventions will be made. Over the medium term, life on earth will get better. I honestly do see a return of the secular bull market and a pretty cool third decade, an updated version of the Roaring Twenties. Only this time there will be no need for speakeasies. I fully intend to be around to enjoy it and am looking forward to being relatively optimistic about the future. I really don’t get much personal pleasure from writing these Debbie Downer letters. But my role is to not think about the world as it should be or as I want it to be, but to be as right as I can about the direction we are going. The ride could just be a little bumpier in the short term of the next few years. Fasten your seatbelts.
And for those of you looking for specific advice, let me point you to Jared Dillian, the new editor of my own Bull’s Eye Investor service. He has been finding ways to trade and invest in this market. Last Friday he wrote:

Guys, the price action has been bad for a while. And it is getting worse. The market is demonstrating repeatedly that it can’t hold its gains. In my 15 years of doing this, I’ve only seen worse price action twice: 2000, and 2007.

You can read about Jared and appreciate his baleful glare of a photo right here. Want to sit on a trading desk across from him? I want him on MY side of the table. See if you might want him in your corner as well.

John Mauldin

Friday, October 10, 2014

Gold is still money. Gold has always been money.



According to Aristotle, money is that which serves as a medium of exchange.  It is the measure of things that can be traded.  It equalizes those things which are by nature unequal.

Yet, also, according to Aristotle,  money has another function that is of equal importance: money must be a store of value. 

Money to the ancient Greeks was called Nomisma - from Nomos which is a custom or law.  In other words money must be accepted as "customary" for use in more than a single transaction.  The customary nature of money gives rise to the necessity that it be a store of value.

But beyond this, money can be more than the measure of a transaction.  Money can be the Goal of a transaction.  As the goal of a transaction it gives rise to the accumulation of Wealth.

Wealth can only be accumulated in the form of money as long as the money is a store of value.

There are two ways for money to store value.

First, money can store value as long as custom dictates it should.  This is the store of value we find in the US dollar which has the "full faith and credit of the US Government."



Second, money can store value through its own intrinsic value.

What is intrinsic value?

Intrinsic value is that which is Universally Customary through time, across cultures, and without the necessity of force of arms to enforce the custom.

In this only Gold and silver can be called money.  Even today, gold can be exchanged most everywhere for other things.  You can't buy a loaf of bread in a store with it, yet you can take it to many places in every city in the world (throughout all of recorded history) and exchange it for local currencies. 

Why?  It doesn't matter why.  It only matters that is has always been so.  And it is so today.


In the same way, we find that paper can never be money except in a most temporary time frame:  that time frame in which a particular govenment can, through the use of arms, enforce this custom.

The US dollar is money right now - as long as it is customary to respect the full faith and credit of the US Government.  And as long as the full faith and credit of the US government can be enforced.

How long will it be before there is a crisis of confidence in the faith and credit of the US govenment?

And what measures will the US government take to protect its money when that crisis of confidence occurs?






Sure Sign that the economy is about to collapse:

"In fact, there’s a very good chance that 2014 will go down in the record books as one of those years when America took a major turn in the right direction."  - Paul Krugman

Wednesday, October 8, 2014

The "Recovery:" One in Five Americans are always Hungry, 4 out of 5 are Hungry for at least part of their lives. But the top 20 percent are doing really well.

More Americans Struggle to Afford Food

Americans' overall access to basic needs is close to record-low

by Alyssa Brown

WASHINGTON, D.C. -- More Americans are struggling to afford food -- nearly as many as did during the recent recession. The 20.0% who reported in August that they have, at times, lacked enough money to buy the food that they or their families needed during the past year, is up from 17.7% in June, and is the highest percentage recorded since October 2011. The percentage who struggle to afford food now is close to the peak of 20.4% measured in November 2008, as the global economic crisis unfolded.
Percentage of Americans Who Struggled to Afford Food

No Disney Fun for Orlando Workers as Poverty Nears 20%


Walt Disney and Mickey Mouse in the central Hub of the Magic Kingdom in Florida. Photograph: Getty Images

It costs a family of five about $1,500 for a four-day pass to the theme parks at Disney World near Orlando, Florida. It takes Weston Vlier, who drives a bus there, four weeks to earn that much.
“If nobody is able to help us out with food, we just don’t eat,” said the 42-year-old father of three who makes less than $25,000 per year. “I can’t even pay my rent this week.”

