Global Meltdown of Historic Proportions & A Fork in the Road

"With continued volatility in many of the key global markets, 40 year veteran, Robert Fitzwilson wrote this exclusive piece for King World News.  Fitzwilson is founder of The Portola Group, one of the premier boutique firms in the United States.  Here are Fitzwilson’s observations:  “The Central Banks have been pursuing a very flawed strategy.  Unfortunately, full speed ahead might be the only remaining alternative.  Printing money to stimulate growth, in the face of declining/aging workforces and falling productivity, will result instead in lowering aggregate real returns for investors and exponential depreciation of fiat currencies..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/9_Global_Meltdown_of_Historic_Proportions_%26_A_Fork_in_the_Road.html

A Crisis in Full Flight

"For a while, it looked as if the European Central Bank’s €1 trillion credit program to pump liquidity into Europe’s banking system had calmed global financial markets. But now interest rates for Italian and Spanish government bonds are on the rise again, closing in on about 6%..."


at http://www.project-syndicate.org/commentary/a-crisis-in-full-flight

G-10 Macro Data Plunges To Worst In Six Months, Turns Negative

"We have discussed the exuberance and dysphoria that is exhibited by economists in the context of extrapolating trends many times and nowhere is that more clearly pictured than in Citigroup's Economic Surprise Index which tracks the rise and fall of both misses and beats as well as better or worse data. For the first time in over six months, macro data for the G-10 has turned negative (with Europe having been there for a while and the US getting very close) indicating significant weakness. When this data turned from positive to negative in July 2010 it pre-empted the 'rescue' of the global economy via QE2 and each time it has dropped below its 200DMA (which it also just did) we have seen notable deterioration in equity prices soon after. What is more worrisome perhaps is the rate of deterioration over the last two months or so. Four of the last five times we dropped this rapidly we saw significant drops in stock prices soon after (Dec 2008, August 2010, and June 2011). Europe and the US are now trending lower in macro data 'surprises' as decoupling disappears but the US remains a little less bad for those looking for silver-linings - for now.

G-10 macro data has turned negative (upper pane) dropped below its 200DMA and is at its lowest in over six months. The pace of deterioration has been rapid (lower pane) and 4 of the previous 5 times this pace of drop has occurred, equity prices have dropped considerably soon after..."

at http://www.zerohedge.com/news/g-10-macro-data-plunges-worst-six-months-turns-negative

Currency Wars: Rickards On Gold, QE, and the Economy

"Jim Rickards is interviewed by FutureMoneyTrends.com. 


Part 1 is focused on Gold manipulation and why gold plays such an important role in the world, even if conventional wisdom doesn't believe so, gold is not only being watched by central bankers, as Mr. Rickards put, "the gold price is being managed."

Part 2 expands into the economy and probability of more quantitative easing (QE). According to Mr. Rickards, QE will come in the next few months because it can't be done this fall since it will look political, and if the FED tries to wait until December, it will be too late..."


at http://jessescrossroadscafe.blogspot.com/2012/04/jim-rickards-is-interviewed-by.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

Leeb: QE3 Is Now 80% - 90% & I’m Going All-In Gold If It Dips

"With the release of the jobless claims number, the Dow at roughly 13,000 and gold near $1,650, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management. Leeb surprised KWN when he mentioned if there is a break in the gold price, he is investing almost everything he has into gold and even some juniors. But first, when asked about the latest jobless claims number, Leeb responded, “388,000 is close to 400,000 and 400,000 is a number normally associated with a recession. We had about two or three months where all of the economic statistics were on the plus side, positive surprises.”

Stephen Leeb continues:

“Now, all of the sudden yesterday’s report on manufacturing and today, this is a standout negative surprise. This is exactly what Bernanke has been saying, that this economy is not growing enough to generate jobs and reduce unemployment. The reason gold got a bid this morning is because this 388,000 (number) brought us much closer to QE3. 

You cannot sustain the US economy with 8%, 8.5% unemployment. And we’re getting suggestions right now that we may have seen the best of the good news. That’s bad news for the people out there, but it is pretty good news for gold..."

athttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/19_Leeb__QE3_Is_Now_80_-_90_%26_Im_Going_All-In_Gold_If_It_Dips.html

Jim Sinclair - Expect Another $17 Trillion of QE & War in Gold

"On the heels of the Fed members commenting publicly, legendary trader and investor, Jim Sinclair, told King World News that even though we have already seen $17 trillion of money printing, we should expect another $17 trillion going forward. KWN also asked Sinclair how he knew, from the beginning, that there would be ‘QE to infinity,’ before anyone else. But first, here is what Sinclair had to say about the action in gold: “$1,650 is a comfortable number (for central planners). Haven’t you seen the tremendous jawboning and market intervention to hold gold in that range at $1,650? $1,764 and they lose control. That begins the move which is exponential.”

