The economic, political and social outlook for 2012 is profoundly negative. The almost universal consensus, even among mainstream orthodox economists is pessimistic regarding the world economy. Although, even here, their predictions understate the scope and depth of the crises, there are powerful reasons to believe that beginning in 2012, we are heading toward a steeper decline than what was experienced during the Great Recession of 2008 – 2009. With fewer resources, greater debt and increasing popular resistance to shouldering the burden of saving the capitalist system, the governments cannot bail out the system.Tuesday, December 27, 2011
Unrelenting Global Economic Crisis: A Doomsday View of 2012
The economic, political and social outlook for 2012 is profoundly negative. The almost universal consensus, even among mainstream orthodox economists is pessimistic regarding the world economy. Although, even here, their predictions understate the scope and depth of the crises, there are powerful reasons to believe that beginning in 2012, we are heading toward a steeper decline than what was experienced during the Great Recession of 2008 – 2009. With fewer resources, greater debt and increasing popular resistance to shouldering the burden of saving the capitalist system, the governments cannot bail out the system.
Nation urged to increase holdings of gold
Dec 27 (China Daily) — “The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign-exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation,” said Zhang Jianhua, director of the research bureau affiliated with the People’s Bank of China (PBOC).
Zhang said bleak economic conditions, increasing international liquidity as countries turned to monetary easing and the resulting high inflation had dampened investors’ confidence. He said that gold had become the only “safe haven” for risk-averse investors. “No asset is safe now. The only choice to hedge risks is to hold hard currency – gold.”
“The PBOC may have realized that its euro-denominated assets are in greater danger than it expected and started to eye gold,” said Li Jie, director of the foreign-reserves research center at the Central University of Finance and Economics.
Zhang said bleak economic conditions, increasing international liquidity as countries turned to monetary easing and the resulting high inflation had dampened investors’ confidence. He said that gold had become the only “safe haven” for risk-averse investors. “No asset is safe now. The only choice to hedge risks is to hold hard currency – gold.”
“The PBOC may have realized that its euro-denominated assets are in greater danger than it expected and started to eye gold,” said Li Jie, director of the foreign-reserves research center at the Central University of Finance and Economics.
A simple plan to keep your assets safe from an out-of-control government
By keeping all your assets in the country where you live, you commit, ahead of time, to ratify whatever policy your home government might adopt, no matter how objectionable, unreasonable or pernicious that policy happens to be. If the next new mandate is “Register today to get a nail pounded into your head,” you’re already signed up.
Americans, by and large, run all their affairs within the confines of the US. The US economy is so large and so varied that it’s easy to assume that everything you want to do with your wealth can be done without crossing any borders. And people in the US, like people anywhere, live with the habits and attitudes developed over generations. They’re only human. In the case of Americans, those habits grew out of long experience with a government that was small and that generally practiced the rare virtue of following its own laws. In a happy exception to mankind’s experience with rulers, there was little to fear from it.
Stay at home is still the norm for Americans, but it’s a norm that is slowly fading. Every billion-dollar tick of the government debt clock, every expansion of the government’s regulatory apparatus, every overreaching judicial decision made in the name of a compelling public need, every inversion of protection for citizens into license for the state and every intellectually tortured discovery of a new meaning in the Constitution’s 4,400 old words leaves a few thousand more people wondering how prudent it is to consign all their eggs to a single national basket. Encounters with high-handed IRS agents and eager TSA gropers do nothing to ease that concern. And for those who listen thoughtfully, the messages from our designated leaders and their would-be replacements only hurry the dawning sense of unease.
Specific worries include exposure to predatory lawsuits, especially claims that could draw extra go-power by association with politically favored causes or legally favored groups; fear of where income tax rates might climb; the prospect of losing a family business in a regulatory battle or simply through estate tax; the fragility of financial institutions that have operated for forty years with the assurance that the Federal Reserve would rescue them from any folly; the possibility that a government desperate to protect the dollar from collapse might impose foreign exchange controls or capital controls; the memory and precedent of the forced gold sales of 1933; and the thought that a government floundering in deficits might start pilfering from IRAs and other pension plans.
