What Are Sanders and Obama Going To Discuss

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Posted on 27th January 2016 by Administrator in Economy

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Guest Post by Jesse
Apparently President Obama and Senator Sanders are going to have an ‘informal one-on-one meeting with no agenda’ and no press today.

This presidential election has really framed up as an attempt at a popular revolt against a Big Money political establishment. And it is fascinating to watch.

Although the mainstream media keeps feigning astonishment, the broader public is clearly seeking two non-establishment candidate who, for better or worse, they think cannot be bought off by Big Money and the revolving door.

This meeting is an informal one with no set agenda.

Perhaps Obama will share the insight he allegedly had early in his Presidency about reformers as recounted by the ex-CIA whistleblower Ray McGovern.

“He’s afraid of what happened to Martin Luther King Jr. And I know from a good friend who was there when it happened, that at a small dinner with progressive supporters – after these progressive supporters were banging on Obama before the election, Why don’t you do the things we thought you stood for? Obama turned sharply and said, “Don’t you remember what happened to Martin Luther King Jr.?” That’s a quote, and that’s a very revealing quote.”

Ray McGovern

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QUOTE OF THE DAY

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Posted on 11th January 2016 by Administrator in Economy

“THE BANKS MUST BE RESTRAINED, AND THE FINANCIAL SYSTEM REFORMED, WITH BALANCE RESTORED TO THE ECONOMY, BEFORE THERE CAN BE ANY SUSTAINABLE RECOVERY.”

Jesse


American Exceptionalism: Endless War, Parasitic Financialisation, Wage Stagnation, and Oligarchy

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Posted on 10th December 2015 by Administrator in Economy

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Guest Post by Jesse

“The financial system itself continues to exhibit dangerous and erratic behavior; the stock market is rigged and Wall Street is a parasitic wealth transfer operation; commodity prices plummet; junk bond defaults double; derivative exposures remain in the dark; community banks are gobbled up; and the holdings of the mega Wall Street banks become ever more concentrated, with just six banks now controlling over 90% of derivatives and 40% of deposits.”

Wall Street On Parade

There will be the usual movement to ‘blame the victims’ in this, the ‘gullible’ American people who do not wish to face the facts.  This is how it always goes, and it works because it is easy to despise the other guy, or just hate ‘the other.’

Most people are busy and working hard to make ends meet. They obtain their view of things from ‘the news media’ for the most part.

When was the last time you saw any rational discussion of any of these charts in a newspaper or on television news program?

And if the ever did present such a chart, it would be to show it and then have a ‘strategist’ from the Democratics and a ‘strategist’ from the Republicans argue about it, relying heavily on spin, emotion, and rhetoric, perhaps backed up with some ‘paid for’ studies funded by oligarchs and their think tanks.

The American people are being fed a steady stream of lies and half-truths from a captive media, and for the most part the privileged achievers keep silent to protect their own interests, to ‘go along to get along.’  They rationalize this by burying themselves in the details of their own professions.

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Silk Road Gold Demand Taking All New Mine Production and More

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Posted on 5th December 2015 by Administrator in Economy

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Guest Post by Jesse

Nick Laird of goldchartsrus.com has provided the latest statistics on the consumption of gold by the ‘Silk Road’ countries.

The monthly demand from these nations as shown below has grown five-fold compared what it was prior to 2008.

In the latest month their total consumption, that is private purchasing and additional to official reserves, was 365 tonnes.

Nick has estimated global production as averaging about 260 tonnes per month.

This represents a shortfall of about 105 tonnes per month to be drawn from existing supplies.

So this is one reason why we have been seeing the existing stocks of gold around the world drawn down to cover the steadily growing demand from these countries.  And as you may recall, the central banks of the world became net buyers of gold around 2008.

Comex has little available stocks in its domestic warehouses compared to this demand, All of the gold in all the warehouses, whether it is for sale or not, if taken and liquidated is just over 200 tonnes as is shown on the report below.

London is a more substantial source of bullion, but is running down it’s supply as we have seen in the ‘gold float’ analysis also included below.

Interestingly enough, the year over year drawdown in the London free float is about 100 tonnes per month.

There is also supply in ETFs and Trusts.  This too has been drawn down steadily, particularly since 2013.

These are not precise figures, but estimates gleaning from public sources.  I suspect the supply numbers are ‘generous’ with regard to the free float and the unemcumbered nature of gold through multiple claims and leasing, but that is conjecture.

