Archive for August 3rd, 2011
No, not in theory; I mean literally.
Readers of FedUpUSA know that I don’t post Alex Jones. This is primarly because I disagree with his positions on a number of things, but on this point he is correct. The Super Congress has officially made the United States a dictatorship. Snuck in with the debt ceiling legislation that was supposed to ‘save us all’ – is a frightening circumvention of the checks and balances of the power of our 3 branches of government.
This is not a partisan issue, either. Both Republicans and Democrats agreed to this. Indeed, NO ONE on either side of the aisle objected to this!
Alex Jones covers the high points of the horrifying new powers that this new small group of people has in this video. Watch it. Pass it to everyone you know.
It is also worth reading the article from the Huffington Post: Super Congress Getting Even More Super Powers In Debt Deal
Our Republic is being destroyed right before our eyes – all because those in power refuse to stop borrowing, spending and giving money to the banks.
For weeks now, I’ve been warning about a market collapse. Among the numerous items I pointed out were:
1) The US economy rolled over in a big way in Q1
2) The Euro Debt Crisis was spreading to Italy and Spain
3) China was showing signs of economic contraction
4) Mutual funds were overly invested in stocks
5) Historical patterns forecasting a collapse
6) Signs that the Fed had lost control of the markets
And on and on.
Meanwhile the mainstream financial media’s consensus was that everything was just fine and that at worse the “recovery” was slowing just a bit. The Euro issues were contained. The US debt issues weren’t a problem. And the Fed would be able to get the economy roaring in no time.
Well here we are and the markets are an absolute bloodbath. Other than hopes for QE 3 there really isn’t much to be bullish on. Indeed, we are very likely heading into the REAL Crisis in short order.
That Crisis will be a Crisis of Faith in the US Fed’s ability to contain and/or solve the problems of the financial system.
For 80+ years, the US financial system has operated under the belief that the Federal Reserve could handle any problem. This belief was put to the ultimate test in 2008 when the Fed faced off against the biggest Financial Crisis of the last 80 years. And the ONLY thing that kept us from the brink was the belief the Fed could fix things.
It couldn’t. And we’re all beginning to see that now.
So when the next Crisis hits it will become clear the Fed CANNOT fix these issues (it never could but most people hoped regardless). And that’s when the real collapse will begin as the entire financial structure of the markets (mutual funds, hedge funds, investment banks, etc) comes unhinged.
Remember, the issues that caused 2008 were never actually dealt with. They were merely swept under the rug. And with leverage levels now higher than they were during the Tech Bubble, a much
weaker economy than then, and the US Federal Reserve itself now virtually bankrupt with garbage debt, the next Round of this Crisis will make 2008 look like a picnic.
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This report is over 17 pages long and includes detailed analysis of why the First Round of the Financial Crisis happened, why the next round (Round Two) will be even worse than 2008, and which
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Graham Summers for ZeroHedge
Here’s the case for dumping stocks and not touching them for at least two years.
The case for “buying and holding” stocks boils down to four words: don’t fight the Fed. Forget moral hazard and all the fancy stuff; the reason to load the truck with stocks is that the Fed is invincible, and its mighty machinery of manipulation can drive stocks higher no matter what else is happening.
Put another way: when the Fed succeeds in driving the dollar to near-zero, the value of stocks will be near-infinite.
The case to dump stocks now and not even look at the market for two years is based not on worship of the Federal Reserve’s infinite wisdom and power but on the charts.The abject, pathetic, remarkably complete failure of QE2 has driven a stake through the heart of the Fed’s political power and its reputation for wisdom; it has been revealed as a clueless cabal, basing policy on textbook models of what “should happen when we do this.” Alas, real life doesn’t follow moldy old PhD theses, and it doesn’t worship the Fed or listen to the cargo-cult incantations of the Keynesians.
Financialization anf globalization have run their course, along with cheap abundant energy. As the giant 17-year bubble in stocks deflates, those entrusting their money with Wall Street face stupendous risk and potentially massive losses. (Shameless pitch alert.) My new book An Unconventional Guide to Investing in Troubled Times is all about withdrawing your trust from Wall Street and investing your capital in alternatives such as localized, productive assets which do not depend on financialization or globalization for their value or income streams. (It’s currently #5 in the Kindle Store’s investing category, and #9 in Amazon’s Investing Bestsellers category, so there’s some interest in the topic.) You can read the first chapter and other stuff here.