Americans, by and large, run all their affairs within the confines of the US. The US economy is so large and so varied that it’s easy to assume that everything you want to do with your wealth can be done without crossing any borders. And people in the US, like people anywhere, live with the habits and attitudes developed over generations. They’re only human. In the case of Americans, those habits grew out of long experience with a government that was small and that generally practiced the rare virtue of following its own laws. In a happy exception to mankind’s experience with rulers, there was little to fear from it.
Stay at home is still the norm for Americans, but it’s a norm that is slowly fading. Every billion-dollar tick of the government debt clock, every expansion of the government’s regulatory apparatus, every overreaching judicial decision made in the name of a compelling public need, every inversion of protection for citizens into license for the state and every intellectually tortured discovery of a new meaning in the Constitution’s 4,400 old words leaves a few thousand more people wondering how prudent it is to consign all their eggs to a single national basket. Encounters with high-handed IRS agents and eager TSA gropers do nothing to ease that concern. And for those who listen thoughtfully, the messages from our designated leaders and their would-be replacements only hurry the dawning sense of unease.
Specific worries include exposure to predatory lawsuits, especially claims that could draw extra go-power by association with politically favored causes or legally favored groups; fear of where income tax rates might climb; the prospect of losing a family business in a regulatory battle or simply through estate tax; the fragility of financial institutions that have operated for forty years with the assurance that the Federal Reserve would rescue them from any folly; the possibility that a government desperate to protect the dollar from collapse might impose foreign exchange controls or capital controls; the memory and precedent of the forced gold sales of 1933; and the thought that a government floundering in deficits might start pilfering from IRAs and other pension plans.
Wednesday, December 14, 2011
The Debt March Goes On...
And imagine you have a big heart, with lots of desires. Your home has a comfy lounge with a large new HD television in front of it. There's a plush recliner in which to park your weary behind. And all around the house are the accumulated creature comforts that enhance the quality of your domestic life.
Now imagine you're forced to take a pay cut at work. Your job no longer provides you with enough income to support the interest payments on your mortgage. Your domestic bliss is still undisturbed. But in the back of your mind, you know that you're living way beyond your means. Your lifestyle exceeds your financial resources.
Now imagine you're the European Union – a vast army of faceless bureaucrats desperately trying to save its big 60-year project in social engineering. The private market – investors who buy government bonds – tells you its losing confidence that you can control your spending. More importantly, the private market tells you it doesn't see how you're going to repay the debts you've already accumulated in order to support your lavish, government-sponsored, Welfare State lifestyle.
Now imagine you're forced to take a pay cut at work. Your job no longer provides you with enough income to support the interest payments on your mortgage. Your domestic bliss is still undisturbed. But in the back of your mind, you know that you're living way beyond your means. Your lifestyle exceeds your financial resources.
Now imagine you're the European Union – a vast army of faceless bureaucrats desperately trying to save its big 60-year project in social engineering. The private market – investors who buy government bonds – tells you its losing confidence that you can control your spending. More importantly, the private market tells you it doesn't see how you're going to repay the debts you've already accumulated in order to support your lavish, government-sponsored, Welfare State lifestyle.
Investing in a Downgraded World
Maybe there never were. But it's one of those sacred cows that has never been gored before. It is now (gored, in painfully slow fashion). The dirty little secret of the bankrupt Welfare State is out: government bonds are just another liability.
The ratings agency Moody's took it upon itself to rain on everyone's parade yesterday. It said that the latest EU summit had failed to yield, "decisive policy measures". It said it would review the credit ratings of 15 EU nations in the next three months. Fellow ratings agency Fitch said it expected Europe's banking crisis to lead to, "a significant economic downturn" in 2012.
You don't say?
Here's a tip: the recession is the solution to the credit excess. It is the lancing of the ulcerous boil. It is the liquidation of bad debts, the reckoning for the bankers, and the justice of the markets on people who used capital poorly.
