Tag Archives: global economic collapse

The Global Economic System Is Crashing – The Stealth Gold Bull Is Alive

Well, this time is indeed very different. This is not Jan., 2015. The world is waking up to the fact that a brand new, multi-headed hydra solvency crisis is upon us. – Eric Dubin, The News Doctors (link below)

One of the idiots from Wall Street that CNBC likes to roll out was on scratching his head over the behavior of the stock market. He asserted that it was nothing more than panic because “the real economy is doing well.”

I’m wondering what data he’s using to draw that conclusion. Nearly every report that has been released for the last few months, other than the highly manipulated/fabricated Government employment report, is showing that economic activity is collapsing to levels last observed in 2008.

The Baltric Dry Index has collapsed to all-time lows. Freight and goods transportation indices area showing a collapse in demand in the wholesale and retail distribution system. This shows a collapse in consumer spending. Based on unadjusted, unannualized numbers, existing home sales plunged 20% from Q3 to Q4. Auto sales are quickly rolling over. Energy debt is blowing a hole in bank balance sheets across the country. Auto finance paper is next.

These are black swans. They’re black swans because no one seems to see them. If they the market sees them then it is not acknowledging them. The current sell-off in the stock market is not remotely close to an acknowledgement of these black swans.

The S&P 500 is at its most overvalued in history by several metrics. It’s dropped roughly 10% from its all-time high and a spectrum of people from money managers to Congressmen are calling on the Fed to “do something.” No one seemed to be bothered by the fact that the stock market never should have been enabled by the Fed to go parabolic over the last 5 years, becoming more dislocated from the underlying fundamentals than at any time in history.

Then there’s gold.  Gold has been pushed inexorably lower by western Central Banks in order to facilitate bad monetary policy decisions.  But gold is the ultimate hedge against corrupt Central Banks and Governments.   Physical gold inventories at the bullion bank controlled gold exchanges in the west are quickly disappearing, as is silver now too.  GLD does not count because it’s always been a roach motel largely of paper gold.

This disappearance of physical gold is another black swan that is neither recognized nor acknowledged by the market, except by a few “conspiracy theory riddled” gold bugs. But the third leg of the gold bull market that began in 2000/2001 is stealthily taking off. Eric “The News Doctors” Dubin has written a worthwhile analysis of what is unfolding:  Stealth Gold Bull Market Continues;  Real-Time Analysis.

Someone from Australia emailed me a report showing that the Perth Mint had temporarily suspended gold sales last night/yesterday.  Physical gold is indeed disappearing.  Soon it will be harder to get at the retail level unless the buyer is willing to pay a hefty premium over spot.  I’m going to start converting as much paper currency as I can into silver – the original and first monetary metal – because it will soon become hard to get as well.

 

Global. Economic. Collapse. And The “Bernanke Moment”

The global economy, including and especially the United States, is collapsing.  It’s debatable whether or not the western hemisphere countries produced true inflation-adjusted real GDP growth from 2009 to present.   Yes, I know the numbers the U.S. Government’s BEA spits out purport to show “seasonally adjusted, annualized” economic growth.  But a book could be written detailing the ways in which the Government manipulates and outright fabricates the data.  John Williams of Shadowstats.com publishes a newsletter with highly compelling evidence.   Anyone who dismisses Williams’ work does so out of complete ignorance.

The Baltic Dry Index is one of the primary tell-tales of economic collapse.  It measures the BDIdemand for container cargo shipments of bulk raw materials used for all stages of manufacturing.  It’s been twisted into evidence that China is slowing.  But it tracks global shipments and the U.S. and Europe are China’s two biggest export markets.  If China is not shipping, it’s because there is no demand from it’s two biggest customers.  It’s really that simple.

Need another indicator of the collapsing U.S. economy?   The mass layoffs that occurred in 2008-2009 are starting to hit the system again.  We know the energy sector is shedding jobs quickly.  But the retail and financial sector are close on the heels of the energy sector with RPIjob cuts – LINK.    And all those bartender and waitress jobs that the Government alleges to have been created are to disappear again:   Service economy is tanking. But there’s always this graph to the left if you think I’m making this up.

The point here is that the entire global economic system is in a state of collapse.  I find it curious that the financial media and analysts in the United States want to blame the problem on the rest of the world, specifically pointing at the distressed debt market in China.

It’s not debt that weighs on economic growth. If debt issuance is required to generate economic growth, then the “growth” was not sustainable unless the growth could generate enough wealth to support the additional debt. Continuous systemic debt issuance is unsustainable and defies all natural natural laws of economics.  At its base level it’s nothing more than a simple Ponzi scheme. A simple Ponzi scheme is probably what best describes the modern application – or misapplication – of Keynesian economics. I guess it’s poetic justice that Keynes’ economic thoughts were adopted by U.S. policy-makers originally at the onset of the first Great Depression and have been reinvented and re-mis-applied at the onset of the 2nd and bigger Great Depression.