But no wonder the Indian government is so anxious to persuade their people to turn their gold into synthetic paper gold, and allow it to be hypothecated.  And no wonder that the Fed told the German government that their gold was temporarily inconvenienced until 2019.  And no wonder Venezuela is being leaned on so heavily to give back the gold that it so recently repatriated so it may be sold.

I wonder what it would take to increase mine production and bring more gold in as scrap and private sales to meet this growing demand.  Higher prices perhaps?

And if so, then perhaps knocking the price down so aggressively, crippling the precious metals mining industry, is not a fruitful idea for the longer term.

Given the current rate of growth in demand and the current state of supply, next year could be interesting.  Still, I never like to underestimate the ‘resourcefulness’ of the central banks, especially when they are operating in relative secrecy.

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THE FED IN DECEMBER

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Posted on 15th November 2015 by Administrator in Economy

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Via Jesse


T’was the Witch of November Come Stealin’

9 comments

Posted on 11th November 2015 by Administrator in Economy

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 Guest Post by Jesse

 

When suppertime came, the old cook came on deck
Sayin’  Fellas, it’s too rough to feed ya
At seven PM a main hatchway caved in
He said, Fellas, it’s been good to know ya
The captain wired in he had water comin’ in
And the good ship and crew was in peril
And later that night when his lights went out of sight
Came the wreck of the Edmund Fitzgerald.

Gordon Lightfoot, The Wreck of the Edmund Fitzgerald

I have included the two stock index cash market charts with technicals.

There is a potential ‘island top’ forming on the NDX, and the SP 500 looks like it might be testing the 200 DMA.

Bottom line is if stocks start rolling over with some real selling, and not this tissue thin HFT shell game that has taken the place of actual price discovery, then we could be in for a very rough ride.

Let’s see how much more the Fed is willing to spend to support their latest paper asset bubble. And let’s see if they can raise rates fast enough to have enough room to lower them again in response to another crisis which they have themselves would most likely have caused.

Today is the 40th anniversary of the wreck of the Edmund Fitzgerald during a fierce November storm on Lake Superior.

No Real Chance of Another Financial Crisis – ‘Silly’

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Posted on 31st October 2015 by Administrator in Economy

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Guest Post by Jesse

I like Dean Baker quite well, and often link to his columns. On most things we are pretty much on the same page.

And to his credit he was one of the few ‘mainstream’ economists to actually see the housing bubble developing, and call it out. Some may claim to have done so, and can even cite a sentence or two where they may have mentioned it, like Paul Krugman for example. But very few spoke about doing something about it while it was in progress.  The Fed was aware according to their own minutes, and ignored it.

The difficulty we have in the economics profession, I fear, is a great deal of herd instinct and concern about what others may say. And when the Fed runs their policy pennants up the flagpole, only someone truly secure in their thinking, or forsworn to some strong ideological interpretation of reality or bias if we are truly honest, dare not salute it.

Am I such a person? Do I actually see a fragile financial system that is still corrupt and highly levered, grossly mispricing risks? Or am I just seeing things the way in which I wish to see them?

That difficulty arises because economics is no science. It involves judgement and principles, and weighs the facts far too heavily based upon ‘reputation’ and ‘status.’ And of course I have none of those and wish none.

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Do Not Look at These Charts Showing Registered ‘Deliverable’ Gold Bullion In New York

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Posted on 4th October 2015 by Administrator in Economy |Politics |Social Issues

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 Guest Post by Jesse

 

“The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil.”

John Kenneth Galbraith, The Great Crash of 1929

Here are a few charts that show the rather striking decline in ‘registered’ gold, that is gold available for those standing for delivery, in the Comex warehouses.

‘Standing’ by the way means standing around and waiting for someone to choose to fulfill your request for your contract to be fulfilled with actual bullion before the cut off date.

You can see from the first chart that the likelihood of someone actually standing for delivery and receiving bullion has never been less at The Bucket Shop.  Real metal is unfashionable amongst our financial sophisticates.

As for delivery and withdrawal of bullion, it is getting stronger and stronger in the East.  Second chart.  What can one say at such embarrassing behaviour?  What a bunch of rubes!

FOURTH TURNING: CRISIS OF TRUST – PART 3

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Posted on 27th September 2015 by Administrator in Economy |Politics |Social Issues

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In Part 1 of this article I discussed the catalyst spark which ignited this Fourth Turning and the seemingly delayed regeneracy. In Part 2 I pondered possible Grey Champion prophet generation leaders who could arise during the regeneracy. In Part 3 I will focus on the economic channel of distress which is likely to be the primary driving force in the next phase of this Crisis.