Vlier belongs to a growing class of working poor in Orlando, which has the lowest median pay among the 50 most-populous American metropolitan areas, according to U.S. Labor Department data. Three of the city’s largest employers, including Walt Disney Co., increased starting pay this year. Even after Disney raised its minimum wage to $10 per hour, Vlier still lives below the federal poverty line.


80 percent of U.S. adults face near-poverty, unemployment, survey finds

People look through boxes of food during a food distribution by the Food Bank of the Southern Tier Mobile Food Pantry on June 20, 2012 in Oswego, New York. The mobile food pantry program was introduced in 2007 in the Southern Tier of New York and covers nearly 4,000 predominately rural miles. The converted beverage truck delivers fresh produce, dairy products and other grocery items to individuals and families in need. The pantry typically distributes for a period of two hours and provides 100 to 160 families with food. According to the 2010 Census, 15.72% the population serviced by the mobile pantry live at or below the federal poverty level.

According to statistics presented at a recent U.S. Senate committee hearing, almost one in seven Americans are living below the poverty line with a significant number of them being children.  
 
Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.

Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor, and the loss of good-paying manufacturing jobs as reasons for the trend.


24% of Kalamazoo County households live above poverty line but below cost-of-living levels

Kroger store, Gahanna, Ohio
People who are working, but not making enough to keep by with the cost of living, may choose unlicensed child care (rather than traditional and more expensive care) and emergency room visits

I — They have often been called the working poor -- people who live above the poverty line but below basic cost-of-living levels.
They are people who are typically working at low-paying jobs, living paycheck to paycheck and in a constant financial struggle.
povertyALICE_chart.jpg 
They are laborers, skilled workers, drop-outs and college grads who haven't found the work they really want and who, with little or no savings, are one big medical bill or one major car repair payment from slipping underwater financially.

Monday, October 6, 2014

Truth Of The Monetized New Millennium: Gold Is The Top Performing Asset Class

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by Bruno de Landevoisin  @ StealthFlation

I’m certain that the Pompom waving Stock Market fanatics and official Federal Reserve cheer-leading squad will have a hard time accepting this, but fortunately, despite their fantasy football gymnastics, facts remain facts. As such, I will categorically point out that even with its substantial sell off, Gold remains by far the best performing asset class of the Monetized New Millennium.  That veritable fact is as startling, as it is significant.
Most of the excitable equity equestrians will undoubtedly brush off this striking statement as insignificant, and simply discard it as the typical cherry picking of particular price data during periods of exceptional performance. Well, ok, but that entirely misses the most critical and crucial point here. Namely, that the dubiously debt driven asset-bubble based economy ushered in by the Monetized New Millennium shows no signs of relenting.
Zero-Interest-Business-Concept_5829309-515x643QE or no QE, ZIRP lumbers on.  They can talk about it all they want, but until they actually let interest rates normalize it’s just talk, simply more hot air spewing from the blathering bogus balloon blowers.  The Fed can keep reflating the captured capital markets via zero cost funds to their preferred multinational banking institutions, they can keep encouraging the selling of naked digital shorts to contain the Gold market, and they can massage all the economic data they want. However, what they are utterly unable to conjure up out of thin air is legitimate, productive and sustainable economic growth at the ground level for the average American.

It’s all a matter of confidence going forward.

