Tuesday, July 24, 2012

Global Financial Fraud Is WIN-WIN For Gold And Silver

The Special Inspector General for Tarp Issues a Wakeup Call … Lambasts the Government and the Banks

By George Washington on 07/23/2012, via Zero Hedge

The government’s special inspector general in charge of oversight of the Troubled Asset Relief Program (the “TARP” bank bailouts) – Neil M. Barofsky – wrote a stunning editorial for Bloomberg yesterday, concluding:
Americans should lose faith in their government. They should deplore the captured politicians and regulators who distributed tax dollars to the banks without insisting that they be accountable. The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.

Only with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.
See this for background.
This is not the statement of a raving blogger (although some of the best reporters write blogs) or a conspiracy theorist living in his mom’s basement (even though some conspiracies are real).
This is the former government official who oversaw the bailouts.

And just where did all that TARP money go?
Interest Or No Interest On Excess Reserves, That Is The Question

July 21, 2012
Today billionaire Eric Sprott spoke with King World News about his greatest fear.  Sprott literally shocked KWN by saying, “My biggest black swan, Eric, is that I think I’ll be right one day.  My worry is that one day they just shut everything down.”  Sprott, who is Chairman of Sprott Asset Management, also added, “They (central planners) say, ‘You know what, we just can’t keep this up anymore, the whole Ponzi (scheme), we just can’t do it and we shut it down.’”  

Sprott went on to say that all of the markets would then “freeze.”  But first, here is what he had to say about the ongoing ciris in Europe:  “It’s beyond the ability of governments to deal with all of these weak countries.  There are only one of two answers:  Yes, someone could print as much money as they want.  Maybe they could print $5 trillion and say, ‘We’ll back up all of the banking systems.’”

“And then one could maybe say the problem is solved.  Of course the problem is, if they print $5 trillion, everyone knows they can’t back it up with anything.  Then you will lose confidence in the currency and you will go into hyperinflation because people will realize that real things are safer than paper things, including bonds and stocks and things like that.

So there are only two choices, they’ve got to print or there are going to be some defaults, which is the natural offspring of a Minsky moment.... 

“Sooner or later you have to write off the debt or you have to inflate it away.

Continue reading the Eric Sprott interview here

Embry - Expect Shortages Of Gold As Soon As Next Month
From Eric King, KingWorldNews.com
July 23, 2012
“We are moving toward a fundamental shortage of gold, and I believe it may start as soon as next month.  I think the bottom is being put in right now.  You see once again with the stock market trading lower, they just turn the algorithms on and grind the price down.

But this action is all just building a massive base in gold.  I think the big issue going forward is this growing shortage of available physical gold.  I strongly believe one of the reasons for the shortage is a lot of it is headed East.  The last four or five months of the year gold should challenge and easily take out its all-time high.  

For what it’s worth, there is an enormous amount of interference in the gold and silver share market.  I think that will end as soon as gold and silver break their highs.  When that happens, I think it’s going to unleash a rally in these stocks that is absolutely going to stun people.  People will be shocked that don’t understand the full extent of the manipulation and how cheap these stocks have become as a result of it.”

Continue reading the John Embry interview here

London Trader - The LBMA Gold Price Fixing Scheme Is Over
From Eric King, KingWorldNews.com
July 20, 2012

With many global investors still concerned about the recent price action in gold and silver, today King World News interviewed the “London Trader” to get his take on these markets.  The source told KWN that “... the LBMA’s price fixing scheme is coming to an end.”  The source also said that because of this, the eventual “move in gold and silver will literally frighten most people.” 

Here is what the source had to say:  “It is now beginning to be discussed, openly, that the unallocated gold is not at the banks.  This is definitely the case with many of the allocated accounts as well.  The reason I’m pointing this out is you have a more ‘open’ disclosure that’s taking place with regards to this.

“This tells me there is something major that is happening behind the scenes.  It tells me that the LBMA’s price fixing scheme is coming to an end.  You have these naked short positions, that are incomprehensible to most people, in both gold and silver....

“As this scandal is brought to light, that the unallocated gold and silver are not there, and much of the allocated gold and silver is not at these banks either, and as you see these naked short positions unwound, the world will witness a massive price rise in in both gold and silver.  The move in gold and silver, at that point, will literally frighten most people.  They simply won’t understand what is happening.

