There is much more debt than there is "money". In fact, without the constant creation debt the monetary system would collapse. Since debt is created out of thin air and loaned out, all of the money in existence is actually owned by somebody else, which is why the central bankers consider everyone's money as their own. All the debtors, including taxpayers, have to repay both the principal and the interest on debts. Since only debt is created at the time a loan is made, this makes it a mathematical certainty that more debt must be created to cover the interest payments due at a later date. The most powerful people in the world own this debt creation machine. Anyone who messes with it will soon be taking a dirt nap. These folks consider billions of us as nothing more than worthless insects.
The Rothschilds will not accept any competition. The US Treasury Notes were allowed to circulate alongside the Federal Reserve Notes so that the public would accept both and see no difference between the two, so that by the time the US Notes were purposefully taken out of circulation, the remaining Federal Reserve Notes, also labeled as and called "dollars" were readily received as the nation's currency. The first stage of the world's largest Ponzi scheme succeeded. Next was the removal and eventual suppression of the price of gold, an ongoing activity by central banks, with the collusion of the bought-and- paid-for de facto government from that time and up to this day, and for the foreseeable future.,,
What is important to watch for next is how price reacts from Friday's high. If the market is to continue to rally, the next correction should have smaller ranges to the downside on a lessening in volume. This will tell us the selling is weak. As the daily chart stands, it is not giving any clear sign of market strength. That could change next week, but until the change occurs, gold will continue to struggle.--M Noonan
1000 S&P is not my target, it was to shows what is needed to be the worst crash in history. Generally I expect a period of waterfall declines between now and November, and drawing on the historical analogs, those declines should exceed 18%. Thereafter I expect a multi-month partial retrace of the falls.--John Hamson
Mon 11 Aug, 1 day after full moon
Mon 25 Aug, new moon
To sum up, IF we were to experience the worst market devastation ever, then the set-up that we have would be pretty ideal for it, namely all-time extremes in valuation, sentiment, leverage, complacency, cross-asset valuation and allocations, the waning of the solar maximum, and the period of the year July-November. Initiation for waterfall selling could potentially trigger around one those August dates.
I am not peddling fear, I am just drawing together the common themes of historic crashes and pointing out how we fit in. We fit in well, so we need to consider the range of potential results. I am not predicting the worst crash in history, but I am predicting there will be a period of waterfall selling at some point to wash out the leverage and I see no compelling case for that episode to be mild and anomalous compared to the others. We are flirting with deflation and nominal values are therefore at greater risk. Therefore, considering the possibility of the worst ever crash does not seem inappropriate.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.
Citigroup – the bank that was propped up after its crash in 2008 with $45 billion of TARP funds, over $300 billion in asset guarantees and more than $2 trillion in low-cost loans from the New York Fed, is now effectively an unregulated stock exchange operating in the dark and annualizing at over $1 trillion in dollar volume in stock transactions. Simultaneously, it is operating insured deposits banks spread across America – all at a time when it has flunked its stress test with the Federal Reserve, which doesn’t have confidence in it to manage its affairs in a sharp downturn.
Citigroup’s previous dark operations – hiding tens of billions of dollars of debt off its balance sheet – contributed to the bank’s collapse in 2008 and its stock losing 60 percent of its value in just the week of November 17-21, 2008. Its regulators were too busy schmoozing with it to see the disaster that was about to befall the bank and the nation.
Under the current market and regulatory structure and lack of meaningful, transparent probes by the U.S. Department of Justice, the public has a very solid basis for distrusting Wall Street.--Wall St on Parade
In 2008 the securitized mortgage market was a liquid multi-trillion dollar market that became a no-bid market and remains so today. If he is correct, and I expect time will prove he is, the five-trillion dollar corporate bond market, like the market for mortgage backed securities would disappear over the course of a few months, as bond yields soar far above their highs of 1981. The stock market will not be immune from a disaster in the bond market as many listed companies trading on nation’s stock exchanges will also be deeply involved in the coming bond market debacle.--these posts are out of order--Yahoo board are bad--readthe posts as Bonds and then Bonds 2, 3,4.--thanks.
As I’ve noted many times before; gold and silver * DO NOT * benefit from monetary inflation, financial assets like stocks, bonds and real estate do. Gold and silver, as well as other precious metals and mining shares benefit from deflating financial assets. As people once again flee from deflation, they will seek the safety of investments in gold and silver. With many trillions of dollars, euros, and yen bidding for the limited supply of market available gold and silver, don’t be surprised when the precious metals markets become no offer markets. In a world where ivy-league academics control the volume of credit and money circulating in our economy, it would be unwise to expect a positive outcome. Gold, silver and the depressed precious-metal miners never looked so good.
Significantly, the CI gives us the bond market’s appraisal of the ability of issuers of lesser quality investment grade bonds to service their debts to term. Since 1999, the bond market, (as seen by Barron’s CI), has an increasingly maligned view of American bond issuers’ ability to service their debts to term – and for good reason.
In early July David Stockman, President Reagan’s former budget director called the five trillion dollar corporate bond market “the IEDs of monetary central planning that will soon be exploding along Wall Street.” Here few snippets of what he said:
But today’s bond market has real problems. I may be the only market commentator today who regularly publishes Barron’s Confidence Index (CI), but I’m glad to do it as the CI has been an excellent forecaster of future economic conditions since the 1930s. It’s important to understand that the CI is not a bond market timing tool. In fact it’s a horrible tool for timing the bond market. The CI increased during most of the 1950-81 bond bear market, and declined during the 2000-2014 bond bull market. So, what good is it?
