Monday, February 20, 2017

Gold World News Flash

Gold World News Flash


The Unthinkable Just Happened In Spain

Posted: 20 Feb 2017 01:00 AM PST

Submitted by Don Quijones via WolfStreet.com,

Untouchable. Inviolable. Immunity. Impunity. These are the sort of words and expressions that are often associated with senior central bankers, who are, by law, able to operate more or less above the law of the jurisdictions in which they operate.

Rarely heard in association with senior central bankers are words or expressions like “accused”, “charged” or “under investigation.” But in Spain this week a court broke with that tradition, in emphatic style.

As part of the epic, multi-year criminal investigation into the doomed IPO of Spain’s frankenbank Bankia – which had been assembled from the festering corpses of seven already defunct saving banks – Spain’s national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel Ángel Fernández Ordóñez, and its former deputy governor (and current head of the Bank of International Settlements’ Financial Stability Institute), Fernando Restoy. It also summoned for questioning Julio Segura, the former president of Spain’s financial markets regulator, the CNMV (the Spanish equivalent of the SEC in the US).

The six central bankers and one financial regulator stand accused of authorizing the public launch of Bankia in 2011 despite repeated warnings from the Bank of Spain’s own team of inspectors that the banking group was “unviable.”

Though they have so far only been called to testify, the evidence against the seven former public “servants” looks pretty conclusive. Testifying against them are two of Banco de España’s own inspectors who have spent the last two years investigating Bankia’s collapse on behalf of the trial’s presiding judge, Fernando Andreu. There are also four emails from the Bank of Spain’s inspector in charge of overseeing Bankia’s IPO, José Antonio Casaus, to the assistant director general of supervision at the Bank of Spain, Pedro Comín, that very clearly express concerns about the bank’s “serious and growing” profitability, liquidity, and solvency issues.

Here are four brief excerpts:

  • [April 8, 2011] “Bankia is unviable, both economically and financially. In the end, the FROB [Spain’s state-owned Fund for Orderly Bank Restructuring] will have to convert its debt into shares for the BFA [Spain’s state-owned banking group] and refund holders of Bankia’s subordinate bonds and “preferentes” shares. […] Find a buyer for the group.”
  • [April 14,2011] “This is not working, it’s getting worse. […] Bankia’s capacity to generate resources is deteriorating.”
  • [May 10, 2011, uppercase used by Causus for emphasis] “The endogenous solution put forward by Bankia — a public listing with a double banking structure without the necessary structural changes — WILL NOT WORK AND WILL HAVE A DEVASTATING IMPACT ON TAXPAYERS.”
  • [May 16, 2011, 2 months before the IPO] “The (bank’s) board is highly politicized and unprofessional. It still has the same directors that led the former entities to need public assistance: [they are] discredited in the eyes of the markets.”

As the court’s edict reads, the contents of the emails unequivocally demonstrate that the Bank of Spain’s management was perfectly aware of the “inviability of the group” as well as “the fabricated financial results it had presented.” Yet, together with the CNMV, it lent its blessing to those results, knowing full well they bore no relation to reality .

Featured in the IPO prospectus, those results were crucial in luring 360,000 credulous investors into buying shares in the soon-to-be-bankrupt bank, not to mention the 238,000 people who bought “preferentes” shares or other forms of high-risk subordinate debt instruments being peddled by Bankia’s sales teams as “perfectly safe investments.” Most have since been refunded by Spanish taxpayers.

The IPO prospectus was also signed off on by Bankia’s auditor, Deloitte, whose Spanish representatives are also warming the defendants’ bench. Deloitte was not just the bank’s auditor, it was also the consultant responsible for formulating its accounts. As El Mundo put it, first Deloitte built Bankia’s balances, then it audited them, in complete contravention of the basic concept of auditor independence [read: Deloitte About to Pay for its Spanish Sins?].

Given this deeply compromising, not to say illegal, set-up, it’s hardly any surprise that Deloitte was happy to confirm in Bankia’s IPO prospectus that the newly born frankenbank was in sound financial health, having made a handsome profit of €300 million just before its public launch. It was a blatant lie: in reality Bankia was bleeding losses from every orifice.