Let’s let the charts speak for themselves, shall we?
Here is the S&P 500 from 1965 to 2011: note the giant double top, and the gigantic bubble which began inflating circa 1994 as financialization and globalization began their long domination of the economy.
Only massive government intervention reinflated the bubble in 2009-11, and now gravity is reasserting itself. The trendline projects to the next low around 600, while the bubble-retrace projects to around 450.
Since volume is the weapon of the Bull, let’s check in on volume: oops, it’s been dropping since 2009. Looks like those in the know have been selling into strength bigtime.
Courtesy of the always insightful Doug Short, here is Doug’s overlay of the current market and two previous stock market bubbles, the Dow 1929 and the Nikkei 1989.Note that the market was rolling over last August, but the Fed launched QE2 and added a year to the “recovery.” Can they extend it another year? based on their dwindling political capital, the answer is “unlikely.”
Interestingly, the low hit by previous bubbles corresponds rather closely with cycle-seer Martin Armstrong’s turn date of July, 2013. (He also pegs August 2014 and September 2015 as turn dates as well.)
This overlay of the 2002 decline and the current market also offers food for thought.As in, “this sucker’s going down.”
Again courtesy of Doug Short, the Q Ratio, which is at highs not seen since the last market top.
Since the U.S. dollar and the SPX have been on a see-saw for years, it’s interesting to compare the DXY’s recent decline with its action back in the summer of 2008, just before the global financial Ponzi scheme imploded.
And to state the Bullish case, here’s the Fed’s pet parrot:
Looks like they’ll need to teach it another line.
Charles Hugh Smith – Of Two Minds
Bailout of Italy on Tap; ECB to Become Buyer of “Only” Resort; Expect Failure of Thursday’s Italian Bond Auction; Who Will Bail Out the ECB?
A critical Italian government bond auction is coming up Thursday, August 4. That bond auction is highly likely to fail. However, if it does fail, don’t expect results to be reported that way.
The chief economist at Citigroup says ECB to Revive Bond-Buying to Protect Italian Auction This Week
Former Bank of England policy maker Willem Buiter said the European Central Bank will revive its bond-buying program to safeguard this week’s auction of Italian bonds.
“The ECB will intervene on whatever scale is necessary to allow Italy to conduct its auction on Thursday,” Buiter, now chief economist at Citigroup Inc., told reporters in London today. “If the ECB doesn’t come in, the Italian bond auction is likely to fail.”
Nonsense from Citigroup
Buiter’s statements are of course complete nonsense. If the ECB steps in it will be because the auction failed. The act of intervention will not turn a failed auction into a successful one.
What the hell is the matter with chief economists who do not understand simple economic principles?
Here is another ridiculous headline on the same subject from The Telegraph: ECB to protect Europe by buying bonds
The European Central Bank is expected to signal it is stepping into the eurozone debt crisis on Thursday by reopening its purchases of government debt, amid fears the turmoil will claim the economy of a nation that is “too big to bail”.
Officials on Wednesday night said the ECB’s monthly meeting was expected to see a reversal on the buying of sovereign bonds after 18 weeks of staying out of the markets, because of an EU institutional vacuum that threatens to drag down Italy and Spain, the region’s third and fourth-largest economies.
With EU officials scrabbling to fine-tune changes to allow the eurozone’s €440bn (£384bn) bail-out fund to intervene in the markets, central bankers are expected to reluctantly accept the precedent of allowing ECB bond buy-backs in May 2010.
Measures allowing the European Financial Stability Facility (EFSF), the bail-out fund created last summer, new powers to buy the bonds of struggling countries were agreed at an emergency euro summit on July 21 in an attempt to protect Italy (whose public debt and bank exposure is shown in the interactive graphic above) and Spain.
However, legally changing the basis of the EFSF and ratifying the changes in 17 eurozone countries, where the expanded fund’s role is controversial in German, Dutch and Finnish parliaments, could take weeks or even months, leaving a dangerous vacuum.
“We’re watching the ECB which, unlike the eurozone, can intervene now and build a bridge until the EFSF can take up its new role in the autumn,” said an official.
