-The Captain
Monday, May 30, 2011
A quick thank you to my readers.
Just wanted to take a quick second to acknowledge and to thank my growing readership base. Its motivating to see the truth going global and to see people everywhere actively searching for more information on what is really wrong with the world economic and political system today. If you agree with the things you are reading on my blog then please, forward the link to a friend, neighbor or relative as another data source for their consideration. Yeah they will probably think you a bit off kilter when they read what I have to say but in time they will finally get it because the collapse of the global debt Ponzi will be unmistakable and unavoidable. If you care about someone you will tell them the truth and the sooner the better so that they have as much time as possible to prepare themselves. There will be life -good life- after the collapse for sure but some hard years are ahead of us all for sure and some thoughtful preparations will ease the pain. Still, how can anyone prepare if nobody has let them in on the con? All the best to you and yours,
-The Captain
-The Captain
Too much money, not enough safe places to hide...
Zerohedge continues to report on the attempts by the Chinese to find other ways to store the value that it currently has stored in trillions of dollars worth of US treasuries. Here's the bottom line: there are not enough traditional places to store all that debt based money and so eventually a lot of it will end up pouring into gold.
Here's how it is: credit based money is by far the biggest component of the global money supply. Another word for that kind of money is debt. To any thinking person this should strike them like a cold slap in the face! After all, money is supposed to be a store of value. But debt is not current value. Debt is a Wimpy Promise©, a promise to create new value in the future and then transfer it to the creditor. Debt is a claim on future labor without any guarantee that said labor will ever occur. Today, debt notes are traded around the world as if they had the same value as cash in hand. Wimpy Promises are foolishly held in the same high regard as the daily labor of honest men. This is the curse of fractional reserve banking. At some point it will become very apparent that promises are not the same thing as work done - not even close. Promises are easy to make; talk is cheap. Real work, not so much.
Today there are all these debt notes running around the world. People who hold these debt instruments believe that they are wealthy in the same way as Madoff clients thought themselves wealthy 2 days before he admitted that his whole operation was a massive con game. The holders of all this debt are getting nervous. As civil unrest and recessions continue to pop up around the world, the debt is being chased to and fro because debt has a way of evaporating into nothingness in bad economic times and at times of civil unrest. All it takes to go from billionarie to broke is for the debtor to say "I'm not repaying the debt, sucker". Each time this debt based money invades a market, that market bubbles up rapidly because there is just too much debt money looking to get converted into stuff of real value like houses and commodities. The serial bubbles we have seen happening around the world are the result of this fractional reserve con game.
The problem at this point for these debt holders is that each time they move from one market to the next its because the current market they are in has collapsed and they have fled out of fear. Its not much different than tuna attacking a bait ball. An attack occurs, some of the bait gets swallowed, the bait ball scatters and then regroups looking for safety. In short order the next attack occurs and then another and then another until all that is left is the scales. The elite hold most of this debt. Their strategy has been to make a nice living by doing no work; the interest on their debt provides them a perpetual source of prosperity. Or so they thought. The only problem with their plan is that it is not a function of money to make new money and so, in aggregate, it cannot do so. It can appear to do so for long periods of time but at some point there must come the great rebalancing. That time is now. Those who are quick to recognize this will abandon debt instruments as sources of income and seek instead tangible assets of enduring value. Those who are slow to figure it out will get mauled.
Debt holders could, today, freely convert some of their value into gold. In fact, the rising price of gold for the past decade shows that this has been happening. But now they consider gold expensive and so they hesitate going there. Instead, the debt runs to and fro looking for a safe haven and for that that all important Wimpy Promise of return on investment. At some point the debt holders will figure out that -between inflation and default- their real rate of return is, in aggregate, zero or even negative. In fact, it has to be so because money does not make money in aggregate. What cannot be will not be. Some people will get richer and some people will get poorer in this process but in aggregate no new wealth will be created.
When the hot money flows into commodities, massive numbers of people can't afford food and they either take up arms and fight for survival or they die in their tracks. Governments don't like to see their livestock fall over dead like because dead livestock cannot be milked and fleeced anymore. Thus, governments intervene to drive commodity prices down. This forces the debt money to flee - the creditors know that rule changes by governments can be very costly. At the end of the day, the final resting place for any value left in the bait ball that hasn't gotten cut to pieces by the razor sharp teeth of the financial tuna will have but one place to go: gold. As I have written in the past, rising gold prices don't hurt the economy. Yeah, rising gold prices whack the crap out of the dying credibility of the con men residing in government and in the offices of the central banks but nobody ever did without food or shelter because the price of gold went up. Gold is not a commodity, it is money. At some point the ravaged debt holders will realize that they should have just gotten into gold early on and forgotten about trying to make their money work for them.
Here's how it is: credit based money is by far the biggest component of the global money supply. Another word for that kind of money is debt. To any thinking person this should strike them like a cold slap in the face! After all, money is supposed to be a store of value. But debt is not current value. Debt is a Wimpy Promise©, a promise to create new value in the future and then transfer it to the creditor. Debt is a claim on future labor without any guarantee that said labor will ever occur. Today, debt notes are traded around the world as if they had the same value as cash in hand. Wimpy Promises are foolishly held in the same high regard as the daily labor of honest men. This is the curse of fractional reserve banking. At some point it will become very apparent that promises are not the same thing as work done - not even close. Promises are easy to make; talk is cheap. Real work, not so much.