Now, just about everybody who played a role in this momentous deception, with the exception of the government itself, is standing trial. That includes 65 former members of Bankia’s management team including its former President and ex-chief of the IMF, Rodrigo Rato, who faces charges of money laundering, tax fraud, and embezzlement.

In his testimony to the court almost exactly two years ago, Rato argued (quite rightly) that the blame for Bankia’s collapse should be much more evenly spread out. Bankia’s public launch “was not a whimsical decision” taken by its chief executives, he said, but was the inevitable result of regulatory changes at the beginning of 2011. According to Rato, the CNMV even played an active role in drawing up the bank’s lie-infested IPO brochure.

Now, two years later, some of Spain’s most senior central bankers and financial regulators find themselves in the rare position of having to explain and defend the actions and decisions they took that helped pave the way to the biggest bank bailout in Spanish history. It will be one of the first times that senior members of the global central banking complex have had to face trial for the consequences of their actions.

That’s not to say that justice will prevail. Spain’s legal system is notoriously slow, especially when it’s convenient, and heavily politicized. There’s also the possibility that the ECB may intervene as it did in Slovenia’s investigation of its central bank’s alleged misuse of bailout funds. The last Spanish judge that dared to take on the financial elite, Elpidio Silva, sent Caja Madrid’s CEO Miguel Blesa to jail — not once, but twice – and was barred from the bench for 17 years. As such, the presiding judge of the current case, Fernando Andreu, would do well to tread carefully; he risks stepping on some very important toes.

Now a hot new bail-in-able debt got cooked up by financial engineers in France. And it’s a big hit. Read…  Biggest EU Banks Embark on the Mother of All Debt Binges

Trump to be blamed for The Biggest Economic Collapse in The History of America

Posted: 19 Feb 2017 11:30 PM PST

Global Economic Collapse Imminent! Dollar Collapse Stock Market CRASH 2017 - 2018 Federal Reserve policy has literally set the country up for economic collapse, and though the central bank has been very creative in making the impossible work, and putting off financial disaster, nothing...

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Trump Dreams Versus Trump Reality - Hope Still Permitted!

Posted: 19 Feb 2017 11:00 PM PST

Via The Saker,

For a lot of Trump supporters the past week has been a painful one. Whether we chose to react with abject panic or pretended like nothing happened, something did happen and it was something big: the Tree Letter Agencies pulled-off a de facto coup against Donald Trump by forcing him to fire his most important foreign policy advisor and the man who had dared to declare that he wanted to reform the bloated and largely ineffective US intelligence community.

There is no way of putting a brave face on what happened. Not only because it showed that Trump is not loyal to those who are loyal to him, but because this episode pretty much killed what I would call the “Trump dream”. I chose my words carefully here. I speak of “Trump dream” as opposed to the Trump reality. Let me explain.

The “Trump dream”

When Trump won the elections the spectrum of hopes about his actions was very wide. It ranged from “Trump will forever reshape the international system, end the Empire and bring peace and prosperity to the USA” to “he will never be as bad as Hillary no matter what he does”. On that spectrum, here is what I would list as the key elements of the “Trump dream”:

  1. Draining the swamp: kicking the Neocons down to the basement they crawled out of 24 years ago, reforming the US intelligence community, possibly even dissolving the CIA or, at the very least, subordinating it, and the JCS, to the President.
  2. Making peace with Russia and negotiate a “grand bargain” which would clearly spell out how the USA and Russia would act towards each other and jointly against common threats. At the very least, this would imply an agreement on the Ukraine and Syria.
  3. Work with Russia to create a new European security system which would keep NATO as a political organization, but which would “dilute it” into a new security framework ranging from Portugal to the Ural mountains and which would include a 21st century version of the Conventional Forces Europe treaty.
  4. Stop pouring billions of dollars into the Empire and redirect the immense resources currently wasted on war, aggression and subversion back into the United States and their decaying infrastructure, medical care, education, small business, etc. Until now, the main profitable sectors of the US economy were either the military-industrial complex or finance. The hope was that Trump would kick-start the “real” economy: the production of goods and services.
  5. End what I would call the “dictatorship of the minorities” and replace it with a restoration of the sovereignty of the majority of the American people over their country. The “Rachel Maddows” who used to be the “ideological masters” of the AngloZionist regime would be gently ushered towards the doors and replaced by people most Americans could identify with.
  6. Law and order would be restored to the USA and the uncontrolled flow of immigrants would finally be regulated at least to some degree.
  7. Last, but most definitely not least, Trump would not act on this stupid, counter-productive and self-defeating Iran-bashing and China-bashing rhetoric. Remember – what I am listing here is not a realistic evaluation of what Trump might do once in power, but what I deliberately called the “Trump dream” with emphasis on the second word. Sure, there might be those who wanted Trump to deliver on his threats and possibly even start a war with Iran or China, but I have not met them. (Then again, these are not people I like to be around). Again, this is my, subjective and personal outline of what I think many (most?) Trump supporters were dreaming about, nothing more.