Jim Sinclair continues:

“It’s a formidable challenge (keeping gold below $1,800). The true range of gold is $1,700 to $2,111, but these guys are going to try to fight it like nobody’s business. Do you think for a moment they are not listening to you and I speaking right now? Forget it, Eric, we are the morning ‘Squawk Box’ tomorrow.

Now comes the payback. The hope and desire that things would improve is ignorant because of the fact that the trillions which have come in have been to save the financial organizations, not Main Street..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/13_Jim_Sinclair_-_Expect_Another_$17_Trillion_of_QE_%26_War_in_Gold.html

Deja Vue All Over Again; ECB Says Bond Buying Program Available; Sweet Talkin' Guys

"ECB Says Bond-Buying Program Available

The ECB went from loading up on sovereign debt and making a huge mess of it when Greece defaulted, to the LTRO program which has not made a big mess yet but will. Things are about to go full-circle as the ECB threatens once again to make another mess of things with sovereign bond purchases.

The Bundesbank, Germany's central bank protested bond purchases the last time (correctly), and will do so again, likely to no avail, and with the same predictable results.

CNBC reports ECB Official Says Bond-Buying Program Available

ECB Executive Board member Benoit Coeure, the ECB board member in charge of market operations, said the central bank still had the Securities Market program (SMP) in place allowing it to purchase debt of euro zone nations, should the need arise.

"We are seeing today growing signs of normalization on a whole group of market segments ... but the situation in recent days shows that this normalization remains fragile," Coeure told a conference in Paris.

Referring to Spain, where sovereign debt yields have spiked amid concerns over the government's ability to cut its deficit, Coeure said: "The political will is there, which makes me think that what is happening at the moment in the market does not reflect the fundamentals."

at  http://globaleconomicanalysis.blogspot.com/2012/04/deja-vue-all-over-again-ecb-says-bond.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

51 Months After The Start Of The Recession, Here Is The Report Card

"Recovery? What Recovery? 4 years after central banks have progressively injected over $7 trillion in liquidity into the global markets (and thus, by Fed logic, the economy), and who knows how many trillion in fiscal aid has been misallocated, to halt the Second Great Depression which officially started in December 2007, the US "recovery" is the weakest in modern US history! How many more trillions will have to be printed (and monetized) before the central planners realize that fighting mean reversion by using debt to defeat recore debt, just doesnt't work? Our guess - lots.

Incidentally, the US has now generated 3 million jobs since the trough of the recession in September 2010, until which point it had previously lost 8 million. Unfortunately, since the real labor force has grown by 4.6 million over the same period, or at the conventionally accepeted 90,000 labor pool entrants per month for 51 months, despite what the BLS may say, because America is after all growing, this means that the Obama administration has created a negative 1.6 million jobs net of demographics, which in turn have cost the US a modest $5.1 trillion in new debt, or an even modest $3.1 million in debt for every job lost..."

Chart 1 - the current "recovery" in the context of all previous ones:





Chart 2 - Min, Max and Average... and now



at http://www.zerohedge.com/news/51-months-after-start-recession-here-report-card

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Eveillard - Mass of Government Debt Underpinning Gold Market

"He figures and I think he’s probably right, that government debt is gigantic today because in order to fight off the deleveraging of the private sector, most governments have gone into debt in a major way

I mean not just the US, but the UK, Continental Europe, Japan, of course, even more than the others. That’s where Spain comes in. Some government debt is already suspect. Greek debt, of course, they just, in essence, defaulted.

Spain and Italy have become suspect too. I think at some point the American government debt, along with British German, French and Japanese government debt, will all become suspect. At that point the crisis will be such that the public will want something different.

I think when the public begins to accept that the governments have their backs against the wall, that government debt has become worse than suspect, that’s when the time will come to sell gold. But we are not there by any stretch of the imagination. 

