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- The Euro Crisis
- Gold Pattern Resolution Needed to Signal Breakdown
- How to own precious metals with NO downside risk
- Here’s the latest on the Greek debt crisis…
- Warren Buffett: Derivatives Are Still Weapons Of Mass Destruction And ‘Are Likely To Cause Big Trouble’
- Expect Fireworks: Gold, Silver, and the Greek Referendum
- Gold And Silver – Three Choices: Sell, Hold, Hold and Add
- China’s Equity Bubble is Going Supernova
- China and the Silver “Kill Switch”
- Fund Manager Warns Puerto Rico Default May Trigger A “Black Swan” Derivatives Melt-Down
- Still Think Greece Was “Priced In”?
- Gold Prices Fall amid fresh wrangling over Greek bail-out terms
- TPP, The Comex, Greece/EU, The Bond Market: The Final Solution Redux
- Eurozone Coming For US? | Rob Kirby
- A Moment of Truth
- Precious metal derivatives decline 29%
- Greece Shows Importance of Gold as Europeans Buy Coins and Bars
- Panic? Oddly, Not According To Gold
- Gold Daily and Silver Weekly Charts - Capped - The Fog of Currency War
- Gold Prices June 30, 2015, Technical Analysis
- Crude Oil Weakness is Not Gold Friendly
- SILVER (XAG) Short-Term Elliott Wave Analysis – June 30, 2015
- Levels to watch: gold, silver and crude
- Worst day for Wall Street since last October as Greece collapses
- 16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World
- Checking Market Breadth
- History of Silver, Part I: Metal of the Moon
- The ‘War on Cash’ is heating up… Here’s what to do
- The U.S. is now one of the cheapest manufacturers in the world
- Jeb Handwerger: Fed Interest Rate Increase Could Be Best Thing to Happen to Gold
- SHOCKING: This is how your bank could steal your money
| Posted: 30 Jun 2015 01:00 PM PDT Make no mistake; the Greek crisis is a euro crisis that threatens the solvency of the ECB itself, and therefore confidence in the currency. Submitted by Alasdair Macleod, GoldMoney: Before going into why, a few comments on Greece will set the scene. Last weekend it became clear that Greece is heading for both a default […] The post The Euro Crisis appeared first on Silver Doctors. |
| Gold Pattern Resolution Needed to Signal Breakdown Posted: 30 Jun 2015 12:42 PM PDT |
| How to own precious metals with NO downside risk Posted: 30 Jun 2015 12:33 PM PDT From Steve Sjuggerud, Editor, True Wealth: Frank Trotter is the most creative banker I’ve ever met… He was a pioneer in online banking as the founder of Everbank.com. Everbank has grown into a bank with $24 billion in assets. He’s the perfect person to talk with about the three biggest ideas in investing right now, as he is in the trenches every day in each of these ideas at Everbank. The three big questions we cover in today’s episode are:
On this show, you’ll get plenty of actionable advice, including:
You can listen to the entire interview below. (You can download this podcast and access the full transcript here) |
| Here’s the latest on the Greek debt crisis… Posted: 30 Jun 2015 12:33 PM PDT From Mike “Mish” Shedlock at Global Economic Trend Analysis: Four years ago I thought odds of an eventual Grexit were nearly certain. Some people still don’t believe so, while others are just beginning to understand the obvious. Former Pimco Co-CEO El-Erian Sees 85% Grexit Odds With ‘Massive’ Contraction Coming. Greece is heading for a “massive economic contraction” and is likely to be forced out of the euro zone, according to Mohamed El-Erian, the former chief executive at Pacific Investment Management Co. “There’s an 85 percent probability that Greece will be forced to leave the euro zone” in the next few weeks, El-Erian said in an interview from New York. “What we are seeing here is what economists call the sudden stop, when the payment system stops. The logic of a sudden stop is a massive economic contraction, social unrest and it’s going to make continued membership of the euro zone very difficult for Greece.” Sudden Stop Thesis While I still think it likely Greece will exit the Eurozone, I will take the “over” line on a “few weeks.” It is amazing how long these things drag out. There are at least two wildcards in play that could prolong things. At the top of the list is Russia. Second in line is the U.S. Why? Because the U.S. does not want Greece to form serious ties with Russia. Also, Merkel does not want Grexit on her watch. Russia the Key Meanwhile, and as I have been saying for months, Russia is the key. Will Russia come to aid Greece with enough money and oil to enable Greece to hang on longer than a few weeks? I suspect the answer is yes. If so, the price may be sanctions. EU rules require unanimous agreement on sanctions. I expect Greece to play that card very well. Greece can and likely will torpedo EU sanctions on Russia by the end of the year. Unless there is an immediate collapse in Greece starting now, look for Russia to keep Greece afloat until sanctions are lifted. Mike “Mish” Shedlock |