Buyer of Only Resort
The idea the ECB can “protect” Italy by buying Italian bonds is as silly as the idea the ECB could protect Greece by buying Greek bonds. We all know how the Greek purchase turned out.
Market forces will overrule anything the ECB can do.
Worse yet, the ECB is exacerbating the problems. If the ECB misprices bonds and does so repetitively, other participants will eventually step to the sidelines and the ECB will become the buyer of only resort, with a balance sheet full of garbage and obvious implications.
Who Will Bail Out the ECB?
Who pray tell will bail out the ECB? The correct answer is no one, and this is one of the driving forces of gold.
For more on nonsensical central bank actions driving the price of gold, please see Quantitative Easing Begins in Switzerland to Counteract Soaring Swiss Franc, Central Bank “Aims to Bring 3-Month LIBOR to 0%”; Gold Soars
Mike “Mish” Shedlock
Global Economic Analysis
We now know exactly how much Turbo Timmy had to pilfer, er, “borrow” from various things (like government worker retirement accounts) in order to not run out of money while the debt ceiling was frozen, and it’s not a pretty picture.
The magic number is $14,293,975
The magic number there is $14,532,332
That’s $238.357 billion.
Remember, May 16th was the “official” day the debt ceiling was hit. So Turbo has been running roughly $100 billion in the hole a month.
That sounds like about $1.2 trillion, but in fact it’s worse. Why? Because June is a heavy deposit (tax payment) month due to estimated taxes. How big of a deal is this? Pretty big – June saw receipts of $108.372 billion, while July saw just $54.069 billion – about half.
Oh, the debt limit increase deal added $400 billion immediately. After taking care of the theft, er, “borrowing” that had previously occurred there is now just $162 billion remaining.
Anyone care to bet on whether Congress will get its act together before two more months run? At current “burn” rates, and considering that September is also a estimated tax deposit month, that $162 billion should just about get us through September – and that’s all.
Seven Startling Things Most People Still Don’t Know About The National Debt, Banking And The Money Supply
Fact #1 – There is no FDIC insurance fund.
The money at your bank is insured against loss by the FDIC’s insurance fund, right? Nope. That’s total fiction. There is no actual money in the fund. The FDIC insurance money has already been looted by the U.S. Treasury which has simply replaced the money with a bunch of IOUs.
Why does this matter? Because it means that if the U.S. government goes into default, so will the FDIC! And that means all your bank funds have zero insurance. That’s gonna be a big shock for tens of millions of people when they finally figure this out one day…
Fact #2 – There are no social security funds, either.
When you pay social security taxes, all that money goes into a trust fund that’s held for safekeeping until the day it pays you back, right?
Ha! That’s the “sucker’s view” of social security that only ignorant people believe. In reality, there is no money in the social security trust fund because it too has all been looted by the U.S. Treasury and spent. In truth, social security is already broke. Can’t wait for people to wake up and figure this one out, either…
Fact #3 – The U.S. Treasury is stealing money from you every day, even if you pay no taxes!
Here’s a mind-boggling truth that most people just can’t seem to get their heads around: The U.S. Treasury is stealing money from you every single day by the simple fact that they keep creating new money and handing it out to wealthy banksters. Well, technically this is being done by the Federal Reserve, which isn’t even part of the federal government. But it’s all done in cahoots with the Treasury, which is eroding the value of your money through these money creation and distribution actions.
That’s why prices keep going up all around you, folks: Food isn’t suddenly worth more money; the truth is that your money is worth less! That’s how the Treasury and the Federal Reserve steal from you without even breaking into your home.
Probably 99.9% of the population has no understanding of this phenomenon — the erosion of currency valuation through the centralized government printing of more currency. And yet it is a government scam that has been carried out against citizens of the world time and time again, spanning millennia! As history has clearly shown, every nation that goes down the path of printing more currency to pay its bills eventually ends up in a runaway hyperinflation scenario followed by
economic collapse. The USA will be no different.
Fact #4 – The “balanced solution” isn’t balanced.
Don’t you love the quirky White House Press Secretary who keeps spewing out the phrase “balanced solution” even while the debt deal leaves the U.S. budget entirely unbalanced?
When you’re spending more money than you’re earning, that’s not financial balance. When the White House says “balanced” what it really means is “compromised” — as in, half way between the Republican position (spend us into purgatory) and the Democratic position (spend us into oblivion). Neither party has any real solution to the cancerous growth of Big Government. That’s because they are creatures of Big Government!
