Guest Post: The Country Is Over

"Originally posted at Monty Pelerin's World blog,

Data are hard to deal with when your vision is on the wrong side of it. Those wanting to claim there is a recovery underway are having just this problem. These people either have no understanding of economics or they believe falsely that they can inflate “animal spirits” with their hyped reports and that will initiate a recovery.

There will not be an economic recovery given the economic policies of this country. A recovery is not unlikely, I would argue it is closer to impossible if not impossible. The reasons for this position are not complicated. In short, the nation has become an out-of-control welfare state that is rapidly destroying the incentives to work or create jobs. Government policies appear designed toward this end. One doesn’t need a high IQ or  an advanced degree in economics to understand the problems.

There are innumerable factors responsible for the decline of the US. Only three important ones will convey why the economy is dying:..."

at http://www.zerohedge.com/news/2013-04-07/guest-post-country-over

Marc Faber : Money Printing leads to Misallocation of Capital

"Marc Faber : “We have this money printing, which obviously will lead to misallocation of capital.” - in a recent interview with CNBC"

at http://marcfaberchannel.blogspot.com/2013/04/marc-faber-money-printing-leads-to.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

Nouriel Roubini : no one should think that any government bonds are completely safe, particularly from inflation and financial repression

"Nouriel Roubini : A lot has changed since 2005. We had the financial crisis, and some of the factors cited by Bernanke have substantially reversed. For example, Asian investment is booming again, led by China. And yet global interest rates are even lower now than they were then. Why?
There are several competing theories, most of them quite elegant, but none of them entirely satisfactory. One view holds that long-term growth risks have been on the rise, raising the premium on assets that are perceived to be relatively safe, and raising precautionary saving in general. (Of course, no one should think that any government bonds are completely safe, particularly from inflation and financial repression.) Certainly, the 2008 financial crisis should have been a wakeup call to proponents of the “Great Moderation” view that long-term volatility has fallen. Many studies suggest that it is becoming more difficult than ever to anchor expectations about long-term growth trends. Witness, for example, the active debate about whether technological progress is accelerating or decelerating. Shifting geopolitical power also breeds uncertainty. - in project-syndicate"

at  http://nourielroubini.blogspot.com/2013/04/nouriel-roubini-no-one-should-think.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

Money Flows In To Gold & Silver Are About To Skyrocket

"Money flows in to gold and silver are about to skyrocket according to renowned economist Michael Pento, who is CEO of Pento Portfolio Strategies.  Pento also believes the dollar is going plunge in terms of purchasing power because of the weight of the massive US debt and yearly national deficits.  Below is Pento’s tremendous piece: 

 

“There is still an incredible amount of misunderstanding on Wall Street about the relationship between the price of gold and the true value of the U.S. dollar.  Most pundits simply claim that a rising dollar, as measured by the Dollar Index (DXY), causes gold prices to fall…and that is the end of their analysis. 

In truth, the dollar’s intrinsic value carries the most weight in determining the price of gold and not simply how the dollar is faring vis a vis a basket of other fiat currencies.  According to many market analysts, the 5% rise of the dollar on the DXY since February has been attributed to the return of “king dollar” and that, as they claim, is why gold prices are falling. 

But they simply choose to overlook the fact that the economies of our major trading partners are in recession and the Bank of Japan’s monetary policy is more aggressive in relative terms towards the depreciation of the yen than our Federal Reserve is to the dollar.  The BOJ will increase the size of its balance sheet by $1.4 trillion by the end of 2014.  Our Fed may end up doing the same but the Japanese economy is just one third the size of the U.S...."

 

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/6_Money_Flows_In_To_Gold_%26_Silver_Are_About_To_Skyrocket.html

 

Sinclair - Stunning Shift In US Government & Fed Gold Policy

"Eric King:  “Jim, we will get to the West in just a minute, but what about China?  I have word from London that the Chinese are in there buying massive amounts of gold right now.  What is their perspective as you see it?”

Sinclair:  “The Chinese are known and respected for having a plan for everything.  In order to have a plan you have to have an analysis.  You can’t pick a plan out of nowhere.  In order to have analysis you’ve got to have facts.

So the Chinese have fully analyzed what the West is doing, which is in fact destroying itself, and they are taking appropriate offensive and defensive measures.... 

“The Chinese have said publicly and chastised the West continually for their laxity in terms of how they created internal demand for goods and services.  Basically this has to do with how the West has used fiscal and monetary stimulation.  Now the Chinese currency is advancing in terms of respect and utilization.  But you have to remember that each time that advance by the yuan takes place, it takes place at the expense of the dollar.