Following the past week, I would say that, for the most part, this dream is now over, especially points 1,2,3 and 5, points 6 and 7 are on life support and only 4 is having of chills and a runny nose but might still live.

They key, of course, is point 1: draining the swamp. In other words, wrestling the power away from the Neocons and the US ‘deep state’ and putting it back where it belongs: in the hands of a President with a mandate of a majority of the American people. That is, alas, the biggest loss we all suffered last week: the man who was supposed to drain the swamp got a humiliating smack-down by a deep state drunk on its own infinite chutzpah. The biggest deal is not that Flynn was sacked, although that is a big deal, but the fact that the deep state forced Trump into publicly betraying Flynn and sacking him instead of those who were involved in this palace coup (including Pence himself).

What the deep state demonstrated this week is that everybody in the Executive Branch serves not at the pleasure of the President, but at the pleasure of the deep state, including probably Donald Trump himself.

By terminating Trump’s #2 the Neocons have now shown the world that everybody else (#3, #4, etc.) and possibly #1 are all here only to the extend that they, the Neocons, let them. I am personally convinced that unless Donald Trump finds in himself the courage to mount a major counter-attack, the Neocons will find a way of kicking him out out the White House before his term ends. That is typically their style: sending “messages” and “making an example”.

If Trump “behaves” they might, possibly, let him do a little of points #6 (law and order) and #4 (redirecting some money to the US homeland). As for point #7 (Iran and China bashing), that is the only part of his program which they will enthusiastically support (thereby also ending the dream of him not acting on that crazy nonsense).

So yeah, this is bad, and barring a miracle, the dream is really over.

However, let’s put that right back in perspective.

The Trump reality

If the *dream* is over, that is hardly a reason to become despondent or to claim that supporting Trump was a mistake. Please always keep in mind what the alternative was: Hillary Clinton.

One of my favorite Russian commentators, Ruslan Ostashko, brilliantly put it when he said:

Not a single rational person was expecting Trump to display true friendship or love for Russia or an immediate recognition of Crimea (as part of Russia). Our joy at the election of Trump was linked to a single factor: with Clinton we would had no chances, none at all, to agree on anything. If Clinton was now sitting in the White House we would not be discussing the issue of the recognition of Crimea or the future of US sanctions. We would be trying to guess when the nuclear war would start, we would be studying our bomb shelter maps, how to use a Geiger counter, and how to count the correct dosage for iodine tablets.

He is absolutely right, of course. This is also exactly what I wrote on November 9th following the election:

So it has happened: Hillary did not win! I say that instead of saying that “Trump won” because I consider the former even more important than the latter. Why? Because I have no idea whatsoever what Trump will do next. I do, however, have an excellent idea of what Hillary would have done: war with Russia. Trump most likely won’t do that.

I never was a “Trump dreamer”. I was merely a Trump *hoper* meaning that I had hopes that Trump would not only be better than Hillary, but that he might deliver on, at least, some of his “dream” message.

But if the choice is the Neocons humiliating Trump or thermonuclear war – then I pick the former, with gratitude.

Furthermore, however unpleasant this thought might be to many Americans, it is an undeniable fact that the United States are currently the host upon which the AngloZionist parasite feeds and which this parasite uses to try to subjugate the entire planet.