The money printing is prevalent practically everywhere. That’s why I think the price of gold is simply in a correction.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/6_Eveillard_-_Mass_of_Government_Debt_Underpinning_Gold_Market.html

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Peter Schiff - Reaction to Fed Minutes Wrong, QE3 is Coming

"With the release of the Fed minutes creating havoc in key markets, today King World News interviewed Peter Schiff, CEO of Europacific Capital. Schiff told KWN the knee-jerk reaction in markets which took place as a result of the release of the Fed minutes is off base. He said the Fed is going to come in with QE3 and noted the Fed even stated in their own minutes they stand ready to come in with more QE if the economy needs it. Here is what Schiff had to say: “People that are assuming it (QE) is off the table based on these minutes are wrong. I would really fade this trade. I don’t see why gold would be getting crushed based on these minutes. I looked at the minutes and yes, the Fed didn’t come right out and say QE3 is coming. They are not going to do that. They are never going to do that.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/3_Peter_Schiff_-_Reaction_to_Fed_Minutes_Wrong,_QE3_is_Coming.html

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The 15 Trillion Dollar Party

"If you knew that you could live in luxury for the rest of your life but that by doing so it would absolutely destroy the future for your children, your grandchildren and your great-grandchildren would you do it? Well, that is exactly what we are doing as a nation. Over the past several decades, we have stolen 15 trillion dollars from future generations so that we could enjoy a dramatically inflated level of prosperity. Our 15 trillion dollar party has been a lot of fun, but what we have done to our children and our grandchildren has been beyond criminal. We ran up the greatest mountain of debt in the history of the planet and we are sticking them with the bill. Sadly, both political parties have been responsible for the big spending that has been going on. Both Democrats and Republicans have run up huge budget deficits when in power. But instead of learning the hard lessons of the past, both political parties continue to vote for even more debt. They would rather continue to steal trillions of dollars from future generations than have the party end and have to face the consequences.
And the consequences will be dramatic when the party ends. During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars. That means that the U.S. government spent about 1.3 trillion dollars that it did not have. It is important to understand that even if the U.S. government spent that 1.3 trillion dollars on really stupid things, that money still got into the pockets of ordinary Americans who then spent it on things like food, gas, housing, etc. In turn, most of those that received money from providing those goods and services would spend it on other things..."

at http://theeconomiccollapseblog.com/archives/the-15-trillion-dollar-party

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Everything Is Going To Be Alright?

"Is the U.S. economy going to be okay? Well, if the only source you listened to was the mainstream media, you would be left with the distinct impression that the U.S. economy is heading toward a full recovery and that everything is going to be alright. Unfortunately, that is not the case at all. The United States is rapidly becoming poorer as a nation and less competitive in the global marketplace. At the same time, consumer debt levels are rising, corporate debt levels are rising, state and local government debt levels are rising and the U.S. government is indulging in a debt binge unlike anything the world has ever seen. Considering the insane amount of money the U.S. government has been pumping into the economy, we should have seen a much more robust recovery by now. Instead, the employment statistics have barely moved and government dependence is at an all-time high. That is really sad, because this is as good as "the recovery" is going to get. The next major economic downturn is just around the bend, and in future years millions of us will desperately yearn for the "good old days" of 2012..."

at http://theeconomiccollapseblog.com/archives/everything-is-going-to-be-alright

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The Illusion of an Economic Recovery: The Backlash of Higher Gasoline Prices...

"The housing recovery seems to have been a temporary affair. Preliminary data frames March as weak as last October. It looks like lower interest rates boasted sales. Those rates are up from 4.72% to 5.02%.

Worse yet, Operation Twist is over. That is where the Fed sold the short end of the bond market and bought notes and bonds of 5, 7, 10 and 30 years. Even though the BIS, The Bank for International Settlements, said the program was a resounding success, it was not. American friends knew the Fed was a buyer, so they proceeded in selling long dated paper destroying what the Fed policy was trying to accomplish. Now we expect QE 3, which we have expected for sometime. Lest we not forget the slight easing of credit and the government’s FHA low down payment programs.

A large negative we did not face several months ago was higher gasoline prices, which the public believes are going to stay at current levels for the next few years.

If a new house is purchased it has to be close to work and that often is not an easy task.

Making plans more difficult is that only half of the homes being sold will be lived in by the owners - the rest are owned by speculators, who for the past 5 years have been eminently unsuccessful in picking a bottom in the housing market.

We wonder if these buyers are aware that the administration, which we reported on a few weeks ago, have proposed to have Fannie Mae and Freddie Mac dump 560,000 under water defaulted properties on the hedge funds and others in blocks of $1 billion or more to be eventually rented and put into REITS. Buyers also have to contend with builders building 513,000 new homes a year when 6.8 million homes are already on sale.