The Chinese see exactly what’s going on.  The Chinese know exactly where all of this is going to go, and they know the role of gold is going to increase significantly in the physical market.  They also know that gold will eventually have a connection to the new financial system.  What I am saying is the Chinese have the answer. 

Every time we go through a significant reaction in gold, which is brought about by Western manipulation, we give a gift to the Chinese.  He who has the gold has the power.  And the West has basically, since Greenspan, taken everything that former Fed Chairman Volcker had won for the West, packaged it neatly and sent it to China. 

This is what the Chinese know.  This is what their plan is.  Their analysis is correct and the future is exactly as they expect it to be.  The US dollar will begin to significantly weaken primarily because of settlement utilization moving towards the Chinese and away from the West. 

Gold is no longer the enemy of the dollar.  It might in fact be what saves it.  Eric, I have been talking to you about the Western suppression of the price of gold, and while that may last for a little while longer, I suspect that time period has now in fact come to an end.

What you are going to see now, and what the gold community doesn’t understand, is that the Fed and the West are now going to encourage the price of gold to go higher.”

Eric King:  “Jim, as you know up to now the Chinese have been mercilessly taxing the West out of its own gold.  Meaning the price of manipulation for the West has been devastating in terms of the outflow of gold out of Western vaults.  The advantage to the West of manipulating gold higher would also be to stop the flow of gold out of Western vaults because the Chinese do not like to chase price.”

Sinclair:  “Regardless of whatever opinions may be publicly given from Federal Reserve Governors, the Chairman, or from the US Treasury, there certainly is a very strong understanding of the history of gold and how important it is to any country, especially in times of stress. 

It is very possible, and in my opinion probable, that the importance of gold is now being recognized at very high levels.  And from this point forward, it is my strong belief that the Federal Reserve will be more friendly, rather than the enemy of gold, and the price in the market will show you that I’m correct.

An increase in the price of gold, aided by the Fed and the West, would definitely be to stop the further draining of gold out of Western central bank vaults.  China will then compensate by increasing their mining activities around the world as well as inside China itself.

The reality is that gold has never been the enemy of the dollar anywhere else but in the minds of the Fed.  Now they will finally come to view gold and the advancing gold price as their friend.  This is the major shift which is taking place.

What people expected to occur in 1979 has now occurred in orders of magnitude greater than almost anyone believed possible, and in this ongoing and rolling financial crisis the US is not going to allow a total drain of its gold reserves.  What people around the world need to understand is that the US government and the Federal Reserve will continue their active manipulation of gold, only this time it will be to the upside.”

 

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/7_Sinclair_-_Stunning_Shift_In_US_Government_%26_Fed_Gold_Policy.html

 

Bank Of England Admits "Stocks Don't Reflect Economic Reality"

"The Bank of England's Financial Policy Committee (BoEFPC) warns there is "evidence of the re-emergence of... behavior in financial markets not seen since before the financial crisis," citing the increased issuance of synthetic products and added that banks have "little margin for error against a backdrop of low growth in the advanced economies," despite what we are told about their 'fortress balance sheets. Bloomberg Businessweek adds that the BoE were careful not to scare the public, they add, events currently "did not appear indicative of widespread exuberance in markets. But developments would need to be monitored closely." This following the Fed's warnings of 'froth' in the credit markets suggests central bans are considerably more concerned at blowing bubbles than they want to admit in public. ECB's Weber recently commented that he feared, "the recent rally in financial markets could be a misleading signal," which appears confirmed by the BoEFPC noting that equity performance since mid-2012, "in part reflected exceptionally accommodative monetary policies by many central banks... But market sentiment may be taking too rosy a view of the underlying stresses."

at http://www.zerohedge.com/news/2013-04-05/bank-england-admits-stocks-dont-reflect-economic-reality

Gold’s Paper Price “Doesn’t Mean Anything”

"...DC: How can tight physical supplies co-exist with falling prices?
TC: There’s a disconnect between the paper and physical precious metals markets. The big banks control the reported price by shorting in the futures markets. But this doesn’t mean anything. The growing shortage of physical shows that there are more buyers than sellers at the artificial paper price."

at http://dollarcollapse.com/precious-metals/golds-paper-price-doesnt-mean-anything/

The 'Other' Parabolic Chart That Has Central Bankers Running Scared

"Presented with no comment...





and its not just 'search',





But remember - Barroso said "the worst of the crisis is over"