When someone goes to a bank and deposits money, if you look at the small print, you don’t actually own that money, you’ve simply loaned it to the bank.  The banks will then turn right around and lend ten to one or whatever leverage they determine to use with your cash.  Well, when there is a run on the banks, as there has been in Europe, the money is printed by governments and given to the customers to calm things down.

The underlying problem here is that when the run on physical gold and silver begins, how will the banks print the gold and silver?  It’s not possible.  So something is brewing here.  There’s no smoke without a fire.  The reason this information is beginning to be discussed more openly is because of legal reasons.  They need to be able to say, ‘We disclosed to people that the gold and silver wasn’t there.’  

Yes, this will include a scandal at the LBMA in those unallocated accounts.  The paper leverage in the LBMA system is off the charts.  Investors believe their gold and silver is sitting in those unallocated accounts, and they will be in shock when they find out it isn’t there.

We are talking here about a run on the bullion bank.  As this unfolds there will be a failure.  These people will only receive the fixed price before trading is halted.  This will not be called a default.  Then there will be a massive gap in the price of gold and silver.  But the bullion banks will not be allowed to go bankrupt during this process.  There is a ring of counterparties here.  If one of them fails, the whole system can fail.  So they will not be allowed to fail.”

Continue reading the London Trader interview here

It should be OBVIOUS now, print money - Precious Metals WIN.  Default on global sovereign debt - Precious Metals WIN.


Got Gold You Can Hold?

Got Silver You Can Squeeze?

It's NOT To Late To Accumulate!!!

Thursday, July 19, 2012

When "Fed Hopes" Are Dashed...What Then?

The denial that is being witnessed in the financial mainstream media, and without question in the US Equity markets, is quite disturbing.  

US economic data should have pulled the rug out from under the US Equity Markets weeks ago, and should have yet again today...

But no...  There are Fed Hopes behind EVERY negative US Economic Data release.  They are there to save the equity markets from collapse.


I suppose the Tooth Fairy and Santa Claus are real too?!

This "act of denial"will not end with people dancing in the streets:

U.S. Retail Collapse Accelerates
Written by Jeff Nielson Tuesday, 17 July 2012 13:17 

Less than two weeks ago I wrote “Crash Warning.” It outlined the current economic parameters of the global economy and explained that we were careening toward a particular form of economic Armageddon which I believe was first described by John Williams of Shadowstats.com, when he coined the phrase “hyperinflationary depression” nearly a decade ago.

The debt-laden, fraud-saturated paper Ponzi-schemes of Western bankers are now all about to implode in a deflationary (debt-default) collapse – most notably all their fraud-bonds. Simultaneously, the rabidly excessive money-printing of these reckless gamblers is causing (and will cause) the prices for hard assets (i.e. assets which actually have value) to spiral upward, with the most likely final destination being hyperinflation.

Because that previous commentary was describing a global economic paradigm, my analysis was necessarily abbreviated with respect to the apex of all economic ills: the United States. In particular, I spent less than a paragraph discussing the collapse of the retail sector in the world’s largest economy -- a consumer economy.

Before we examine this train-wreck directly, let’s take a moment to define the backbone of this consumer economy: the American consumer. The two charts below should be very familiar to regular readers, and describe the American consumer in stark but precise terms: poor and/or unemployed.

[chart above courtesy of http://nowandfutures.com/index.html]

We see two things in the chart above on average American wages. First we see how (in real dollars) wages for the average U.S. worker have been falling steadily for more than 40 years. Those wages have now fallen by more than 50%, all the way down to the same levels as during the Great Depression. And we see how the U.S. government’s lies about inflation have almost entirely concealed this relentless collapse in wages. How convenient.

Meanwhile, we see the percentage of Americans who are actually working also plummeting downward, to a 30-year low. The collapse in wages has been accompanied by a collapse in employment levels. Combined, it translates into a collapse in consumer purchasing power of well in excess of 50%.

The great Economic Myth (naturally perpetuated by the U.S. government) is that “the world can’t live without” the American Consumer. The truth is that the rest of the world has been gradually learning how to live without the American consumer for the past 40 years, as the American consumer is literally less than half what he used to be. The real-and-obvious question instead is how will the U.S.’s consumer economy be able to survive the Death of the U.S. Consumer?

The relentless campaign by the U.S. government to transform its own Middle Class into the Working Poor has been an unmitigated success. Using the numbers of the Corporate Media itself, only about 10% of the U.S. population presently qualify as “middle class”, now actually a smaller segment of the total population than the wealthy Americans who tower oppressively above them.