| Posted: 30 Jun 2015 12:00 PM PDT Thirteen years after describing derivatives as "weapons of mass destruction" Warren Buffett has reaffirmed his view that they pose a threat to the global economy and financial markets. The next great global financial collapse that so many are warning about is nearly upon us, and when it arrives derivatives are going to play a starring […] The post Warren Buffett: Derivatives Are Still Weapons Of Mass Destruction And 'Are Likely To Cause Big Trouble' appeared first on Silver Doctors. |
| Expect Fireworks: Gold, Silver, and the Greek Referendum Posted: 30 Jun 2015 11:30 AM PDT Let the fireworks begin!! Submitted by Rory Hall, The Daily Coin: Our system is corrupt to the core. The Greek people know this first hand. Sunday, Taki, GoldSilverWorlds, and me discussed what is happening in Greece right now and how the Troika, along with the Greek government have kept the citizens ignorant about expectation […] The post Expect Fireworks: Gold, Silver, and the Greek Referendum appeared first on Silver Doctors. |
| Gold And Silver – Three Choices: Sell, Hold, Hold and Add Posted: 30 Jun 2015 11:00 AM PDT For the PMs crowd, there are three simple choices available. For those unhappy where the price for gold and silver are trading, sell, get out. Take a loss and move on and quit complaining. Life is too short. You can hold what you have and remember the reasons for buying and accumulating either metal, or […] The post Gold And Silver – Three Choices: Sell, Hold, Hold and Add appeared first on Silver Doctors. |
| China’s Equity Bubble is Going Supernova Posted: 30 Jun 2015 11:00 AM PDT A supernova is a stellar explosion that is so bright it momentarily outshines the entire galaxy. The most massive supernovae are caused by stars which collapse under their own gravity, sending massive shockwaves radiating outwards into space. Any onlooker happening to see a supernova might be forgiven for thinking that these super-bright objects are the most awesome stars in the sky […] The post China's Equity Bubble is Going Supernova appeared first on Silver Doctors. |
| China and the Silver “Kill Switch” Posted: 30 Jun 2015 10:00 AM PDT In the past, total open interest always dropped going into FND, now it is not. Not only are all July contracts closed out being rolled into September, the total is rising rather than declining sharply. I first wrote last August about the situation where huge open interest in the September contract dwarfed the available silver […] The post China and the Silver “Kill Switch” appeared first on Silver Doctors. |
| Fund Manager Warns Puerto Rico Default May Trigger A “Black Swan” Derivatives Melt-Down Posted: 30 Jun 2015 10:00 AM PDT It is highly probable that the crashing stocks of MBIA, AMBAC and AGO are the alarm bells of a black swan landing. And, of course, no one has been talking about them…. until today. Although these firms are somewhat obscure and small compared to the size of the majority of financial companies, they are […] The post Fund Manager Warns Puerto Rico Default May Trigger A "Black Swan" Derivatives Melt-Down appeared first on Silver Doctors. |
| Still Think Greece Was “Priced In”? Posted: 30 Jun 2015 09:30 AM PDT I cannot stress how important it is now for you to be on guard for anything at any time. A market closure, though likely over a weekend, can occur during ANY WEEKDAY! Do not allow yourself to be lulled to sleep by any rallies from here or stories of how “the storm has passed”. It […] The post Still Think Greece Was “Priced In”? appeared first on Silver Doctors. |
| Gold Prices Fall amid fresh wrangling over Greek bail-out terms Posted: 30 Jun 2015 09:01 AM PDT Bullion Vault |
| TPP, The Comex, Greece/EU, The Bond Market: The Final Solution Redux Posted: 30 Jun 2015 09:00 AM PDT The TPP Agreement is going to be the final nail in the coffin of the middle class in the United States (and for the middle classes in all the signatory countries). The TPP outright usurps the sovereignty of the signatory countries and hands rule of law over to the large transnational corporations. This means […] The post TPP, The Comex, Greece/EU, The Bond Market: The Final Solution Redux appeared first on Silver Doctors. |