There are very few people left on this earth who lived through the last Fourth Turning (1929 – 1946). The passing of older generations is a key component in the recurring cycles which propel the world through the seemingly chaotic episodes that paint portraits on the canvas of history. The current alignment of generations is driving this Crisis and will continue to give impetus to the future direction of this Fourth Turning. The alignment during a Fourth Turning is always the same: Old Artists (Silent) die, Prophets (Boomers) enter elderhood, Nomads (Gen X) enter midlife, Heroes (Millennials) enter young adulthood—and a new generation of child Artists (Gen Y) is born. This is an era in which America’s institutional life is torn down and rebuilt from the ground up—always in response to a perceived threat to the nation’s very survival.

For those who understand the theory, there is the potential for impatience and anticipating dire circumstances before the mood of the country turns in response to the 2nd or 3rd perilous incident after the initial catalyst. Neil Howe anticipates the climax of this Crisis arriving in the 2022 to 2025 time frame, with the final resolution happening between 2026 and 2029. Any acceleration in these time frames would likely be catastrophic, bloody, and possibly tragic for mankind. As presented by Strauss and Howe, this Crisis will continue to be driven by the core elements of debt, civic decay, and global disorder, with the volcanic eruption traveling along channels of distress and aggravating problems ignored, neglected, or denied for the last thirty years. Let’s examine the channels of distress which will surely sway the direction of this Crisis.

Channels of Distress

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability –  problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

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The MIsguided Paperati and Bifurcated Markets

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Posted on 16th September 2015 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse
There is a short excerpt of a video interview with hedge fund titan Ray Dalio at the Council on Foreign Relations below.

I think it is priceless.   Ray lays out his thoughts on wealth and hedging with gold to the chuckles and sniggers of the pampered ruling class  in a very clear and straightforward manner.

There is also another video interview in which Dalio discusses his views with the smirking chimps from CNBC.   It is almost a scene out of Huxley’s Brave New World,  with Dalio as some kind of monetary savage trying to explain reality to those who have been incubated in an artificial currency regime of King Dollar and know nothing else.

Here is why I think that this is important.

The gold market in particular seems to have bifurcated, or split into two: one market for largely paper speculation and high leverage, and another for the purchase and distribution of actual physical bullion.

Is this a problem?

When the Unsustainable No Longer Sustains

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Posted on 10th September 2015 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse

“Benign remedies are for the innocent.  Misdeeds, once exposed, have no refuge but in audacity.  And they had accomplices in all those who feared the same fate.”

Tacitus, Annals

Gold and silver were hit early on today, and knocked lower on high volume in relatively quiet trade, while the stock market was being pumped higher.

The Fed would like to set the stage for their FOMC meeting next week, and rather badly so.   They are afraid to do it with these unstable equity and bond markets, because if they raise and the market breaks, they will be blamed for it.  You can see that the IMF and the World Bank have already covered their posteriors by warning.  And Larry Summers has also chimed in.

It is not a 25 basis point increase that will break these markets. They are already broken, an accident waiting to happen.  The trail of policy errors goes back to the Greenspan chairmanship of the FOMC.

The Comex continues to bleed out, with additional gold and silver leaving their warehouses yesterday.

Registered (deliverable) gold has fallen to 185,314 troy ounces, a low we have not seen since before the year 2000.   On a quick calculation pending the final numbers early tomorrow, I would think that the ratio of paper claim to actual deliverable gold at price is now at an unprecedented level of 226:1.

Say what you will, this is not ‘normal.’

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‘Among Major Economies, Only the Chinese Numbers Are More Suspect’

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Posted on 8th September 2015 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse

 

On the surface this report shows solid economic growth for the US economy during the second quarter of 2015. Unfortunately, all of the usual caveats merit restatement:

— A significant portion of the “solid growth” in this headline number could be the result of understated BEA inflation data. Using deflators from the BLS results in a more modest 2.33% growth rate. And using deflators from the Billion Prices Project puts the growth rate even lower, at 1.28%.

— Per capita real GDP (the number we generally use to evaluate other economies) comes in at about 1.6% using BLS deflators and about 0.6% using the BPP deflators. Keep in mind that population growth alone (not brilliant central bank maneuvers) contributes a 0.72% positive bias to the headline number.

— Once again we wonder how much we should trust numbers that bounce all over the place from revision to revision. One might expect better from a huge (and expensive) bureaucracy operating in the 21st century.

Among major economies, only the Chinese numbers are more suspect.

All that said, we have — on the official record — solid economic growth and 5.3% unemployment.

What more could Ms. Yellen want?

Consumer Metrics Institute, BEA Revises 2nd Quarter 2015 GDP Growth Upward to 3.70%

 

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