Contrived Exits – 12/9/12
“We all know what to do, we just don't know how to get re-elected after we have done it.” – Jean-Claude Junker, Prime Minister of Luxembourg
Dear All,
Prime Minister Junker, quoted above in a moment of candor thus revealed the essential dilemma of economic stewardship under fiat monetary systems. The more government largesse to which the electorate is accustomed, the less tolerant it becomes of threats of its cessation. Private sector profit (and a stable currency) is the mother milk of liberty and higher living standards. Once a threshold is crossed where the majority no longer grasp this, the political dynamic enters a point of no-return.
About that exit strategy…Fed Exit Plan May Be Redrawn as Assets Near $3 Trillion
'There is certainly an issue about unwinding the balance sheet'” in a way that “is effective and continues to support the recovery without creating inflation,” St. Louis Fed Bank President James Bullard said in an interview in October. The central bank might have to “revisit” the 2011 strategy, he added.'
'Unwinding?' Are you kidding me? The essential truth about the Fed's exit strategy is that there isn't one. The only strategy is for various Fed members to make statements concerning the theoretical timing of withdrawals that will never occur, in order to create the illusion of consideration and prudence, all the while pumping like mad. The banks and financial markets will continue to chew up fresh stimulus and what comes out the other end is inflation. The U.S. central bank cannot withdraw for the same reason it could not fail to inject in the first place. The alternative to injection was and remains total collapse. Inflation is the Fed's exit strategy, which in turn means a significantly lower U.S. standard of living and a much higher gold price. Inflation is often referred to as “the invisible tax” for its stealth attributes – its sub-rosa nature being the reason for its populariity among politicians and central bankers. It is mostly invisible to the lowest economic classes — those who least understand its source and unfortunately for them, are most injured by and least able to defend against it.
It is true at the five largest U.S. banks as well. Their balance sheets are works of fiction: Deutsche Bank Hid $12 Billion in Losses; misvalued giant derivatives position
The New York Fed reported that the percentage of federal student loans 90 days or more delinquent catapulted to a record 11% percent as of Sept 30th, a level which for the first time exceeds credit card delinquencies. As of July 30th the figure was 8.9% — a 24% jump in serious delinquencies in only 3 months. The Fed report included this note though (emphasis mine):
“[T]hese delinquency rates for student loans are likely to understate actual delinquency rates because almost half of these loans are currently in deferment, in grace periods or in forbearance and therefor temporarily not in the repayment cycle.”
In my prior post I referenced Greece's parliamentary staffers' protestation of non-exclusion from that country's austerity measures. Their reasoning was quite simple — they're special. Now enter none other than the U.S. Postal union coalition, explaining to Congress that it is only fair that its workers be similarly spared from any fiscal cliff cuts. Their rationale? “[I]t is time our nation’s leaders found other ways to reduce the deficit than continually taking from those who have dedicated their lives to public service.”
From the organized labor machine that speaks for the shuffling, bloated cast of ingrates populating a federal agency that should have been permanently shuttered and privatized sometime during the last century comes precisely the spirit of shared sacrifice one would expect. Given that public sector jobs (or as the unions prefer –”public service”) have been growing faster than those in the private sector — one might reasonably conclude that the country would be better off with a bit less [cough] 'public service,' – which is in fact — a public screwing.
NSA whistleblower William Binney was featured here in a prior post. Russia Today (RT) (the new gold standard for investigative journalism that has no U.S. peer) recently conducted a chilling interview with the former NSA operative who explained the essential point that everyone in the US is under virtual surveillance.' The NSA'S head is arguably the most powerful man in the western world yet virtually no American has heard of him. For that matter, boobus americanus has likely never heard of the National Security Agency.
Nader: War Criminal Obama Worse Than Bush
Richard Maybury came as close to predicting the events and timing of the 9/11 attacks as anyone I'm aware. I have previously sung the praises of his indispensible geopolitical journal, 'U.S. & World Early Warning Report.' I became a subscriber in the late '90's and encourage you to as well (I have no affiliation with nor receive any financial compensation from the publication). In the current issue Maybury points to the heightened Japanese/Chinese tensions over disputed Pacific possessions in the East China Sea amidst the presence of the U.S.' 7th fleet and the Okinawa Marine base:
“Keep an eye on Okinawa. It is the center of the US Military build-up in the East China Sea, much as Cuba was the center of a Soviet buildup in the late 1960's, right before the Cuban Missile Crisis. Do not assume that this time cooler heads will prevail.”
