- Counterfeit
economies
- Waves of
Insolvency
- Canaries
in the Coalmine
- Misery
Spread Widely
- Bombs...er...bonds,
the ultimate Malinvestment
The Mayan calendar points to
the end of the world coming in December. It may not end on that date but
major disruptions can be anticipated. CENTRAL banks have fully uncorked the
printing presses to meet the waves of insolvency set to STRIKE the banksters,
public servants and the elites. Transferring your wealth to themselves and
their something for nothing societies to PAY for their moral and fiscal
insolvencies.
There is an incredible number
potential crisis in the short term (3 to 6 months); any one could spark a
major financial, economic and political crisis by themselves. Taken together
they practically GUARANTEE it. Fat tails and black swans loom. They really
are only black swans and fat tails to Keynesian economists, for those of the
Austrian camp they are PREDICTABLE and INEVITABLE! Look at this litany of
UNFOLDING CATASTROPHES from a recent Financial Times:
Larger Image
Collapsing economies, capital
flight from weak to the strong (target 2 sends the funds right back to the
failing central banks), planned tax increases and mandatory spending cuts,
and chronic current account and BUDGET deficits. You must understand that the
US fiscal cliff was the ONLY answer for politicians who need someone else to
blame for what MUST come to pass. So they did the deal and now can point to
each other with no one specific to blame. My opinion: the spending cuts need
to be retained and all government spending must be frozen. The government
does not need any more money for INVESTMENTS (spending).
"Nothing in
government happens by accident, if it happens you can be certain it was
planned that way."
~Franklin Delano Roosevelt
Now let's look at the greatest
BLACK swan of them all, one far from the headlines but the HEART of the currency
and financial system EXTINCTION event (courtesy of www.zerohedge):
Larger Image
The JAWS OF DEATH! This is the
FINGERPRINTS of the COLLAPSING US economy. This is a death, debt and deficit
SPIRAL. This is what central planning and PROGRESSIVE government has done.
Regulations have INCREASED 25% in 3.5 short years, debt has climbed about 60%
($6 Trillion Plus). If you think that sets the table for ECONOMIC and JOB
growth: VOTE DEMOCRAT. The only thing that can fill those holes that BIG is
the printing press. So you can expect counterfeit money creating counterfeit
growth.
Now we know why QE infinity is
REQUIRED: complete and total INSOLVENCY of the government of the United
States and of course this is just today. The debt of the United States is
approximately 60 to 70% of the RESERVES of ALL central banks around the
world. When they go to zero so does every other central bank in the world.
Any keen observer of US treasury auctions KNOWS that they are mostly bought
by the Federal Reserve and other central banks to preserve the purchasing
power they have left. They then call them assets. It is check kiting on the
grandest scale in history.
Based on Harvard studies by
Lawrence Kolikof, the GAAP (Generally accepted accounting principles), the
total outstanding liabilities TOTAL $222 TRILLION dollars up $11 trillion
dollars SINCE LAST YEAR. Previous issues of this newsletter have outlined how
the US economy in REAL terms is about $11 trillion (not the $15 trillion plus
that is posted by the government) when you back out IMPUTED phantom growth. So
debt and future obligations in the United States are now compounding at
approximately 100% PER YEAR of GDP!
As the FINAL chapter in money
printing FOLLIES roars into life with UNLIMITED Quantitative Easing now the
official policy of the BANKRUPT WELFARE STATES of the developed world in
anticipation of financial system asset and Sovereign bond failures .
Central bank balance sheets as TOXIC waste dumps!
This is the face of TOXIC
assets being financed by central banks, $10 trillion dollars since 2006, a
doubling or tripling to follow!
Larger Image
This is the face of central
bank balance sheets BEFORE QE to infinity, the pace is now set to explode
higher. Globally most major economies are in FREE Fall so Central bank
cannons (money printing out of thin air) are fully engaged in the US,
Eurozone, Japan, Switzerland and the UK. Battles are raging between Bankrupt
financial systems and their elite owners versus Mother Nature, Darwin, and
history.
In the developed world
economies are in free-fall in REAL terms. As income, wealth creation and tax
receipts crumble under the socialist governments in power policies, the
printing press is being substituted. The public is told it is to protect them
and revive the economies when it is actually the greatest theft in history as
elites use the main stream media, misinformed citizens and a printing press
to transfer wealth from the public to themselves via financial repression in so
many ways.