Source: Google"

at http://www.zerohedge.com/news/2013-04-03/other-parabolic-chart-has-central-bankers-running-scared

Budget Deficit Exploding Out of Control -John Williams

"Economist John Williams says don’t be fooled by the new highs on the Dow.  Williams contends, “The economy is still in serious trouble.  The banking system is still in serious trouble.  The budget deficit is exploding out of control.”  Williams thinks the ongoing banking crisis in Cyprus has global implications.  Williams says, “You have a precedence set in Cyprus that they can seize the funds.  They will not guarantee all deposits.  If that’s the case, you may have a much worse crisis than you had back in 2008.”  Williams adds, “The big problem is the government is insolvent in the long term.”  Williams says the U.S. dollar could start selling off in May because of a deadlock in Congress on the budget.  Williams predicts, “The global markets are looking for the U.S. to address its long term sovereign solvency issues.  That’s not going to happen. . . .  In response, it’s going to be off to the races with a dollar sell-off.  That could be the trigger for the early stages of hyperinflation.”  Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com."

at http://usawatchdog.com/budget-deficit-exploding-out-of-control-john-williams/
     

System Designed To Collapse Ahead Of New World Currency

"Today Jim Sinclair spoke with King World News about the tremendous importance of the operation the central planners are executing in key markets right now.  He also told KWN that the current financial system is designed to fail, ahead of the introduction of a new world currency.  Below is what Sinclair, who was once called on by former Fed Chairman Paul Volcker to assist during a Wall Street crisis, had to say..."

at  http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/2_System_Designed_To_Collapse_Ahead_Of_New_World_Currency.html

The need for a second round of ‘look east’ policies in south Asia

"The global economy was traditionally dominated by north-north relations with some concern for north-south relations. South-south economic relations were, until recently, of minor import.

In the early 1990s, south Asian countries initiated their ‘look east’ policies to enhance closer relations with east Asia (see Haokip 2011, Ladwig III 2009). India announced its ‘look east’ policy in 1991 and subsequently other countries followed suit. This shift is best thought of as part of their economic reform programs.

Our recent paper argues that these policies have had many positive impacts (Rana and Chia 2013). International trade between south Asia and east Asia has surged, albeit from low bases, and China has become the largest trading partner of India. Foreign direct investment between countries in the two regions has also increased, and Singapore has become the second largest source of foreign direct investment to India. Tourism and travel has also been surging. A number of free trade agreements have been signed between south Asia and east Asia, India holds summit-level dialogues with ASEAN and is a member of the East Asia Summit. India has also started to negotiate the Regional Comprehensive Economic Partnership which is a free trade agreement among ASEAN and its six dialogue partners: Australia, China, India, Japan, Korea, and New Zealand..."

 

at http://www.voxeu.org/article/need-second-round-look-east-policies-south-asia

Spain's Deficit Set to Soar; GDP Poised to Plunge; Job Losses Fastest in 3 Years; IIF Wants Permanent Tax Hikes

"The situation in Spain took another sharp turn for the worse. Employment losses are the greatest since 2009, tax revenue is declining, the deficit is increasing and the IIF wants economically insane tax hikes..."

at http://globaleconomicanalysis.blogspot.com/2013/04/spains-deficit-set-to-soar-gdp-poised.html#zf20vA2JJ145Xo4f.99

Holland: "An Economy On The Brink"

"Infamous for little boys plugging holes with their fingers and grown-ups plugging their mouth with their foot (D-Boom), it seems Holland, Berlin's most important ally in the goal of greater fiscal discipline in Europe, has fallen into an economic crisis itself. As Spiegel reports, the once exemplary economy is suffering from huge debts and a burst real estate bubble, which has stalled growth and endangered jobs.

The statistics make for some worrisome reading: no nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books; consumer debt amounts to about 250% of available income - by comparison, in 2011 even the Spaniards only reached a debt ratio of 125%; unemployment is on the rise; consumption is down; and growth has come to a standstill.

The trouble for Holland is that despite their proclamations of the need for Fiscal conservatism, even EUR46 billion in austerity measures are apparently not enough to keep the nation's deficit within the EU debt limit. The Dutch were long among Europe's most diligent savers, and in the crisis many are holding onto their money even more tightly, which is also toxic to the economy, as "one of the main problems is declining consumption."

