The Long Cold Winter

[can't sit still]

Some more numbers,,,mostly from memory. There are reportedly about 10 quadrillion in contracts denominated in dollars. 4 years ago, there were $ 1.02 quadrillion in derivatives. Today, it's about $ 791 trillion. The bond market is worth about $ 89.8 trillion. The secondary market for bonds trades $ 11 trillion every day. The Foreign exchange trades about $ 3 trillion a day of currency. The stock market; "The size of the world stock market was estimated at about $36.6 trillion at the start of October 2008.[1] The total world derivatives market has been estimated at about $791 trillion face or nominal value,[2] 11 times the size of the entire world economy."
The world GDP is about $ 50 trillion,,, U.S. GDP is about $ 14.5 trillion. All the things called money in the U.S. is about $ 6 trillion. Currency amounts to $ 878 billion. What this all means is that there is an ENORMOUS pile of debt instruments circulating.

The economy has left behind productivity and just relies on capital manipulation for profit. Eventually, it mis-prices risk and the whole empire collapses.
"(It is also worth pointing out that the true final step in each of these historical economies is; collapse)"
http://en.wikipedia.org/wiki/Financialization

Currently, the financial system is moving around great gobs of what it believes to be "money". Most of this "money" is just debt instruments,,,, a promise-to-pay.
OK, so who does the paying eventually? Many of these instruments will just be rolled-over and never cashed out. So somebody has to scrape up the cash to service this debt. The cash is produced from profits and taxes squeezed from the productive sector. The nominal value of all these debt instruments has just gotten too high for the productive sector to service the debt. How is all this debt created?

"Today you can break a country, you do not need money. You just need synthetic Euro-shorts or Credit Default Swap contracts. A trillion dollar bailout? Goldman can create 10 trillion of Euro-shorts. It dominates whatever governments can do. So basically Goldman can create shorts faster than Europe can create money." -
- Jim Rickards (Omnis strategist)

OK, that's pretty clear. The banks create ANY amount of debt-instruments that they want. They can destroy any economy that they want.
The problem comes in where GOVs or companies or taxpayers have to service this debt. It has grown so huge that, it can't be done.

We have a two-tier economy. The parasite has grown too large to be sustained by the meager earnings of the host.
http://www.guardian.co.uk/commentisfree ... ial-crisis
The cash is held outside the productive economy. The mega-parasite is grabbing everything in sight. There is no money circulating in the lower tier. This site shows a good representation of the 2 different circulations. http://www.citizensamericaparty.org/socialcredit.htm
The maga-parasites need all the cash to save themselves;


OK, so how much is enough? How long will an additional $ 2.4 trillion last? http://www.cnsnews.com/news/article/pel ... w-borrowin

This will go on for about 16 months longer. GOV is scared shitless that the bond market will get scared shitless. Eventually, it will happen. GOV needs to sell about $ 4.5 trillion in bonds in the next 18 months. There isn't anybody who will buy them. GOV can't allow any failed auctions. GOV is forcing it's primary dealers to buy as much as can be squeezed. So, what has been the results? The primary dealers are crashing. GS stock is down 20% in 6 months. B of A is down 34.51% over the past 6 months, 14.2% over the past month alone.
http://theautomaticearth.blogspot.com/2 ... ilout.html

EVERYBODY is getting the big-squeeze. GOV doesn't want to stop spending. The banks don't want to keep buying. The FED doesn't want to buy any more treasuries. The banks are being eaten alive by defaults. They have no cash-flow. GOV is about $ 5 trillion in arrears at funding the federal pension plan. GOV is about $ 7 trillion in arrears in funding SS. A runaway financial system invariably causes collapse. WE are about to write the next chapter in that book.
Have a nice day.

[can't sit still]

Here are a few notes from The Daily Reckoning. They are a great help at understanding the situation that we are in.
"David Rosenberg explains:

Plain-vanilla, garden-variety business expansions and contractions that are influenced by the manufacturing inventory cycle tend to have recessions separated between five and 10 years apart. That was certainly the experience that economists came to understand and appreciate in the post-WWII era...

This time, we are dealing with something different. This is a balance-sheet downturn...when businesses and households begin paying down debt and rebuilding the asset side of their balance sheets. Instead of spending...they save.

It is a very natural thing to do, but it hasn't happened in 80 years. And it changes the whole nature of the economy."

"By Zachary Keck, DC Foreign Policy Examiner

On Tuesday the United States net public debt to GDP ratio reached 100%. That is, the federal government's accumulated debt is equal (actually surpassed) the United States Gross Domestic Product in 2010.

