- QE does not work. You cannot create jobs by creating money out of thin air. Did QE 1.0 worked? Obviously not! All the propaganda in the MSM cannot hide the fact of 22.5% unemployement and 42.5M people on food stamps. QE means currency debasement. It means the end of the USD. QE 2.0 announced to the world that the Illuminist central banksters want to wage financial war!
- If countries maintain their competitive devaluation policy, they are in effect saying that the USD is worth something. For eg, China by maintaining its USD-CNY peg is saying that the USD is worth something. So, the banksters create great gobs of these funny money and go on a buying spree in China. This is the same for other countries too. If countries put up barriers, capital controls and reject the USD, in effect it amounts to the selling/dumping of the USD ie devaluation. You can see that it is a lose-lose situation for the rest of the world.
- We are heading towards great turbulence in the coming weeks. The calamitous collapse can happen any day. Such collapse, like earthquakes, is a non linear phase change event. It comes suddenly and the ramifications are unpredictable and highly volatile!
Global finance leaders warn on QE2
Global finance leaders are continuing to lash out at the decision by the U.S. Federal Reserves to implement a further $600 billion in quantitative easing, to push the economy further from recession. After 18 months of anaemic growth, almost no progress on unemployment, and still slumping house prices hammering U.S. consumers, since the Fed’s initial attempt to inflate the world’s largest economy away from deflation, quantitative easing 2 was unveiled late last week.
Following up March 2009’s more than $1 Trillion with a further $600 billion when the side effects of the Fed’s first QE experiment include a sliding US dollar, which has paved the way for a currency war, and triggered an across the board commodity price spike, was never going to be universally popular.
The emerging economies which have born the inflationary and currency appreciating brunt of QE1 will largely bear the same again. The Fed’s announcement pushed Brazilian Finance Minister Guido Mantega to rail against the move in pointed terms.
“Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter.”
German Finance Minister Wolfgang Schäuble was even more scathing.
“With all due respect, U.S. policy is clueless,”
A more understated Chinese Vice Foreign Minister, Cui Tiankai, alluded to the widespread concern, observing, “For the Fed’s new relaxed monetary policy, many countries have expressed worries about what impact it would impose on financial stability,” before adding the point skeptics believe patently obvious.
“The U.S. new monetary policy will affect not only emerging economies but also developed ones,”
But the Russian response, thus far, has been surprisingly positive according to Presidential Aide Arkady Dvorkovich. If there is to be a flood of dollars seeking higher yields than the sub 1% on offer across much of the developed world, then some at least will be welcome in Russia.
“Some additional capital inflows into Russia, are of course, in our interest. Currently foreign capital is very small and we are interested in attracting further capital, so this move can be seen as a plus for us.”
Russia has so far been a net beneficiary of the commodity price rebounds affecting gold, and a range of metals, trimming the anticipated budget deficit and buttressing the balance sheets of major Russian exporters. Its currency, the rouble, has largely been spared the QE1 induced appreciation, holding limpet like to the 30-1 ratio against the U.S. dollar, while counterpart commodity currencies such as the South African Rand, and the Canadian and Australian dollars have powered to generation highs, and with the Central Bank of Russia easing the trading band recently in the face of global Central Banks moves to intervene on currencies. Even the traditional Achilles heel of the Russian economy – inflation – was improving until the onset of the summer drought and a flood of imports turned around the 18 months drop from 15% to 5%.
Vladimir Tikhomirov Chief economist, at Otkrytie says it is inflationary fears which are driving much of the reaction to the Fed’s announcement, and which Russia most needs to be on guard over. He says, that a break out of inflation would undermine economic recovery, with artificial economic growth eroding incomes and savings.
“What is important is inflationary expectations, because all the participants of the economy including banks and companies…if they see that inflation targets are not met it means that next year they will be even higher…which means the banks will incorporate it in their interest rates – credit activity will slow .“
Analysts say that with inflation already higher in developing economies than in the developed world dollar depreciation is a certainty. With dollar denominated assets taking on the appearance of a bubble, despite the absence of underlying economic substance, alarm bells about the next possible bubble burst are expected to get louder.
- Most of the CDOs, ABS, MBS … derivatives are largely fraudulent. They are backed by zero collateral and zero asset. Banks and financial institutions all over the world hold trillions of dollars of these worthless toxic papers. What do you think will happen when they have to declare these losses? This entire quadrillion dollars derivatives, financial weapons of mass destruction, is an Illuminist Wall Street bankster engineered take down of the world. All the money in the world cannot patch up this financial black hole. Global financial, economic and monetary collapse is a certainty. The only question is timing.