As soon as it becomes self evident that this monetized, synthetically engineered, juiced market economy can not reach escape velocity, unable to establish genuine sustainable economic growth for all of its citizens, the confidence in the misguided monetization paradigm which the financial authorities have unwittingly embraced will be shattered.  At that point, even though the Fed will have lost all credibility, as the economy inevitably drowns in excess liquidity, they will nevertheless double down and once again try to re-monetize.  Let’s face it, that’s all they really know how to do, well, besides looking the other way as Wall Street’s invisible bought off sheriff.
Clearly, the renewed called-for further monetary accommodation will invariably fail once more, and simply exacerbate the real structural economic problems we all know we have.  An economy addicted to and utterly dependent upon cheap debt monetization that invariably brings with it diminishing returns is not a viable regimen, but rather, a lethal injection for the run-down patient.
Having lost all faith in the monetary authorities, America will lose confidence in its ability to grow, and the dollar will start to slide as it becomes clear for all to see that the most indebted nation on the face of the earth, without real and sustainable growth, will be unable to pay down its debts in stable valued dollars.  At which point, both foreign and domestic creditors will demand higher interest to finance American treasury obligations.
This is the tipping point where gold will simply explode, as our misguided monetary authorities finally face the music and pay the piper, forced to further debase the currency in order to pay off the monumental national debt. This is the crucial and absolute truth which the designated financial cheerleaders conveniently ignore and don’t want you to even think about. Yet, this is precisely why Gold remains the best performing asset class of the Monetized New Millennium.  To paraphrase the infamous words of Al Pacino; “It’s just getting warmed up here”
The country simply can not sustain higher interest rates, it can only appear to grow via this ongoing monetization abomination.  That Jerry-rigged jig is nearly up, and sure signs of its having jeopardized our sustainable future growth are already popping up in many crucial economic data points.

New Monetized Millennium Facts Jack:

  • US real median family income has declined to the level of twenty years ago.
  • Labor participation rate has dropped to a 36 year low.
  • Total U.S. household debt, currently over $10 trillion, nearly tripled during the new millennium.
  • U.S. debt to GDP ratio up over 100% since we entered the new monetized millennium.
  • Anemic to flat-line average Real GDP growth throughout the new monetized millennium.
  • As for the new millennium inflation results, take a peak at the chart below, it will blow your mind.
inflation
Reflated nominal equity prices have certainly been a windfall for the minority of Americans that actually own a stock portfolio, but in the end, they do little for the country as a whole, and the shortsighted Fed policy effort may well have greatly harmed our Nation.  In terms of genuine and sustainable economic growth that lifts U.S. boats of all shapes and sizes, the Fed’s fantasy free funds will end up flooding the super ship of state.
The financial sector now accounts for over 30% of all corporate profits.  In my view, as mass counterfeiters, we are simply ignobly living off the vestiges of a world reserve currency which was so honorably achieved by a once monumentally productive America.  Today, the West prints and parties while the rest of the world works and weeps, that is not a sign of exceptionalism, it’s a sign of weakness and an empire in decadent decline.
So when the next eternally eager equity beaver tells you that gold is nothing but a barbarous relic from monetary ages gone by, you can tell them this;  “As the best performing asset class bar none, Gold officially welcomes you to the Monetized New Millennium”.
The bottom line is that we need genuine productive growth to maintain a stable dollar and pay back our monumental national debt.  The Federal Reserve’s monetization abomination modus operandi evidently has diminishing returns and eventually will blow up a debased fiat currency…….same as it ever was.
You show me sustainable growth through monetization and I’ll take my bat & ball and go home. Until then, you’re blowing hot air up my backside.

AS THE FED "TIGHTENS" THE LARGEST US BANKS STOCKPILE TREASURIES: WHAT DO THEY KNOW THAT YOU DON"T KNOW?

American Banks Pile Up Treasuries as Deposits Surpass Loans (4)
2014-10-06 16:00:00.469 GMT


(Updates 10-year yield in fifth paragraph.)

By Susanne Walker
Oct. 6 (Bloomberg) -- American banks are loading up on U.S.
government debt, a sign they remain cautious on the economy even
with the jobless rate at a six-year low and corporations at
their healthiest in a generation.


Commercial lenders increased their holdings of Treasuries
and debt from federal agencies in September by $54 billion to an
unprecedented $1.99 trillion, data from the Federal Reserve
show. Banks have now been net buyers for 12 straight months.
Bank of America Corp. and Citigroup Inc. are among the
lenders adding government bonds this year as loan growth fails
to keep up with record deposits and banks prepare for rules that
take effect in January requiring them to hold more high-quality
assets. While companies in the Standard & Poor’s 500 Index are
earning more than ever and carrying the lowest debt burdens in
at least 24 years, the buying suggests that loan officers are
less sanguine over the outlook for the U.S. economy.