After Congress and the Obama administration passed the debt ceiling limit, the Treasury borrowed $238 billion on Tuesday. This brought public debt to $14.58 trillion dollars, slightly higher than the United States GDP in 2010, which was $14.54 trillion."

"The reason is debt. It won't go away. It won't say ‘adios' and get on a bus. Like a bad houseguest, it won't leave!

The feds have tried to ignore it. They've tried to postpone it. They've tried to make the problem go away by stimulating the economy to grow faster.

But nothing has worked. Day by day the debt grows larger... And day by day, the moment of truth grows closer.

What truth?

That you can't make excess debt disappear. It has to be paid...either by the borrower, or by the lender. Someone has to suffer.

Why is that? Because borrowing takes from the future. Sooner or later, the future shows up and wants to be paid"
Up to this point in time, the borrower has taken much of the loss. Now, the borrower is out on the street, broke. Next in line for the losses is the lender. The stock markets have figured this out,,, slowly. The consumer is broke. Stocks lost $ 2.1 trillion of valuation,,, just this week.
Next in line after stocks is the bond market. The bond market is starting to write off debts;
http://www.reuters.com/article/2011/08/ ... H620110804
Little by little, the debt will disappear.

[can't sit still]

Well, the unthinkable has happened. U.S. debt has been downgraded. http://www.bbc.co.uk/news/world-us-canada-14428930
The Credit default Swaps have priced U.S. debt rated at AAA as being riskier than the debt of Chile rated at A+. The debt rating agency, Standard and Poor has dropped the U.S. rating. ALL debt worldwide is rated referenced to U.S. debt. This will drop all debt worldwide. BAD news.

[can't sit still]

This article by Jim Willie lays it all out. The U.S. Banks are completely trashed,,,, FED also,,, ECB,,, CPI. The greed was carried TOO far. There is no going back. The West is in a depression.
http://www.24hgold.com/english/contribu ... +willie+CB
The FED [banks] are trying to save the banks by printing. They have transfered their worthless paper to "the people". "The people" are about $ 750 trillion short. http://www.bloomberg.com/news/2011-08-1 ... -weil.html

[can't sit still]

I try not to point out the obvious. I guess that some things that are obvious to me might not be obvious to others. It works the other way around too but, I don't see a lot of posts here that show something new.
Man, as a hunter-gatherer was fully employed. When he moved into agriculture, he got more food security and just a bit of rest. When he introduced draft animals, he got even more productivity and a bit more rest. When he employed steam engines, he became far more productive and got even more rest. He didn't have to employ the very young and very old to get enough calories for everybody. Every advance in productivity meant that fewer and fewer men were needed. The leisure-class continued to invent new labor-saving devices. All the man-hours that were no longer needed for subsistence were used to produce luxury items.

As time went on fewer and fewer workers were needed for physical labor. When the computer was introduced, it firstly increased productivity,,, like the steam engine. As implementation of computers saturated the workplace, there was less and less need for man's mental labor. Man now concentrates on planning and other things that computers haven't taken over.
GOV tries to produce make-work jobs to keep everybody working. As efficiency increases in the private sector, GOV tries to increase inefficiency in the public sector. When the EU bureaucracy was introduced to the European countries, it reduced GDP by 20 %. It didn't improve anything. It just employed more bureaucrats.
Industry continues to destroy job niches. It has gotten beyond the capacity of GOV to support and absorb the entire redundant work force and their dependents.
With the sudden outsourcing of jobs, this problem came to a head much faster. GOV sends out 80 million checks a month. 52.5 % of Americans depend on a check from GOV at some level. GOV is supporting them with borrowed money and anticipated future earnings.

Professor Martin Armstrong wrote a program that includes every economic event for the last 3,000 years. No, I haven't seen it. He runs 23,000 variables to predict economic events. He has proved to be very accurate. Computers are everywhere. What happens when AI is everywhere? What happens to niches of human employment when AI proves itself to be more accurate? What happens when robots get more autonomous? Imagine AI applied to Armstrong's program.

Every corner of the world is screaming about no employment for youth. GOV can't create jobs other than regulatory jobs. There is a limit to how many regulators and policeman are needed. GOV keeps pumping up bogus job opportunities for bureaucrats. The Capitalist system has NO provision for supporting non-producers. That is left up to GOV.