The purpose of destroying wage-levels for U.S. workers has been to drive those wages so low that American serfs will be able to “compete” with the wages of Asian serfs…while they manufacture toys and consumables for the wealthy. This is the “prosperity” which the Corporate Oligarchs promised us when they rammed “globalization” down our throats. They had the gall to call it “free trade”, when the only thing “free” about it was their ride – on our backs.

However, this transformation comes at a terrible cost. Deprived of income, the Working Poor have been forced to use ever-increasing amounts of debt in a foolish quest to sustain an unsustainable level of consumption: mimicking the policies and attitude of the U.S. government itself. The result is the ultimate retail “perfect storm”: consumers with small-and-falling incomes; loaded up with so much debt that they are incapable of borrowing any more; and with much/most of those incomes permanently going to pay interest to the Debt Parasites (i.e. banks). Perpetual debt-slavery.

Of course the “collapse” to which I’m referring didn’t just start last month, or even last year. It began in earnest with the Crash of ’08, and has continued unabated since then. The propaganda-concocted “recovery” of government and media has been nothing but a cruel hoax, designed to placate the growing suffering of the Working Poor, and goad them into more overspending with the malicious lies that “things are getting better”.

The truth is the exact opposite. During every month of this sham-recovery, the real rate of inflation (as provided by John Williams of Shadowstats.com) has exceeded the percentage increase in retail sales (which are always unadjusted for inflation). Translation: every month of this “recovery” U.S. retailers have been selling less and less goods. This leads to another extremely obvious question: how can a consumer economy claim to be experiencing a “recovery” when it sells less and less goods each month, to consumers with ever-smaller incomes (and ever-larger debts)?

This scenario become still more absurd when we note that rising costs of raw materials have put extreme pressure on retail profit margins. Selling less and less goods for less and less incremental profit is not a formula for retail success. Rather it is a prescription for annihilation, and this is precisely what we see before us.

U.S. mall-vacancy rates have soared to all-time highs, and stubbornly refused to budge from those levels. Concurrently, margin-starved retailers are closing their storefronts and opting for more and more on-line commerce. In other words, they’re closing stores which generate significant numbers of jobs and tax revenues in favor of on-line operations which provide little of either. It is a self-reinforcing downward spiral which can only end in total economic disintegration. And we’re told that this collapse in sales, profit margins, employment, and tax revenues can all be taking place while the U.S. economy “recovers”.

This brings us (at last) to the actual numbers currently being peddled by this propaganda-machine. On Monday it was announced that U.S. retail sales had fallen by 0.5% in the month of June, and that this was the third month in a row that sales had (officially) fallen. For a consumer economy, this sounds bad enough even when we only contemplate the official propaganda. However, it’s only when we translate these numbers that we can truly appreciate the approaching U.S. economic holocaust.

As noted previously, retail sales numbers are never adjusted for inflation. Living in a permanent era of high inflation, this makes absolutely no sense at all if you’re attempting to distribute information with this statistic, but makes wonderful sense if you’re a propaganda-machine with the sole goal of deceiving people every day of their lives.

Instead of the runaway inflation produced by the psychopathic money-printing of Western bankers being their “enemy”, it is their best friend. The propagandists hide it completely with their absurd lies about “official” inflation. And eureka! High inflation is magically transformed into “high (and growing) retail sales”, and “high (and growing) GDP”.

I’ve dealt exclusively with the U.S.’s GDP sham in a previous commentary, so those readers still not familiar with this clumsy ruse can refer to that older piece. Here’s how the game of pretending that inflation doesn’t exist is used to lie about retail sales.

Real inflation is currently bouncing somewhere around the 10% level. John Williams will tell us that it has briefly dipped below that level, however his calculation is somewhat skewed by the effect of (temporarily) falling gasoline prices. As less and less of the Working Poor can afford to drive, the correct weighting of gasoline in an any inflation calculation must steadily fall – while (high) double-digit increases in food prices must be given more and more weight, as is the case in other poor nations.

I will steadfastly stick with a 10% figure for real inflation, with the qualification that this is an understatement for the American majority. Note also that in order to hide its deceptions involving retail sales, the U.S. government reports it as a monthly figure, with monthly rates of change. Conversely, almost every other major economic statistic is expressed as an annual rate of change, because we have been programmed to understand all statistics expressed in this manner. Thus by reporting retail sales in purely monthly terms, this dramatically shrinks the perceived size of these incremental changes in the eyes of the average reader. This serves two purposes.