Instead we have the Interminable Intervention with the aim of more centralization. We'll get back to that in a moment. But meanwhile, with a downgrading of France and Germany (and the US) simply a matter of time, the bond market is a different beast now.
The ratings agency Moody's took it upon itself to rain on everyone's parade yesterday. It said that the latest EU summit had failed to yield, "decisive policy measures". It said it would review the credit ratings of 15 EU nations in the next three months. Fellow ratings agency Fitch said it expected Europe's banking crisis to lead to, "a significant economic downturn" in 2012.
You don't say?
Here's a tip: the recession is the solution to the credit excess. It is the lancing of the ulcerous boil. It is the liquidation of bad debts, the reckoning for the bankers, and the justice of the markets on people who used capital poorly.
Instead we have the Interminable Intervention with the aim of more centralization. We'll get back to that in a moment. But meanwhile, with a downgrading of France and Germany (and the US) simply a matter of time, the bond market is a different beast now.
Saturday, December 10, 2011
Gold price still consolidating after 3 months
This week the gold price has been bouncing around quite a bit. Gold got as high as $1750 on monday only to drop back to nearly $1700 yesterday only to rally back again today to trade around $1730.
When you take a step back and look at how gold has performed this year all the action in the past 3 months since September 23rd is all about one thing, consolidation.
All this is very healthy in a secular bull market and hardly surprising when you look at the action over summer.
On July 1st gold took off to the up-side and went from $1500 to $1920 – all in the space of a couple of months. That’s a 28% gain in very short order and at one point the gold price had actually put on 36% for year.
But like all powerful bull markets in the past that wants to show signs that it has much further left to run gold has pulled back and has really been in consolidation mode for the past 3 months. The range is quite big with $1800 marking the top and $1587 marking the closing bottom.
But in reality the action is really centered around the $1700 level.
When you take a step back and look at how gold has performed this year all the action in the past 3 months since September 23rd is all about one thing, consolidation.
All this is very healthy in a secular bull market and hardly surprising when you look at the action over summer.
On July 1st gold took off to the up-side and went from $1500 to $1920 – all in the space of a couple of months. That’s a 28% gain in very short order and at one point the gold price had actually put on 36% for year.
But like all powerful bull markets in the past that wants to show signs that it has much further left to run gold has pulled back and has really been in consolidation mode for the past 3 months. The range is quite big with $1800 marking the top and $1587 marking the closing bottom.
But in reality the action is really centered around the $1700 level.
Gold price falls as the EU gives a consummate lesson in the art of expectation management and spin
The headlines said it all this today “PM blocks EU-wide treaty changes” and the assumption is that the EU conference that started yesterday has been a failure. But has it?
First of all this conference wasn’t really about fixing the looming debt explosion that just about all EU countries face. After all how could it? We all know that the ‘solution’ will come via the printing presses of the ECB, FED and/of the IMF. Rather this conference should be seen in the light of ‘never letting a good crisis go to waste’.
What the unelected technocrats of Europe are really about is using the crisis to solidify Europe as a superstate and the increasing centralisation of power to those unelected faceless grey suits in Brussels.
But how to do it? You see if the gang meeting in Brussels did come out with a new all singing all dancing treaty they would face a rather huge problem. Namely that a new treaty would require votes through parliament and even a few referendums in some countries.
These guys in Brussels are a lot of things but stupid is one they are not. They know that they haven’t got a hope in hell in getting public support for more centralised power. No, far better to announce before the meeting that you’re trying to pass a new treaty only to wrap up the meeting seemingly in ‘failure’ because you only managed to agree an accord of the 17 euro using countries.
First of all this conference wasn’t really about fixing the looming debt explosion that just about all EU countries face. After all how could it? We all know that the ‘solution’ will come via the printing presses of the ECB, FED and/of the IMF. Rather this conference should be seen in the light of ‘never letting a good crisis go to waste’.