What is happening now is that the Neocons and the deep state have succeeded in re-taking control of their host, but only at the cost of a major weakening of that host. And that is objectively good for our planet. Just as the coup in Turkey ended up gutting the military and security services and dramatically curtailing their ability to influence the events in Syria (this is, in part, why Erdogan is now playing ball with the Russians and the Iranians), the ongoing color revolution against Trump is gutting the power of the American host and, thus, of the AngloZionist parasite. For one thing, the entire political establishment is so deeply involved in the struggle for power inside the USA, that very little bureaucratic energy is left to deal with anything else. Furthermore, in political terms, the “indispensable nation” and “city upon the hill” are now the laughingstock of the planet. The next time around some State Department propagandist starts regurgitating the usual chunk of propaganda prolefeed about democracy, human right and fair elections he will be greeted with a hysterical laughter and screams of “physician, heal thyself!!”. And, frankly, God only knows where this process might lead us next. I, for one, would absolutely not exclude the possibility of civil war in the USA. And before that statement gets greeted with jeers and the usual set of ad hominems, let me remind you that I predicted the civil war in the Ukraine when almost everybody else was in total denial (see: The gates of Hell are opening for the Ukraine, written on Nov 20th, 2013). At this point in time, I am not predicting a civil war in the USA, but I am saying that it has become a real possibility.

Civil war or not, all the Neocons and the deep state are doing is accelerating the inevitable collapse of the USA as a world hegemon. True, Trump could not have prevented it, but he could have negotiated it, using the still immense power of the USA to get the best possible deal from the other big actors. If a person falls off a skyscraper, there is no way of preventing him of hitting the ground – but whether he has a parachute or not will make a huge difference to him on how he will land. That is what Trump could have done – making a “descent on the breaks” as the Russians expression goes. The skills to make that happen are straightforward: realism, willingness to negotiate, ability to understand the other guy, the courage to give up that which is not sustainable, etc. That is the exact skillset that the Neocons totally lack. What they can do is double-down, then double-down again, and then double-down some more. And that kind of maniacal attitude always leads to catastrophe.

Whatever may be the case, the big story for the foreseeable future will be the infighting inside the US deep state. Why infighting? Because Trump is also part of the deep state, he did not just suddenly pop out of nowhere ex nihilo, he had, and still has, powerful backers. That’s the, comparatively speaking, the good news. The bad news is that the faction of the deep state which is backing Trump appears to be the weaker one. And Trump himself is not exactly a knight in shining armor, to put it mildly. Still, if we imagine that by some aggregate measure of power the anti-Trump forces inside the deep state are, oh, 70% and the Trump supporters are therefore 30%, the infighting between the 70% and the 30% will leave very little energy to either party to deal with Russia, China or Iran.

It is a sweet irony that the big proponents of divide et impera did just that to themselves, is it not?

Conclusion

It is way too early to become despondent. Yes, the “Trump dream” is probably over, it was beautiful as long as it lasted, but now the “Trump reality” is taking center stage and we all need to learn how to operate in this new context. We need to carefully and systematically study this new reality and carefully parse it for all the risk and opportunities it presents us with. And there are a lot of great opportunities, along with very real risks, to be discovered. Just the fact that the leaders of the Empire have turned against each other is a God sent blessing! Let’s use that to the max.

Coincidence or not, but the Duran is reporting that the Chairman of the JCS, General Joe Dunford, and General Valery Gerasimov, the Chief of the Russian military’s General Staff have met in Baku. This is the first such meeting since January 2014 and it took place in a “cordial atmosphere”. In fact, Dunford reassured Gerasimov that there are in fact no plans to deploy US ground troops to Syria (there are, of course, already several thousand US troops on the ground in Syria, both sides know that, but both sides also know what Dunford is referring to: regular armed forces).

Can you imagine such a meeting under Hillary?