Today there are all these debt notes running around the world. People who hold these debt instruments believe that they are wealthy in the same way as Madoff clients thought themselves wealthy 2 days before he admitted that his whole operation was a massive con game. The holders of all this debt are getting nervous. As civil unrest and recessions continue to pop up around the world, the debt is being chased to and fro because debt has a way of evaporating into nothingness in bad economic times and at times of civil unrest. All it takes to go from billionarie to broke is for the debtor to say "I'm not repaying the debt, sucker". Each time this debt based money invades a market, that market bubbles up rapidly because there is just too much debt money looking to get converted into stuff of real value like houses and commodities. The serial bubbles we have seen happening around the world are the result of this fractional reserve con game.
The problem at this point for these debt holders is that each time they move from one market to the next its because the current market they are in has collapsed and they have fled out of fear. Its not much different than tuna attacking a bait ball. An attack occurs, some of the bait gets swallowed, the bait ball scatters and then regroups looking for safety. In short order the next attack occurs and then another and then another until all that is left is the scales. The elite hold most of this debt. Their strategy has been to make a nice living by doing no work; the interest on their debt provides them a perpetual source of prosperity. Or so they thought. The only problem with their plan is that it is not a function of money to make new money and so, in aggregate, it cannot do so. It can appear to do so for long periods of time but at some point there must come the great rebalancing. That time is now. Those who are quick to recognize this will abandon debt instruments as sources of income and seek instead tangible assets of enduring value. Those who are slow to figure it out will get mauled.
Debt holders could, today, freely convert some of their value into gold. In fact, the rising price of gold for the past decade shows that this has been happening. But now they consider gold expensive and so they hesitate going there. Instead, the debt runs to and fro looking for a safe haven and for that that all important Wimpy Promise of return on investment. At some point the debt holders will figure out that -between inflation and default- their real rate of return is, in aggregate, zero or even negative. In fact, it has to be so because money does not make money in aggregate. What cannot be will not be. Some people will get richer and some people will get poorer in this process but in aggregate no new wealth will be created.
When the hot money flows into commodities, massive numbers of people can't afford food and they either take up arms and fight for survival or they die in their tracks. Governments don't like to see their livestock fall over dead like because dead livestock cannot be milked and fleeced anymore. Thus, governments intervene to drive commodity prices down. This forces the debt money to flee - the creditors know that rule changes by governments can be very costly. At the end of the day, the final resting place for any value left in the bait ball that hasn't gotten cut to pieces by the razor sharp teeth of the financial tuna will have but one place to go: gold. As I have written in the past, rising gold prices don't hurt the economy. Yeah, rising gold prices whack the crap out of the dying credibility of the con men residing in government and in the offices of the central banks but nobody ever did without food or shelter because the price of gold went up. Gold is not a commodity, it is money. At some point the ravaged debt holders will realize that they should have just gotten into gold early on and forgotten about trying to make their money work for them.
Greece is falling to pieces
Mish reports on capital flight from Greek banks in the midst of new rounds of protest. Mauldin describes the situation as A Random Walk Through The Minefield. Both of their posts are well worth the time to read. Mauldin's even lists a potential sequence of events that could occur in case of default. By the way, all talk of "muddle through" is now history with Mauldin. Now he only refers to "end games" and "mine fields". He's realized finally that no soft landing is possible this time. The con can only be perpetuated for so long. When a certain critical mass of the people are negatively affected, the con is on its last legs. We are well past that point for several of the PIIGS.
The quick summary of their posts is that Greece is going to default on their debt (was there ever any doubt? Really? REALLY??). The only question is how. "When" is always a question too. It's like this: Germany and France (and others) lent a lot of money to Greece so that it could buy their products (vendor finance get rich quick scheme at the sovereign level). Now that it's clear that Greece could never afford their overpriced products in the first place, Germany and France want the next generation of Greek youth to submit to being life time debt slaves in order to pay for the sins of their parents. If Greece defaults then not only are Germany and France out a lot of money that they are owed, they also lose a lot of future foreign sales. Given that they have become accustomed to revenues from these fraudulent sales, the loss of them is going to sting. The collapse of foreign debt also has knock on effects in their own economies (think businesses going bankrupt and unemployment rising and civil unrest aimed at the central mismanagement). Also, any default will cause a chain of defaults. If Greeks refuse to pay, will the Irish pay? Will the Spaniards? No. They will look at the herd next door and they will model their behavior by what they see.
Until now, Germany and France have been suggesting that the situation be handled by Greeks tightening their belts, consuming less and working harder so that the output of their labor can pay the interest on the debt. They will never pay the debt off and that is not even the goal of the debt owners. The goal is to keep their economic serfs in perpetual debt - a constant source of revenue for the slave masters. At this point it is clear that belt-tightening has had unintended consequences including riots and fire bombs. Confidence in the leaders has been lost. Greeks realize that their elected officials are con men who are in it for themselves, everyone else be damned (Americans haven't come to this realization yet - we are still foolishly arguing Dem vs. GOP - but we will do so when Greek style problems hit us in the future).
Worse yet, the herd is starting to self-organize in unison against the con men. The elite fear self-organized people more than anything else. They count on the herd not being able to self organize! Organization is what the elite claim they bring to the table. It's their supposed value add. If people are self organizing outside of the control of the elite then the elite will be cut out of the pie. They will not be able to control things or to parasitically steal from the people which is their only means of subsistence. The elite also know that if the herd gets all moving in the same direction at the same time that they feed on each other's energies. This makes it very difficult to divide and conquer them. Self-organizing slaves have always been a danger to the slave owners.
