Central counterparties keep records of trades and help suck risk out of the banking system, but this only works if they themselves are well capitalised and have plans in place to deal with a sudden collapse of one or more of its members and get close to failure. Otherwise, they’re just unexploded nuclear bombs nestling deep in the financial system. – Business Insider LINK.
Who are we kidding. Since the 2008 de facto banking system collapse, the OTC derivatives problem has mushroomed out of control. The Obama Government heralded in the Dodd Frank legislation, which allegedly made the financial system safer for everyone. In reality it is nothing more than a fairlytale written with the goal of allowing the Too Big To Fail banks to cover up their continued derivatives Ponzi scheme.
Public banking expert Ellen Brown thinks big banks will be saved from a coming calamity at the expense of the little people. Brown explains, “I think the big banks won’t go down. They are protected by the bail-ins, which we haven’t yet seen in the U.S., but we’ve seen them in Europe starting in Italy. They did them starting last year. There were four small banks that got bailed-in . . . they took deposit accounts where they got some interest, and they were called bond holders. So, they took the bond holders’ money. They were really just ordinary depositors that thought they were making a little interest. There was one man who committed suicide because he lost his whole 100,000 euros. He pinned a sign to his chest and blamed it on his bank. The effect of the bail-ins in Italy was, rather than stabilize the banks, it destabilized the banks. Depositors in Italy were pulling their money out. It seems to me that the way things are playing out, the banks will be kept in place by governments because of this fear of the collapse of this derivatives scheme. Who will be hurt? It will be the little people. So, we will see a crash, but it will be a crash on us. We will lose our deposits or we will have to do a bail-in. The big banks, under the current law, are pretty much safe.”
Click through for the full post and video interview.
In mid-2009, the IMF announced that it was going to sell a portion of its gold. It ended up selling 403 tonnes of its then-reported 3218 tonnes of gold. Back then the original announcement made it sound like the IMF was trying to push down the price of gold with a big sale announcement, as the price of gold went parabolic after the 2008 de facto collapse of the financial system. The excuse for the gold sale was to “shore up” IMF finances. However, historically, the IMF has sold off portions of its gold holdings as a policy to reduce gold’s role in the global fiat currency system.
At the time, India and China jointly delivered a research paper which suggested that, if the IMF were interested, the two countries would be interested in buying all of the IMF’s gold. The IMF limited its sale to the 403 tonnes: 200 tonnes to India, 2 tonnes to Mauritius and 10 tonnes to Sri Lanka. By December 2010 the IMF concluded the sale of the balance of the gold without ever disclosing the buyers.
The only way to reverse declines in labor participation and stagnation in wages and demand is to make it easier to start enterprises and hire people. Mainstream economists are mystified why wages/salaries are still stagnant after 7+ years of growth / "recovery." The conventional view is that wages should be rising as the labor market tightens (i.e. the unemployment rate is low) and demand for workers increases in an expanding economy. But wages are only rising significantly for the top 5%, while workers between the bottom 81% who have seen their household incomes decline and the top 5% are experiencing stagnant earnings.
Gold is set to benefit from a “perfect storm” of dwindling investment alternatives and greater investor risk, according to the August report of the World Gold Council (WGC).
It says central banks are increasingly pulling out all the stops to stimulate growth, which has driven yields on government bonds to absurdly low levels. Fewer than 40% of government bonds around the world available to average investors have a positive yield, and only 17% yield more than 1%.
Investors have to take on additional risk to generate any sort of meaningful returns. And this search for returns is pushing investors toward gold to balance the risk, according to the WGC:
The failures of government intervention in the economy have made headlines yet again. Recent stress tests by the Federal Housing Finance Agency found something sinister brewing under the surface at notorious mortgage giants Fannie Mae and Freddie Mac. The results show that these puppet companies could need up to a $126 billion bailout if the economy continues to deteriorate.