"If the outlook for
the labor market does not improve substantially, the Committee will continue
its purchases of agency mortgage-backed securities, Undertake additional
asset purchases, and employ its other policy tools as appropriate until such
improvement is achieved in a context of price stability."
~ Ben Bernanke September
FOMC
You must understand that they
have created a hurdle: LOWERING UNEMPLOYMENT. Which money printing and asset
purchases will NEVER yield to: so the money printing will never end. Take a
look at this chart for the Harvard business school's "PROSPERITY AT
RISK" study from January 2012:
Do you see lack of funding,
liquidity or loans stopping business expansion? NO. The impediments are:
REGULATIONS, LACK of TALENT from a public school system that no longer
teaches, TAXES, POLITICS and MACRO economics as a result of the FAILURE of
CENTRAL PLANNING out of WASHINGTON DC. Do you see anyone in government
willing to reduce regulations taxation and the control of others which they
have sold to the special interests which support them?
(This is an extremely
interesting detailed analysis document and can be accessed at http://www.hbs.edu/competitiveness/pdf/hbscompsurvey.pdf
the survey is of real heavyweight businessmen). It pins the blame on
WASHINGTON DC. NO SURPRISE as the progressives attack all virtuous behavior
and rewards poor behavior. These CORRUPT public serpents within the BELTWAY
and their crony capitalist and bankster masters are the cause not the
solution of the problem.
"Respondents point
to America's tax code, political system, K-12 education system, macroeconomic
policies, legal framework, regulations, infrastructure, and workforce skills
as the greatest current or emerging weaknesses in the U.S. business environment."
~ Prosperity at risk,
Harvard 2012
Notice that the government is
IN CHARGE of the areas of greatest concern? Look at the deep overview these
business leaders gave into the various impediments to growth created by the
public serpents and their CRONY CAPITALIST masters have created in the United
States.
Wow, what an indictment of the
political vacuum and poor leadership from the fraudsters inside the beltway
and in progressive state capitols. This study provides a roadmap to
government and economic REFORM, wealth and job creation. So it's a
candidate for the trash can inside the beltway.
QE3 has NOTHING TO DO with
ECONOMIC STIMULUS. That is what they tell the useful idiots (dumbed down
citizens) to get them to buy into the program of robbery: WITH THEM AS THE
VICTIM, but they don't know it.
This is a BANKING,
FINANCIAL system and insolvent US government rescue and nothing more. They will pay for it by stealing the
purchasing power right out of your money while it SITS in the BANK. Your
balance stays the same but EVERY DAY it BUYS LESS.
This misery has just begun,
kicking into a newer higher gear of FINANCIAL repression as the powers that
be have now embraced inflating their way out of debt. They will fail and
destroy us all in the attempt.
Fiat currency and credit
systems die in waves of insolvency and the global central banks see a tsunami
of insolvency on the horizon. So they have positioned themselves to guarantee
the unpayable and inextinguishable debts of bankrupt financial systems,
elites and their sovereign partners. Transferring the wealth of the public to
themselves. It will work for a while until the public WAKES UP which
they will do sooner or later and abandons the paper FAKE money. Then from the
ashes of the asset market crash a "Crack-up Boom" will APPEAR!
CURRENCY wars are in full
bloom as each Central bank tries to devalue faster than the other. At the
World Bank and IMF meetings In Japan Helicopter Ben promised them they will
be defeated at the hands of the FED. Give up he said and let your
currencies rise against the dollar. After that speech I am sure they
called the printing rooms in their countries and planned to crank them up as
the battle is joined.
Bankers now RULE the world as
they control the money and as the insolvencies unfold they will gather MORE
POLITICAL power in exchange for money printed out of thin air or by a
keystroke. Just ask Mariano Rajoy in Spain who huffs and puffs about no
conditionality for a rescue of the banking system and the morally and
fiscally insolvent sovereign. The world for him and them is constantly
shrinking. Waiting for stupid PRIVATE sector lenders to COMPLETELY REFUSE to
buy the unpayable and inextinguishable debt.
"Let us control the
money of a country, and we care not who makes the laws."