Unfortunately for the con men, the Greeks are no longer feeding off just their own herd energy. Mish's article has the following:
"This is the fifth day of protests in Syntagma Square and this time they have been joined by a Spanish group who wanted to express solidarity with the merger."
- and-
"People were outraged, but needed motivation to express themselves. The Spanish have given us that motivation," said Argyrou Iphigenia, an insurance agent, told Reuters. "We're not asleep. We are awake. The IMF must go."
- and -
"The demonstration has been called through social networks, as well as in Spain, and the participants cited the movement as a reference 15M."
So the people of the region are now feeding off the herding energy of neighboring sovereigns. Just when the con men think they have gotten the herd to sleep, some new commotion puts them all back on the hoof again. Yes, that is really what is happening. The herd is also leveraging social networks, Youtube, streaming cameras and other high tech ways to get their message out quickly. The solidarity formed through this sort of rapid ideology propagation is powerful. By the way, the reference to 15M above is 15 May - the day that Spaniards began their big sleep over protests in public squares. 15M is now young person code for "damn the man" (credit: Empire Records). They are building something to rally around, something that is theirs and which they control. Something that is not the property of their overlords. The great herd awakening is spreading like wildfire and the pace is increasing. There will be fireworks in Euroland this summer and it will not be related to the celebration of US independence.
The quick summary of their posts is that Greece is going to default on their debt (was there ever any doubt? Really? REALLY??). The only question is how. "When" is always a question too. It's like this: Germany and France (and others) lent a lot of money to Greece so that it could buy their products (vendor finance get rich quick scheme at the sovereign level). Now that it's clear that Greece could never afford their overpriced products in the first place, Germany and France want the next generation of Greek youth to submit to being life time debt slaves in order to pay for the sins of their parents. If Greece defaults then not only are Germany and France out a lot of money that they are owed, they also lose a lot of future foreign sales. Given that they have become accustomed to revenues from these fraudulent sales, the loss of them is going to sting. The collapse of foreign debt also has knock on effects in their own economies (think businesses going bankrupt and unemployment rising and civil unrest aimed at the central mismanagement). Also, any default will cause a chain of defaults. If Greeks refuse to pay, will the Irish pay? Will the Spaniards? No. They will look at the herd next door and they will model their behavior by what they see.
Until now, Germany and France have been suggesting that the situation be handled by Greeks tightening their belts, consuming less and working harder so that the output of their labor can pay the interest on the debt. They will never pay the debt off and that is not even the goal of the debt owners. The goal is to keep their economic serfs in perpetual debt - a constant source of revenue for the slave masters. At this point it is clear that belt-tightening has had unintended consequences including riots and fire bombs. Confidence in the leaders has been lost. Greeks realize that their elected officials are con men who are in it for themselves, everyone else be damned (Americans haven't come to this realization yet - we are still foolishly arguing Dem vs. GOP - but we will do so when Greek style problems hit us in the future).
Worse yet, the herd is starting to self-organize in unison against the con men. The elite fear self-organized people more than anything else. They count on the herd not being able to self organize! Organization is what the elite claim they bring to the table. It's their supposed value add. If people are self organizing outside of the control of the elite then the elite will be cut out of the pie. They will not be able to control things or to parasitically steal from the people which is their only means of subsistence. The elite also know that if the herd gets all moving in the same direction at the same time that they feed on each other's energies. This makes it very difficult to divide and conquer them. Self-organizing slaves have always been a danger to the slave owners.
Unfortunately for the con men, the Greeks are no longer feeding off just their own herd energy. Mish's article has the following:
"This is the fifth day of protests in Syntagma Square and this time they have been joined by a Spanish group who wanted to express solidarity with the merger."
- and-
"People were outraged, but needed motivation to express themselves. The Spanish have given us that motivation," said Argyrou Iphigenia, an insurance agent, told Reuters. "We're not asleep. We are awake. The IMF must go."
- and -
"The demonstration has been called through social networks, as well as in Spain, and the participants cited the movement as a reference 15M."
So the people of the region are now feeding off the herding energy of neighboring sovereigns. Just when the con men think they have gotten the herd to sleep, some new commotion puts them all back on the hoof again. Yes, that is really what is happening. The herd is also leveraging social networks, Youtube, streaming cameras and other high tech ways to get their message out quickly. The solidarity formed through this sort of rapid ideology propagation is powerful. By the way, the reference to 15M above is 15 May - the day that Spaniards began their big sleep over protests in public squares. 15M is now young person code for "damn the man" (credit: Empire Records). They are building something to rally around, something that is theirs and which they control. Something that is not the property of their overlords. The great herd awakening is spreading like wildfire and the pace is increasing. There will be fireworks in Euroland this summer and it will not be related to the celebration of US independence.
Saturday, May 28, 2011
Police brutality escalating. The pain in Spain is now in Barcelona.