Assured Guaranty Sues Deutsche Bank Over Mortgages (emphasis mine)
A unit of Assured Guaranty Ltd. sued affiliates of Deutsche Bank AG over $312 million of mortgage- backed securities that the bond insurer guaranteed and says were “plagued by rampant fraud and misrepresentations.”
Assured Guaranty Corp. is asking a judge to force the bank to repurchase the loans, on which the insurer has already paid almost $60 million in loss claims and sees the potential for tens of millions of dollars more, according to a complaint filed today in New York state Supreme Court against DB Structured Products Inc. and ACE Securities Corp. The bond insurer, backed by billionaire Wilbur Ross, is also seeking reimbursement for the claims paid and for future losses.
“The entire pools of loans that Deutsche Bank securitized (and to a large degree originated) in the transactions are plagued by rampant fraud and misrepresentations and an abdication of sound origination and underwriting practices,” Assured said in the complaint.
Assured said more than 83 percent of 1,306 defaulted loans examined in one of the transactions, ACE’s Home Equity Loan Trust, Series 2007-SL2, breached Deutsche Bank’s representations and warranties. In the second deal, Home Equity Loan Trust, Series 2007-SL3, 86 percent of the 1,774 loans breached the agreements, Assured said.
- When maestro Jim Sinclair and Harry Schultz speak, I keep quiet and listen. There are too much endless jabbering in this world that are not worth getting out of bed for. But here are today’s pearl of wisdom: we are returning to a gold standard !
A Note From Harry Schultz
….Yesterday, Nov 8, 2010, was a day I’ve awaited for 40years, since President Nixon shut down the last vestiges of the gold standard. Yesterday, at last, a respected member of the ruling classes called for a discussion to readopt a modified global gold standard as a lynchpin for the monetary system. Robert Zoellick, World Bank President and a former US Treasury official, says a new system is needed (as called for in HSL for 20 years), using 5 main currencies, with gold as the international reference point for future currency values. He wondrously said “Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.” I couldn’t have put it better and in fact I have put it in those exact words, as has Jim Sinclair and a number of free market analysts.
RZ said “The development of a monetary system to succeed Bretton Wood II launched in 1971, will take time. But we need to begin.” Amen, Mr Z and thank you! Also, thanks to the Financial Times for making this the leading page one headline story, despite their traditional aversion to gold. Ethics won! This story broke in the early AM Nov 8th and halted a correction that began in the gold price, after which gold rose to a new high. The story freaked out ruling politicians around the world who despise gold because it acts as a governor on government spending. After Nixon closed the gold window, government spending and deficits rocketed, as the data charts prove, from that exact moment. Germany, the US Fed, and Trichet of ECB all patted Mr. Z on the head, but said it’s not practical.
What would you expect them to say dear reader? They will fight a gold-linked system, but in the end they will give in, because the system is dying, fast, as the gold price reflects. How good a new system will be, whether it will have only a symbolic link or a strong one, can’t be guessed today, nor how soon. The gold price will tell us. My prediction on Bloomberg TV in Paris a few years ago was that “Gold will force a system change when gold hits $1,650, but that it might need $2,000 to bring a change.” That may still come true, because, as you see in the press today, most political leaders tried to discount Mr Z’s brave, but wise recommendation.
- Never listen to what politician snakes say. Observe their actions. Only when no one is watching or in secrecy will they tell the truth. Thereafter, it is the usual subtlety, deception and obfuscation. You believe that QE 2.0 is to help Main Street, boost employment and stimulate the economy? I have a seaside bungalow on Mars I would like to sell to you!
Bernanke Confirms That The Key Goal Of The Fed, And QE2, Is To Boost Stock Prices
So much for the Fed’s two mythical mandates of promoting “maximum employment” and maintaining “price stability.” First, we had Bernanke’s predecessor Greenspan confirming in late July on Meet the Press what everyone knows: namely that the primary goal of the Fed is merely to encourage higher stock prices: “if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here.” And now, courtesy of an Op-Ed by the current chairman, we get confirmation, again, just three months later, from the current chairman, that the Fed cares mostly about stimulating high stock prices, solely to create the completely artificial illusion of “wealth” for the few, the proud, the shareholders, and the banking oligarchy.
Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
See, the thing is Bernanke is absolutely right… when it comes to a few hundred thousand “consumers” (out of over 330 million). One group of Americans whose wealth is tied into the equity value of any given company, typically insiders, are more than happy to take advantage of this massive surge in artificial stock valuations. This last week for example they took over 660 million advantages worth. We repeatedly demonstrate that the ratio of insider selling to buying is now beyond grotesque. In the past week alone it hit over 400 (and was over 2,300 a few weeks ago) – see chart at bottom of post. So yes, those for whom Bernanke’s “easing” is working, are taking advantage of it. As for the other group of beneficiaries, the ones who are going to receive over $100 billion in bonuses this year, well: they already literally own Bernanke, so we are not too worried about them either.