The real problem with bonds is that they’re a relic of the gold standard, an anachronism that for investors serves no purpose in our world of unrelenting monetary inflation. Below are the plots of the component yields used in Barron’s Confidence Index (CI); these yields are from bonds rated investment grade. Bear markets are seen as rising bond yields, bull markets in falling yields. If bond market history has one lesson to teach investors, it’s that buying bonds when yields are low is a mistake. Currently, yields for investment grade bonds are at levels not seen since the 1960s. Unfortunately, to retired people choosing between 0.15% offered for their savings at the bank or 5.50% from an “investment grade” bond (Red Plot below), the bond market today is deceptively enticing.
Citigroup's settlement will not change the tradeoffs from what Citigroup's top management saw in 2006. As a result, in the future bankers are likely to make the same decisions that they did in 2006.
Did the Banks Have to Commit Fraud?
Friday, 18 July 2014 05:23
Floyd Norris has an interesting piece discussing Citigroup's $7 billion settlement for misrepresenting the quality of the mortgages in the mortgage backed securities it marketed in the housing bubble. Norris notes that the bank had consultants who warned that many of the mortgages did not meet its standards and therefore should not have been included the securities.
Towards the end of the piece Norris comments:
"And it may well be true that actions like Citigroup’s were necessary for any bank that wanted to stay in what then appeared to be a highly profitable business. Imagine for a minute what would have happened in 2006 if Citigroup had listened to its consultants and canceled the offerings. To the mortgage companies making the loans, that might have simply marked Citigroup as uncooperative. The business would have gone to less scrupulous competitors."
This raises the question of what purpose is served by this sort of settlement. Undoubtedly Norris' statement is true. However, the market dynamic might be different if this settlement were different.
Based on the information Norris presents here, Citigroup's top management essentially knew that the bank was engaging in large-scale fraud by passing along billions of dollars worth of bad mortgages. If these people were now facing years of prison as a result of criminal prosecution then it may well affect how bank executives think about these situations in the future. While it will always be true that they do not want to turn away business, they would probably rather sacrifice some of their yearly bonus than risk spending a decade of their life behind bars. The fear of prision may even deter less scrupulous competitors. In that case, securitizing fraudulent mortgages might have been a marginal activity of little consequence for the economy.
Between July 14 and July 15, contracts representing 126 tonnes of gold was sold in a 14-minute time window which took the price of gold down $43 dollars. No other market showed any unusual or extraordinary movement during this period.
To put contracts for 126 tonnes of gold into perspective, the Comex is currently reporting that 27 tonnes of actual physical gold are classified as being available for deliver should the buyers of futures contracts want delivery. But the buyers are the banks themselves who won’t be taking delivery.
One motive of the manipulation is to operate and control Comex trading in a manner that helps the Fed contain the price of gold, thereby preventing its rise from signaling to the markets that problems festering in the U.S. financial system are growing worse by the day. This is an act of financial terrorism supported by federal regulatory authorities. Another motive is to help support the relative trading level of the U.S. dollar, as we’ve described in previous articles on this topic. And, of course, the banks make money from the manipulation of the futures market....
The only explanation for this is that the Government is complicit in the price suppression and manipulation of gold and silver and welcomes the insider trading that helps to achieve this result. The conclusion is inescapable: if illegality benefits the machinations of the US government, the US government is all for illegality.--PC Roberts site
With The Fed proclaiming bubbles in some of the most-loved segments of the stock market and explaining that the economy is doing "ok" but they must remain dovish for longer for feasr of "false dawns"... what better time than now to dump $2.3 Billion notional in futures... of course the dump in gold's anti-status quo price coincided with an odd v-shaped recovery in stocks... Gold remains above its pre-June FOMC levels still.
The break was precipitated by the sale of over 17,000 contracts (or over $2.3 Billion notional)...
Well it is pretty obvious who somebody is and when you are Mrs. Central Printer or her agent (GS, JPM?) its pretty easy to dump $2.3 of fiat. Someday these games will end as witness the unsustainable debt bubble, but until then we will watch the fun and games and take advantage of any falls BGEIX
Here's one way to understand how reliance on ever-expanding debt hollows out the economy. Let's say the average interest on the $60 trillion in total debt is 4%. (Recall that charge-offs for defaulted loans must be included as debt-related expenses. The interest paid to lenders is only one expense in the debt system; the other is the losses taken by lenders for defaulted credit card loans, mortgages, etc.)
That comes to $2.4 trillion annually.
Now take the $16 trillion U.S. economy and reckon that real growth in gross domestic product (GDP), even with questionable hedonic adjustments and understated inflation, is about 1.5% annually. That's an increase of $240 billion annually.
That means we're eating over $2 trillion every year of our real wealth, i.e. our seed corn, to support an ever-increasing mountain of debt. That is not sustainable. Even if the economy were growing at a faster pace, it wouldn't come close to offsetting the interest payments on our ever-expanding debt.
This leaves the entire Status Quo increasingly vulnerable to any sort of credit shock; either rising rates or a decline in the rate of debt expansion will cause the system to implode.--Charles Hugh Smith
Roughly a month ago IMF bureaucrats released an official report which stated, among other things, that Bulgarian banks are “stable and liquid.”
Talk about epic timing. Because less than two weeks later, Bulgaria’s banking system was in the throes of a full-blown crisis.
There was a run on two of the nation’s largest banks—several hundred million dollars had been withdrawn in a matter of hours.
And the Bulgarian central bank had to step in and take over both of them or risk a collapse in the entire system.
This is the modern miracle of fractional reserve banking.
The lesson here is clear: The people in charge of regulating the system and making these proclamations about bank safety are totally clueless.
Clearly, Bulgaria (and Portugal) shows that the entire system can really be a bunch of smoke and mirrors.==Silver Doctors