GOV has a patchwork of programs to support those who can't get on GOV rolls and can't fit in the private sector. Currently, these programs are having funding problems. As the economy winds down from lack of consumptive power, more and more people will be in need of support that was provided previously by a job.
Currently, there is no framework to support large numbers of people who have no place in the job market. The dissemination of AI will only make things worse.
Capital will fight tooth and nail against supporting non-producers.
Many people believe that socialism is the answer. It hasn't worked out yet. It's possible that world socialism WITHOUT war expenditures would be a viable system. Either way, full employment is a thing of the past. That was the goal of the industrial revolution.

[can't sit still]

This is an excellent post at the Automated Earth. It has links to dozens of previous articles. There are a few on deflation.
When bubbles reach their maximum extent, they invariably deflate. Our explanation as to why this is inevitable can be found in Inflation Deflated, followed by, The Unbearable Mightiness of Deflation, a rebuttal to inflationist Gary North, and Debunking Gonzalo Lira and Hyperinflation.
There is one titled; 40 ways to lose your future. http://theautomaticearth.blogspot.com/2 ... -your.html

There is an excellent article from Janszen proving that we will have inflation, not deflation;
http://www.itulip.com/forums/showthread ... post205428
I found his proofs of deflation just as convincing as the arguments for deflation.
The news blowing in the wind is that France will soon blow up. GOV builds an enormous smoke screen to hide insolvency. Then, private banking comes along and blows it all away. They "short" the debt and THEN they blow away the smoke. Sure, they make a lot of money BUT, they apparently don't care if they destroy the economy. The demonstrators in Tel Aviv brought a big guillotine with them. It looks functional. I can only guess who they had in mind.

Should you be interested in where the money is concentrated, this is an eye-opener;
http://eastmanclann.files.wordpress.com ... _story.pdf
Just keep in mind that life goes on. Perspective and continuity.

[Ugly Dougly]

WARREN BUFFETT SAYS:
Stop Coddling the Super-Rich

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

He was ranked as the world's wealthiest person in 2008 and is the third wealthiest person in the world as of 2011.

[can't sit still]

The die is cast. The Euro is dead. GOV wants some sort of socialist monetary union in Europe. The tax strains on European countries to support banking socialism have crashed growth. Without growth, there can't be bond-service for proposed eurobonds. As Italy crashes, the huge bank, Societe General will cash. That will destroy confidence in France. The banking socialists have tried everything legal. They have also tried several illegal strategies. It's all crashing.
http://theautomaticearth.blogspot.com/2 ... ge-of.html
The banking socialists have tried to load all their debts on the backs of the only group that is actually productive. The load was too much to carry. They sucked out all the working capital from wanna-be producers and wanna-be consumers. Now, there is no profit or tax to be found for them to suck up.

[can't sit still]

This is an excellent article showing cause to believe that all sectors of the economy are broken. The guy seems to know his stuff. Unlike most writers, he proposes solutions. "We must recognize that there are no workable macroeconomic solutions which can be laid down: that everything is a matter of functioning microeconomics building things up;"
http://www.24hgold.com/english/news-gol ... n+Corrigan

This loooooonnnngg article covers a lot of ground. It too proposes solutions. Those of you who are well-read will already know that Germany pulled off an economic miracle long before it persecuted anybody or armed itself.
"Hitler's economic miracle
The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years"
http://www.atimes.com/atimes/Global_Eco ... 4Dj01.html

The article lays out The brilliant strategy employed by the Germans. They already had a currency. They already knew from experience that unlimited printing would destroy it. They created a new currency that would be used ONLY to pay wages in jobs programs.
When the U.S. prints money, it flows into stocks, bonds and commodities. It makes the "first spenders" quite happy and makes the rich,,, richer.

Money can be created for any of 4 objects.
Productive investments
Speculative investments
Consumption
Ponzi schemes.

If money is created for anything besides productivity, it is eventually wasted. The German model insured that the money would be used only for productive efforts. It was a roaring success.
In essence, Germany threw out the bankers. Most of the banking houses at the time were jewish. They tried to protect their vested interests.
"Long before the Hitler government began restricting the rights of the German Jews, the leaders of the worldwide Jewish community formally declared war on the "New Germany"
http://www.wintersonnenwende.com/script ... ecwar.html

The rest they say,,, is history.

[can't sit still]

The money supply has been rising much faster than the GDP. Nothing new there. Since US GOV has gone on a printing spree, investors are worried about the value of their investments. Many have fled both bonds and stocks. The next worry is QE III. QE II did not work but, GOV has only one playbook. Many investors have fled to commodities. They have driven up the price of commodities until they killed demand. Commodities are falling. US treasuries are the only thing that isn't falling. The main reason is the flight to safety is throwing a LOT of money into US T bonds. Hard to say how long this will go on. They lose 10% a year for inflation. While commodities are falling, gold and silver are rising. All the currencies are being trashed and everybody knows it. The price of gold shows it.

