The news over the last week alone, forget the plural “weeks”, is staggering. All of which indicate things are moving at speeds that leave people with half a brain saying, “How in the world did we miss this thing?” It is Monday morning, and the futures markets are in a tail spin to the down side. Summary, anything I post in this installment could be dated in hours, not days. Note the following from Monday morning: http://www.zerohedge.com/news/2015-08-24/blood-streets-down-dumps-1000-points-open-biggest-drop-lehman
Followed by this from ZeroHedge less than 10 minutes later. Hell the DOW might be up by the close later today, who knows with the PPT (Plunge Protection Team). To be sure it will soon rally to the paper bobble head cheers. Remember the eventual equity carnage will pale in comparison to the bond apocalypse, "when" it revs up (caveat: equities are nothing but debt these days as well). The fools will mistakenly run to treasuries for safety. Or hey, you could try to catch a ride on the "VIX"...! Or better yet get off the paper train wreck!
Back to more cerebral "big picture" pursuits, that aren’t 100% manipulated. Let’s continue down the route of "big picture" solutions, and causations, while avoiding most of the minutia. Just remember this, while students of the markets will say it is easy to predict these undulations, the dullards, and “media lackies” will make excuses like, “Who could have seen this one coming?”
On a bigger, more important, longer lasting, worldwide scale that statement will be even more prevalent, and repeated many, many more times. It might be instructive to look at the loss of sovereignty again, via dollar export both overt, and even more importantly covert. The alternative media may recognize it, but I now think it’s final impact could be underestimated, and about to leverage our own lifestyles. Tune in to the last segment below.
Before looking at the western magician’s dollar fantasies, I think it might be worthwhile to take a second look at the guaranteed “panic” that will hit the buy-side in the monetary metals market. Based on last week's activities, I now think, even a “negative Nancy” like myself may have underestimated it, it being the panic to get on board the real money train.
But first, something really important hit the weekend news. Kris Jenner beat Kylie Jenner in a swimsuit competition. I suspect many people lost their “retirement shirts“ betting on this one, I sure did. I had my last silver dollar on Kylie!!!! Damn-it!!!!
It doesn’t get more important than that, does it? Simply amazing, front page too.
Panic in the Monetary Metals:
The lack of interest in the monetary metals on the way down the paper price scale will pale in comparison to the “panic” on the upside……”EPIC” will be the one of the few words to be an adequate descriptor. This is a lock, and will apply, whether it is a paper pricing platform or a very simple barter system (which will have some sort of paper indices from somewhere to be applicable).
The deep thinking Doug Casey, I believe, said the metals markets aren’t manipulated. To which he was treated to a round of boo’s from the alternative media/metals bugs crowd. Somewhere in a past installment, "I said I agree, and disagree with Casey’s manipulation assertions," but I am not sure if my agreement is in line with his non manipulated statement’s supporting reasons. When a deep thinker like Casey makes a statement of this nature, and it is then aided by the msm’s repetitive “gold & silver aren’t money” choruses, it is easy to see reasons for the levels of disinterest in the monetary metals in SixPack land.
But, the one reason I agree with Casey’s assertions of “no manipulation” will be one of the primary drivers that will help create the purchasing panic for the massive move to the upside. Paper pricing, or barter pricing being the case, it will not matter. The only way to catch a ride is to the upside, and late arrivals may not be allowed on board.
To repeat my own analysis from the prior installment on market manipulation (amazingly paraphrasing my own stuff...too lazy to look it up):
“There is no doubt that the banksters, or someone behind the scenes is trying to push the price of monetary metals through the floor. Still Casey could be right about true price discovery, as the power of the people, those involved in the “willing buyer to willing seller” arrangement, seem to be disinterested. Thus the illegality of price manipulation "freely" exists, as the masses have spoken, for they are either “disinterested or cowardly”, and thus are an integral part of the market pricing structure. Amazingly, it therefore contains some of the elements of a non-manipulated market.” Wolf Gray
I would surmise that it is 99% “disinterested”, not cowardly. The lack of interest is why the prosecutions are meaningless, and the bankster/perpetrators get away with blatant price manipulation. So in some twisted way of thinking, there is true monetary metal price discovery thanks to a lack of interest on the buy side.