What happened is really simple. With the election of Trump, the Neocons suffered a crushing defeat and it took them less than a month to regroup and castrate Trump. This is bad and the “Trump dream” is over. But we – the resistance to Empire, as still in very good shape. After all, Trump was never *our* candidate, he was the candidate of the part of the deep state which we, opponents of the US deep state in toto, supported as a lesser evil: and we were right – he was and he still is the lesser evil. Furthermore, the party which really lost the most is the Trump-supporting part of the deep state, and they now enough power left (10, 30 or 45 percent – that does not really matter) to regroup and fight back. And if/when they do fight back, we still have to give them our support simply because that is the moral and pragmatic thing to do. Right now, Trump looks like Yanukovich, true. But I think that he is also a far smarter and much more honorable person than Yanukovich. Call me naïve, but my gut feeling is that Trump cares for the USA and that he wants to do the right thing. I might be wrong, of course. But at least so far I do not see the clear signs of the total rot and corruption which Yanukovich has all over his face. Furthermore, Trump appears to be learning. That is very important. In his latest press conference Trump finally finally showed some real guts and counter-attacked the media, very effectively I would say. And remember how fast Trump learned from his first defeat in the debate against Hillary? Trump might be a fast learner and if that is really the case, then he might learn some most useful lessons from the entire Flynn debacle.

Hopes still permitted :-)

So hopes are still permitted. Not expectations – those are always bad. But reasonable, reality-compatible hopes. Like all humans, politicians change. If the Neocons don’t succeed in impeaching him, Trump might still end up kicking some ass, so to speak. And if they do impeach him, they will further weaken the Empire. So, all in all, I would say that while we had a very bad week we are still on good shape.

Trump : America soon to become Greece , We are on the Verge of Collapse

Posted: 19 Feb 2017 10:30 PM PST

Trump inherited The Mother Of All Financial Bubbles -- The Point of No Return Nobody can save us. The situation is not salvageable. But what can be done is to not make it worse, by shedding as many illegals as possible, and avoiding importing more jihadists and jihadist sympathizers. ...

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Gerald Celente - Buy Gold , The Economy is about to Implode

Posted: 19 Feb 2017 09:30 PM PST

Gerald Celente-Debt Crisis Builds-Buy Gold  Top Trends researcher Gerald Celente says that Trump is inheriting a U.S. and global economy that is bullish for gold prices. Celente explains, "The debt crisis continues to build. The people are in an uproar about getting their pensions...

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North Korea's Regime In Jeopardy After China Bans All Coal Imports

Posted: 19 Feb 2017 07:48 PM PST

North Korea just lost a very big ally.

On Saturday, China said that it was suspending all imports of coal from North Korea as part of its effort to implement United Nations Security Council sanctions aimed at stopping the country's nuclear weapons and ballistic-missile program. The ban, according to a statement posted on the website of the Chinese Commerce Ministry, takes effect on today and will last until the end of the year. While China will hardly suffer material adverse impacts, Chinese trade - and aid - have long been a vital economic crutch for North Korea, and the decision strips North Korea of one of its most important sources of foreign currency.

The ban comes six days after the North Korean test of a ballistic missile that the Security Council condemned as a violation of its resolutions that prohibited the country from developing and testing ballistic missile technology. In the test, - which took place during a dinner between Japan's Prime Minister and Donald Trump - North Korea claimed that it had successfully launched a new type of nuclear-capable missile. It said its intermediate-range Pukguksong-2 missile used a solid-fuel technology that American experts say will make it harder to detect missile attacks from the North.

According to the NYT, China's decision has the potential to cripple North Korea's already moribund economy: coal accounts for 34-40% of North Korean exports in the past several years, and almost all of it was shipped to China, according to South Korean government estimates. As Yang Moo-jin, a professor at the University of North Korean Studies in Seoul confirms, coal sales accounted for more than 50 percent of North Korea's exports to China last year, and about a fifth of its total trade. China had previously bought coal under exemptions that allowed trade for "livelihood" purposes. China's Ministry of Commerce didn't respond to faxed questions outside office hours. 

"Of course they may have methods to replace the damage, but just by looking at the size of the loss, that's a pretty big blow," Yang said.

China's import ban follows a UN Security Council resolution adopted in November in response to the North's fifth and most powerful nuclear test, according to which the country should not be allowed to export more than 7.5 million metric tons of coal a year or bring in more than $400 million in coal sales, whichever limit is met first. It was unclear whether that cap has already been reached for this year.

Officials of the United States and its allies, including President Trump, have suggested that China, North Korea's principal economic patron, should be more aggressive in enforcing sanctions. But while it does not approve of the North's weapons program, China has also been seen as reluctant to inflict crippling pain on North Korea, for fear that it might destabilize its Communist neighbor.