When these numbers are bad (as they are presently), it dramatically understates this severity in the minds of those being fed these numbers. Conversely when the numbers were (supposedly) “good”; when U.S. retail sales were increasing (nominally) by a 20%+ annual rate while wages were increasing by only a (nominal) 3% annual rate, it stopped the dim bulbs in the media from forming the word “bubble” in their minds.

The argument for expressing these numbers in monthly terms is that they are “highly volatile”, and so reporting them as annual figures would be “misleading”. Obviously such an argument is nothing less than Machiavellian when coming from the most-accomplished propaganda machine which the world has ever seen.

Translated into an annual number, and adjusted for inflation; the 0.5% number reported for June is transformed into a collapse in U.S. retail sales at an annual rate of 16%. The 0.2% decline reported in May becomes a plunge of well in excess of 12% (annually). Which of these numbers “misleads” people, and which informs them?

With consumption directly or indirectly accounting for well over 80% of the U.S. economy; by the time that the “multiplier effect” is factored in (in reverse) this collapse in retail sales transforms almost point-for-point into a collapse in (real) U.S. GDP. Thus the consequences of this double-digit freefall in U.S. retail sales are plain for all to see.

The worsening economic collapse engineered by several successive U.S. regimes (at the guidance of their Bankster Overlords) is about to produce an economic cataclysm for Americans which will make the Great Depression seem like a day at Disneyland. Indeed, in the don’t-worry-be-happy world of the U.S. propaganda machine and its beloved “recovery” every day is like a day in Disneyland.

Who is Obama gonna blame this on?

US Ag Sec:Likely To See Food Price Increase Late ’12, Early ’13
By   || July 19, 2012 at 12:20 GMT

WASHINGTON (MNI) – The following are excerpts from the transcript
of the press briefing by U.S. Agriculture Secretary Tom Vilsack
Wednesday at the White House:
“I did have an opportunity to visit with the President. He is very
well informed on the circumstances surrounding a very serious drought —
the most serious situation we’ve had probably in 25 years — across the
country. Sixty-one percent of the land mass of the United States is
currently being characterized as being impacted by this drought.
“There’s no question that this drought is having an impact on our
crops: 78 percent of the corn crop is now in an area designated as
drought impacted; 77 percent of the soybeans that are being grown in
this country also impacted. It also obviously involves other
commodities as well — 38 percent of our corn crop as of today is rated
poor to very poor; 30 percent of our soybeans poor to very poor.
“And this obviously will have an impact on the yields. Right now we
have indicated yields will be down about 20 bushels to the acre for corn
and about 3 bushels to the acre for beans. That may be adjusted upward
or downward as weather conditions dictate.
“This will result in significant increases in prices. For corn,
we’ve seen a 38 percent increase since June 1st, and the price of a
bushel of corn is now at $7.88. A bushel of beans have risen 24
“The question that a lot of folks are asking is what will the
impact be on food prices. Because livestock producers will begin the
process of potentially reducing their herds in light of higher feed
costs, we would anticipate in the short term actually food prices for
beef, poultry, pork may go down a bit, but over time they will rise. We
will probably see those higher prices later this year, first part of
next year. Processed foods obviously impacted by crop yields, and we
will likely see the increase of that also in 2013.
“It’s important to note that farmers only receive 14 cents of every
food dollar that goes through the grocery store, so even though prices
on commodities increase significantly, it doesn’t necessarily translate
into large increases for food prices. And if, in fact, people are
beginning to see food price increases now, it is not in any way, shape,
or form, related to the drought. And we should be very careful to keep
an eye on that to make sure that people do not take advantage of a very
difficult and painful situation.
“There is some degree of uncertainty about all of this. Technology
has allowed us to have more drought-resistant crops. The spotty nature
of drought, the spotty nature of rains can sometimes result in better
yields than anticipated. We’re just going to have to see. As of today,
1,297 counties have been designated as Secretarial Disaster Areas.
That’s approximately a third of the counties in the United States.
We’re adding 39 counties today in eight states — those states are New
Mexico, Tennessee, Utah, Wyoming, Arkansas, Indiana, Georgia, and

And the US Equity Market levitates higher...there is only so much hot air even in a blowhard like Bernanke.
Tyler Durden's picture

What Housing Recovery? Existing Home Sales Miss By Most In 2 Years

Reality recovery Renaissance While it seems like everyone 'wants' the housing recovery to be real and organic (and not simply a reflection of limited supply and P.E. investor interest in scraping up the lowest fruit - they have to earn their commish after all), even the NAR couldn't put lipstick on this morning's pig of an existing home sales number. The biggest drop MoM in 16 months and the largest miss to expectations in 24 months is hardly the stuff of a solid foundation for the renaissance of the American Dream. CNBC's Diana Olick speaks the truth on the distressed supply drying up (despite Liesman's efforts to ignore it).