~ Amschel Rothschild,
original head of the House of Rothschild.
The ECB is another one of his
children's possessions and Mario Draghli is his EMPLOYEE in his role as a
director of the Bank of international settlements (central bank to central
banks). The conversion developed world's citizens from FREE MEN to as DEBT
SLAVES continues to unfold.
"Not since the days
of slavery have there been so many people who feel entitled to what other
people have produced as there are in the modern welfare state, whether in Western
Europe or on this side of the Atlantic."
~ Thomas Sowell
The Spanish government will
surrender to the money printers or be torn apart by their constituent
something for nothing citizenry. As for the Eurozone the warblers in the
press are reporting the preparations being made to RESCUE Spain and Italy
once they have surrendered sovereignty through a memorandum of understanding
with European commission in Brussels, IMF and the ECB. Spain and Italy are in
the financial emergency room with euro 550 billion PLUS in new debt and old
that must roll by the end of 2013. Chance of this happening without ECB
support? NONE!
Their financial death is
assured and the ECB and European commission is trying to figure out the
maximum amount of HOT AIR that can be deployed to substitute for REAL money.
The money to fund the Spanish Bank bailout was only an illusion. No money was
being sent, just more promises to pay known as BOMBs...er...bonds. More
unpayable promises to pay to replenish imaginary reserves with more imaginary
reserves.
Illusions on top of illusions,
Unpayable and inextinguishable debts piled on top of each other, IOU's
denominated IOU's and called assets and wealth. When the PUBLIC WAKES UP the
real crisis BEGINS. The crisis of an epidemic of insolvency. Met heads up by
the printing money "OUT OF THIN", now to infinity!
Now the whole deal is off the
table as the AAA core of Germany, Finland, Belgium, France etc., are now
reneging of the July summit agreement to RESCUE the Spanish banking system.
Look at the most recent report on Non-performing loans in the Spanish banking
system courtesy of www.zerohedge.com:
Wow , a runaway BULL
market in BAD DEBT! 10.5% of all outstanding loans, a record 178.6
billion EUROS. The ECB and Spanish authority's and independent auditor Oliver
Wyman put the bailout amount at 60 million euros, just 1/3rd the amount
needed to rescue the banking system and the losses on NON performing loans
just keep on RISING. Who do you believe? The ECB, Spanish finance ministry
and European commission or YOUR LYING EYES? KEEP IN MIND, Italy's banking
system is approximately 6.8% nonperforming loans so it is not far behind (12
months at the maximum).
It's strange that this is not
in the press as the demise of the Spanish and Italian banking systems will
rip apart the Euro and European Union banking systems. The target two
Imbalances, bank runs and capital flight alone assure the death of the core
and peripheral banking systems. All the European commission and ECB need to
do is WAIT, and they will conquer Spain, Italy, Portugal, Greece and Ireland
with a printing press rather than at the point of a gun.
(Author's note: This is NOT Doom and GLOOM, it
is the greatest opportunity in HISTORY. Invest properly for this outcome and
Prosper, invest looking in the REARVIEW mirror and your wealth will be
irreparably DAMAGED. Volatility is opportunity for the prepared investor. As
it is priced in and markets ZOOM higher or LOWER to price in collapsing
economies and money printing huge opportunities are created. Is your
portfolio structured to thrive? The greatest transfer of wealth
from those that hold it in paper and financial assets to those that don't is
UNDERWAY. Restoring fiat currencies to sound money and absolute return
alternative investments with the potential to thrive in all market (up, down
and sideways) conditions is what I do. If you have an interest in learning
more and working with Ty: CLICK
HERE).
Canary's in the COAL mine.
Please take notice that George Soros, Jacob Rothschild and John Paulsen have
recently made huge new purchases of GOLD while at the same time they have
taken profits on a lot of their equity positions. What do they know that we don't?
What would their ACTIONS rather than their words SIGNAL? Can you say the big
boys are out at the top (stocks) and in at the bottom (GOLD)? PROBABLY. Now
add Bill Gross at Pimco and Ray Dalio at Bridgewater associates singing the
praises of GOLD. Every major hedgie in the world is looking at themselves and
saying: DO I HAVE GOLD IN THE PORTFOLIO? Do you smell something about to
happen? Look at this BULL MARKET in central bank's gold holdings:
Wow, can you say under
accumulation? Do you think GOLD can go down much in the face of this and
private sector demand? With negative interest rates, unlimited QE which
projects to at least $10 Trillion dollars (all developed world central banks
combined) in the near term, and a wonderful LONG TERM correction BEHIND US.