Now that banks have cleaned up most of the defaults at the low end of the market they’ll now concentrate on the smaller middle sector and the top of the market. This lender policy will add many more homes to defaulted inventory and could take that number to 9.8 million defaulted homes for sale. Those looking for a let up will have to wait beyond 2014. That means you should continue to rent over that timeframe. That means depending on type and area, homes over that period should fall another 10% to 20%. What is disconcerting is the perpetual buying by lenders (banks), Wall Street, government statistics, the National Association of homebuilders and the National Association of Realtors - all produce bogus figures to trick the public into buying. There is also a shrinking number of people eligible to be buyers. These facts at our disposal tell us that there is no housing recovery in progress and that the economy needs QE 3 ASAP. The Fed is trapped and has to print more money just to keep the game going sideways. That, of course, pushes inflation higher, which pushes gold and silver higher.

You have to ask yourself how can there possibility be a recovery?
The stock market may be approaching old highs due to the Fed manipulating money, but there is no recovery on Main Street, nor will there be..."

at http://www.globalresearch.ca/index.php?context=va&aid=30060

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Chris Martenson Interviews Charles Biderman: The Problem With Rigged Markets

"Charles Biderman: The Problem With Rigged Markets

"Even Wile E. Coyote had to come back down to earth sooner or later", says Charles Biderman, founder of TrimTabs Investment Research. In his opinion, the prices of stocks and bonds - enabled by excessive financialization of our economy and central bank money printing - have been defying gravity for a dangerously long time.

If we continue to do all we can to preserve the status quo -- to maintain "phony" asset price levels as Charles calls them -- at best we will restrict overall growth and handicap the economy.

The problem isn't so much the unfairness and malinvestment evident in a rigged market. As Charles shrewdly asks: what happens when the market becomes un-rigged?

We've never experienced the unwinding of an entirely manipulated financial system, so we can't predict for sure. But at this point, a painful collapse of our markets and loss of the US dollar as the world's reserve currency seem entirely plausible.

On Market Manipulation

The market is rigged. In January of ’10, I went on CNBC and on Bloomberg and said that there is no money coming into stocks, and yet the stock market keeps going up. The law of supply and demand still exists and for stock prices to go up, there has to be more money buying those shares. There is no other way in aggregate that that could happen..."

at  http://www.zerohedge.com/news/chris-martenson-interviews-charles-biderman-problem-rigged-markets

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BRICS cite obstacles to growth set by debt struck West

"The world’s five largest emerging economies claim the West’s quantitative easing policy is destabilizing their own growth.Should the western cheap cash injection last too long, the developed countries themselves will suffer, experts are warning.
Brazil's President Dilma Roussefftold the fifth annual BRICS summit that while the developed world's monetary policy "brings enormous trade advantages to developed countries, it results in unfair obstacles for others".
The BRICS summit joint statement, signed by the leaders of Brazil, Russia, India, China and South Africa states that the enormous cash slush created by the west to deal with its debt crisis has "been spilling over into emerging economies, fostering excessive volatility in capital flows and commodity prices".
The US Fed, Bank of England and the ECB have injected trillions into their banking systems and cut their key interest rates to boost domestic economies. Lately the ECB alone provided for $1.3 trln in form of the 3-year loans at a very low interest rate, seeking to cool worries around the European money market. The benchmark US Fed rate has been varying within the bottom coring of0-0.25% for more than three years. The ECB rate stands at 1%, while the Bank of England's charges 0.5%.
“Since western countries gets cheap money, they seeks to invest it into the most precious things, which is today commodities,” Tamerlan Khasimikov, a general director at BST Capital Management, told Business RT, “BRICS have real cause for concern, as high demand in commodity driven economies makes them the major destination for foreign investors”

at http://rt.com/business/news/central-banks-monetary-policy-738/

Farage - Western World Collaborated in Giant Ponzi Scheme

“What’s happened and we’ve seen it with the ECB, in America and around the Western world, is the central banks have acted in a very concerted manner and have created a whole new, fresh load of money. 

We call it quantitative easing in the United Kingdom, others might even call it a giant Ponzi scheme. But we’ve created all of this fresh credit, and for the moment we’ve kicked the can down the road.