That’s right — the two companies that were taken over by the government and that sucked $187 billion from the treasury could be entitled to more taxpayer money. The toxic home loans bought during the last crisis coupled with a lack of liquidity have suddenly become serious risk factors. The so-called “recovery” that has been trumpeted for years by countless politicians and economists is falling apart in plain view. The media will do just about anything to assure the public that this is all isolated and overblown, but the canary in the coal mine has just dropped dead.
The tests ran a scenario eerily similar to warnings we’ve heard about what the economic future might hold:
“The global market shock involves large and immediate changes in asset prices, interest rates, and spreads caused by general market dislocation and uncertainty in the global economy.”
James Turk continues: “As we discussed last week, it is not unusual for the precious metals to take a breather in August, particularly given the fantastic year they are having. Price corrections from time-to-time are a fact of life. So we should not be surprised that gold and silver were hit after the unemployment report was released Friday morning. The numbers were better than expected, but the report seems to be doctored, based on the growing number of economists who are rising their eyebrows on the unusual and so-called “seasonal adjustments” that made the report look good.
Gan Golan, of Los Angeles, dressed as the "Master of Degrees," holds a ball and chain representing his college loan debt. (AP Photo/Jacquelyn Martin) Regulations are flying out the door in in Washington, where an already hyper-aggressive Obama administration is looking at its last chance to move its agenda forward while sidestepping Congress. Many of the expensive rules in areas like energy, health care, and finance have drawn widespread public and media scrutiny – which makes it all the more curious that what is likely to be the single most expensive proposed regulation of the year, a Department of Education rule that would discharge billions in student loans, has gone almost completely unnoticed.
What could go wrong? Debt is slavery. This is why holding some real money in the form of silver and gold will protect wealth.
“That,” I tell the Russian economist, “is quote-of-the-day material.”
We’re sitting in this small conference room in the center of Moscow, talking of opportunities in a misunderstood, wrongly despised economy, when the conversation turns to the notion of propaganda. At which point she tells me: “We had the Soviet Union. We are experts in propaganda. The Americans — they are like children.”
It will not sit well with Americans who refuse to believe the media and the government here at home are manipulating them, but her point is spot-on.
It’s a point I routinely make: Too many Americans gobble up the factual shape-shifting that spills forth from the media, and particularly from the federal government, and they think they’re well-informed citizens with fact-based opinions.
Worse, they believe like gospel the disinformation and misguided reportage from just about every mainstream media outlet, and they use that “information” as the basis of important decisions.
When Ford reported its Q2 earnings, Ford’s auto finance division reported a decline in profits that reflected lower values realized at auction on cars returned after the lease expired. Auto market weakness typically shows up first in the resale/used market (I traded the auto supply sector junk bonds when I traded on Wall Street in the 1990’s, which is why I’m familiar with auto cycle dynamics). In addition, Ford Credit reported higher than expected credit losses.
My point here is that the auto industry, after being hyper-stimulated by the Fed with $100’s of billions of subprime quality car loans and leases, is going to head south
Be sure to click through for the full article. This will affect platinum for sure.
With continued uncertainty in global markets, today the man who has become legendary for his predictions on QE, historic moves in currencies, and major global events, spoke with King World News about the grand illusion, $80,000 gold and a worldwide nightmare.
(King World News) Egon von Greyerz: “Welcome to the wonderful world of illusions. This is a world where few people can see the difference between reality and fantasy. And maybe there is no difference. Just looking at the US election and the candidates, it seems like total fantasy from this side of the Atlantic. It is difficult to take the whole election process as well as the candidates seriously. But this is the world we live in today. Having in the last week seen people in many European countries run around the countryside and cities chasing Pokémon Monsters, you wonder if the presidential candidates might also be part of the same game…
Trends forecaster Gerald Celente has been predicting a financial panic in 2016. How close are we? Celente says, “I believe we are very near an inflection point coming up very soon. . . . I would have thought this would have happened back in 2012; however, there has never been such a thing as quantitative easing. There has never been such a thing as zero interest rate policy and negative interest rate policy. We make forecasts based on information that used to be, but now we have things that never were. . . . I was never taught that central banks could take over the economy as it is now. This is not capitalism. Capitalism is dead–it’s now bankism. The only thing that is keeping this up is a giant fraud. October is usually the killer month. . . . I believe the crash will happen before the end of the year, and it almost happened with Brexit.