Buy the dips...
Another canary is the
legendary Warren Buffet who has also taken a lot of equity gains off the
table, while at the same time EXITING the muni bond insurance business with a
big loss! Meredith Whitney may be reviled for blowing the whistle early on the
coming muni bond bust but the facts remain the same. After three California
municipal bankruptcies, one in Birmingham AL and Harrisburg Pa things are
heating up. The State of Illinois and city of Chicago insolvencies are
looming bigger and BIGGER. These are but the tips of the iceberg of the
coming state and municipal bankruptcies. HI HO, HI HO it's off to the
printing press they will GO!
The powers that be now have
given up on reviving their economies through policy changes to revive their
economies. Entrenched bureaucrats and special interest elites (bankster,
crony capitalists, and unions) prohibit the changes that must be made. Now
they are just trying to preserve and expand leviathan government at all
costs. Confiscating the parts of the private sector that have escaped
previous confiscation. Most are resorting to 5 dollars of new taxes versus 1
dollars' worth of FAKE spending cuts. And the public is RECOILING in HORROR
as they have little left to give.
Preludes to the next leg down
in the REAL economy, look no further than FRANCE for the socialist recipe for
failure. I can hear the explosions in the near future as that economy
implodes under socialist savior Francois Hollande. Exactly the opposite of
what must occur, which is lower regulation, lower taxes, rewards for saving
and investment and the restoration of PRIVATE property.
"A man who is used
to acting in one way never changes: he must come to ruin when the times, in
changing, no longer are in harmony with his ways"
~ Machiavelli
This statement is the death
knell for socialists throughout the developed world. Current leaders are
DOOMED to FAILURE. Socialists who are doing what they always have done
throughout history: SPREADING MISERY WIDELY as their policies destroy the
incentives to produce, save, and create wealth. Punishing those that do so
and rewarding those that don't in exchange for political support in exchange
for theft and redistribution of the property of others at the end of a
government gun. IT IS A TIME TESTED RECIPE for FAILURE and evolving
dictatorships as market economies collapse. See Cloward PIVEN strategy,
google it, read it and weep. This is what is being done THROUGHOUT the
developed world, dictatorships loom.
"Poverty is the
parent of revolution and crime."
~ Aristotle
Mother Nature is demanding
that the developed world RETURN to creating wealth rather than consuming and
destroying it. Survival of the fittest as Charles Darwin observed, whether we
like it or not the spoils of success go to those that are the strongest/fittest:
mentally, militarily and economically. The developed world is weak in those
respects and ignore the lessons of history. So they are doomed to
repeat it.
It was how the developed world
was built prior the Bretton woods II, now we must return to that economic
model. An economic plan based on the production of wealth rather than the
consumption of it. Producing wealth produces demand. Just ask the Chinese or
the Germans who produce wealth and increase demand by doing so. In order for
wealth creation to happen the crisis must escalate in pain to the point that
the powers that be will FORCED to embrace freedom rather than control over
others.
Leaving humans free to build
and accumulate wealth that they can keep. Just ask Deng Xiao Ping how that
works after he had an epiphany "To get rich is Glorious" China has
risen from a backwater to the world's second largest economy in just two
short decades!
Nothing is more upsetting to
me than the rush into the Bomb...er...Bond markets and cash by global
investors. These ARE NOT the safe havens that are perceived to be. They
believe money is still a store of value, no it is:
- A medium of
exchange
- A promise to
pay, also known as an IOU of fiscally and morally bankrupt politicians
& central banks
- Redeemable
in NOTHING, now add: printed endlessly
- Worth no
more than the paper on which it is printed
In order for a bond to be paid
the borrower must have INCOME that is stable at least stable or rising. In
fact, in real terms the Developed world's economies are in FREEFALL. Subtract
GDP from government spending financed by borrowing and you will see the true
picture: economies declining at an annual rate of 3 to 9% compounding
annually while their debts compound at approximately the same rate.