Tyler Durden's picture

Another Double Digit Negative Philly Fed Print Means Fourth Miss In A Row

Market Conditions Philly Fed
Every single economic data point keeps coming worse than expected, and the S&P is just shy of 2012 and probably all time (for those who still care about such things) highs. The Philly Fed just posted its July index print which was as usual abysmal, posting its third negative month in a row, coming in at -12.9, and missing expectations of -8.0 for the fourth month in a row. And while the bulk of index subcomponents were more or less in line, the biggest and most notable change by far was the Number of Employees which tumbled from 1.8 to -8.4. Sadly, which the economic contraction accelerates and print after print is horrible, once again they are not nearly bad enough to usher in New QE any second, even as the market has priced in not only QE 4, but 5, 6, and so on.

The Six Psychological Stages of Denial
From the book Aftershock written by David Wiedemer, PhD
[see Chapter 4, page 126]

First Stage: Denial

This is the stage in which the United States has been firmly planted for quite some time. This is the “Don’t worry, just go shopping” phase of dealing with (or more correctly, not dealing with) the reality of our vulnerable multibubble economy. Regardless of the facts, in the Denial stage people firmly believethat home prices cannot drop any further, the stock market hasalready hit bottom, and the mighty U.S. dollar will always be king.

The big advantage of the Denial stage is that people do not haveto take any unpleasant actions at all. We don’t have a problem and therefore we don’t have to change. But this stage involves more thansimply ignoring the problem. In the Denial stage, we actively keepour multibubble economy pumped up and expanding. Governments, businesses, and individuals continue to borrow their way to prosper-ity, regardless of the future price tag. And even when things start going bad, the Denial stage just won’t let the party quit. We continueto buy homes we can’t afford until we can no longer get mortgages,and run up more and more debts we can’t easily repay until we canget no more loans. And we continue to entrust our retirements andother investments to Wall Street even when stock prices have far out-stripped an economic basis because we want to believe in Tinker Bell.

It can be very comfortable to live in denial—in a big, multi-bubble economy that has only begun to fall. In the Land of Denial,there’s no need to recognize economic bubbles before they growtoo large. After all, this is the United States of America, the biggest,most powerful economy in history. Everything is fine. And besides, if things really start to look bad, we can always turn to our next stageof dealing with our economic problems, which is to rely on ourabiding faith in repeating market cycles.

Got Gold You Can Hold?

Got Silver You Can Squeeze?

It's NOT TOO LATE To Accumulate!!!

Wednesday, July 18, 2012

For Gold And Silver, The Big One Is Near

Finally, the mainstream media is not only reporting on global banking fraud, but accusing the banks of fraud as well.  This has been a LONG time coming!  And yet, when it comes to the manipulation of Precious Metals prices, the mainstream media has a lot of catching up to do.  Unfortunately, it will [likely] only be after "The Big One", that the mainstream media will reveal the Truth about the decades long suppression of the prices of Precious Metals by the banks.

July 18, 2012
By Eric King

Today four-decade veteran John Hathaway told King World News, “People have talked about gold manipulation ... There is tremendous corruption in the banking system, and I think the banks are now essentially agents of the state, more than they ever have been.” The prolific manager of the Tocqueville Gold Fund also warned, “... people are concerned that their liquid assets are not safe,” and “... there is enough in the system, right now, to justify gold trading well above $2,500.”

Here is what Hathaway had to say: “All of us look at the fundamentals and say, ‘How can gold not be $2,500?’ I remember back in 2008, and I asked myself, how can gold not be at a much higher number? What I learned then is the causes for gold to be trading higher are there, but you don’t get instant gratification in this game.”

“Let’s not forget we are fighting the powers that be, and they don’t want to see gold going to $2,500. So they are trying to paint the tape. People have talked about gold manipulation, and now we know that banks have manipulated LIBOR. There is tremendous corruption in the banking system, and I think the banks are now essentially agents of the state, more than they ever have been.