Once the “buy side” interest arrives, due to an undeniable media version of the King Dollar crisis, it will not be motivated via the standard market metrics. The price motivation will instead be for reasons of pure survival, and “panic”! Throw survival in the picture, and make no mistake the ultimate “panic” will not be for the reasons of missing a “trendy”, uptrend product with some profit potential (this will be an epic never before seen panic). Oh no, this panic is to survive. This “panic” will be ….EPIC.....!!!
EPIC, is soon to be the word. Just wait until the margin calls start rolling in, and in fact note this article from ZeroHedge:
Though the above article is more suited to the deeper economic thinker, like those who frequent the pages of “roguemoney.net”, the margin call phenomena, detailed by ZeroHedge will be another epic item for this economic era, and not just for the traditional market. Wait till a version of hypothetical, margin calls hit the street level pricing for the SixPack’s survival needs…..WHOA! Thus bidding up for survival needs! The stock market will be forgotten entirely…….Let’s gear down our brains for this……..
Lack of Interest or Indoctrinated Stupidity:
This subtitle transitions easily from the “panic” subtitle that preceded it, but with a different twist, another defining of the level of stupidity is involved (I seem to get caught on this in every installment).
I ain’t quite the geopolitical wizard that James, or the mighty SilverBack are, or quite the economic statistician with pinpoint analysis like supplied by Ken Schortgen Jr (or say Jim Willie to all the above), but I am pretty good at seeing obvious, on the ground signs that will eventually upset the prognostications & lies from the “western paper pushers”.
Though not a wizard, I will get a bit fancy with my thinking in the final segment (after this one), in this installment, and probably embarrass myself. That being said………
The obvious signs referred to in the above paragraph are stats that are becoming more and more “in your face” to anyone with a minimal high school education. But, from the looks of things, very few made it through high school in the US, even though diplomas were handed out. Thus you have to chalk it up to indoctrinated stupidity. Check this out:
No one should require a PhD in any economic studies, or business studies, or political science studies to recognize the above “headline” is a sign saying the western economic patient is very very sick, and most likely the world is getting sick as well. “Forecasts Cut”, heck you don’t even need to read the article the headline says it all, so why can’t those with a high school degree seem to see the obvious on going trend? Indoctrination, misdirection, and possibly just plain dumb.
Let’s try something a little more complicated, but still well within the range of a typical high school educated individual’s level of reconnaissance to be applied to reality.
The Chinese purchasing managers index took it on the chin (pun intended). Forget the stock indices, and look at real business numbers, the Chinese PMI, that like the CCFI (China Containerized Freight Index), & Baltic Dry Index, don't bode well for the markets. These are indicators that semi well read high schooler could understand, an advanced RM degree isn't necessary.
Let’s move onward, and upward, but still within a high schooler’s level of understanding:
In referencing the above video, it occurs to me, that I tend to try to equate to the rapid fire minds of "The Economic SilverBack", "The Russian Analyst", and Ken Schortgen Jr., but in my case I tend to fall back, and use some basic logic as to the background and structure of what I am listening to (btw they probably do as well, my older brain just ain't as fast as theirs). In this interview with Steve St. Angelo, I could almost not give a hoot about whether his theories are right or wrong, because there is one theme that stands out. As in slaps you in the face, stands out!
…..”Natural resources, and real money”…NOT PAPER! This is what the big players know, the things that deserve to be reviewed and debated time and again. Proper positioning of yourself with gold & silver, bars & coins, natural forms of sustenance, physical protection, and safety from the elements. Time tested items that typically move up at the pace of overall inflation, and even more so in an economic crisis. Thus again, broken down to a high schooler's level, an advanced degree from RM isn't necessary.
I doubt you will not hear any of the more astute alternative media experts talking about the best way to offshore your paper, or the coolest most current, hot, “hash tags”. This is a good interview to ponder, especially as regards the importance of monetary metals, and it is still within the understanding realm of a high schooler by just grasping the big picture in the interview. Not that hard to do either!