Tuesday, January 1, 2002 - Launch of euro notes and coins
Friday, February 8, 2002 - GOLD ABOVE $300
Monday, December 1, 2003 - GOLD ABOVE $400
Thursday December 1, 2005 - GOLD ABOVE $500
Monday, April 17, 2006 - GOLD ABOVE $600
Tuesday, May 9, 2006 - GOLD ABOVE $700
Friday, November 2, 2007 - GOLD ABOVE $800
Monday, January 14, 2008 - GOLD ABOVE $900
Monday, March 17, 2008 - GOLD ABOVE $1000
Monday, November 9, 2009 - GOLD ABOVE $1100
Tuesday, December 1, 2009 - GOLD ABOVE $1200
Tuesday, September 28, 2010 - GOLD ABOVE $1300
Wednesday, November 9, 2010 - GOLD ABOVE $1400
Wednesday, April 20, 2011 - GOLD ABOVE $1500
Monday, July 18, 2011 - GOLD ABOVE $1600
Monday, August 8, 2011 - GOLD ABOVE $1700

If commodities go up, it screws with consumption and the economy. Since gold is good for almost NOTHING, it is the one investment that doesn't wreck a market. Imagine if rice had gone up parallel to gold. Gold's lack of usefulness and comparative rarity have made it a fairly good store of value. The dollar is fine for trade but, hopeless as a store-of-value. As investors drive up food commodities, the riots increase. If they drive up inorganic commodities, the producing and manufacturing sector die off.
You can say that gold is expensive but, it has always been that way. It has never sold for it's industrial value. Gold has doubled about every 4 years. It will stop climbing when people regain confidence in paper money.

[can't sit still]

Hugo Chaves wants to bring Venezuela's gold home. 211 tons in total. 99 tons is held by British banks. They do NOT list that much in their vaults.
http://silverdoctors.blogspot.com/2011/ ... ns-of.html
The LBMA is just a big poker game. Hugo wants to leave the table. He's going to take the "pot" with him.

[can't sit still]

This is a good article from Automatic Earth. It's about inflation and deflation. It claims that GOV is printing money to create expectations of inflation,,, it won't actually appear.
"While credit expansion (inflation) is a powerful driver of increasing prices, credit contraction (deflation) is a far more powerful driver of decreasing prices. Credit, having no substance, is subject to abrupt fear-driven disappearance. Confidence and liquidity are synonymous, and confidence is once again evaporating quickly, as it did in phase one of the credit crunch (October 2007-March 2009). As contraction picks up momentum, the loss of credit will rapidly lead to liquidity crunch, drastically undermining price support for almost everything. With purchasing power in sharp retreat, however, lower prices will not lead to greater affordability. Purchasing power typically falls faster than price under such circumstances, so that almost everything becomes less affordable even as prices fall. "
http://theautomaticearth.blogspot.com/2 ... ities.html

[can't sit still]

Here's some interesting info on currency reform.

"The German economic miracle, the Wirtschaftswunder.

That miracle was founded in currency reform. On the very day when Ludwig Erhard’s currency reform was put into place the economic paralysis ended. The “rightest” economist of the 20th century, Jacques Rueff, wrote (with André Piettre) about the turnaround beginning on the very day of the reform:

Shop windows were full of goods; factory chimneys were smoking and the streets swarmed with lorries. Everywhere the noise of new buildings going up replaced the deathly silence of the ruins. If the state of recovery was a surprise, its swiftness was even more so. In all sectors of economic life it began as the clocks struck on the day of currency reform. Only an eye-witness can give an account of the sudden effect which currency reform had on the size of stocks and the wealth of goods on display. Shops filled with goods from one day to the next; the factories began to work. On the eve of currency reform the Germans were aimlessly wandering about their towns in search of a few additional items of food. A day later they thought of nothing but producing them. One day apathy was mirrored in their faces while on the next a whole nation looked hopefully into the future.



Rueff took a similar approach, including a dramatic currency reform, to reviving the French economy. As economist and Lehrman Institute senior advisor John Mueller summarizes:

Despite the unanimous opposition of his cabinet, de Gaulle adopted the entire Rueff plan, which required sweeping measures to balance the budget and make the franc convertible after 17.5% devaluation – though not without qualms. ‘All your recommendations are excellent,’ de Gaulle told Rueff. ‘But if I apply them all and nothing happens, have you considered how much real pain it will cause across this country?’ Rueff replied, “I give you my word, mon General, that the plan, if completely adopted, will re-establish equilibrium in our balance of payments within a few weeks. Of this I am absolutely sure; I accept that your opinion of me will depend entirely on the result.’ (It did: ten years later, de Gaulle awarded Rueff the medal of the Legion of Honor.)