Politicians can no more solve the problems of Big Government than arsonists can solve the problem
of office fires. Because they are, themselves, creatures of runaway debt spending (how else do you get elected these days?), they simply do not possess the cognitive framework from which real financial solutions must stem.
Fact #5 – The government is going to steal everything from you before it collapses
Oh my, this is a tough one for people to get their heads around… especially those who naively trust governments to act in the interests of the People. The simple truth of the matter — and I’ve publicly made this prediction before — is that the government is going to STEAL almost everything you own as it heads toward a total financial implosion.
• The government theft of private retirement accounts. The feds will claim they’re taking them over “for your protection.” Yeah, right. And then one day they will simply all vanish. Kiss your IRA
• The government theft of precious metals. Within the next 3 years, watch for a national emergency to be declared, followed by government confiscation of gold and silver. The feds will take your gold and hand you paper money in exchange. The paper money, of course, will be all but worthless shortly thereafter. Only the suckers, of course, will actually turn in their metals…
• Government takeover of your bank accounts. As banks begin to fail in the big collapse, the government will step in and take ownership of the failed institutions, just as it did with Fannie Mae and Freddie Mac (which used to be publicly-owned companies but are now largely just government finance operations). This will put your bank accounts under the direct control of the White House, which can use executive orders to do things like banning all wire transfers out of the country or limiting daily withdrawals and transfers. Sure, you’ll still “own” your money in the bank, you just won’t be able to freely access it!
Fact #6 – Most people have no idea about fractional reserve banking, derivatives, the
money supply or the Federal Reserve
Congress have no idea how all this works. With few exceptions (like Ron Paul), they’re just clueless!
Get this: Even most bankers don’t even know how fractional reserve banking really works. They don’t understand derivatives, either, which is why they screwed them up so badly in the housing boom that crashed in 2007. And because bankers, investors and bureaucrats have no idea how it all works, they unwittingly turn it all into a runaway catastrophe.
Fact #7 – Most people are betting their lives on the dollar
People buy insurance for their cars, their homes and even their health. But when it comes to money, 99 out of 100 people in America are betting their entire financial existence on the U.S. dollar! They get their paychecks in dollars, their savings accounts are in dollars, and all their assets are denominated in dollars. As a result, they have no diversity to protect them against dollar devaluation.
That’s kinda crazy, considering just how quickly the dollar could collapse in the near future and become totally worthless. That’s why smart people are diversifying their assets and converting
dollars into land, gold, silver or even storable food. Here in central Texas, even ammunition has a long-term barter value that far exceeds dollars.
Looking around at the financial behaviors of others, I’m just stunned at how many people are betting everything on the dollar because they never realized they had any other option (that’s the way the government likes to keep it, of course!).
Coming soon: A huge national finance education of the masses
Bunch of cowards and crooks running this country. They don’t understanding banking and finance, and they’re determined to make sure you don’t either. Because the less you know about what’s really going on, the longer they can continue to loot the U.S. economy while people stand around and do nothing.
How bad is the situation, really? Just yesterday, Vice President Joe Biden called Congressional Tea Party members “terrorists” for their insistence that the U.S. budget be balanced. So now, the mere idea of calling for a balanced budget turns you into a “terrorist” to be prosecuted under the Patriot Act.
And why not? Demanding financial sanity MUST be labeled an act of terrorism for our criminal government to continue its own criminal looting operation. Next we’ll probably see the President ordering the arrest and prosecution of any members of Congress — i.e. “terrorists” — who do not go along with unlimited increased in the debt ceiling.
Now you see what the terrorism laws are really all about: They are legislative weapons to be used against political enemies, not actual terrorists. Meanwhile, Big Government is technically engaged in the use of financial weapons of mass destruction against the People, yet no one notices.
A bizarre world we live in, folks. It is dominated by the mindless masses and run by criminal sociopaths. Those who demand real solutions are labeled terrorists, and those who try to explain all this to everybody else are labeled “alarmists.”
Just wait until this house of cards collapses, though. There will be a day of reckoning in which a whole bunch of apologies will be owed to all those people who tried to warn the nation what was
really happening (and where it would lead us).
Mike Adams for Natural News