Our high schooler may need a little history to understand this next one, but the business portion is so so pure and simple. Note this link, reminds me of the US in the mid 1980’s:
It would appear in the above link that China is trying to grow internally, which is the best way to keep your country safe from outside forces. Hmm, maybe we should have listened to Ross Perot. This article details the growth in start-up businesses in China. Low and behold them ‘commies’ appear to be attempting to encourage small business growth, a concept currently lost on America's "too big to work society" (tbtw). The article couches it’s positive news with the problems Chinese entrepreneurs are experiencing with high start up costs. Thus the reason for my comparison to the 1980's, with our own tax rates that were well above the 50% mark for those that were most likely to start businesses. A Reagan type leader can solve some of those problems, and did.
But, it is worth noting that 6 or so months ago, I read an article posted on ZeroHedge that small business ownership had hit all time lows here in the USA. This can easily be attributed to ridiculous government overhead cost (how about Zero Care) breathing down the aspiring new business entrepreneur’s neck. You have to give the USA credit though, they are consistent in their wrongness. "No surprises to see here folks, please move along!" Yep, a high schooler, if paying attention, could latch on to this story-line! Again, no RM degree required!
Here is one that anybody should be able to comprehend as a leading indicator, check out this headliner from ZeroHedge:
And, finally for something possibly above a high schooler’s level of understanding, I give you the following link from ZeroHedge. Over the last several decades, when the tech market leaders (Microsoft, Cisco, Google, & now Apple) of the world hit bear market territory, it meant look out below for every sector in the equities markets! Wonder if the msm will portray it that way this time? BTW, I suspect the PPT (plunge protection team), will give "APPL" plenty of attention:
Wait...that should actually be the easiest thing to understand for your typical high schooler. Their I-pads & I-pods will not be updated to the latest versions by mommy & daddy anytime soon, as they will be too busy scrambling to keep their heads above the survival needs headwaters. Moving on to an item that may have me in over my head...but here goes
The Illusion of the King Dollar’s Control:
The right to autonomy is granted via a lack of outside ownership. In an economic sense, it would be defined by the lack of outside ownership of one’s own currency, and or debt frameworks. The US now has no borders in a business or in an economic setting or framework. Why? I would maintain it is due to the fact that well in excess of 50% of the US paper afloat worldwide is outside their geographic, or better yet, their jurisdiction over the "domestic citizen tax payer laws". …To put it simply they can’t call the shots anymore, and guarantee the results to their greedy desires anymore.
We don’t own them, they own us! Without a reasonable sized manufacturing base in relationship to our massive dollar/bond (actually dollar plus bond) expansion, without real money in the storage bin, and without real development of our natural resources, we have no, as in ZERO leverage! Or as I love to say, we can’t operate or negotiate from a vital position of strength, without the proposition of force in visible tow.
It is reported that China has little if any outside (outside their economic borders) debt holders. Who cares Wolf? The Chinese, I say, because they can devalue, revalue, overvalue, or you name it, without the devastating effects high outside debt levels would normally have on their economy. On the obverse side if the percentage of debt holders outside their economic borders started to increase, maneuverability would be reduced.
Imagine being the owner of a neighborhood business in which you are leveraged quite heavily with your neighbors holding the debt, and then telling them you are going to devalue your business holdings. For the most part it is darn near impossible, and if their debt holdings are very large as in, say 50% or more of the total monies in or tied to your business’s framework & it’s production, well let’s just say you are screwed. Just imagine knocking on the door of your neighbors, and telling them you are devaluing the very things that they stuck their necks out for, YOU & your own inspiration, your business!
It may be oversimplified, but that is where we are, unless the amount of paper outstanding isn’t that large. Hey, maybe the alternative media is fudging a bit on the high side of how bad we have sold this nation of ours out in the dollar sovereign autonomy business.
