May 16 2011 1:11PM
Central Banks Global Insanity Makes Scary Markets
Central bankers in Europe, America and parts of Asia are determined to keep printing, and selling new bonds backed by empty air with no oxygen, and smoke and mirrors. We think it’s deliberate to bust the global credit system and begin anew with erased debt, and a one world currency. In our view, if the system is smashed, what do the smashers have left with which to take control over the smashees-the Sheeple?
“The market place is a crime and punishment world, and this Federal Reserve credit expansion is the greatest monetary crime of all time. Accordingly, the punishment will be far and away the greatest punishment of all time.” -John Exeter, Gold Newsletter June, 1987 and James U. Blanchard III Golden Insights
Individually, much of the crazy stuff we see in our daily travails could be called absurd and not a real threat to world-wide economics. However, when we begin to produce a longer list; a daisy chain of foolishness, it’s not so funny any more. Here is our latest pile of the nasties producing rapt attention, and hair standing on end amid bug-eyed bewilderment.
The underground lending economy in China is charging 10% interest for private loans. Chinese inflation is running 10% annually in some regions and over 35% in others. Crops are burned-up and food imports will be legendary.
There are numerous, very serious problems in China right now and they are doing their best to correct them. However, the sheer magnitude of a huge population and millions of job positions regularly needed for new workers is overwhelming. It has been reported they need 25,000,000 new jobs per year just to stay even. This is impossible.
On the primary river, the Yangtze, water level is down -40%. This hurts hydro production and creates more problems down stream. Food and jobs are the largest issues in China. Suicides are increasing by the month as corporate slave labor is driven to the wall with overwork earning peanuts.
Greece cannot begin to pay its debts and signaled last Friday it might be on a permanent exit path from Euroland and the Euro currency. Rating agencies in the USA have down-graded Greek paper to junk. This problem is coming to a head and must be settled next month or else.
Portugal is slightly less nervous but only because their “Debt Day” is further out on the calendar this year.
Iceland has stiffed the European bankers and told them they will not pay. If they do, it’s a dollar a week and the rest when they catch the debtors; which is never. Greece and Portugal might be next in this action. Meanwhile, “Sell-out” Iceland banksters are kidding the ECB into believing they want to repair the damage and join the EU community of nations. This is false-flag-pacifier feeding pabulum to the European bankers and media.
Ireland has seen a major decline in pub traffic amounting to -7% fewer customers. There is a one way exodus from Ireland to Australia for opportunity and work. The Irish central bank scammers are trying to persuade Europe’s lending markets that billions in debts will be re-structured and they will be paid. Yet, remnants of the old IRA are girding for battle again; this time against the bankers. Remember what we wrote about relating to Adam Fergusson’s book When Money Dies during the years 1918-1922? Then, some politicians and bankers were exterminated. We are strongly against this violence but history repeats.
Legitimate voting, negotiation and conciliation are the right and legal way but when a man’s been robbed blind and those doing the robbing continue to rob, we know where things are headed into the streets.
Our latest trouble spot last week was news from the U.K. Ironically, they will get the worst outcome for trying to do the right thing by moving to a severe austerity program. By installing major cutbacks on free-stuff, the herd is going to retaliate as their suffering increases. This one could very well be the Black Swan me and my colleagues have been worrying about.
Germany is strung-out for nearly $600 Billion to $1 Trillion in credit to the PIIGS and other weak-sister Euro-land members. Some of the nearby non-Euro members from Eastern Europe are looking for ways to duck and run.
We learned on a recent radio interview; from the host, that Switzerland no longer has gold behind its Swiss Franc as of 2006; this after somehow making a deal with the IMF. The Swiss are solid but a fiat currency is a fiat currency. Should conditions go very sour quickly, as they are liable to do in emergency credit situations, the Swiss Franc might get tossed with all the rest.
Canada and Australia are in better condition than most but those USA bad credits would be a millstone on Canada should Bernanke’s Frankenstein credit creations go south. The Aussie’s had $22 Billion in national good credits when the current administration took office. Now they are about that amount in the hole and are having economic meetings on the problem this month.
Weather all over the world is creating major destruction including earthquakes, drought, floods, grain shortages, and massive damage to say nothing of storm deaths in the USA and thousands killed in Japan. The PC crowd says its global warming. We say it’s a normal, one decade long disaster that’s been proven to be cyclically problematic throughout history. These weather cycles are normal and recurring. Global warming is a scam to take money from governments and taxpayers.
American farmers are doing their very best to grow and provide but cold, rain, flooding, storms and later planting are not encouraging to say the least. We think the corn market is the most vulnerable. Prices could set new records and rationing might arrive in the fall.
Those in the PC Green crowd proclaim fraudulent science to make money on green energy and other trashy ideas, designed to steal government subsidies and make money. If you corral all of that nonsense and compare it with crude oil, natural gas and coal, their scam might produce 1-2% of the global energy needs per year if lucky and, at a distinct economic disadvantage… as in loser. Without subsidies this scam is toast.
The USA lacks a longer range coherent energy policy but rather ricochets from one stupid idea to another as politicians change seats on each Election day.
The latest world-class stupid idea is to tax American drivers by the mile. They are already taxed that way by paying fuel taxes at the pump. How about some national budget reductions and savings? Not a chance.
Energy costs will rise on inflation and erratic markets. The USA is at risk in our view since 35-40% of our unleaded gasoline arrives as imported fuel from foreign refineries. What happens if deliveries are interrupted?
The US refinery population is diminishing rapidly mostly because of no energy policy, government rules interference and ridiculous EPA pressures. There can be safe and clean drilling. It has been proven for years, but the more recent response has been not in my backyard, or even in the backyard at the North Pole.