Ah, Barcelona. GaudÃ. La Sagrada Familia. The architecture. The history. The pickpockets. And now, of course, the F$%*^g militarized police hitting people in the face and upper body with their batons just because the unemployed young people are protesting nonviolently. Modern video cameras and the Internet give you that "I was just struck in the face by a fascist cop" feeling anytime you want it these days (watch in full screen for best vicarious viewing experience):
http://www.youtube.com/watch?v=Geg_6Xoy04s&feature=player_embedded
What gives the right to a public employee of any class to strike someone else in the face with a hard wooden baton when such person is sitting on the ground making no threatening moves? This is how ranchers herd their cattle. It is not how supposedly civilized people should treat nonviolent protestors in this day and age. I know the cops are tired and that they have been working long hours but I say TOO BAD. It comes with the job. I work long hours too and I get frustrated too but if I took a stick to someone who was bothering me I would be in jail for 10 years. Police have every right to defend themselves but they have no right in any civilized country to hit someone in the head with a heavy baton who is just sitting there . Shame on you, Policia de Barcelona. El mundo está mirando ustedes. Cuidado con lo que haces en la cámara.
So what drives these young people to sit there and take beatings to the head and upper torso? Clearly they are passionate about something. Clearly the herd is now in risk taking mode. Participating in that demonstration is high risk behavior - not something normally associated with herd-think. How easy it would be for any one of them in the front row to have an eye bashed out or to lose their teeth as the result from a blow from one of the Centurions. A wrong blow could even cause concussion or coma. It has happened before... Where would they get medical care? No job=no benefits. Yet there they sit bleeding. Truth be told, only 5% of them have any real clue why they are there. They know they are unemployed (unemployment among young people in Spain is 41%). They know that bankers screwed them somehow but they really don't know how. Their main sense is that bankers "messed up" and then used political connections to get bail outs and that's what they are pissed about. If only it were so simple.
The problem is not bankers but a corrupt global banking system which enables fiat currency and fractional reserve lending. Anyone who is part of this system who does not play the game gets creamed or becomes irrelevant. As Chuck Prince reminded us "you have to dance while the music is playing". This corrupt con game swells the money supply when people are borrowing and the resulting larger money supply creates booms. Then, when people decide to stop borrowing, the money supply deflates again causing busts.
Each inflation/deflation cycle clearly results in more net inflation because governments try to battle the deflation by printing money. Once the bad debt is written off the next credit cycle begins on top of a larger monetary base. Of course, bankers know the timing of all this and they take advantage of it to concentrate the wealth of the land into very few hands. Con men end up rich, hard workers end up face down in the gutter, destitute. How many people really understand this scam? In my experience, 5% or less. Most people still roll their eyes when I tell them our banking system is a scam waiting to collapse under its own corrupt weight. They don't want to think about the facts because the facts are scary to them. They don't want to traverse the Kubler-Ross grief cycle so they are stuck in denial.
So, that's the scam, pure and simple and it is global. It works the same way in Spain as in Greece as in the US, albeit with different timing. The scam is criminal in nature. In fact, I believe that it is treasonous. I labeled Greenspan a traitor 5 years ago. Yes, Alan "Maestro" Greenspan, I want to live to see you tried for treason against the United States and for financial crimes against humanity. Please don't die until your scams catch up with you. That would just be too easy. Those running this scam should be tried for all of the global pain and suffering they have caused. They are as bad as any war criminal when you add it all up. Central banking based on fiat currency and fractional reserve lending is a crime against humanity. That may sound extreme today but wait and see, folks. The big crash is still coming and when it sets in the damage and pain and human suffering that it will cause will make many past human tragedies pale in comparison. It's already worse on a global basis than many people thought possible just 4 year ago...
What is a young person in Spain (or elsewhere) supposed to do if (s)he can't get a job because the con men have fraked the credit system so badly that we could be a decade or more in the repair of it? Yes, folks, that's what we are looking at. So the 25 year old unemployed person could end up being 35 with no skills, no experience, no prospects and at some point perhaps even no food. Good lives wasted by the con men of money. I'm sorry to say that nobody is going to be that patient to wait for 10 year or 20 years. In fact, taking batons to the face is going to make them run out of patience much sooner. The whole Eurozone is quite likely on the brink of a Tunisia style revolt yet the US headlines barely have a word of it. The online news is now as tightly controlled as the printed media has been for years. Google et al. have been told not to frighten people and to avoid topics of contention for the sake of the people. Of course the reality is that this is like France or Germany bailing out Ireland or Spain or some other PIIGS. If they do it, they do it for themselves, not someone else.
If the bloggers get cut off then be afraid. Be very afraid. If the day comes when government can't shrug off the stinging words of seemingly inconsequential bloggers then it should be taken as one of those many trigger points I have often written about in the past. I believe it could likely happen within the next decade. Perhaps that's why facebook billionaire Mark Zuckerberg is now slaughtering his own meat and learning about farming. Learning subsistence living techniques.. does this seem like typical behavior for a tycoon? Perhaps he's just smart enough to know that in a worst case scenario his billions in funny money wouldn't be worth the green toilet paper they are printed on. A reversion to honesty would mean there is no such thing as billionaires because nobody can possibly work that much harder or produce that much more economic output than his fellow man. Billionaires are an artifact of a corrupt money supply.
http://www.youtube.com/watch?v=Geg_6Xoy04s&feature=player_embedded
What gives the right to a public employee of any class to strike someone else in the face with a hard wooden baton when such person is sitting on the ground making no threatening moves? This is how ranchers herd their cattle. It is not how supposedly civilized people should treat nonviolent protestors in this day and age. I know the cops are tired and that they have been working long hours but I say TOO BAD. It comes with the job. I work long hours too and I get frustrated too but if I took a stick to someone who was bothering me I would be in jail for 10 years. Police have every right to defend themselves but they have no right in any civilized country to hit someone in the head with a heavy baton who is just sitting there . Shame on you, Policia de Barcelona. El mundo está mirando ustedes. Cuidado con lo que haces en la cámara.