| Eurozone Coming For US? | Rob Kirby Posted: 30 Jun 2015 08:30 AM PDT Rob Kirby, former bullion banker, expert on the financial markets, and founder of KirbyAnalytics.com, returns to connect the dots from the Eurozone to the globalists who formed the Federal Reserve, and exposes whether the elite have US in their sights for a New World Order. In part 2, Kirby brings the global threat down to […] The post Eurozone Coming For US? | Rob Kirby appeared first on Silver Doctors. |
| Posted: 30 Jun 2015 08:27 AM PDT Look, I'm not going to try to blow sunshine up your rear end. Two years ago today, it looked like The Final Washout Bottom and that was with prices at $1180 and $18.20. And now here we are...still near $1180 but down another 15% in silver. Is this it? Are we at support again or are the metals about to take the plunge to even lower levels? |
| Precious metal derivatives decline 29% Posted: 30 Jun 2015 05:36 AM PDT A bit of debunking of a Zero Hedge story on OCC gold derivatives http://research.perthmint.com.au/2015/06/30/precious-metal-derivatives-decline-29/ |
| Greece Shows Importance of Gold as Europeans Buy Coins and Bars Posted: 30 Jun 2015 05:01 AM PDT gold.ie |
| Panic? Oddly, Not According To Gold Posted: 30 Jun 2015 03:45 AM PDT investing |
| Gold Daily and Silver Weekly Charts - Capped - The Fog of Currency War Posted: 30 Jun 2015 03:45 AM PDT 24hgold |
| Gold Prices June 30, 2015, Technical Analysis Posted: 30 Jun 2015 02:05 AM PDT fxempire |
| Crude Oil Weakness is Not Gold Friendly Posted: 30 Jun 2015 02:05 AM PDT goldseek |
| SILVER (XAG) Short-Term Elliott Wave Analysis – June 30, 2015 Posted: 30 Jun 2015 12:30 AM PDT fxtimes |
| Levels to watch: gold, silver and crude Posted: 30 Jun 2015 12:20 AM PDT ig |
| Worst day for Wall Street since last October as Greece collapses Posted: 29 Jun 2015 08:22 PM PDT US stocks dived in heavy trading on Monday and the S&P 500 and the Dow had their worst day since October after a collapse in Greek bailout talks brought fears that the country could be the first to exit the euro zone. The European Central Bank froze funding to Greek banks, forcing Athens to shut banks for a week to keep them from collapsing. Default today? Greece appeared to confirm it was heading for a default after a government official said the country would not pay a 1.6 billon euro loan installment due to the International Monetary Fund today. Meanwhile, US investors also worried about Puerto Rico’s debt problems and a bear market in China before Thursday’s US jobs report and the long weekend for US Independence Day, July 4th. The S&P and Dow Jones had their worst days since October and both have turned slightly negative for the year to date. The last annual decline for both indexes was 2008. The Nasdaq had its biggest one-day percentage decline on Monday since March 25th. Volatility rose sharply and all 10 S&P sectors retreated while the Global X FTSE Greece exchange-traded fund , which tracks the Athens stock market, fell 20 per cent. In Europe, the blue-chip Euro STOXX 50 suffered its biggest one-day fall since 2011. While the Greek economy is small and most US corporations have limited direct exposure, investors are concerned about the fallout across Europe if Greece exits the euro zone. A snap Reuters poll of economists and traders found a median 45 percent probability that Greece would leave the euro zone. Chinese stocks had closed sharply lower after a volatile day of trading despite surprise monetary easing by the central bank. Usually such action by the People’s Bank of China is seen as a reason to buy on the dips, but it did not happen. Buying dips? Only a sharp reversal of bad news from Greece can stem what now looks to be the long-awaited correction for US and European stock exchanges which have reached record highs in recent months on the back of a very flimsy economic recovery. This happened in China last week. Has the bubble pumped so high by money printing now reached its limit? Well at the very least there ought to be a huge correction before renewed money printing can push asset prices back up again. Excessive money printing by central banks has only ever ended one way in history: badly. Make no mistake this his ‘High Noon’ for global stocks and time to sell out! |
| 16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World Posted: 29 Jun 2015 06:10 PM PDT