As for everyone else, tough luck. Since for 99% of America, surging prices will not be offset by any appreciation in their meager stock holding, nor will deteriorating employment prospects, declining home values, and a recessionary relapse in the economy provoke Americans to actually part with their increasingly meager capital as confirmed by the 26th sequential outflow from US retail mutual funds. In other words, the bulk of America has nothing to look forward to except encroaching poverty, and retirement fund balances substantiated by nothing than fraudulent, FASB-endorsed, stock valuations.
But lying and scheming is nothing new to the Chairman. As we showed earlier, Bernanke lied under oath to Congress. Why should he start telling the truth now? Additionally, when all those who are chasing stock momentum higher are piggybacking on the “frontrun the Fed” trade, are benefiting, why should they voice disapproval with a strategy that is helping them, if only until such time as the market experiences another massive, and this time terminal, crash… No matter how destructive it is for everyone else.
At the end of the day, it is a question of time: when the people of America realize that all those who are selling on the chart below are doing so at the expense of 99% of American population, and are also sentencing the country to a fate of debt-based insolvency, the time will come. The time will be one of a violent overthrow of the Fed.
Until then, America, for some odd reason believing it has achieved some atual change in the political arena, can just continue to bend over, and take the Fed’s daily dose of lies, wealth transfer, and involuntary indebtedness, like a flock of very docile sheep, which has its iPad and iPhone. After all, who needs anything more.
- I was watching gold and silver prices pushing higher yesterday. It looked like silver could have hit the US$30/oz mark at the rate it was going. All of a sudden both silver and gold started crashing. Gold went down US$30 and silver almost US$3 from their highs. I am really pissed but not sure what/who is to blame. News came out that CME had increased the margin requirement for silver by 30%. So, this was the reason silver and gold tanked. It certainly helped the bullion banksters. There are quite alot of pissed gold and silver bugs. Judged for yourself how much they say is true.
BLATANT MARKET MANIPULATION IS EMBARRASSING THE “NEW” CFTC
When JPM/HSBC Don’t Like The Results, The CME Just Changes The Rules: Full Revised Silver Margin Schedule
Dano Norcini highlights that the bull market for gold and silver is not over. He is correct. This is another great opportunity to buy at lower prices. What are you waiting for?
CME Group today announced a hike in the amount of money or margin needed to control a full-sized (5,000 ounces) silver contract. Margin for silver jumped to $6,500 from $5,000 or 30%.
Several things to know about this:
First, it is quite common to see this occur in markets that are undergoing sharp upmoves in price. The increasing price range can easily wipe out the entire margin amount in a single day with ease and this is designed to protect the integrity of the clearing houses and the brokerage firms. Customers who lose big cannot oftentimes meet margin calls and end up sticking the brokerage firm with losses. The idea is that the firms protect themselves by having more money at the clearing houses sufficient to cover potential losses.
Second – members of the exchange generally tend to be on the short side of a market moving higher and once they get trapped, they begin to squeak, and quite loudly at that. Squeaky wheels get the grease and since the exchange membership brings with it voting rights, they generally get what they want.
Thirdly – Small specs whose accounts are generally underfunded to begin with and who chase the markets higher based on the hype end up buying at relatively high levels. Once the margins get raised, these weak hands get forced out since they generally cannot meet margin calls and their exodus precipitates a wave of selling. That engenders more paper losses which then engenders more margin calls and the snowball effect occurs.
Fourthly – strong hands on the long side will look to add on during such price retracements when it appears that the bulk of the weak-handed latecomers have been flushed out. Stronger hands on the short side who have been experiencing severe bleeding of their trading accounts will welcome the opportunity to finally cover some of their existing shorts in an attempt to minimize the amount of damage that they have incurred. Getting out with a small loss after sitting through a huge one is a psychological victory for trapped shorts.
Fifthly – to believe that the bull market in the metals is now over and that gold in particular has topped, is to also believe that the US Dollar is about to somehow mysteriously repair itself in spite of the conditions that have been contributing to its recent decline. Gold is acting as a currency and will remain one. It is no longer trading as a commodity. Severe stress in the global monetary system assures that it will be well supported.
Sixthly – the breakdown in the long bond is signaling that the market is fearful of inflation ahead. Gold and silver are your protection against such conditions.
- Those of you who thinks I am exaggerating by saying the United States have started financial world war should listen to what Dr Hudson says. He is saying exactly what I have mentioned many times. You have to be insane to allow Illuminist banksters to buy up your country using their funny money!