A new refinery costs $6 Billion to build. Kuwait offered to pay for one in the USA and they were EPA turned down. They went to China where they were welcomed with open arms.
“More than 28% of U.S. homeowners owed more than their properties were worth in the first quarter as values fell the most since 2008, Zillow, Inc. said today.” -John Gittlesohn 5-9-11 Bloomberg.net -Editor: Crash and burn trends in housing continue, as we have predicted since June, 2005. This will take a decade to reverse, find new support and regain strength.
Despite the anguish, whining and silliness that precious metals trends are “finished,” we forecast they continue rising much higher for several years. Our shortest forecast is 2017 and our longer one is 2024 for very long and extended rallies as real hard money continues to be recognized, purchased and saved for a rainy day. Hey, its raining already and the storms are increasing with ferocity. This is why precious metals continue to rally.
The Federal Reserve TARP program did nothing but prop-up bankrupt bankers and auto companies with a few others like AIG, which is still a Zombie company praying on the public shares markets’ and taxpayers to cover Goldman Sach’s bad trades. The U.S. Government plans to sell a large amount of AIG shares as soon as possible maybe at the peak before a fall selling event in New York.
The derivative scams continue and this time the breath and extension has been worse than before the Lehman crash. No one will stop these bankers and CEOS as they continue to use taxpayer’s money to pay lobbyists’ to promote their scams.
With American elections many months away next year, the regular, preliminary foolishness is well underway promoting individual agendas while handing out more free stuff for votes using taxpayers money to pay for it.
The president’s election war chest is estimated at $1 Billion dollars. The president will be re-elected and the administrations’ disasters shall continue.
We thought how naïve of us that the GOP’s would get busy and keep their promises to work for a balanced budget. What a joke! In their first tiny budget battle they folded like a cheap suit. The GOP idea of leadership is to “Go Along to Get Along,” or, in common parlance, we get the same old political crap as usual.
The die is cast and the end is very clear. The USA and world economies are doomed and, we as the little Sheeple, just have to recognize it; deal with it and be prepared.
Current inflation will go into hyperinflation. When it does, it will happen swiftly in days or hours terrifying markets and the entire world. This isn’t just a German 1919-1921 repeat. This is the reserve currency for 85% of an entire global monetary system rushing into a major smash. The German event was play school compared to what’s coming.
How can we cope with $6-$10 gasoline, heating oil at double or triple and the airlines trying to operate with Jet-A costing three times as much? One-third of the airlines operational costs are fuel. Recently, those costs were raised from 33% to nearly 40% for the industry. One executive said this fuel increase can ruin the airline industry.
Old folks pensions will be decimated causing choices of eat or, freeze; take your pick on higher utility bills. Food is already up significantly for some items and this is only the beginning.
This summer could be the start of major street riots and violence over food, water, and no paychecks. There are now 44,000,000+ on USA food stamps. It goes to 50,000,000 by the end of this year.
Some have said the Middle Eastern riots, violence and protests could not happen in the U.S. Why are we any different? Another interesting point… why are all of the Middle Eastern nations sinking into trouble at once? Was this a coordinated effort?
Could all this mayhem be prevented? We say easily by walking-away from three stupid wars and bringing home thousands of troops to do other more productive work. There is no need for America to be a policeman to the world.
Why is it necessary to attack half the immediate world in the Middle East to steal their oil? We could probably pay full retail on longer term contracts for a fraction of the money it costs for the wars. This is all about money, power and control.
Why is there no reasonable longer, term USA energy policy that would include not only the world at large but, a USA domestic policy?
The other huge money-saver could be cancellation of ALL government run and mandated heath care programs. Let private industry do it all as they would be released from layers of useless red tape and rules. The result would offer better care, less paperwork and tremendous savings. Charity would cover those unable to pay and the medical universe along with churches, the Red Cross and others would pitch-in to help the unfortunate.
This cannot happen as lobbyists for Big Health Care, and those for the massive defense industries need the government’s money to keep producing stuff to smash and blow it up for nothing. Big health care companies need your taxpayer dollars to make huge profits.
The better advice we can offer is to expect nothing from these situations and hope for the best. Take care of family and friends, invest in hard assets and daily necessities and soundly cut back your standard of living. We all have things we can do without and would probably be the better for it. Be careful out there. Control risk first but work at enjoying the simpler things in life.
More than ever, it is important to take immediate necessary precautions to protect yourself and your families and friends. Traders and investors should be buying precious metals and select shares right now. In our newsletter we have a great list of trading and investing ideas for you.
Meanwhile, you can never go wrong buying physical precious metals and holding them for security. We’ve had a constant run of nearly eleven years in gold rising +15% per year or more, so this remains a good trade. In the last twelve months, gold rallied over 34% and is going ever faster. As outstanding as those numbers are, silver is doing even better. Inflation adjusted gold should be about $2,350. Charts are telling us the top is no where near for now.
It’s not going to stop any time soon. In fact, we predict those annual percentages will rise even more and this offers a chance, arriving only once in 25 years on the historical commodity cycles.
Editor Trader Tracks Newsletter
The Jay & Rog Blog at webeatthestreet.com
Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. See webeatthestreet.com for more information. Listen to our Traderrog Daily Market Close on the Korelin Economics Report website http://www.kereport.com/
Contact Claudio Bassi, at Trader Tracks New York City publishing offices for an introductory 30-day trial subscription for only US$49.00. This is half the monthly rate our subscribers pay. Call us at 718-457-1426 Monday through Friday, 9:00 am to 4:30 pm (EST) for details. You can also e-mail our office manager, Claudio Bassi at email@example.com for more information.