So we are just getting deeper and deeper into problems. Leaving our children and grandchildren with loans that could well take decades to finish (paying) off. I fear we are now stoking up the conditions, at some point in the future, for serious inflation..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/28_Farage_-_Western_World_Collaborated_in_Giant_Ponzi_Scheme.html

Jim Rogers : when the next blow comes, we have nothing left

"Jim Rogers : "Money was too cheap and too plentiful,He caused the stock market bubble and that led to the real estate bubble and the consumer debt bubble. Now those bubbles have burst and what is Ben Bernanke — the current Fed chairman — doing? He's printing more money. Bernanke couldn't get a job as a banker. He's just a printer. That's all he knows how to do. Print money. There isn't enough trees to print all of the money Bernanke wants." "Sure, when the next blow comes, and it will over the next 18 months, we have nothing left." - in gulfnews"

at http://jimrogers1.blogspot.ca/2012/03/jim-rogers-when-next-blow-comes-we-have.html#.T3Mm6A0AJ74.pingfm

Illusion of Cheap Money; Major Promises in Europe But No Real Reform; Does the Bond Market Have it Wrong? 30 years of Japanisation?

"Steen Jakobsen, chief economist at Saxo Bank in Denmark discusses the illusion of cheap money, bond market yields, and the lack of European reform in his latest email.

In Spain, things are going from bad to worse. Last weekend's local election in Andalucia, where Spain’s centre right People’s Party failed to secure an outright majority, left Prime Minister Rajoy without a mandate to carry on with tough austerity.

It was a bad start to week where we on Thursday will see a major general strike aimed at… Yes, you guessed it: Austerity measures.

Spain 10-Year Bonds and 5-Year CDS



Illusion of Cheap Money

The European story remains one of major promises and no actual reforms. A low interest rate and an extreme sense of “security” created by the illusion of easy money and low interest rates won't last forever.

As I wrote in Interest rates: the market has it all wrong, we could be on route to an exit strategy from central banks which at a bare minimum will be a goodbye to “unconventional measures” and if so, the low in interest rate cycle is in place.

30 years of Japanisation?

The only way central banks can create a proper exit from unconventional is to hand over the torch to reforms from governments and politicians. Unlikely, yes, needed?

Absolutely, otherwise we are doomed to 30 years of Japanisation..."

at  http://globaleconomicanalysis.blogspot.com/2012/03/illusion-of-cheap-money-major-promises.html

MACQUARIE: BUY GOLD NOW: It's About To Rocket To $2250

"BUY THE DIP.
That's the advice of Macquarie Private Wealth in respect to gold.
Gold has certainly come off quite a bit, form a high of around $1900/oz. late last summer, to around $1650/oz. now. And the improving economy and the rise in real interest rates has made a lot of people turn negative on the metal.
Macquarie advises getting in now for 5 reasons:

• Sentiment towards gold has no reached "extreme pessimism" levels.
• March is seasonally the weakest month for gold.
• Excess slack in the US economy will prompt the Fed to say on hold until 2014, as indicated, keeping short rates low.
• The extent of the long-term rate rise is over. The Fed will ease some more.
• Sovereign risk is not over.

Ultimately, they see it going to $2250/oz.
These two charts underpin their argument."

Macquarie

Macquarie

at http://www.businessinsider.com/macquarie-this-is-a-good-opportunity-to-buy-gold-2012-3#ixzz1qDD0pf3U

Trichet Warns of "Behavioral Contagion" and Nontraditional Steps That He Personally Started

"Please consider Trichet warns of "behavioral contagion"

Jean-Claude Trichet, the former president of the European Central Bank, said Saturday that he is worried that controversial quantitative easing and other nontraditional steps that global central banks have taken since the financial crisis could be here to stay.

The Fed has purchased $2.3 trillion of securities since it cut interest rates to zero in December 2008 in a bid to bring down long-term interest rates and boost economic growth.

These actions have led to criticism, especially during the early days of the Republican contest for the 2012 presidential nomination, that Fed Chairman Ben Bernanke was undermining the dollar and creating conditions for a sharp rise in inflation.

Speaking to a conference of influential central bankers from around the world and leading academic experts on monetary policy, Trichet said it could still turn out that the bond-buying, asset purchases and liquidity injections by global central banks might go away after the financial system gets back on its feet.

That is the optimistic scenario, he said.

But Trichet said there was a “less flattering conjecture” that the extraordinary actions will be part of a new “permanent regime.”

Those factors may have created the permanent risk of “behavioral contagion” or a grave and immediate threat to the systemic functioning of the financial system, similar to the market meltdown in the wake of the collapse of Lehman Brothers.
“Nobody would have expected such a long time after Lehman Brothers, [central banks] would continue to have this level of expansion of our balance sheets,” he said. “We are all still in crisis.”

at http://globaleconomicanalysis.blogspot.com/2012/03/trichet-warns-of-behavioral-contagion.html