Remember
- Gold is the
currency of kings
- Silver is
the currency of merchants
- Credit is
the currency of slaves
- Credit is
not money
These poor souls are and will
be the true victims of the currency and financial system extinction event as
it unfolds around us. Let's look at the rush into a FOOL's gold:
"Insanity in
individuals is something rare - but in groups, parties, nations and epochs,
it is the rule."
~ Friedrich Nietzche
LET ME BE CLEAR: you cannot
store wealth in paper for the foreseeable future. In real terms the
DELEVERAGING has barely occurred. Sure there are small pockets that have
begun the deleveraging process but the REAL market clearing event of BAD DEBT
is in the future. That is why QE to infinity is now official policy. As I
said earlier a Tsunami of bad debt is about to strike.
And credit markets are the
most net long they have been since 2008 (chart courtesy of www.zerohedge.com):
Larger Image
Bond market sentiment is
euphoric and at levels which precede denouements. Everybody is RECORD long
bonds since 2008 at a point of deep insolvencies within the banking and
sovereign financial systems.
"US government debt
is a safe haven the way Pearl Harbor was a safe haven in 1941."
~ Niall Ferguson
Now let's look at the leading
indicator for when the slaughter of the innocents will begin and it is the
velocity of money from a previous edition of TedBits:
It is at FIVE decade
lows and dropping FAST.
With lots of room to FALL bringing global business to a crawl like in
previous DEPRESSIONS, which we are in one now. Money is moving to the
sidelines faster than the central banks can print it, banks can deploy it and
governments can spend it to prop up their economies. This is the face of
fear. FEAR of GOVERNMENT < FEAR OF THE FUTURE < FEAR OF UNPREDICTABLE
SOCIALISTS IN POWER < FEAR OF SOMETHING FOR NOTHING SOCIETIES! FEAR drove
this money to the sidelines and soon it will DRIVE IT OFF!
Now that developed world central
banks are GARANTEEING ALL SOVEREIGN DEBT AND TOXIC BANK ASSETS with their
printing presses it is only a MATTER of TIME till the PUBLIC WAKES UP! When
they do you can expect a crash UP in Velocity. It is just as if you had a gun
put to your head. Would you DUCK or take the BULLET? The holders of cash or
bonds will DUCK as they wake up to the fact that they are storing their
wealth in something that will be printed and issued WITHOUT LIMIT! This
awakening looms in the near future...
Remember there is no final
payment with a bomb...er...bond, they are IOU's denominated in IOU's. If one
creditor doesn't get, you the other one will. For example, you may hold a
bond in Johnson and Johnson, Intel, Microsoft or any international behemoth
with stable cash flow, international diversification and customer bases,
seemingly a very safe asset. Abracadabra, Presto-chango: trillions of
dollars, euros, yen or pounds are printed and the purchasing power of the
investment is vaporized leaving you with a bond denominated in NOTHING, which
will be the value of your safe investment . THIS DAY IS LOOMING! It is
right on the HORIZON!
"There are decades
where nothing happens; and there are weeks where decades happen."
~ Vladimir Lenin
This moment approaches...
In closing: The decision to
inflate their way out of the bad debt and toxic assets HAS BEEN MADE. Now it
is only a question of how much to print and which toxic assets should be sent
to the TOXIC WASTE DUMPS now known as CENTRAL BANKS balance sheets FIRST. The
list will begin small and expand rapidly as toxic waste and bad debt goes to
die. The bomb...er...bond markets are under direct ATTACK as the insolvent
governments and the banks take the route of the soft default of the printing
press. With the public IN AT THE TOP of a 3 decade mega BULL.
Many people believe Romney
will stop the printing press. NO WAY, we are below the event horizon,
withdraw the monetization and the insolvencies will make Lehman brothers a
walk in the park. In fact, any REAL accounting of the bad debt in the
financial system would instantly VAPORIZE the balance sheets of the biggest
banks in the world.