Today on this the 40th anniversary of the closing of the gold window a group of Americans issued a statement stating, in its conclusion:

[W]e support a 21st century international gold standard. America should lead by unilateral resumption of the gold standard. The U.S. dollar should be defined by law as convertible into a weight unit of gold, and Americans should be free to use gold itself as money without restriction or taxation. The U.S. should make an official proposal at an international monetary conference that major nations should use gold rather than the dollar or other national currencies to settle payments imbalances between one another. A new international monetary system, based on gold, without official reserve currencies, should emerge from the deliberations of the conference."

http://www.forbes.com/sites/ralphbenko/ ... -disaster/

[can't sit still]

When the banks were on the edge of crashing a few years ago, GOV bailed them out. The debts never went away. The crash was only postponed.

From The Economic Collapse:

The following are 25 signs that the financial world is about to hit the big red panic button....

#1 According to a new study just released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.

#2 Will Bank of America be the next Lehman Brothers? Shares of Bank of America have fallen more than 40% over the past couple of months. Even though Warren Buffet recently stepped in with 5 billion dollars, the reality is that the problems for Bank of America are far from over. In fact, one analyst is projecting that Bank of America is going to need to raise 40 or 50 billion dollars in new capital.

#3 European bank stocks have gotten absolutely hammered in recent weeks.

#4 So far, major international banks have announced layoffs of more than 60,000 workers, and more layoff announcements are expected this fall. A recent article in the New York Times detailed some of the carnage....

A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.

#5 Credit markets are really drying up. Do you remember what happened in 2008 when that happened? Many are now warning that we are getting very close to a repeat of that

#6 The Conference Board has announced that the U.S. Consumer Confidence Index fell from 59.2 in July to 44.5 in August. That is the lowest reading that we have seen since the last recession ended.

#7 The University of Michigan Consumer Sentiment Index has fallen by almost 20 points over the last three months. This index is now the lowest it has been in 30 years.

#8 The Philadelphia Fed's latest survey of regional manufacturing activity was absolutely nightmarish....

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009

#9 According to Bloomberg, since World War II almost every time that the year over year change in real GDP has fallen below 2% the U.S. economy has fallen into a recession....

Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.

#10 Economic sentiment is falling in Europe as well. The following is from a recent Reuters article....

A monthly European Commission survey showed economic sentiment in the 17 countries using the euro, a good indication of future economic activity, fell to 98.3 in August from a revised 103 in July with optimism declining in all sectors.

#11 The yield on 2 year Greek bonds is now an astronomical 42.47%.

#12 As I wrote about recently, the European Central Bank has stepped into the marketplace and is buying up huge amounts of sovereign debt from troubled nations such as Greece, Portugal, Spain and Italy. As a result, the ECB is also massively overleveraged at this point.

#13 Most of the major banks in Europe are also leveraged to the hilt and have tremendous exposure to European sovereign debt.

#14 Political wrangling in Europe is threatening to unravel the Greek bailout package. In a recent article, Satyajit Das described what has been going on behind the scenes in the EU....

The sticking point is a demand for collateral for the second bailout package. Finland demanded and got Euro 500 million in cash as security against their Euro 1,400 million share of the second bailout package. Hearing of the ill-advised side deal between Greece and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral, arguing that their banks were less exposed to Greece than their counterparts in Germany and France entitling them to special treatment. At least, one German parliamentarian has also asked the logical question, why Germany is not receiving similar collateral.

#15 German Chancellor Angela Merkel is trying to hold the Greek bailout deal together, but a wave of anti-bailout "hysteria" is sweeping Germany, and now according to Ambrose Evans-Pritchard it looks like Merkel may not have enough votes to approve the latest bailout package....

German media reported that the latest tally of votes in the Bundestag shows that 23 members from Mrs Merkel's own coalition plan to vote against the package, including twelve of the 44 members of Bavaria's Social Christians (CSU). This may force the Chancellor to rely on opposition votes, risking a government collapse.

#16 Polish finance minister Jacek Rostowski is warning that the status quo in Europe will lead to "collapse". According to Rostowski, if the EU does not choose the path of much deeper economic integration the eurozone simply is not going to survive much longer....

"The choice is: much deeper macroeconomic integration in the eurozone or its collapse. There is no third way."