So that’s just one more reason to be distrustful of financial assets you have in the banking system....

Continue reading the John Hathaway interview here :

July 17, 2012
By Eric King

Today Stephen Leeb told King World News that the gold market now boils down to a “war between establishment and the non-establishment.” Leeb, who is Chairman of Leeb Capital Management, also said, “When the banks finally get scared that they are short too much gold, you will see a major explosion in price.”

The acclaimed money manager also stated, “The banks continue to charge the customers for holding their gold as ‘allocated,’ even though the gold has gone out the door to aid in the gold price suppression scheme. This is fraud, plain and simple, but this fraud is being encouraged by the establishment.”

Here is what Leeb had to say about the war in gold, who the players are, and how it will end: “I’ve been reading through your past interviews, Eric, and it’s becoming more and more apparent to me that the gold market is really at the center of what is the major divide in this world, and that’s the establishment vs non-establishment.”

“The establishment believes the dollar should be currency. I’m just saying they have a vested interest, a very, very strong interest in making sure the dollar maintains its status as a reserve currency. The problem is that it is becoming clear to virtually all savvy investors that gold is a better currency to own.

Gold has gone up almost six and a half fold since the beginning of this century....

Continue reading the Stephen Leeb interview here :

July 16, 2012
By Eric King

Today John Embry told King World News, As the global economy continues to deteriorate, the natural reaction to that (by central planners) is to create as much money as humanly possible, to make sure that it (the economy) doesn’t implode.” Embry also said, “To me, that’s enormously supportive of higher gold prices.”

Embry, who is Chief Investment Strategist of the $10 billion strong Sprott Asset Management, also discussed market manipulation. Here is what Embry had to say: “Gold survived another attack from the other side last week, and posted a very strong recovery on Friday. So I’m not the least bit surprised meeting resistance today because one of the mantras in this whole gold suppression scheme is to keep excitement to a minimum.”

“One way you do that is you don’t permit follow-through of any significance. You don’t have a day where gold is up 3% or 4%, and then follow it with another day like that. So now gold is struggling to hold its price it reached on Friday.

But the fact is we are coming into a seasonally strong period of demand....

Continue reading the John Embry interview here :

"How outrageous and hypocritical is this one?… Bernanke said to Congress that the LIBOR manipulation was "unacceptable." Excuse me Bernanke! You have the cojones to say that publicly while your own outfit manipulates the price of gold and silver nearly every day?"
 -Bill Murphy, GATA

From Bill Holder, GATA [ http://lemetropolecafe.com ]  Please Subscribe!

Bill H:
To all; "How close are we to a new Great Depression?" This was a question and article put out by none other than CNBC yesterday. Going back to the piece that I wrote yesterday, had we not run a deficit equal to 10% per year of GDP, the 2008-09 "recession" would have seen a decline of OVER 10% (a 10% or greater decline of GDP IS the definition of a "depression") and we would never have had a positive quarter since then. In short, the answer to CNBC's question is that we ALREADY are and HAVE BEEN in a depression since late 2007, early 2008.

Look at housing for example, I can remember back in the mid to late 1980's where 1.5 million new homes were built per year in the U.S. Fast forward to the current "recovery", we have only built 1.5 million homes in the last 4 YEARS,...total! This by the way is a drop of 75% or so. Inventories are still very high and the foreclosures just keep on coming. Banks have been withholding foreclosed homes from the market and not dumping them so as to not shoot themselves in the foot and smash prices further. Ask yourself, are the banks on more solid footing today than they were back in 2008? Look at the auto industry, back in the heyday, 16-17 million units were sold per year. Now, after dropping to slightly less than 10 million units, 13 million is all we can hope for and still 20% lower than "the good old days".

These are 2 pretty significant industries and at one point the heart of our economy. Neither has, nor will, even come close to the glory days even with interest rates as low as they have ever been. The "bubbles" have not reflated and after seeing interest rates drop to the current levels, who can argue "recovery or even green shoots" with a straight face? My point is this, ALL of the past "policy tools" that used to work, now don't and they haven't worked in a very very PUBLIC FASHION! It is not like fiscal policy was used on it's own, neither was monetary policy. No, they were used jointly and absolutely blasted full force at the economy, the result? Not enough umpf to kick this dying carcass of an economy forward for more than a few months at a time.