The nationalization on SNS in February brought this reality home and as Spiegel reports, "there is no end to the crisis in sight."





at http://www.zerohedge.com/news/2013-04-02/holland-economy-brink

Marc Faber : My concern is that we will have a Systemic Crisis

"The Fed has been printing so much money it does not flow evenly through the sysyem.Bubbles are created and Marc is concerned about a systemic crisis approaching..."

at http://marcfaberchannel.blogspot.com/2013/04/marc-faber-my-concern-is-that-we-will.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

Thorsten Polleit on the gold standard that never was

"Episode 115: Professor Thorsten Polleit, whom recently founded Polleit & Riechert, an investment management company, is an economist who specialises in the Austrian School of Economics, sits with Andy Duncan at the Austrian Economics Research Conference 2013.
Thorsten delivered a speech at the conference entitled “The gold standard that never was.” This speech, which is discussed, details the conditions Thorsten sees as being necessary for a gold standard to be compatible with free market principles.
Thorsten is an advocate of a 100% commodity backed currency and explains how this would work with regards to the banking system.
No central banking, no tender legal laws and no government involvement in the monetary system; radical ideas or a sensible approach based on the axioms of human action.
Professor Polleit leaves us with a lot to ponder..."

at http://www.goldmoney.com/podcast/thorsten-polleit-on-the-gold-standard-that-never-was.html

Buiter: Most European banks are zombies

"It’s Easter weekend here in Germany and I caught this interview with Willem Buiter from the Financiëele Dagblad that I get by e-mail each morning. I thought it was significant enough that I would translate it. Buiter has been fairly pessimistic about the future integrity of the euro zone and thinks that some of the euro members are destined to leave the euro area..."

at http://www.creditwritedowns.com/2013/03/buiter-most-european-banks-are-zombies.html#utm_source=rss&utm_medium=rss&utm_campaign=buiter-most-european-banks-are-zombies

The Eurozone Unemployment Rate Divergence

"This is a theme I’ve been discussing for a number of years now – the way the design of the Euro most benefits the current account surplus nations (primarily Germany) and hurts the current account deficit nations.  The commentary below is from a recent Albert Edwards note out of Societe Generale.
As you can see, there’s an unbelievable divergence in the unemployment rate in Germany when compared to the rest of Europe.  That’s not surprising given the fact that Germany can continue to run a substantial current account surplus as the single currency keeps them quite competitive with other nations, but sucks the life out of the current account deficit countries who have no floating exchange rate or internal rebalancing mechanism.

Here’s more from Edwards:

“Most economic analysis concludes, probably correctly, how much more costly it would be for either a creditor or debtor nation to leave the eurozone system compared to struggling on within it. Indeed for Germany, despite becoming increasingly irritated by having to dip their hands into their rapidly fraying pockets, the crisis in the eurozone has been accompanied by the lowest unemployment rates since before re-unification in 1990 (see chart below – we won’t rehearse the very valid argument that Germany enjoys an
extreme currency undervaluation within the eurozone umbrella). For the German worker with 5.3% unemployment it is a case of “crisis, what crisis?” But the argument about whether a country will leave the eurozone will not ultimately be an economic decision. Leaving the eurozone will be a decision based on the politics of depression.”

 

at http://pragcap.com/the-eurozone-unemployment-rate-divergence

Go For Gold

"In both 13 Bankers (2010) and White House Burning (published 2012, paperback just came out) James Kwak and I weighed the merits of going back on a global gold standard.  In those books, we ended up siding with the prevailing fiat currency system – in which money is backed by nothing more than your confidence in central banks.
In the light of recent events – in the US and in Europe – I feel we should reconsider the arguments.  On balance, I am now in favor of going back on gold for ten main reasons..."

at http://baselinescenario.com/2013/04/01/go-for-gold/

Jim Rogers : It's pretty scary what's going on in Europe

"In Europe, Rogers said that he owns Swiss francs and several long-term investments he's had for decades, but added that he is "certainly not buying there. It's pretty scary what's going on in Europe, especially when they're taking money out of people's bank accounts." On the stock market hitting all-time highs, Rogers said that "it is very artificial. If you give me a trillion dollars, I'll show you a good time too and a lot of people are having a good time. I'm somewhat skeptical because I know it's going to end badly." - in CNBC"

at  http://jimrogers1.blogspot.com/2013/03/jim-rogers-its-pretty-scary-whats-going.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Nouriel Roubini: Forget the G20, We Live in a G Zero World

"Nouriel Roubini: Forget the G20, We Live in a G Zero World : The global disagreements that are making leadership and action difficult..."

at  http://nourielroubini.blogspot.com/2013/03/nouriel-roubini-forget-g20-we-live-in-g.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29