#17 German voters are against the introduction of "Eurobonds" by about a 5 to 1 margin, so deeper economic integration in Europe does not look real promising at this point.

#18 If something goes wrong with the Greek bailout, Greece is financially doomed. Just consider the following excerpt from a recent article by Puru Saxena....

In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!

#19 The global banking system has a total of 2 trillion dollars of exposure to Greek, Irish, Portuguese, Spanish and Italian debt. Considering how much the global banking system is leveraged, this amount of exposure could end up wiping out a lot of major financial institutions.

#20 The head of the IMF, Christine Largarde, recently warned that European banks are in need of "urgent recapitalization".

#21 Once the European crisis unravels, things could move very rapidly downhill. In a recent article, John Mauldin put it this way....

It is only a matter of time until Europe has a true crisis, which will happen faster – BANG! – than any of us can now imagine. Think Lehman on steroids. The U.S. gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the U.S. is at best at stall speed, will tip us into a long and serious recession. Stay tuned.

#22 The U.S. housing market is still a complete and total mess. According to a recently released report, U.S. home prices fell 5.9% in the second quarter compared to a year earlier. That was the biggest decline that we have seen since 2009. But even with lower prices very few people are buying. According to the National Association of Realtors, sales of previously owned homes dropped 3.5 percent during July. That was the third decline in the last four months. Sales of previously owned homes are even lagging behind last year's pathetic pace.

#23 According to John Lohman, the decline in U.S. economic data over the past three months has been absolutely unprecedented.

#24 Morgan Stanley now says that the U.S. and Europe are "hovering dangerously close to a recession" and that there is a good chance we could enter one at some point in the next 6 to 12 months.

#25 Minneapolis Fed President Narayana Kocherlakota says that he is so alarmed about the state of the economy that he may drop his opposition to more monetary easing. Could more quantitative easing by the Federal Reserve soon be on the way?

And the conclusion which is, as usual, spot on:

Things have not looked this bad for global financial markets since 2008. Unless someone rides in on a white horse with trillions of dollars (or euros) of easy credit, it looks like we are headed for a massive credit crunch.

What we witnessed back in 2008 was absolutely horrifying. Very few people want to see a repeat of that. But as things in the U.S. and Europe continue to unravel, it appears increasingly likely that the next wave of the financial crisis could hit us sooner rather than later.

None of the fundamental problems that caused the crisis of 2008 have been fixed. The world financial system is still one gigantic mountain of debt, leverage and risk.

Authorities around the globe will certainly do all they can to keep things stable, but in the end it is inevitable that the house of cards is going to come crashing down.
Let us hope for the best, but let us also prepare for the worst."

[can't sit still]

International Business Daily has some observations on the cost of the safety net.

First, as Investor’s Business Daily reported recently, the US government’s safety-net spending now exceeds every dollar of tax revenue from personal income taxes and payroll taxes.
Federal Safety-Net Spending Now Exceeds Every Dollar of Personal Federal Tax Revenue
“The federal government will spend about $100 billion more this year on social benefit programs than it will collect in personal income and payroll taxes,”

It appears that some in GOV are tired of paying for the safety net. There may be 3 million tossed out of the net fairly soon.
http://mobile.salon.com/tech/htww/2011/ ... xtensions/

The dumb fuckers should have thought of this eventuality when they voted for "most favored nation" trading status for China.

[can't sit still]

Jim Willie claims that France will choke on Greek debt and crash big-time. http://www.24hgold.com/english/news-gol ... +Willie+CB
He also lays out a scenario for a few other problems.

[Ugly Dougly]

French person choking on Greek person. Got pics?

[can't sit still]

Sorry, no pics. There;s going to be some Italians choking too.

[can't sit still]

There was a big shiteroo when a big-time trader said on BBC that the entire system was toast. Now, there is another insider who is speaking up.
"the southern European nation will stop paying salaries and pensions and automated teller machines in the country will empty “within minutes.”"
He says that it is ALL over with. He's the head of Unicredit Global Securities
http://www.zerohedge.com/news/step-asid ... obal-finan

[can't sit still]

There is endless speculation as to how all of these problems will eventually turn out. We have a long history to guide us. There are a huge numbers of variables. The best of the best is Martin Armstrong. He started out young and smart.
"As a teenager, Armstrong worked at a rare stamp and coin dealership and became a millionaire at age fifteen"
"Princeton Economics International, Ltd. established offices in Paris, London, Tokyo, Hong Kong, and Sydney, Australia employing about 240 people around the world"
His downfall came when GOV demanded his models. He refused and got 7 years in prison for contempt. After that he was convicted of securities fraud. GOV didn't bother with an actual trial. He eventually got out of prison and tried to resume his life.
http://kingworldnews.com/kingworldnews/ ... trong.html

He knows lots about gold and a lot about politics.
"When asked about what Congress is drafting with his help, Armstrong stated, “Well, unfortunately in politics you can’t get any kind of major reform passed at this stage of the game because most people are going to look at their careers and it’s really a stalemate.