I would also like to add that the "numbers" we are forced to use are compiled by the government and are not even close to the reality as compilation methods have been changed numerous times to elicit "more favorable" numbers! Even with false unemployment, inflation and sales numbers, the policy tools have not worked. Now, we face municipalities, states, the Treasury and the Fed having to go forward with impaired balance sheets and the ability to "borrow and spend" more being impaired. Make no mistake, on the municipal and state levels, taxes will be raised and services cut unlike anything we have ever seen or "nightmared" about. Which leaves only the Fed and Treasury as the "engines of new credit". The balance sheet of the Fed is now laden with junk credit and the Treasury's admitted debt (not counting war debt, Medicare, Social Security and many other obligations) is already over 100% of GDP.

Folks, this is a depression and will be seen as one shortly. We are just one market event, bankruptcy event, one more MF Global or PFG Best or other fraud event uncovered (ie. where's the Gold?) away from this realization. People ask me all the time "when do you think it will happen?" to which I now always reply, "could be tomorrow, next week, next month or whatever, it should have already happened long ago". If not for bogus reporting of economic numbers, bogus accounting and "marking of assets" by banks, official sector propping (officially and behind the curtains) of the stock and bond markets, bogus reporting by our media to keep the herd calm, the roof would have already caved in.

In this business you can never ever "guarantee" anything but I will guarantee you this, when, not if the roof caves, you will hear from every direction possible, "who could have seen this coming?". A better question would be, "who couldn't?". Every "Black Swan" event is by definition a "surprise". In the current, because something is "needed" to point a finger at, you can bet your last Dollar that some sort of Black Swan event which "no one could have seen coming" will appear out of nowhere. Every policy tool has been used and every financial and economic number fudged or forged, the only thing left is to point fingers which may be exactly what this LIBOR scandal will morph into. In the meantime you have only one job to do, do not let yourself be fooled, bored or scared out of your precious metals positions. It is WAY TOO LATE IN THE GAME to make that mistake now! Regards, Bill H. 

After two days of Quivering Lip Bernanke's dismal assessment of the US Economy before the US Senate and Congress, equity markets have convinced themselves that Bumbling Ben is just itching to pull QE3 out of his hat...despite the obvious lack of interest in doing so from Ben-jibber-jabber himself.

The markets are brimming with "Fed Hopes" as they levitate higher on next to NO VOLUME.  Ya gotta hand it to "Baffle Them With My B.S." Ben, he has does the impossible, and kept the US equity markets from collapsing with nothing more than the words from his quivering lips and the lips of his companion Fed Heads.

What is most amusing is that the higher the equity market's "hopes" levitate the markets, the LESS likely "Been There Done That Didn't Work" Bernanke will be able to pull another rabbit out of his hat...let alone be right in doing so:


Even the Precious Metals Markets have fallen victim to the "Fed Hopes" sentiment...falling when these "hopes" are dashed, rising when they are raised.  I've grown tired of watching the Precious Metals markets move in sync with equities...haven't you?  I honestly believe that until either these Fed Hopes are extinguished, or Bubble Blower Ben unleashes QE3 [only to be greeted with its complete failure], the Precious Metals markets will remain mercilessly tethered to the levitation and air pockets in the equity markets.

And when the Precious Metals Markets and the Equity Markets go their separate ways, then, and only then, will we get The Big One.

The End of the Bernanke Put is Here

Submitted by Phoenix Capital Research on 07/17/2012 08:20 -0400

For well over a year, even after Ben Bernanke admitted that the consequences of QE outweighed the benefits, the financial media world is awash with claims that QE 3 is just around the corner. It doesn’t matter than it’s been over a year. Nor does it matter that the Fed has staged 10 FOMC meetings without launching more QE, everyone claims QE is coming.

Guess what? It’s not. And I’m going to lay this idiotic theory to rest right here and now.

First off, the Fed cannot launch QE because of the political climate in the US. In case you missed it, the last time the Fed engaged in a large monetary move (outside of just extending some pre-existing policy) was in November 2011 when it facilitated a coordinated Central Bank move to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements.

The political response to this was extreme. Every GOP candidate under the sun began to target the Fed. Some began calling for Bernanke to be fired.  Meanwhile, Obama became totally silent on defending the Fed. Let that sink in for a moment. Obama, who reappointed Bernanke, didn’t defend Bernanke’s actions. In fact he acted as if nothing had happened.

The message was clear: the Fed had become politically toxic and if Obama wanted a shot at re-election, he needed to distance himself from the Fed.