So what drives these young people to sit there and take beatings to the head and upper torso? Clearly they are passionate about something. Clearly the herd is now in risk taking mode. Participating in that demonstration is high risk behavior - not something normally associated with herd-think. How easy it would be for any one of them in the front row to have an eye bashed out or to lose their teeth as the result from a blow from one of the Centurions. A wrong blow could even cause concussion or coma. It has happened before... Where would they get medical care? No job=no benefits. Yet there they sit bleeding. Truth be told, only 5% of them have any real clue why they are there. They know they are unemployed (unemployment among young people in Spain is 41%). They know that bankers screwed them somehow but they really don't know how. Their main sense is that bankers "messed up" and then used political connections to get bail outs and that's what they are pissed about. If only it were so simple.
The problem is not bankers but a corrupt global banking system which enables fiat currency and fractional reserve lending. Anyone who is part of this system who does not play the game gets creamed or becomes irrelevant. As Chuck Prince reminded us "you have to dance while the music is playing". This corrupt con game swells the money supply when people are borrowing and the resulting larger money supply creates booms. Then, when people decide to stop borrowing, the money supply deflates again causing busts.
Each inflation/deflation cycle clearly results in more net inflation because governments try to battle the deflation by printing money. Once the bad debt is written off the next credit cycle begins on top of a larger monetary base. Of course, bankers know the timing of all this and they take advantage of it to concentrate the wealth of the land into very few hands. Con men end up rich, hard workers end up face down in the gutter, destitute. How many people really understand this scam? In my experience, 5% or less. Most people still roll their eyes when I tell them our banking system is a scam waiting to collapse under its own corrupt weight. They don't want to think about the facts because the facts are scary to them. They don't want to traverse the Kubler-Ross grief cycle so they are stuck in denial.
So, that's the scam, pure and simple and it is global. It works the same way in Spain as in Greece as in the US, albeit with different timing. The scam is criminal in nature. In fact, I believe that it is treasonous. I labeled Greenspan a traitor 5 years ago. Yes, Alan "Maestro" Greenspan, I want to live to see you tried for treason against the United States and for financial crimes against humanity. Please don't die until your scams catch up with you. That would just be too easy. Those running this scam should be tried for all of the global pain and suffering they have caused. They are as bad as any war criminal when you add it all up. Central banking based on fiat currency and fractional reserve lending is a crime against humanity. That may sound extreme today but wait and see, folks. The big crash is still coming and when it sets in the damage and pain and human suffering that it will cause will make many past human tragedies pale in comparison. It's already worse on a global basis than many people thought possible just 4 year ago...
What is a young person in Spain (or elsewhere) supposed to do if (s)he can't get a job because the con men have fraked the credit system so badly that we could be a decade or more in the repair of it? Yes, folks, that's what we are looking at. So the 25 year old unemployed person could end up being 35 with no skills, no experience, no prospects and at some point perhaps even no food. Good lives wasted by the con men of money. I'm sorry to say that nobody is going to be that patient to wait for 10 year or 20 years. In fact, taking batons to the face is going to make them run out of patience much sooner. The whole Eurozone is quite likely on the brink of a Tunisia style revolt yet the US headlines barely have a word of it. The online news is now as tightly controlled as the printed media has been for years. Google et al. have been told not to frighten people and to avoid topics of contention for the sake of the people. Of course the reality is that this is like France or Germany bailing out Ireland or Spain or some other PIIGS. If they do it, they do it for themselves, not someone else.
If the bloggers get cut off then be afraid. Be very afraid. If the day comes when government can't shrug off the stinging words of seemingly inconsequential bloggers then it should be taken as one of those many trigger points I have often written about in the past. I believe it could likely happen within the next decade. Perhaps that's why facebook billionaire Mark Zuckerberg is now slaughtering his own meat and learning about farming. Learning subsistence living techniques.. does this seem like typical behavior for a tycoon? Perhaps he's just smart enough to know that in a worst case scenario his billions in funny money wouldn't be worth the green toilet paper they are printed on. A reversion to honesty would mean there is no such thing as billionaires because nobody can possibly work that much harder or produce that much more economic output than his fellow man. Billionaires are an artifact of a corrupt money supply.
Tuesday, May 24, 2011
Mauldin: Greek defaults will not be contained.
In a recent video interview, John Mauldin stumbles through an explanation of the obvious and actually says things I wrote to him about years ago. All talk of "muddle through" from him has evaporated. The bottom line is simple: the sovereign debt crisis is global. Nothing about it has been "fixed" by all of the bail outs. They are just buying time. They are old men adrift in a sea of debt with a tin can bailing out a sinking boat and getting very weary from the effort at this point. Mauldin points out a few things that I think are important:
One more thing to think about: Utah did finally pass a law stating that gold and silver are now recognized as money in the state. The passage of the law, in many ways, raises more questions than it answers but one aspect of it is very clear: there will be no more state level taxation on fake inflation gains from gold and silver. The implications of this are huge. First off, it represents a big % increase in retained earnings relative to other forms of investment. It enables (state) tax free speculation in gold and silver. Do you think that will increase investment demand for the money metals? (In my best Clint Eastwood impression): Well, do ya?