Financial writer and precious metals expert Craig Hemke says forget about new threats that the Federal Reserve is raising interest rates in September. Hemke explains, “They are trying to move things by talking, which is their primary policy. That’s why so many of these Fed goons, not Fed Governors, as we like to say, that’s why they seem to have conflicting messages all the time. They are always trying to get the markets to do what they want them to do. Rational human beings are telling you that they are not going to raise rates in September. Not only are they going to do it right before an election, that never happens, if you look at FOMC minutes, the expectations actually went down. . . . People see through the nonsense, and actually you’ve got to go all the way out to March of next year, seven months from now, before you at least have a 50/50 likelihood of a an interest rate hike.”
The Fed has not only failed to fix what's broken in the U.S. economy--it has actively mad those problems worse.
The Federal Reserve claims its monetary interventions saved America from economic ruin in 2009, and have bolstered growth ever since. Don't hurt yourself patting your own backs, Fed governors past and present: it's bad enough that the Fed can't fix the economy's real problems--its policies actively make them worse. After seven long years of politicos and the financial media glorifying the Federal Reserve's policies as god-like in their power and efficacy, let's take a quick look at the results of these vaunted policies: ZIRP (zero interest rates), (QE) quantitative easing, both of which are ways of shoving nearly-free money ( a.k.a. liquidity) into the banking sector, where all this free money is supposed to filter into the global economy, working miracles of prosperity.
Will history record September 4th, 2016 as the day the dollar died? Before continuing, let me make it clear that you aren’t going to wake up on September 5th to find anything noticeably different…
The dollar won’t lose its reserve currency status overnight. It won’t be instantaneously inflated into worthless piece of currency, and we aren’t going to see immediate 90% hyperinflation. None of these things are going to happen.
What I mean is that in the not-too-distant future, maybe five years, maybe three years, maybe less, we’ll look back and say, “That was the date when everything changed. That was the turning point for the dollar and we didn’t see it at the time.” But those who know what to look for will understand the significance of that date.
It all has to do with the International Monetary Fund (IMF) and something called the Special Drawing Right, or SDR for short. World money is another term for it.
"There is a lack of critical assessment of the past. But you have to understand that the current ruling elite is actually the old ruling elite. So they are incapable of a self-critical approach to the past."
But they maintain a firm grasp on information and power, for their own sake, and sidetrack and stifle any meaningful reform.
In October 2000 Thomas Frank published a prescient critical social analysis titled, One Market Under God: Extreme Capitalism, Market Populism, and the End of Economic Democracy.
In the video below from 2015, Thomas Frank looks back over the past 15 years to when he wrote this insightful book, and ends with this observation. "I want to end with the idea that the market is capable of resolving all of our social conflict, fairly and justly. That is the great idea of the 1990's. And we all know now what a crock that is. I think what we need in order to restore some kind of sense of fairness is not the final triumph of markets over the body and soul of humanity, but something that confronts markets, and that refuses to think of itself as a brand."
Chairman of GATA (Gold Anti-Trust Action Committee) Bill Murphy thinks financial markets are way more vulnerable than they appear. Murphy explains, “There are negative interest rates and low interest rates that just keep staying down there, and supposedly things are really good. Look at our Dow at all-time highs, and yet something is really wrong. Of course, this fits into the GATA premise on this whole thing. There’s a lot of quantitative easing (money printing) and propping up of the markets, and it’s on very shaky ground. The plug could be pulled at any time. . . . With interest rates where they are and debt growing all over the place, the reasons to be in gold are off the charts.”
Murphy says “silver is Kryptonite to central bankers” because
Click through for the full post and video interview.