I tried googling any suspects in the academic world in regards to the amount of US dollars and bond debt floating around overseas, and as expected it is a waste of time. The best I could come up with was from an economic professor emeritus named Edgar Feige. He wrote a brief paper on the amount of US dollars overseas, and stated it was vastly overestimated (appears to be based on 2010 numbers). Which means The SilverBack, Jim Willie, Ken Schortgen Jr., and many others are wrong about the offshoring of our debt, and or ramming it down our lacky’s throats. Here is the text...
Despite financial innovations that have created important new substitutes for cash usage, per capita holdings of U.S. currency amount to $2950. Yet American households and businesses admit to holding only 15 percent of the currency stock, leaving the whereabouts of 85 percent unknown. Some fraction of this unaccounted for currency is held abroad (the dollarization hypothesis) and some is held domestically undeclared, as a store of value and a medium of exchange for transactions involving the production and distribution of illegal goods and services, and for transactions earning income that is not reported to the IRS (the underground economy hypothesis). We find that the percentage of U.S. currency currently held overseas is between 30-37 percent rather than the widely cited figure of 65 percent. This finding is based on the official Federal Reserve/Bureau of Economic Analysis data which is a proxy measure of the New York Federal Reserve’s (NYB) “confidential” data on wholesale currency shipments abroad. We recommend that the NYB data be aggregated so as to circumvent confidentiality concerns, and be made readily available in order to shed greater light on the question of how much U.S. currency is abroad while providing important information on the location of overseas U.S. dollars. The newly revised official estimates of overseas currency holdings are employed to determine the Federal Reserve’s seigniorage earnings from 1964-2010, which have provided a $185 billion windfall for U.S. taxpayers. Overseas currency stock data are also used to derive estimates of the domestically held stock of currency as well as narrow and broad measures of domestic monetary aggregates. These domestic monetary aggregates are believed to be better predictors of future economic activity than traditional monetary aggregates and are tested to determine their ability to predict fluctuations in real output and prices. Domestic cash holdings are finally used to estimate the size of the U.S. fiscal underground economy as measured by the amount of income that is not properly reported to the IRS. By 2010, “unreported income” approached $2 trillion, implying a “tax gap” in the range of $430- $475 billion. Currently, we estimate that 18-19 percent of total reportable income is not properly reported to the IRS.
BTW, I am going to cut this guy a break, as he apparently did what anyone would do in his position. Go to the public record, and make deductions from it. As a man who is involved in a profession of and about facts that are displayed on paper, what else could he do and stay employed that is? But, RMers’ probably know there is far more to this subject than meets the eye, and the alternative media has it more right than wrong.
In his summary we have a nice overall review of the Fed's & IRS’s printed balance sheet (a honest one to be sure, I bet!!!!!) designed to come to a conclusion as regards the amount of dollars held overseas. Hmm, asking the guys who supply the funds well under the radar screen for the BLICS (BELGIUM, LUXEMBOURG, IRELAND, CAYMAN, SWISS), what the percentage of paper is over seas, may be an incomplete study as regards the hidden truth. Duh, ya think! And, not researching the control room of the Fed.'s greater involvement in covert money usage overseas as a broker for the "ESF" (Exchange Stabilization Fund), is true folly in reporting the dollars overseas. I suspect the covert outnumbers the “TRUTHFULLY” (yea right) overt dollars by many many multiples.
So if this professor emeritus dude in economics is at 30-37% of the grand total (his research paper numbers) outstanding for an overseas figure, when confined to the phony Fed released stats, then I would surmise we can all assume the true number is closer to some of the figures I have seen in the alternative media...reaching nearly 80%, and well above 50+%. Remembering the previous neighborhood business financing example, is the USA really in a position to devalue, revalue, overvalue, or do any overt revaluing of their currency like China can? NO! We are devoid of leverage, in fact even “arm bending leverage” has lost it’s professional luster to our debt holders.
We are at the end of our debt ropes, and it is just pure mathematics at this point. Business 101/economic mother nature. We owe way, way more than we make, and the guys we owe have lost their debt holder patience. It ain’t rocket science.