Complacency reigns in many
markets; volatility is at levels that have preceded MAJOR attitude
adjustments/corrections among investors. Take a look at this look at stock,
commodity and currency volatility:
Near RECORD LOWS across the
board! Notice the difference from previous QE episodes? QE normally is
applied when blood is running in the streets. Now it is being applied during
a relatively quiet period. Obviously BLOOD is spilling (or about to be
spilled or both) but WE can't see it but the Federal Reserve and other
central banks CAN. Please notice that low volatility is always followed by
high volatility. It has always been so and always will, it is the nature of
markets and human nature. Now we see that the net longs in the stock market
(courtesy of www.zerohedge.com) are at
levels seen prior to market crashes as investors lean on the central bank
puts protection with superhuman belief:
And the hedge funds (courtesy
of www.zerohedge.com) are similarly
complacent and UBER BULLISH:
This is a classic battle between
Mother Nature and Darwin versus the most powerful people on the earth (Barack
Obama, Ben Bernanke, Francois Hollande, Mario Draghli, Mervyn King, Juan
Manuel Barroso, Herman Van Rompuy, Angela Merkel, Bank of international
settlements, etc.), GOD and Mother Nature versus MAN. These men think of
themselves as GODs who have power over nature. THEY DON'T! They think they
can DICTATE reality and beat the markets. They will learn the lessons that
politically correct is not practically correct and no substitute for it.
The central banks are applying
leverage at the top of recent ranges to underpin the asset prices which form
the asset bases of Commercial and private banks, insurance companies, other
central banks, pensions, institutional investors and the public. Trying to
force the public into these overpriced RISK assets known as MALINVESTMENTS to
us Austrians. They may succeed for a while but ultimately they will fail when
the PUBLIC wakes up. The stampede will crush them when they do.
(Author's note: This is NOT Doom and GLOOM, it
is the greatest opportunity in HISTORY. Invest properly for these outcomes
and Prosper, invest looking in the REARVIEW mirror and your wealth will be
irreparably DAMAGED. Volatility is opportunity for the prepared investor. As
it is priced in and markets ZOOM higher or LOWER to price in collapsing
economies and money printing huge opportunities are created. Is your
portfolio structured to thrive? The greatest transfer of wealth
from those that hold it in paper and financial assets to those that don't is
UNDERWAY. Restoring fiat currencies to sound money and absolute return
alternative investments with the potential to thrive in all market (up, down
and sideways) conditions is what I do. If you have an interest in learning
more and working with Ty: CLICK
HERE).
Public servants in the United
States, UK and Japan need not do the structural changes (reduce regulations,
taxes, money printing and restore private property) required in the PROSPERITY
AT RISK study since the central banks will print the money without them doing
the reforms to Restart growth. Draghli will fold before it's over, the
STRUCTURAL reforms will never be implemented except in main street media
headlines. Look no further than this excerpt from A RECENT SPEECH BY Richard
Fisher of the Dallas Federal from Senator Chuck Schumer speaking to Ben
Bernanke at a recent finance and banking committee meeting:
"Chuck Schumer, told
Chairman Bernanke, "You are the only game in town." I thought the
chairman showed admirable restraint in his response. I would have immediately
answered, "No, senator, you and your colleagues are the only game in
town. For you and your colleagues, Democrat and Republican alike, have
encumbered our nation with debt, sold our children down the river and sorely
failed our nation. Sober up. Get your act together. Illegitimum non
carborundum; get on with it. Sacrifice your political ambition for the good
of our country~for the good of our children and grandchildren. For unless you
do so, all the monetary policy accommodation the Federal Reserve can muster
will be for naught."
Well said Mr. Fisher! The
despicable senator from New York, nothing more than a Benedict Arnold to our
country and our futures. The prosperity at risk study outlines the demise of
the United States economy and competitiveness. In every category businesses
are TURNING AWAY from the United States and choosing our competition. Capital
is VOTING with its FEET (either leaving the US or not coming here), and it
does not augur well for future economic growth.
So the demise of REAL
wealth creation will accelerate.
In the Eurozone some of the countries have surrendered their financial sovereignty
and many are resisting, but the vise of insolvency marches along. Don't worry
THEY WILL PRINT THE MONEY! Some will pay by surrendering freedom, others will
get the FRESH cash for FREE.
Thank you for reading TedBits,
subscriptions are Free at www.Tedbits.com
or www.TraderView.com, may God Bless
you!
For greater insight into
the philosophy behind Tedbits, have a look at the Tedbits Overview - To
help understand our mission in serving you, the TedBits Overview gives a
broad description of what's unfolding globally and what you can expect from
Tedbits as a regular reader.