1. On Monday, the Dow fell by 350 points. That was the biggest one day decline that we have seen in two years. 2. In Europe, stocks got absolutely smashed. Germany’s DAX index dropped 3.6 percent, and France’s CAC 40 was down 3.7 percent. 3. After Greece, Italy is considered to be the most financially troubled nation in the eurozone, and on Monday Italian stocks were down more than 5 percent. 4. Greek stocks were down an astounding 18 percent on Monday. 5. As the week began, we witnessed the largest one day increase in European bond spreads that we have seen in seven years. 6. Chinese stocks have already met the official definition of being in a “bear market” – the Shanghai Composite is already down more than 20 percent from the high earlier this year. 7. Overall, this Chinese stock market crash is the worst that we have witnessed in 19 years. 8. On Monday, Standard & Poor’s slashed Greece’s credit rating once again and publicly stated that it believes that Greece now has a 50 percent chance of leaving the euro. 9. On Tuesday, Greece is scheduled to make a 1.6 billion euro loan repayment. One Greek official has already stated that this is not going to happen. 10. Greek banks have been totally shut down, and a daily cash withdrawal limit of 60 euros has been established. Nobody knows when this limit will be lifted. 11. Yields on 10 year Greek government bonds have shot past 15 percent. 12. U.S. investors are far more exposed to Greece than most people realize. The New York Times explains…
13. The Governor of Puerto Rico has announced that the debts that the small island has accumulated are “not payable“. 14. Overall, the government of Puerto Rico owes approximately 72 billion dollars to the rest of the world. Without debt restructuring, it is inevitable that Puerto Rico will default. In fact, CNN says that it could happen by the end of this summer. 15. Ukraine has just announced that it may “suspend debt payments” if their creditors do not agree to take a 40 percent “haircut”. 16. This week the Bank for International Settlements has just come out with a new report that says that central banks around the world are “defenseless” to stop the next major global financial crisis. Without a doubt, we are overdue for another major financial crisis. All over the planet, stocks are massively overvalued, and financial markets have become completely disconnected from economic reality. And when the next crash happens, many believe that it will be even worse than what we experienced back in 2008. For example, just consider the words of Jim Rogers…
Of course Rogers is far from alone. A recent article by Paul B. Farrell expressed similar sentiments…
Things have been relatively quiet in the financial world for so long that many have been sucked into a false sense of security. But the underlying imbalances were always there, and they have been getting worse over time. I believe that we are heading into a global financial collapse that will make what happened in 2008 look like a Sunday picnic by the time it is all said and done. Global debt levels are at all-time highs, big banks all over the planet have been behaving more recklessly than ever, and financial markets are absolutely primed for a huge crash. Hopefully things will calm down a bit as the rest of this week unfolds, but I wouldn’t count on it. We have entered uncharted territory, and what comes next is going to shock the world. The post 16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World appeared first on The Economic Collapse. |
| Posted: 29 Jun 2015 04:22 PM PDT Post Source: ShortSideofLong Chart Of The Day: Number of stocks making new 52 week lows is rising!
Source: Short Side Of Long Today’s chart of the day focuses on US stock market breadth. The chart above shows long term US stock market breadth on the New York Stock Exchange, in the form of 52 week new highs vs. 52 week new lows. Breadth readings are averaged over 21 trading days or one month. Interestingly, percentage of stocks making 52 week new lows has been rising for awhile now, and when averaged over one month, is now higher than the percentage of stocks making 52 week new highs. Technically, the internals suggest that the bears are in control of the short term trend for the first time since October 2014. A pullback or even a correction is now under way. The chart does not include today’s breadth data, as selling pressure on Greece might make the above measure deteriorate further.
The post Checking Market Breadth appeared first on The Daily Gold. |
| History of Silver, Part I: Metal of the Moon Posted: 29 Jun 2015 04:00 PM PDT Seeking Alpha |
| The ‘War on Cash’ is heating up… Here’s what to do Posted: 29 Jun 2015 01:01 PM PDT From Bill Bonner, Chairman, Bonner & Partners: The Dow is back under 18,000 points. Meanwhile, gold continues to wander around, apparently lost. More on that below… Our long-term stock market indicator, developed for us by our chief researcher and former ValueLine stock market analyst Stephen Jones, is flashing a warning.