The recent law has to make Utah residents wonder why they should report fake paper gains on gold and silver sales to the IRS (and so they won't). Utah has basically said it is immoral to tax gold and silver based transactions in and out of the dollar. How big a leap is it really to say that this exempts people from paying sales tax if the item is priced in gold? What are they going to do, demand tax be paid in gold? Hmm. Maybe that's the whole point. Maybe its how they go from today where the state collects taxes in the form of worthless paper to a point where it collects taxes (sales tax, property tax, income tax, etc.) paid in gold and silver coins. Remember, the LDS are an educated lot in aggregate and they are known to be wise in the ways of money too. That's not a stereotype, its a compliment.
Finally, Utah is not alone. Many other states are in the mid to later stage of enacting similar laws. Advantage: gold and silver, the untaxable investments. Owning anything else is starting to feel like a punishment.
- Greece is headed for default, period. The con men are trying to create new terms such as "re-profiling" to avoid using the "D" word in order to avoid triggering credit default swaps but nobody is going to be fooled by that at this point. Many people are actually lined up waiting for their CDS to pay off. When the defaults occur they will be screaming to get paid. A name change is not going to affect that! It is in their best interest for a collapse to occur. They are mushrooms waiting for the dead tree to fall over. CDS are supposed to be a way to spread risk, kind of like insurance. But with so much excess credit based money sloshing around in the economy people had to come up with creative ways to "put it to work". Many CDS are now bought as investments, not as insurance. In other words, its like "investing" in insurance on an old person that you hope will die soon so you can get the payout.
- Any sovereign default is likely to result in a complete default. The whole point of the "we haven't defaulted yet" charade is to enable further borrowing. Once the defaults occur nobody will loan them money so they might as well default on anything and everything they can. Make a real jubilee of it.
- The big lie is that CDS' will balance each other out. The story goes that financial speculator A bets this way, financial speculator B bets that way. Sometimes A wins and sometimes B wins but in aggregate its a wash. But this neat little explanation ignores the elephant in the living room which is counterparty risk. When A or B "wins", what guarantees that the person who lost will pay up? If A and B win some and lose some but they don't get paid by counterparties when they win then they themselves will have to default on payment of the CDS' they lost on. In other words, its one big financial circle jerk waiting for the first deadbeat to default in a big way.
- To underscore this point, note what Mauldin says about the European Central Bank (ECB) only having 10 billion Euros in capital. Ten stinking billion. That is chump change in this world of credit based money. The ECB is hardly a central bank at all. If it starts printing Euros like crazy the inflation in Euroland will skyrocket.
- There is no game plan because there can be no game plan. No Ponzi ever lasted forever and it's not different this time. The con men are simply keeping the Ponzi plate spinning as long as they can because they get paid a lot of money each week that goes by for doing nothing of any economic value. Could you imagine the bankers actually having to do real work like cleaning toilets or competing with sun-hardened laborers? They would literally die. In fact, some of them appear to believe they are better off dead than to step down from the Ponzi and get a real job. It looks like throwing oneself off a tall roof is going to be in fashion for the next couple years if you are con man banker. Some of them appear to be going about it in a very calm, organized way, almost as if completing a pact.
One more thing to think about: Utah did finally pass a law stating that gold and silver are now recognized as money in the state. The passage of the law, in many ways, raises more questions than it answers but one aspect of it is very clear: there will be no more state level taxation on fake inflation gains from gold and silver. The implications of this are huge. First off, it represents a big % increase in retained earnings relative to other forms of investment. It enables (state) tax free speculation in gold and silver. Do you think that will increase investment demand for the money metals? (In my best Clint Eastwood impression): Well, do ya?
The recent law has to make Utah residents wonder why they should report fake paper gains on gold and silver sales to the IRS (and so they won't). Utah has basically said it is immoral to tax gold and silver based transactions in and out of the dollar. How big a leap is it really to say that this exempts people from paying sales tax if the item is priced in gold? What are they going to do, demand tax be paid in gold? Hmm. Maybe that's the whole point. Maybe its how they go from today where the state collects taxes in the form of worthless paper to a point where it collects taxes (sales tax, property tax, income tax, etc.) paid in gold and silver coins. Remember, the LDS are an educated lot in aggregate and they are known to be wise in the ways of money too. That's not a stereotype, its a compliment.
Finally, Utah is not alone. Many other states are in the mid to later stage of enacting similar laws. Advantage: gold and silver, the untaxable investments. Owning anything else is starting to feel like a punishment.
Monday, May 23, 2011
Statist debt Ponzi collapsing in slo mo.
The recent news from California is that they have to let prisoners go. Why? Because they can no longer afford to continue expanding the penal system and so overcrowding has gotten critical. In other words, their debt Ponzi is collapsing and along with it the statist quo. The statists love prisons. They love overbearing laws. They love control. They love jailing people for nonviolent non-dangerous drug infractions. But they don't want to pay for the prisons themselves. Like all statist programs, including welfare, they want someone else to pay for it. They claim they are doing it for compassion and for order and for civility but the truth is that they are doing it so they can turn a tidy profit administering the whole thing. When it finally collapses there will be far less compassion and order than there would have been without the statist bubble. All of their efforts to control people will end up being a net negative. All they ever wanted was power over their fellow man even though they themselves don't produce anything useful. They have been financing this power grab for many years with massive debt but now they have entered the end game of the debt Ponzi. When the Ponzi collapses their beloved power will swirl the bowl too.