What the unelected technocrats of Europe are really about is using the crisis to solidify Europe as a superstate and the increasing centralisation of power to those unelected faceless grey suits in Brussels.
But how to do it? You see if the gang meeting in Brussels did come out with a new all singing all dancing treaty they would face a rather huge problem. Namely that a new treaty would require votes through parliament and even a few referendums in some countries.
These guys in Brussels are a lot of things but stupid is one they are not. They know that they haven’t got a hope in hell in getting public support for more centralised power. No, far better to announce before the meeting that you’re trying to pass a new treaty only to wrap up the meeting seemingly in ‘failure’ because you only managed to agree an accord of the 17 euro using countries.
Bank of England maintains 0.5% interest rates – Gold price holds steady on the news
The Bank of England has decided to keep those printing presses working overtime and keep interest rates at 0.5%. This is while CPI inflation is running at 5%, some 3% more than its government mandated target of 2%
The BoE also said it will keep it’s money printing facility – also known as the APF (Asset Purchased Facility) at an almost unbelievable £275bn.
From the release:
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its program of asset purchases totaling £275 billion financed by the issuance of central bank reserves.
The Committee expects the announced program to take another two months to complete. The scale of the program will be kept under review.
The BoE also said it will keep it’s money printing facility – also known as the APF (Asset Purchased Facility) at an almost unbelievable £275bn.
From the release:
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its program of asset purchases totaling £275 billion financed by the issuance of central bank reserves.
The Committee expects the announced program to take another two months to complete. The scale of the program will be kept under review.
Thursday, December 1, 2011
The Gold in Gold etfs, Now You See it, Now You Don’t
London Metals Trader whistle-blower Adrian has stated as much at a Commodity Futures Trading Commission Hearing (CFTC), the US Government regulatory agency, to the chagrin of the London Bullion Market Association (LBMA).
He claims that the worlds largest gold trading center is nothing more than a giant ponzi scheme with trades backed, not by gold, but by a fractional reserve system where 100 ounces of gold is backed buy only one ounce. So if everyone who 'owned' gold in the system demanded their stored value in gold bars and not cash, like a run on the bank, there would not be enough gold to supply the demand.
This is not the first time this has come to light. In 2007, Morgan Stanley forked out several million dollars to settle claims it had charged 22,000 clients for storage fees on non existent silver bullion.
He claims that the worlds largest gold trading center is nothing more than a giant ponzi scheme with trades backed, not by gold, but by a fractional reserve system where 100 ounces of gold is backed buy only one ounce. So if everyone who 'owned' gold in the system demanded their stored value in gold bars and not cash, like a run on the bank, there would not be enough gold to supply the demand.
This is not the first time this has come to light. In 2007, Morgan Stanley forked out several million dollars to settle claims it had charged 22,000 clients for storage fees on non existent silver bullion.
Comex Gold Trades Near Steady as Recent Gains Consolidated
(Kitco News) -Comex February gold futures prices are trading near steady in early U.S. trading Thursday. The market is pausing and consolidating this week’s solid gains, and in the wake of the surprise move by the major central banks of the world to increase liquidity in the financial markets. The general market place has stabilized this week, which is a bullish factor for the gold market, which has been trading in sync with the general raw commodity sector recently. February gold last traded up $1.90 at $1,752.20 an ounce. Spot gold last traded down $1.40 an ounce at $1,748.50. March Comex silver last traded up $0.426 at $33.23 an ounce.
The unexpected collective move by the U.S. Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada and the Swiss National Bank were bullish for risk assets as the U.S. and European stock markets, and most commodity markets, rallied on the news. Earlier Wednesday China announced it was also lowering its reserve requirement ratio for banks, which in effect also eased China’s monetary policy.
The unexpected collective move by the U.S. Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada and the Swiss National Bank were bullish for risk assets as the U.S. and European stock markets, and most commodity markets, rallied on the news. Earlier Wednesday China announced it was also lowering its reserve requirement ratio for banks, which in effect also eased China’s monetary policy.
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