Here's a story that came out earlier today. Maybe it's just me but it's easy to see a Bullion Bank plot here. For months, we've documented all of the various points of demand for gold in all its forms. And now, as The Bullion Bank Paper Derivative Pricing Scheme is being stretched to extremes, suddenly the LME wants to offer another form of paper gold with which to screw everyone.
And note who's involved here...not only is it the LME working in conjunction with the Evil Of Evils Goldman Sachs, they're all "working in conjunction" with The World Gold Council. IF ANYTHING SHOULD PROVE FOR YOU ONCE AND FOR ALL THE THE WGC IS A SHADY, NASTY AND WORTHLESS ORGANIZATION, THIS SHOULD DO IT! Here's your link from Reuters detailing the news: http://uk.reuters.com/article/gold-contract-lme-idUKL6N0WR4PI
By Greg Hunter’s USAWatchdog.com (Early Sunday Release)
Economist John Williams says don’t believe the hype about the U.S. economy being good—it’s not. Williams explains, “I love America, but we are in a deepening recession. The economy collapsed into 2009 . . . we never really recovered from that. We had a few bounces higher, but generally, we went into low level stagnation, and now it’s turning down again. We just had a revision to the benchmark GDP (1.2%) and the numbers are nonsense. The numbers are a lot weaker than they appear. There’s no question we are in a recession.”
Click through for the full article and video interview.
Political resistance to the oligarchy's financialization skimming operations will eventually cripple central bank giveaways to the financial sector and corporate oligarchs. That inflation and interest rates will remain near-zero for a generation is accepted as "obvious" by virtually the entire mainstream media. The reasons for this are equally "obvious": central banks have the power to suppress interest rates indefinitely by creating money out of thin air and using this new cash to buy bonds in unlimited quantities; and the commoditization/ globalization of labor, capital and production has generated a global backdrop of over-capacity and near-zero pricing power.
But suppose for a moment that this confidence in near-zero interest rates and inflation as far as the eye can see is wrong. As I have demonstrated this week,rising interest rates and inflation would break the back of the status quo.
The grim reality is that real inflation is 7+% per year. This week, I've noted that Consumer Prices Have Soared 160% Since 2001 while under-the-radar declines in value, quantity and quality are forms of Inflation Hidden in Plain Sight.
What would happen if the real rate of inflation was revealed? The entire status quo would immediately implode. Consider the immediate consequences to Social Security, interest rates and the cost of refinancing government debt. Unbiased private-sector efforts to calculate the real rate of inflation have yielded a rate of around 7% to 13% per year, depending on the locale--many multiples of the official rate of around 1% per year.
Click through for the full article. The thing is, the illusion can only last so long. I haven't a clue when it will be blown away but I'm certain it will end. And when it does the system will be a mess of rubble and pain.
Our real-world experience tells us the official inflation rate doesn't reflect the actual cost increases of everything from burritos to healthcare.
In our household, we measure inflation with the Burrito Index: How much has the cost of a regular burrito at our favorite taco truck gone up? Since we keep detailed records of expenses (a necessity if you’re a self-employed free-lance writer), I can track the real-world inflation of the Burrito Index with great accuracy: the cost of a regular burrito from our local taco truck has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016. That’s a $160% increase since 2001; 15 years in which the official inflation rate reports that what $1 bought in 2001 can supposedly be bought with $1.35 today.
On Friday, gold made the most of a weaker US dollar and expectations of an extended period of ultra-loose monetary policy and negative interest rates around the globe, jumping to a two-week high.
Gold futures in New York for delivery in December, the most active contract, added 1% to a midday high of $1,357.90 Gold hit a near two-year high earlier in July and year to date the metal has gained 28% or just shy of $300 an ounce.
Rising real interest rates raises the opportunity costs of holding gold because the metal provides no yield and therefore the price should decline. Higher rates also boost the value of the dollar which usually move in the opposite direction of the gold price.
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