So the only real option you have is to basically set down, on paper, how to revise the world monetary system, and you keep it in the drawer. Then, when basically everything hits the fan, you pull it out out of the drawer and then it gets passed like tarp within a matter of a few days.”

For clarification KWN asked, “So we will be in this manic phase, this unbelievable crisis, gold will be skyrocketing and they (Congress) will pull this thing out of the drawer and they will ram it through?” To which, Armstrong replied, “That’s the way it always is.”
http://kingworldnews.com/kingworldnews/ ... _Move.html

Armstrong has always referred to America as the welfare-warfare state. I believe that he is calling for the final collapse in sept of 2012.
Since debt is equal to GDP, I suspect that any plan must include debt reduction. I also suspect that any plan that originates from GOV will be directed towards continuity of GOV. it has long been acknowledged that GOV IS the problem. It can be expected that this provisional plan will be thought out by the same brilliant people who brought us to this point.
OK, so, we're going to have a "command economy",,, planned by moronic criminals who can't see beyond their own self-interest. "They" will expect us to all be good productive drones. History has proved that this recipe will result in a comprehensive collapse to anarchy.
Have a nice day.

[can't sit still]

This post is on gold. It has a long important history in the monetary world. By definition, gold IS money. Paper is just fiat crap. There are many important people calling for a return to the gold standard. GOV would like to have pure fiat currency but, it has never worked out well.
Keep in mind that the U.S. GOV claims to have about 8000 tons of gold. This gold is valued at $42.22 an ounce.

Jeff Clark;
"t appears to me this process has been going on since 407 BC, with the first great inflation in Athens. I have charts in my book, Guide to Investing in Gold and Silver, starting in the year 1918, showing the value of the gold held at the United States Treasury compared to the value of all of the base money or paper currency, and it was a 1:1 ratio.

Jeff: So history shows that the value of gold eventually equals the value of all paper money in circulation?

Mike: Yes. Back then, the US dollar was a claim check on real money — gold. Base money was the number of US Treasury gold notes in circulation. Before World War I, base money equaled the value of the gold held at the US Treasury. Then we established the Federal Reserve and did a bunch of deficit spending for WWI, expanding the currency supply, so now there wasn’t enough gold to cover all the dollars they printed. In 1934 the price of gold was changed to $35 per ounce and the values of base money and gold at the Treasury were once again in equilibrium."

"Mike: When I finished the book, it required a $6,000 gold price to cover base money plus outstanding revolving credit. I’m not saying that that’s going to happen, but if history were to repeat, that would be the price.
However, since the book was written, Bernanke created a whole bunch of base money to bail out the banks, and now it takes a $15,000 to $20,000 gold price"

"My target for gold is that it should be equivalent to 1/40 of a single-family, medium-priced home, or two shares of the Dow. So gold will probably buy you about 12 times more stocks and 3 times more real estate in the future than it does now"

"All of the previous transitions were baby steps from something (gold) to nothing (debt). In order to give confidence back to the currencies, we’ll have to go from nothing (debt) to something (most likely gold again) in one big, huge, gigantic leap. This will cause an economic convulsion the likes of which the world has never seen."
"The US government never confiscated gold; they “nationalized” it. In 1933, they bought it from US citizens at full face so that the Treasury could hold it as an asset for the entire nation. That’s the very definition of nationalization."

This is an excellent article on gold confiscation;
http://www.usagold.com/gildedopinion/go ... -ganz.html

The thing to remember is that GOV bought your gold for $ 20 and then revalued it to $ 35. They simply devalued the dollar. While there are many risks involved with revaluing the dollar, it is probably inevitable. If the price of gold has ALWAYS been adjusted to the volume of dollars [historically], it's not a bad bet. GOV would not be stealing your gold. They buy it at face value. Will it be bought at $ 42.22 an ounce or will it be bought at the prevailing market value? Dunno.
75% of gold is held privately. It must be very attractive to GOV. The current value of U.S. gold is only equal to 1.5 % of the national debt. Should gold be radically revalued, every ounce that could be squeezed from private holders would be worth quite a bit. Much of the gold could be easily tracked down. Bullion Vault alone holds 18 tons.
FOFOA showed goos calculations that gold would have to go to about $ 45,000 an ounce to cover ALL currency and credit instruments. There is a lot of good info in his compositions;
http://fofoa.blogspot.com/2009_08_01_archive.html