So when I hear guys say we should devalue our currency, like let’s just do it with a push of a button, I laugh. We are the world’s reserve currency, with outsiders holding our debts, and we have an insignificant manufacturing or export business…we can’t do “diddly squat”. If they say, “No more!” WE ARE CORNERED WITH NO WHERE TO GO…….Basically to quote that famous philosopher & shoe salesman Alfonse Bundy, “We are screwed!”
I did go a bit further in my research and uncover the following linked pdf research piece. Enjoy the following academic pdf. if you so wish. I read about 2 words fell asleep & quit, as it ranks right in there with the stats from the BLS (Bureau of Labor Statistics).
As I think I heard Jim Willie say, “If you don’t include in your western paper discussions the impacts of derivatives, then the discussion is totally meaningless!” (paraphrasing) You know what is even better? Much of the derivative language as reported by these crooked banking entities, is termed “notional”. Boy that gives me that warm and fuzzy feeling. So when JPM or Citi, or Bank of Amer. fires out a figure of say 40-70 trillion in “notional” derivative exposure, that means it could be...even worse? Come on man!
I suspect we will never know the true, hidden values of overseas dollar leverage, but we will surely feel the aftershocks that come from the exposing of the real numbers. Don’t be fooled. This is part of the magic act, and I hate to say it, it is brilliant! After all why not “run up the tab, big time”, no one will ever know the real numbers. All they will know is pain was a result, and not recognize the cause or source. A result that many can cushion with, and you know the next line by now, “A well thought out DHAP”. Instead we will all hear, “Who could have seen that coming! A high schooler should have!
In summary; not including the ESF, the BLICS fraud, the the Japanese Pension frauds (note last 2 are debt instrument transactions, but still US paper backed), or the many other paper frauds known & unknown, is like pretending a pack of grinning, fat, foxes outside a broken down structure of a chicken house has no impact on the population of chickens currently dropping eggs residing therein.
Truthfully, and truthfully is the word that matters, a study of our “money changing” strategies or lack thereof is meaningless once we have totally lost our financial autonomy. The control is a damned illusion….! An illusion to take our minds off questions about the undisclosed numbers, and leave us unprepared for the coming pain.
Prepare yourself, as I fear this will be “epic”, in ways “the unprepared” would never have imagined.
Hard Asset Tip:
Start making precision check lists now. They are very boring, but they clear the worries over, did I remember to do that, or that, or that…? From personal experience keeping a check list on items as simple as vitamin supplements can be complicated, and without a table it is (if you take quite a few supplements like ‘yours truly’) a nightmare. I recommend 6 months supplies at a minimum on everything you deem to be necessary to sustain you, and your family.
A Wolf Gray Repeat:
Stock your shelves with humility, throw out your ego, as it will be handed to you no matter how well prepared you are. Those not prepared will get rid of the soon to be most undesirable hard asset ever, a mirror, for those to see the fool who did nothing. At least make an effort. Note the following music video if you so choose, it somehow seems appropriate at this juncture (lyrics below):
So, so you think you can tell Heaven from Hell, blue skies from pain. Can you tell a green field from a cold steel rail? A smile from a veil? Do you think you can tell?
Did they get you to trade your heroes for ghosts? Hot ashes for trees? Hot air for a cool breeze? Cold comfort for change? Did you exchange a walk on part in the war for a lead role in a cage?
How I wish, how I wish you were here. We're just two lost souls swimming in a fish bowl, year after year, Running over the same old ground. What have we found? The same old fears. Wish you were here
"The same old fears" will be different this time, by many "real life" multiples......Prepare yourselves!
God Bless, & be well!
Credits to the thoughts of: Opie, The Economic SilverBack, James the Russian Analyst, Ken Schortgen Jr., Dr. Jim Willie, ZeroHedge, Steve St. Angelo, Michael Rosecliff, & Pink Floyd
PS: Sunday & Monday are for writing, and Tuesday '& or' Wednesday are for trying to decipher my poor grammar. The changes I will witness during the decipher stage will nearly require a complete rewrite, except at this stage you should be only a slightly interested observer of paper, and thus the big picture should be all that matters.