I probably get more email about climate change than any other subject. I'm hardly a zealot on the issue and have no financial skin in the game (which is something one ought to discern about many of the scientific experts dispensing opinions on the subject). I'm simply not prone to paying attention to the pronouncements of politicians or Hollywood celebrities. I write on the subject regularly to suggest that you too block out the noise and rely on your intellect when for instance the media bombards you with claims of causality when a severe hurricane hits. To wit, the most recently released hadCRUT data set reveals that global temperatures have been flat for the past 16 years, negating the statistical significance of the prior 16 year period when temperatures rose (hardcut4 data also shows cooler temperatures for most recent 5-year period than the prior 5-years period.). This is an inconvenient truth that you have unlikely seen reported anywhere by mainstream media.
“A study led by Bo Christiansen of the Danish Meteorological Institute, concluded: ‘The level of warmth during the peak of the MWP in the second half of the 10th Century, equaled or slightly exceeded the mid-20th Century warming.' There was also a pronounced warming period in Roman times.”
Really Bob?..Broadcaster Bob Costas delivered a gun-control promo during last Sunday night's NFL game following the suicide of player/murderer Jovan Belcher. The irony of Costas pontificating about gun violence midway through a broadcast featuring organized savagery; one of the most violent legal endeavors for which men are paid –was no doubt lost on the NFL front man. Costas lamented the “current gun culture” but not the dysfunctional professional football ethos which includes an NFL team caught running a financial incentive system for its players to cause serious injury to opponents. Bob forgot to mention the League's roster of players — past and present, with criminal rap sheets statistically comparable to those of the worst inner-cities — featuring domestic violence, assault, drug possession, DUI and dog-fighting. There was no lament by Costas either that between 1977 and 2009, 307 football players at the high school through professional level suffered incomplete recoveries from devastating cervical cord injuries. Costas made no reference to the traumatic head injuries such as the ones that according to a friend of the deceased Mr. Belcher, the player struggled with (along with alcohol and painkillers) and of which the NFL has been brutally dismissive for most of its history (Why not ban automobiles,Bob? — Intoxicated Dallas Cowboy kills teammate in car crash).
Could it be that the problem is simply this: Jovan Belcher was all-too typical of the low-lifes who have come to populate the criminal cesspool known as the National Football League; a group of largely semi-literate men recruited from the facades of what are supposed to be institutions of higher learning? Costas — in effect an unregistered paid lobbyist for the National Football League instead went for the cheap straw issue; the low-hanging politically ripe fruit — guns. By conveniently attacking the last line of defense by good people against tyranny and homicidal deviants such as Belcher, Costas played NFL pimp, implicitly defending the skewed world where professional athletes are idolized and their whitewashed personal problems further sanitized by sanctimonious broadcasters. Upon completing his sermon Costas enticed: “The second half is next, from Dallas.”
The trend…
AustrianTimes: Call to bring Austrian gold back home from the UK (Austria has 80% of its gold (224.4 tonnes) stored in the UK.)
Brazil has no gold reserves, just claims against bullion banks, Goldcore discloses(The concept of counterparty risk among sovereigns is not a concern at the central bankers club.)
WSJ: China Moves Forward in Opening Gold Market
Reuters: South Korea central bank bought 14 tonnes of gold in Nov
Pension Benefit Guaranty Corp. running $34 billion deficit
Gold and silver…
This call by Goldman Sachs should make your contrarian heart sing. If you've acted upon their prior such calls you're considerably poorer for it: IT'S OVER: Goldman Calls The End Of The Great Gold Bull Market
I would not recommend forgetting the metal but this Wall Street Journal article is spot-on with respect to the relative valuation of equities: In Gold Investing, Forget the Metal and Focus on Stocks
“To put it simply: the price of an ounce of gold today would buy more stock in gold-mining companies than at any point in a quarter century.”
In spite of gold and silver's performance this year sentiment continues to be lousy, particularly in the gold/silver stocks. A number of people I know simply couldn't take it and have bailed out. Personally it saddens me but as an investor I know that arithmetically only a small minority can thrive, and that the less crowded the boat, the sooner and bigger the payoff.
All the best,
Jeff
2012-12-10 07:04:12
Source: http://goldmap.typepad.com/goldmap/2012/12/draft2.html
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