It looks at the price of stocks relative to the economy that supports them… And right now, it tells us to expect an average annual loss of 9.6%, after you account for inflation, over the next 10 years. Don’t Count on Your ATM CardsWill this indicator be proven correct? We will wait to find out… Yesterday, came a report that the prime minister of Poland, Ewa Kopacz, has urged Poles traveling to Greece to take “a larger amount of cash” with them. Why? Because the situation could be “very dynamic,” she says. “Please do not count only on your ATM cards and on ATMs, but take a larger amount of cash with you.” It’s not the dynamic situation that would worry us. It’s the dynamite that lies beneath the whole world’s money system. It is a system that is fundamentally flawed. It depends on the intelligence and integrity of its custodians. Not that we think Madame Yellen is dumb. Nor do we doubt her honesty. But she is, after all, only human. And centrally planning an $18 trillion economy – by manipulating asset prices and interest rates – is a super-human undertaking. The odds that something will go wrong? 100%… Controls on CashA reader asks a good question: I have a question about the recommendation to hold cash. If countries are putting controls on real cash and banking, in what form should a person hold cash? U.S. dollars or some other currency. If we truly go to a “cashless society” what good would having a hoard of cash do? We would like to have a better answer, but we only have the one we have. Money is always a convention. It is an understanding. People recognize money as a stand-in for wealth. Since the beginning of civilization, people have experimented with different kinds of money. They ended up – almost always and almost everywhere – with gold and silver. Why? Because they were handy. And because they were hard to produce. They were cash that governments could not easily control. No super-humans were needed to manage them. Governments – the people who are able to boss other people around – always want to control money. They put their faces on it. They mint it. They clip coins. And they print pieces of paper and call it money. But they could never completely control cash. People hoarded gold. They hid it. They ran away with it. They used it to make trades between themselves… regardless of what the feds said. And when the feds’ money went kaput – which it always did – they turned back to gold, because they knew they could trust it. And now, the feds are making a new attempt to bring money totally under their control. For example, under the pretext of cutting funding for terrorists, the French government already has a law in the pipeline banning cash transactions of over €1,000 ($1,120). There’s nothing stopping governments from banning cash transactions altogether… and ending the usage of paper money. Economists pretend it is a matter of convenience to the consumer (no more waiting for the clerk to make change for the fellow in front of you). … or they try to sell it as a useful macro tool for central planners (they will be able to stimulate demand by imposing negative interest rates)… … or they say a cashless world will be safer – you won’t be held up at gunpoint, and terrorists will find it harder to get financing. But the real reason is control. If governments can eliminate cash, they can easily track, tax, and confiscate your money. When You Need a Stash of CashAnd if the feds can control your money, they will be able to control you. Do you voice an opinion they don’t want to hear? Do you belong to a group they want to get rid of? Do you want to know what happened to your tax money? Watch out… With a keystroke, you could be “disappeared.” “Sometimes, when the government tells you to do something, it’s best to do the opposite,” says a French neighbor. In 1944, her father was the adjutant mayor of a small town in southwestern France. The Allies had landed in Normandy and the Germans were pulling their forces back to the Rhine. Our friend tells the story: Someone had blown up a German truck as it went through town. People were doing that. Taking pot shots at the Germans. The SS didn’t like it. They would gather up the mayor and a few other people. If they didn’t turn over the guilty person, they would kill the mayor. Or sometimes the whole town. My father got a message that told him he was supposed to go to the town square. Instead, he went into the woods. It’s a good thing he did. Otherwise, I wouldn’t be here. When do you need a stash of cash? When the feds try to outlaw it. Hold some dollars. And some gold. We realize that our answer to the reader’s question is insufficient. After all, what good will cash be after it is declared illegal? We’re not sure. Maybe we’ve spent too much time in Argentina, where people have more supple and more subtle attitudes to monetary regulations. Trading pesos for dollars, on the black market, is illegal. Do it and they take you for a scofflaw. Don’t do it and they take you for a fool. More to come on this in future updates. Stay tuned… Regards, Bill Crux note: We’ve been getting a lot of questions from readers about the monetary catastrophe Bill sees coming. So, we’ve decided to unlock an issue of The Bill Bonner Letter and make it available – for free – to all readers. It deals specifically with the crisis Bill sees coming… and what he recommends you do to prepare. Get Bill’s full report here. |