I find it fascinating that the U.S.-based financial propaganda incessantly obsesses on this idea that China is the cause of the world’s ills. This is nothing more than narcissistic jingoism in its “best” light.  But I prefer to see it as a form of yellow journalism seeded in pathetic ignorance. This article from the NY Times’ “Deal Journal,” for instance, references $5 trillion of troubled debt in China, calling it the world’s biggest problem. Hmmm…

Let’s shine just brief light on the United States. Currently the U.S. credit markets, enabled and partially backed by the Government, have now created over $1 trillion in student loan debt, at least 30% – 40% of which is in some form of technical default; over $1 trillion in auto debt, of which at least 30% can be considered of the toxic subprime variety and which I suspect will begin to collapse sometime during 2016; close to $2 trillion in junk bonds have been issued since 2009, with close to 25% of that in the energy sector, which is collapsing as I write this; since 2013, roughly $500 billion of new mortgage debt has been issue, a large portion of which is of the subprime variety masquerading as 3.5% down payment “conventional mortgage” debt. That’s $4.5 trillion of already or potentially toxic debt and that number does not include generic bank and revolving credit loans extended to consumers, small businesses and large corporations. We know already that the banking system is choking badly on a couple hundred billion of toxic energy loans.

The point here is that global economy activity – including the United States – is collapsing independent of the amount of debt sitting on top of the financial system. If the wealth created by economic activity was adequate to support the debt issued against the “hope” of economic growth, then servicing the debt would not be an issue.  But economic cycles never have been and never will be growth in perpetuity.   Unfortunately, the amount of debt issued since the advent of modern QE has taken a parabolic growth path.

We are about to be confronted with an economic catastrophe that will likely shock and awe just about everyone.  The amount of fatal debt piled on top of the global economy will have the effect of throwing thermate into a napalm fire.

The Fed knows this and it’s why a couple of the Fed officials, including the highly influential NY Fed President, have been floating the concept of negative interest rates in this country.  Think about that for a moment.  The policy makers are considering the idea of paying you to borrow money.  If that’s not an admission of defeat on the use of money printing to spur economic growth, I don’t know what is.   Not only are we at the Bernanke Moment of dropping money from helicopters (apologies to Milton Friedman, who’s notion was hypothecated and abused by Bernanke), but they want to pay you to catch the money falling from tree tops in order to spend it.   Man, this is going to get weird – I hope you are bracing for impact.

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World’s Largest Silver Producer Calls On The LBMA To Explain Last Week’s Fraudulent Silver Fix

The London gold/silver fix was established in 1919 principally by the House of Rothschild to enable the Rothschilds  to control  international money markets through the manipulation of the price of gold.  The daily gold/silver fix was conducted in the offices of N.M. Rothschild and Company.  Fast-forward to 2016 and very little about the London fix has changed, other than some of the names involved with setting the “fix.”

As most of you know by know, the London price fix committee “fixed” the price of silver 84 cents below the market price as represented by silver futures trading.  In the context of the daily interventions in the precious metals market in London and NYC, this act of manipulation was a particularly brazen display of contemptuous disregard for anti-collusion laws.

The parties who were harmed by this are the entities that had posted offerings in physical silver prior to the fix.  They are the ones who need to initiate legal action so we can find out what happened.  Certainly mining companies who posted their silver for sale had their face ripped off by this event.  The more interesting side of the “fix” would be know the identities of the beneficiaries.   My bet is that the bullion banks, some of whom are involved in the price fix process, were the biggest beneficiaries of the fraudulent price fixing.

As it turns out, the world’s largest silver producer, Poland-based KGHM, has called on the LBMA to provide an explanation:

KGHM, one of the largest producers of copper and the single largest producer of silver in the world, called the difference between the prices “very alarming” and called on the London Bullion Market Association (LBMA) to provide an explanation.  LINK

Unfortunately, KGHM’s half-hearted plea will fall on deaf ears.   The criminal manipulation of the London gold and silver market has been going on for over 100 years.  Nothing will change that until the west collapses and the global system of fiat currencies is reset.

Having said that, not only does the LBMA price set the price for clearing physical gold and silver trades twice a day, it also is used to benchmark OTC derivatives.  My best educated guess is that a couple of the most influential bullion banks involved in the fix – JP Morgan and HSBC, each of whom respectively operates the SLV and GLD trusts – used the fraudulent silver price on Friday in order to address an immediate need – either a large physical silver deficiency or a derivatives problem.