The prisons are just the start of it. Welfare will collapse, housing subsidies will collapse. Everything that they have bought with their ridiculous debt will collapse. Infrastructure will collapse too. California is Greece. Strike that. California is more like Spain or Italy both in economic size and in likelihood of going bankrupt. Over the next decade, California will just get older and grittier. California will see riots before this bust is over. The easy, credit driven funny money is drying up. California is raising taxes to try to fill the gap but it is causing businesses to flee. California government is chasing out many of the top producers and as a result the burden on those remaining just continues to ratchet up, inch by inch. It reminds me of Floridians who stayed in their condos while many of their neighbors left. The result was a dramatic rise in the monthly condo fees as constant fees were borne by fewer shoulders. Con men and willing patsies at every level have run California into the ground and I fear that an eventual massive collapse is inevitable for the state at some point, probably within a decade. Not that everyone else will have it very much better but California bubbled up higher and thus has much further to fall as the Grand Illusion - the American Dream - evaporates back into the ether right along with all the debt that it used to pump itself up in the first place.
The smart people are those who see it coming and who leave before it gets real bad. The smart ones hear the economic tsunami sirens wailing and are running like Hell for higher ground. The people who sold Florida condos for a small loss ended up saving themselves from total loss by leaving early. Those who remained have properties whose condo fees are as much as the mortgage in some cases. This makes their property un-sellable. Of course, condo fees are a rip off and always have been. Who in their right mind would pay $350-$500 or more per month so that someone can mow the lawn and trim the hedges and clean the pool? If I have a lawn and a hedge and a pool it certainly doesn't cost me $350-$500 per month to maintain them and you would think that each condo owner's piece of the hedge and pool is quite small when amortized over all the residents. Obviously some con man is making a profit off the condo fees - money for nothing. When the credit was flowing nobody cared. Now that the credit is retracting, everyone will care a lot.
The prisons are just the start of it. Welfare will collapse, housing subsidies will collapse. Everything that they have bought with their ridiculous debt will collapse. Infrastructure will collapse too. California is Greece. Strike that. California is more like Spain or Italy both in economic size and in likelihood of going bankrupt. Over the next decade, California will just get older and grittier. California will see riots before this bust is over. The easy, credit driven funny money is drying up. California is raising taxes to try to fill the gap but it is causing businesses to flee. California government is chasing out many of the top producers and as a result the burden on those remaining just continues to ratchet up, inch by inch. It reminds me of Floridians who stayed in their condos while many of their neighbors left. The result was a dramatic rise in the monthly condo fees as constant fees were borne by fewer shoulders. Con men and willing patsies at every level have run California into the ground and I fear that an eventual massive collapse is inevitable for the state at some point, probably within a decade. Not that everyone else will have it very much better but California bubbled up higher and thus has much further to fall as the Grand Illusion - the American Dream - evaporates back into the ether right along with all the debt that it used to pump itself up in the first place.
The smart people are those who see it coming and who leave before it gets real bad. The smart ones hear the economic tsunami sirens wailing and are running like Hell for higher ground. The people who sold Florida condos for a small loss ended up saving themselves from total loss by leaving early. Those who remained have properties whose condo fees are as much as the mortgage in some cases. This makes their property un-sellable. Of course, condo fees are a rip off and always have been. Who in their right mind would pay $350-$500 or more per month so that someone can mow the lawn and trim the hedges and clean the pool? If I have a lawn and a hedge and a pool it certainly doesn't cost me $350-$500 per month to maintain them and you would think that each condo owner's piece of the hedge and pool is quite small when amortized over all the residents. Obviously some con man is making a profit off the condo fees - money for nothing. When the credit was flowing nobody cared. Now that the credit is retracting, everyone will care a lot.
Saturday, May 21, 2011
The reveal is happening. All that remains is the backlash.
For at least 4+ years now I have been writing that the global economic system is a debt Ponzi. Back then the herd simply did not believe it. Nowadays, however, these words are being repeated again and again. They are being pounded into the collective head on every news outlet. The confidence of the herd in the ability of central bankers to create perpetual prosperity is waning. Most of the population is still in wait and see mode but an increasing number of people are making quiet preparations, hoarding food, buying physical gold and silver, etc.
The EU is currently on crash watch. Its become a spectator sport with the ability to bet on it. Looking at the deteriorating situation of the PIIGS and understanding how this will impact the regional masters (France and Germany), the collapse of the EU is a matter of when, not if. Interest rates of the PIIGS debt is skyrocketing. Euro-scammers are trying to find ways to default on Greece's debt without actually calling it a default. They hope to avoid triggering a potential chain reaction of Credit Default Swaps and other derivitives that could take down the global financial system overnight. Good luck with that.
Civil unrest in Spain is starting to smell a lot like that of Egypt and Tunisia. The Spanish government banned the protests. In response, the people ignored them. Nothing says "you have become irrelevant" and "you only ever had power as long as we allowed you to have it" like a week of public protests that run 24/7. The Spanish government will soon have to make a choice: step down and let the Ponzi collapse or begin shooting its citizens like the criminal Syrian government has been doing. Every day that goes by in which the edicts of government are ignored emboldens the people. The emboldening brings increasing numbers of the more sheepish members of the herd into the mix. There is nothing that is so feared by government as a repressed people who suddenly taste freedom.
Spain's unrest seems to have rekindled unrest in Italy. The whole area (and in fact the whole world) is run by organized crime posing as government. The EU Tower of Babel is teetering. At the same time, China is over heating, the housing bubbles in Australia and Canada are rolling over (canaries in the coal mine of the coming collapse of the China bubble) and Japan is just plain old fashioned screwed. Here in America, the ECRI is predicting another global slowdown this summer.