If the world? goes back to a gold standard after "economic convulsion the likes of which the world has never seen.", we can expect an end to deficit-financed wars.
There is ONE item of importance above ALL other items. If food commodities are priced MUCH higher, it will price a billion people out of the market. There have already been a few hundred million people added to the "starving" by the latest market manipulations of GS. The world will only tolerate just so much manipulation before they strike back. India will nationalize foreign assets before they will starve out 250 million. Oil will be traded for food by those who have it. Those who have nothing to trade will starve.

[can't sit still]

Apparently, the northeast is in for a HARD winter;
http://www.accuweather.com/blogs/news/s ... the-mi.asp

[can't sit still]

The definitive book on money is "Modern Money Mechanics" written by the FED.
http://www.rayservers.com/images/Modern ... hanics.pdf
Here it is in vid;
The book makes it very clear that all money is created as debt. Since only the principle is created, the interest has to be extracted from newer loans. This means that loans can only be serviced in an expanding economy. Should expansion end, credit creation slows way down. The interest burden had grown so heavy in the last few years that, credit was created at 6 times the rate that the GDP grew. This was done in an effort to create the adequate interest-income that was not being created by the productive sector. This hugely increased credit blob absorbed an even greater portion of productive capital / existing money. GOV/banks created new money to service the un-serviced loans. The defaulting loans were piled on the backs of the taxpayers. The debt never went away. The interest burden just keeps increasing.
The ever-increasing burden increasingly absorbs capital needed by the productive sector. The productive sector diminishes as it'd resources and markets dwindle.
Typically, the starvation of the productive sector is ignored by the non-productive sector. As in Greece and Ireland, the bankers gleefully demand extraction of every bit of money. After the money is gone, they demand physical assets and infrastructure. This is a trap with no exit.
Argentina was once the sixth richest country in the world. The bankers have fine-tuned their operations there. Argentina now has perpetual servitude. The compounded interest burden is so high that the GDP can never reach a point of paying off the debt. The extraction of the interest burden ensures that there is never enough capital to increase the GDP.

The banks received interest on their loans. Why,,, because of the risk. If there were no risk, the loans should have been executed for just a service fee. If there were risk, the loans should have been allowed to default. It didn't happen that way. Now, the non-productive sector is destroying the productive sector. The banks expect/plan/hope to come out of this owning all the physical assets.
There is great danger in taking EVERYTHING from a populace. if they have nothing, they have nothing to lose. A sad state of affairs.

[can't sit still]

Here's a list of predictions from 6 years ago;
http://relay4thetruth.blogspot.com/2009 ... inand.html
The guy knows his stuff.

[BBadger]

Can't you post this on your own blog rather than here? This is like masturbation.

[can't sit still]

Well, looks like the Europeans are getting desperate. "G20 tells euro zone to fix debt crisis in eight days". It appears that the PTB are trying to stampede the European Union into accepting an enormous bailout from the IMF. This is part of the behind the scenes battle between the IMF and the BIS. The BIS wants "hard" money and the IMF is trying to pry their way into controlling the EU using "soft" money. The ECB stabilization fund is collapsing and inadequate. The IMF is dangling funds to lure them into a big screwing. That is why we see Fitch, Moodys and S&P doing so many bank downgrades. It is a full-on attack from FRN forces trying to take over the European economy. Italy is going down fast. French bonds are dropping fast. The EU has a devil in front and a devil behind.
http://news.yahoo.com/g20-tells-euro-zo ... 58742.html

The whole world is trying to find political solutions for financial problems. http://theautomaticearth.blogspot.com/2 ... s-for.html
It just doesn't work that way. It has NEVER worked that way.
http://www.itulip.com/forums/showthread ... 8#poststop
You couldn't organize a good party in 8 days. An EU wide rescue is an impossibility.

[unitivity]

It is cheaper to make everything free and then no debt.

[1durphul]

It is cheaper to make everything free and then no debt.

You necromancied one my favorite threads ever! This thread, while full of inaccurate fortune telling, was a great read into the level of hysteria surrounding the economy. Around 2008 this thread got so shrill I realized it was time to move out of the stock market, if only because people like this were starting to panic and that never goes well for stocks. I managed to avoid massive losses thanks to that decision. I feel like listening to the fringes and their level of hysteria is a better predictor of impending crash than the actual numbers, especially in a market bubble fueled by optimistic speculation.