A friend of Bill “Midas” Muphy’s sent a note into Midas relating what happened with CDS in “The Big Short” with the silver market:

I can’t get the comparison to silver out of my mind as it truly is the mirror image of Credit Default Swaps. That is the CDS were never allowed to rise in value as the underlying mortgage bonds defaulted yet Goldman was constantly trying to buy them back from the holders at very low prices…..it wasn’t until Goldman had been able to purchase enough CDS back that the price skyrocketed.

I think what we saw on the LBMA last week with the silver fix is exactly that.

Unfortunately we’ll never know the truth about what happened.  But the act itself reflects the desperation that is creeping into the bullion banking establishment.  Desperation that is being fueled by what I believe is the early stages of an extremely powerful resumption of the bull market in gold/silver.

Is The U.S./West About To Collapse?

Well, in truth, we had a de facto collapse in 2008 which was addressed with $4 trillion in QE and, ultimately, a few trillion in Taxpayer subsidies. The proverbial can was kicked down the road in order to enable the insider elitists to continue looting as much wealth as possible from the system. A fractional reserve banking system will always eventually collapse. The fraction of reserves is allowed to become smaller over time and the amount of unpayable debt balloons to the point of explosion.

I would suggest that the massive debt implosion about to happen in the energy sector will be the trigger point for a collapse that can’t be prevented this time.

With that in mind, Zerohedge reposted a Reuters article which is reporting that the Italian banking system is collapsing – LINK.   What’s that got to do with the U.S. financial system, you might ask?  Derivatives.  Every single big bank in the world is interconnected through the insidiously toxic international web of OTC derivatives.

Someone will lose big on Italian credit default swaps and not be able to pay their counterparty.  The counterparty may have offloaded some of that risk and  fail to stand as a counterparty on the risk it laid off.  And so on down the line.  The banks themselves do not know the extent of true counterparty risk exposure.  Internally employees lie to risk managers.  Risk managers knowingly and unknowingly lie to the board.  The CEO then knowingly and unknowingly lies to the Fed and other Central Banks about that bank’s specific derivatives exposure.   I witnessed this first-hand in the 1990s’ when derivatives were just beginning to blossom as a wealth-extracting device for Wall Street.

I bring all this up because one of Bill Murphy’s readers sent him a letter that should, at the very least, raise the hair on the back of your neck.  I emailed Bill, with whom I communicate several times per day every day and asked him about the credibility of the person who submitted this letter:  “Well written, little drama, just input. I couldn’t make up a story like that. This is just a regular guy ho believes our story and follows you too. No reason for him to send this except to point it out. If I thought a bit bogus, I would never have run it. No reason for the girl to make that up and, of all people, one of the Koch brothers.”

So with that, here’s the letter published by LeMetropole Cafe/Bill Murphy’s Midas report:

This email from a fellow Café member will catch your attention. It is edited to keep the identity of the sender private, but the essence of what was presented is striking…

Bill,
I have been working in a chemical plant and have been there for 39 years. We have about 400 people working at the site. I can’t talk to anyone about what is going on with the financial system because nobody wants to hear any of this, they either don’t believe it or their eyes glaze over and they change the subject. I gave up trying to tell people what is coming years ago.

There is one man at the plant that knows what is going on with the worldwide financial system. He is the production superintendent for the plant, reports to only the plant manager, I have two supervisors between him and myself. Last night he called me about 8pm, which was very unusual because we normally stay in touch through email or sometimes, very seldom though, he comes to the unit I work in and we discuss what is going on at that time. His daughter works for Koch Industries in Wichita in marketing. She called him yesterday and told him they had a meeting with one of the Koch brothers giving the meeting. He came out and told his employees that we were about to go into unprecedented times. He said that their company was cash rich and they would be able to ride out the coming storm. One of her coworkers asked if we were going to have a recession or a depression. Mr. Koch answered that no we were going to have an economic collapse with a 40% devaluation of the dollar. I know you know who these Koch brothers are, with the money and inside connections they have wouldn’t you presume they have inside information.

My superintendent’s daughter told her father that Mr. Koch sounded just like him with the speech he gave, because her father has been telling his 2 daughters for years to get ready for the collapse and they have. My job allows me to read probably 11 hours a night when I work days and on weekend days. I started researching our financial system in 2008 because of what went down back then. It is totally amazing to me now that we have a system that is totally manipulated by TPTB constantly and people don’t have a clue about what is really going on. We really do live in the Matrix.
R

Time will tell if this information proves to be prophetic.  Someone asked me today if I thought a collapse was right around the corner.  I answered that, with the enormous effort being exerted by the Fed and other western Central Banks to keep the system from collapsing, there’s no way to know with any reasonable degree of accuracy.  But I said that I would be surprised if the system makes through 2016 intact.