Economic slowing is the seeds of unrest no matter where you live. What ECRI does is to watch the herd in an organized fashion and to make predictions based on what they see. Their track record is not perfect but it is pretty good.
Of course, some of this is pretty easily predictable. When Bernanke was printing money from thin air and dropping it on the economy from a helicopter, the economy started bouncing. Unfortunately, so did gold and silver and gas and food prices. Now that he is trying to pull back on the stimulus it is very unlikely that the recovery will continue. The minute Bernanke puts the defib paddles down, the heart is going to weaken and stop. This time it will likely happen much more quickly than the last time. At some point the world is going to figure out that the heart is beyond saving and that's when the big global collapse will likely set in. Unfortunately, these things often follow the laws of exponential awakening. Most people think they will be OK until suddenly they are far from OK and there they sit, wondering what hit them and wondering what the heck to do next. I urge people not to allow themselves to end up in that position. Make some preparations. If they never get used then consider it an insurance premium paid with no claim made. The premiums are cheap right now. If the global economy threatens real collapse again then the premiums will go up dramatically. Complacency regarding this is just not a good Darwinian survival strategy right now.
When things begin to slow again, Bernanke will pull out the paddles for QE3 but I don't think it will work this time. Exponentially more stimulus is having exponentially lower positive effects. The global con is running very thin. I think as soon as the metals markets see another QE happening, the mad rush into gold and silver will be screaming loud and clear, "all global fiat currencies are fraudulent" and it will wipe away the remaining complacency from the herd. At that point I expect to see some real movement from the herd - some real fear - and quite possibly armed conflicts even in the USA.
Most people on the planet are still in denial. They are Madoff victims looking at their account statements and thinking themselves in good shape. They have made no provisions for the collapse of the debt Ponzi. They are just hoping for the best and planning nothing at all. They have been hypnotized into believing that government can and will save them should things go badly south. This is like cattle standing in front of the slaughter house hoping that the rancher which herded them there will save them from becoming steaks.
The EU is currently on crash watch. Its become a spectator sport with the ability to bet on it. Looking at the deteriorating situation of the PIIGS and understanding how this will impact the regional masters (France and Germany), the collapse of the EU is a matter of when, not if. Interest rates of the PIIGS debt is skyrocketing. Euro-scammers are trying to find ways to default on Greece's debt without actually calling it a default. They hope to avoid triggering a potential chain reaction of Credit Default Swaps and other derivitives that could take down the global financial system overnight. Good luck with that.
Civil unrest in Spain is starting to smell a lot like that of Egypt and Tunisia. The Spanish government banned the protests. In response, the people ignored them. Nothing says "you have become irrelevant" and "you only ever had power as long as we allowed you to have it" like a week of public protests that run 24/7. The Spanish government will soon have to make a choice: step down and let the Ponzi collapse or begin shooting its citizens like the criminal Syrian government has been doing. Every day that goes by in which the edicts of government are ignored emboldens the people. The emboldening brings increasing numbers of the more sheepish members of the herd into the mix. There is nothing that is so feared by government as a repressed people who suddenly taste freedom.
Spain's unrest seems to have rekindled unrest in Italy. The whole area (and in fact the whole world) is run by organized crime posing as government. The EU Tower of Babel is teetering. At the same time, China is over heating, the housing bubbles in Australia and Canada are rolling over (canaries in the coal mine of the coming collapse of the China bubble) and Japan is just plain old fashioned screwed. Here in America, the ECRI is predicting another global slowdown this summer.
Economic slowing is the seeds of unrest no matter where you live. What ECRI does is to watch the herd in an organized fashion and to make predictions based on what they see. Their track record is not perfect but it is pretty good.Of course, some of this is pretty easily predictable. When Bernanke was printing money from thin air and dropping it on the economy from a helicopter, the economy started bouncing. Unfortunately, so did gold and silver and gas and food prices. Now that he is trying to pull back on the stimulus it is very unlikely that the recovery will continue. The minute Bernanke puts the defib paddles down, the heart is going to weaken and stop. This time it will likely happen much more quickly than the last time. At some point the world is going to figure out that the heart is beyond saving and that's when the big global collapse will likely set in. Unfortunately, these things often follow the laws of exponential awakening. Most people think they will be OK until suddenly they are far from OK and there they sit, wondering what hit them and wondering what the heck to do next. I urge people not to allow themselves to end up in that position. Make some preparations. If they never get used then consider it an insurance premium paid with no claim made. The premiums are cheap right now. If the global economy threatens real collapse again then the premiums will go up dramatically. Complacency regarding this is just not a good Darwinian survival strategy right now.
When things begin to slow again, Bernanke will pull out the paddles for QE3 but I don't think it will work this time. Exponentially more stimulus is having exponentially lower positive effects. The global con is running very thin. I think as soon as the metals markets see another QE happening, the mad rush into gold and silver will be screaming loud and clear, "all global fiat currencies are fraudulent" and it will wipe away the remaining complacency from the herd. At that point I expect to see some real movement from the herd - some real fear - and quite possibly armed conflicts even in the USA.
Most people on the planet are still in denial. They are Madoff victims looking at their account statements and thinking themselves in good shape. They have made no provisions for the collapse of the debt Ponzi. They are just hoping for the best and planning nothing at all. They have been hypnotized into believing that government can and will save them should things go badly south. This is like cattle standing in front of the slaughter house hoping that the rancher which herded them there will save them from becoming steaks.
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