“There’s extra cash the banks have to put to work,”
George Goncalves, the head of interest-rate strategy at Nomura
Holdings Inc., said by telephone Sept. 29. “It’s not being
fully utilized because of less demand, but also the banks have
to be much safer,” which is why they’re buying Treasuries.
The banking industry’s appetite for U.S. government bonds
has helped Treasuries gain 4.2 percent this year and pushed down
yields on the benchmark 10-year note by more than half a
percentage point to 2.42 percent as of 11:55 a.m. in New York.

Deposit Overflow

Banks’ holdings of U.S. government debt securities rose
last month by the most since 2010, even as Treasuries slumped on
deepening concern the Fed would end more than six years of near-
zero rates sooner than some investors expected.
The 0.6 percent
decline was the biggest monthly loss of 2014.
Futures traders are now pricing in a 52 percent chance the
central bank will increase its target rate in July.
After culling government bonds last year for the first time
since 2007, lenders have added almost $180 billion this year,
data compiled by Bloomberg show. Banks have stepped up their
bond purchases as deposits have ballooned to $10.37 trillion,
the most since the Fed data starts in 1973.
Lenders accumulated so much cash that deposits exceeded
loans by the most on record last month. That gap has widened by
more than $300 billion in the past year.
Bank of America, the second-biggest U.S. bank, has more
than quadrupled its available-for-sale holdings of Treasuries
and federal agency debt this year to $38.7 billion as of June
30, the latest company filings compiled by Bloomberg show.

Saturday, October 4, 2014

The US Dollar VS Socrates

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


It certainly appears that as Europe and Japan collapse, the US dollar will keep rising indefinitely.

It appears that the US Dollar is manifestly different from the Euro and the Yen, and from the Ruble and the Yuan.

It is true that only the Dollar is able to fund itself internationally through the issuance of dollar denominated debt.

Yet it is also true that the dollar is similar to the other currencies in that has no intrinsic value.  It is backed only by the Good Faith established by the US Government.

Some people claim that no currencies have ever had "intrinsic value."  But this claim ignores that fact that for all of human history gold has been either money itself, of exchangeable on demand in virtually every city in the world for local currency - even today.  This is the very definition of "Intrinsic value."

The dollar has been the world's reserve currency - which means it can fund itself through dollar denominated debt - for 50 years of world history.

That appears to be a very long time.  It appears to be almost permanent.

Yet the dollar will cease to be the reserve currency the second a large creditor refuses to roll over its dollar denominated debt.

It appears that this will never happen.

Yet is has always happened.

As Euros and Yen and Rubles and Yuan flee Europe and Japan and Russia and China to escape the massive instability in those countries, and pour into the US - It Appears  as if the US economy is strong and gaining strength.

Yet the US economy has barely been growing at 2 percent for the 5 years of current "recovery."

And as the Dollar gets stronger and stronger, it becomes increasingly difficult for US companies to export to the rest of the world.

It appears that the US Dollar strength must be a very good thing for the US economy and the US markets.

Yet that very dollar strength in an economy that's barely growing  will be the very thing that pushes that US economy back into recession.

The markets appear to welcome the dollar strength.

Yet  the US markets have thrived precisely because of everything the US Central Bank has done to weaken the US Dollar.

So what's all this have to do with Socrates?

Well, Socrates was the fellow who developed an entire Philosophy based on the idea that to understand anything at all one must ask as series of four questions:

1) What is it?  2) What is it not?  3) What does it appear to be?  4) What does it appear not to be?

The entire universe of Greek Philosophy revolved around the discussion of "Appearance" or "Seeming."  The first word ever to appear on coinage is "Phanes" which means "To appear" or to "Seem to be", and also "to Shine" and by extension to be "Eminent" or "Royal."

Before the Greeks the idea of a difference between appearance and reality did not really exist.  There is not even a word for to appear or to seem to be in the Semitic languages.

As our culture was founded on Greek Culture, our institutions founded on Greek institutions (like "Democracy") it would appear that Seeming or Appearance should be at the center of Modern American Thought.

Yet it is not.

In fact, there are many right now who would argue that everything is relative - in other words there is no real difference between Seeming to be and Being.  It is thought to be quaint or naive to believe in this distinction that informed that thought of Socrates, Parmenides, Heraclitus and Plato.

We know better now.  So if the dollar appears to be strong, and the US markets appear to be strong then they must be strong.

Until, suddenly, one day, they're not strong.

And then it will appear as if this change happened over night.