| The U.S. is now one of the cheapest manufacturers in the world Posted: 29 Jun 2015 01:00 PM PDT From Harold L. Sorkin, Bloomberg: An entire generation of Americans has come of age laboring under the assumption that the U.S. can’t compete in the manufacturing arena with low-cost competitors such as China and Brazil. That may have been true a decade ago, but it’s no longer true today. I recently completed a review of manufacturing costs in the top 25 export economies with my colleagues Justin Rose and Michael Zinser. Our research shows that when the most important economic factors are considered—total labor costs, energy expenses, productivity growth, and currency exchange rates — Brazil is one of the highest-cost manufacturing nations in the world, Mexico is cheaper than China, China is virtually even with the U.S. (as are most of the traditionally “low-cost” countries of eastern Europe), and the low-cost leader in western Europe is none other than the country that launched the Industrial Revolution: the United Kingdom. So throw away the old playbook. Welcome to the new era. The country with the lowest manufacturing costs, we found, is not China. It’s Indonesia, then India, Mexico, and Thailand. China comes next — with Taiwan’s costs just a tad higher and the U.S.’s a bit more than that, ranking America No. 7 in our study. As Chinese labor costs rise, American productivity improves, and U.S. energy expenses fall, the difference in manufacturing costs between China and the U.S. has narrowed to such a degree that it’s almost negligible. For every dollar required to manufacture in the U.S., it now costs 96¢ to manufacture in China, before considering the cost of transportation to the U.S. and other factors. For many companies, that’s hardly worth it when product quality, intellectual property rights, and long-distance supply chain issues are added to the equation. For the record, the countries with the highest manufacturing costs of the 25 nations we studied were Australia, Switzerland, Brazil, France, Italy, Belgium, and Germany — all of which have costs 20 percent to 30 percent higher than the U.S.’s. Previous cheaper havens, including Brazil, China, the Czech Republic, Poland, and Russia, experienced a significant increase in relative manufacturing costs since 2004 because of some combination of sharp wage increases, lagging productivity growth, unfavorable currency swings, and dramatic increases in energy costs. Several countries that were relatively expensive a decade ago, most in western Europe, have become more expensive compared with America. Manufacturing costs in Belgium and Sweden rose 7 percentage points from 2004-2014 relative to the U.S., and in France and Italy they rose 10 percentage points. Largely because of productivity gains, the U.K. held its own. The two countries making the greatest strides in manufacturing competitiveness were Mexico and the U.S. The key reasons were stable wage growth, sustained productivity gains, steady exchange rates, and the big energy advantage the U.S. has captured since the shale-gas boom began. The new data are more than food for thought; they’re food for action. Many companies continue to make manufacturing investment decisions based on conditions from a decade or more ago. They still see North America as high cost and Latin America, eastern Europe, and Asia, especially China, as low cost. The new data show there’s a competitive marketplace of manufacturing opportunities today, with high-cost and low-cost countries virtually everywhere. When companies build new manufacturing plants, they’re typically placing bets for 25 years or more. They need to carefully consider how relative cost structures are changing and how these changes are likely to continue in the future. |
| Jeb Handwerger: Fed Interest Rate Increase Could Be Best Thing to Happen to Gold Posted: 29 Jun 2015 01:00 AM PDT A true contrarian knows that when everyone says an interest rate hike by the Federal Reserve would kill stocks, that is the best time to double down on junior mining names. In this interview with The... Visit the aureport.com for more information and for a free newsletter |
| SHOCKING: This is how your bank could steal your money Posted: 26 Jun 2015 12:18 PM PDT From Bill Bonner, Chairman, Bonner & Partners: The Dow ended the week back above 18,000 points, despite all the hand-wringing over a potential Greek default. Gold fell back below the psychologically important $1,200-an-ounce mark. It is a wait-and-see period. We are waiting to see what will happen with Greece, for example. A Heinous Accusation…But before we get to the Greeks, we rise to our own defense. Last week, a reader leveled a heinous accusation – a dirty blow, beneath the belt, outrageous, and hideous. He implied we were a closet Democrat. Can you imagine? Our escutcheon sullied… our dignity impugned… our intelligence and savoir faire challenged in such a defamatory manner! Wrote Diary reader Bud S., in response to our recent series, “The Good, the Bad, and the Ugly” (To catch up, here’s Part I, Part II, Part III, and Part IV): Commenting on Bill’s current list of ugly people, it seems like the common denominator is that they’re all Republicans. Hmmm… How can you have a list of ugly people without a Clinton or an Obama on it? Hmmm… very interesting, guess you can make of that what you will. Let us assure readers we are not now, nor have we ever been, a Democrat. Not even with a small “d.” We confess that in our youth – our lungs filled with the gas of civic virtue and our head with delusions of democracy – we once