It was only a few months later that the Fed went into full on damage control mode by increasing its town hall meeting efforts (Bernanke now goes to colleges to explain why the Fed is great), writing complaints about how the media is presenting its moves during the financial crisis along, and of course the now famous “Bernanke’s a normal guy who drives a Sebring and reads a Kindle” article in the Wall Street Journal.

Consider that Bernanke, only a few years ago, lied to Congress about monetizing debt. Around that same time the Inspector General in charge of oversight of the Fed said that the Fed:

1)   Didn’t know where it was sending hundreds of billions of Dollars.
2)   Had not launched any investigations into where the money had gone
3)   Had not launched any investigations into why Lehman Brothers had been allowed to fail

Has everyone forgotten this? Bernanke, the savior of capitalism, Time Magazine’s Man of the Year, and arguably the most powerful human being in terms of monetary clout ON THE PLANET is now going into classrooms to explain why the Fed is wonderful and should continue to exist.

Even more than that, he’s having his favorite mouthpiece at the Wall Street Journal portray him as a normal American who drives a US car and reads his kindle. This is the HEAD OF THE FED we’re talking about. Since when does Bernanke need anyone to depict his private life? The guy used to tell the media to get stuffed when it snooped around the Fed’s actions… now he’s openly going to the media asking to get profiled?

Folks, the political game has changed in the US. The Fed is no longer invulnerable. In this climate more QE cannot possibly happen. End of story. Indeed, if the Fed were to launch QE at any time between now and the election, Obama is DONE. The last possibly chance for QE without it being a clear hand-out to Obama (and a gift from the political gods to Romney) was June. The Fed passed on that.

Don’t believe me? Why do you think Obama is privately begging Germany and EU leaders to keep the EU together until after November? He knows the Fed cannot step in and save the day without killing his chances at re-election. END. OF. STORY.

Finally, there’s a simple monetary reason the Fed cannot engage in more QE: BANKS NEED TREASURIES. Treasuries are the ONLY senior asset on bank balance sheets that are increasing in value (don’t even try to claim that mortgage bonds, corporate bonds or muni bonds are attractive to banks given what the banks know about the ongoing debt crisis in the world).

More QE pushes the US Dollar down. So for the Fed to engage in more QE would mean the Fed would be buyingappreciating assets from the banks (which can be leveraged up for trades… remember all the big banks are now basically hedge funds) in exchange for cash which yields next to nothing and would be depreciating in value if more QE was announced.

The banks need all the Treasuries they can get their hands on. I know, I know, ultimately Treasuries will be worth much less when the debt crisis hits the US. But it hasn’t yet.

If you’re a large bank what would you rather own? Treasuries or some other sovereign bond which either yieldsnothing (Germany, Japan, France) or which is about to default (the PIIGS and others)? 

The answer is obvious. You want Treasuries. We’re not talking about ideals here; we’re talking about reality. And in today’s financial reality, Treasuries are the best senior most asset a bank can buy. WHY would a bank want to hand these off to the Fed for cash, which yields nothing?

I could go on and on, but the reality is the above arguments alone erase any reason for the Fed to launch QE any time soon, if ever. The ONLY reason the Fed would launch QE would be if liquidity needs were so desperate for the banks that the would be willing to give up their senior most assets in exchange for cash to meet day to day liquidity needs.

And if we get to that point in the US again, QE will be the LAST of our worries.

So, QE is not coming. End of story. You can continue to argue otherwise based on some idealistic view of the world, but the reality is Europe and Japan’s bond markets are both on the brink of collapse. US banks want all the Treasuries they can get. In a perfect world, they’re not great investments, but they’re far more attractive that the alternatives in the REAL world.

So… if you’re still investing based on the idea that QE is coming and that the Bernanke Put is firmly in place, you’re going to be in for a HUGE surprise in the coming months. QE isn’t coming. And the Bernanke Put is losing its credibility rapidly.

Which means… the primary prop underneath the US stock market and financial system (namely Fed intervention) is slowly being removed. What follows will not be pretty and smart investors should be taking steps now to prepare in advance.

If you’ve yet to take steps to prepare for this, I can show you how: my Surviving a Crisis Four Times Worse Than 2008 report is chock full of information on how to not only survive but thrive during the months to come.

Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).

Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.comand click on the OUR FREE REPORTS tab.

Good Investing!

Graham Summers

PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com
Biderman’s Daily Edge 7/17/2012: Stock Prices to Emulate Drops in Housing Values Post Bernanke Put

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