pulled the lever for Jimmy Carter. As presidents go, he was not the worst. But we quickly realized our error and swore off voting forevermore – a pledge that we have solemnly honored ever since. If our barbed words seemed to prick Republicans lately, it is only because – at least as far as the zombie wars are concerned – they are the loudest and dumbest jackasses in the field. Yes, there are plenty of Democrats in this pasture, too. But you get the impression that their motives are purer. They are just in it for the money. And the Imbecile Vote – which is, of course, decisive. Showdown in EuropeBack in Europe it is like a showdown in an old TV Western. Greece on the one side… Germany on the other. Each in the street, facing off, waiting for the other to blink an eye or draw his gun. And waiting… And waiting… One deadline passes. Another approaches. If we had money in Greece, we’d definitely want to make sure our passport was up-to-date and our savings were outside of the country. Apparently, there are a lot Greeks with the same idea. The Wall Street Journal reports that cash outflows from Greek banks doubled in the last four days. The smart money is voting – to leave. Big banks are private businesses. But they are so closely connected to the government and so heavily regulated that they may as well be public utilities. Banks are responsible for creating roughly 90% of the money supply. They do this by simply lending money into existence. Banks are also tools for “public policy” implementation – that is, for clumsy and counterproductive central economic planning. They play an integral role in QE. And overnight lending rates between banks determine where short-term interest rates go. The feds also bail the banks out when they get in trouble… You may think you have “money in the bank.” You don’t. Your “deposits” are really loans to the bank. You lend it your money. It agrees to pay you back – under certain conditions. And it can change those conditions when it has the backing of the feds. Our Meeting with the PresidentAs the crisis nears, first the feds will limit withdrawals to a certain amount per day. The amount will seem reasonable; most people will see the need and not be inconvenienced. But a growing number will see the handwriting on the wall… and begin taking out as much cash as they can. Then the feds will reduce the maximum withdrawal limit. Then they’ll ban withdrawals altogether. When your bank reopens, your deposits could be subject to a tax (a negative interest rate). Or they could be transformed into a different currency. That’s what happened in Argentina at the start of the new millennium. And it’s what could happen in Greece too. We were involved personally, in a minor way, in the Argentine crisis. It was the late 1990s. The government of Carlos Menem had pegged the peso to the dollar. But the Argentine version violated just about all the rules of how a currency peg should work. And the smart money was beginning to bet that he couldn’t hold the peg. We visited President Menem in the Casa Rosada. (The U.S. has a White House. Argentina has a Pink House.) “Are you going to keep the peg?” we asked. “Of course, we’re going to keep it. There is no way we would ever abandon it. It is now the heart of our economy. It is why foreigners such as you are willing to invest in Argentina, because you know the currency is safe. It is the reason we have such a booming economy.” A few months later, Argentina abandoned the peg. It closed the banks. People had tried to protect themselves from a devaluation of the peso by opening accounts in dollars. But when the banks reopened, they discovered that their dollars had been converted to pesos – with a 66% loss! The important insight is that government and banks always work together to protect themselves – not you. Is Your Money Safe?We saw it happen in Cyprus, too. The government there (working with the big banks) changed the terms of the deal – suddenly and, for depositors, catastrophically. It gave big depositors – with over $100,000 in the bank – a haircut and a shave equal to nearly half their money. Why? The Cypriot banks had bought Greek government debt. The fall in value of those bonds (the Greeks couldn’t pay then, either) left the banks on the edge of bankruptcy. The loss was very real. Who ended up paying for it? The banks that made the bad investments? The government that regulated the banks and forced them to buy government bonds? Nope. The depositors! Innocent, but perhaps naïve, the depositors got scalped. And now, Greek depositors – the smart ones, at least – are taking precautions. They yanked out €3 billion ($3.4 billion) this week – or about one-quarter of all deposits for the year. In the U.S., the FDIC guarantees individual deposits at member banks up to $250,000. How good is that guarantee? In a pinch, all sorts of things that you took for granted suddenly have question marks behind them. What’s the bank’s collateral really worth? How much does the bank have in reserves? How much does the FDIC have? How long will I have to wait to get my money? What will it be worth then? What will I do in the meantime? You may want to take precautions too. Regards, Bill Crux note: If you think this kind of thing can't happen in America, think again. In fact, it came within hours of happening just a few years ago. And it's starting to happen again. Bill explains it all in his new investor presentation. You can view it here. |
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