That, however, changed on Saturday and as Bloomberg says "China's move to ban coal imports from North Korea, effectively slicing the country's exports by about half, came with a message for the U.S. and its allies: It's time to do a deal" even if it means risking political upheaval.

While China has previously resisted calls by the U.S. to apply greater pressure on Kim's regime, North Korea is increasingly becoming a strategic liability, according to Zhou Qi, director of the National Strategy Institute at Tsinghua University in Beijing. "What we're seeing now is Beijing is showing a new willingness to bring the North to near the breaking point," she said. "There is still some room to squeeze the regime. But of course, it's a risky card to play."

"The Chinese are getting more frustrated with North Korea," Eurasia Group President Ian Bremmer said in an interview at the same conference. "They clearly don't feel that they have a lot of influence and they're worried that the U.S. under Trump is going to blame China as opposed to continuing a multilateral process."

At the same time as China announce the coal import bank, Chinese officials said that pushing North Korea into a corner won't work as Kim's regime will keep developing its nuclear capability until it feels safe. Instead, it's time to restart talks and "break the negative cycle on the nuclear issue," Chinese Foreign Minister Wang Yi said in a statement on Sunday after meeting South Korean counterpart Yun Byung-se at a security meeting in Munich.

As Bloomberg adds, China's call for a new initiative contrasts with a more hawkish tone out of Washington.

President Donald Trump, who during his campaign said he could negotiate with Kim over a hamburger, this month promised to deal with North Korea "very strongly" after its latest missile test. He also called on China to get tougher. The U.S. is putting a defense system called Thaad in South Korea -- a move that also potentially threatens Beijing's military capabilities.

 

China may soon have company in making the shift. South Korea's President Park Geun-hye was impeached in December and the leading candidates to replace her all take a softer line on North Korea, with front-runner Moon Jae-in saying that the next administration should review the decision to deploy Thaad.

Meanwhile, last week's bizarre assassination of Kim's estranged half-brother, who was protected by Chinese authorities, added to calls in Beijing's foreign policy establishment to take stronger action, according to Shi Yongming, an associate research fellow at the Foreign Ministry-run China Institute of International Studies. "The case fully exposed the desperate irrationality of the Kim regime," Shi said. "Beijing still wants to bring him to a negotiation table - and that's where the U.S. role lies - because the collapse of the regime is right now outside China's realistic capacity to handle."

Making the recent situation somewhat embarrassing for Beijing, China has backed the Kim dynasty since it took charge after the Korean War, in part to prevent having a U.S. ally on its border.

With the international community enforcing sanctions on North Korea after a series of nuclear tests, China now accounts for more than 90 percent of its total trade, according to Bloomberg data.

Whether the Chinese ban will bring Kim's regime to the negotiating table is unclear. North Korea has accelerated its development of nuclear bombs and ballistic missiles since 2009, when it walked away from six-party talks involving the U.S., South Korea, China, Russia and Japan. However, losing perhaps the biggest source of outside funding will almost certainly lead to political chaos in the communist nation.

The question on everyone's lips, but which few dare to ask in public, is whether Kim Jong-Un, pressed into a corner, will - after years of posturing with his ballistic missile tests, finally launch a rocket into one of the neighboring nations. Trump's administration has said it will deploy the missile defense system this year in South Korea and back Japan "100 percent" in moves to deter North Korea.

Since it may have no choice but to test out this defense system in the very near future, one hopes that any North Korean "desperation" launches are safely brought down.

China Responds To Fed Jawboning March "Live" - Weakens Yuan, Spikes Money Market Rates

Posted: 19 Feb 2017 07:45 PM PST

After a week of jawboning markets into believing that the March FOMC meeting is now "live", it appears China has decided to send a little message.

 

After weakening the fix by the most since Jan 9th, Chinese money market rates are soaring (1 week CNH HIBOR up 303bps) despite notable liquidity injections...

 

Of course an unexpected rate hike in March is an implicit tightening of the world's financial conditions and thus liquidity withdrawal... reversing recent improvements in global dollar liquidity.

As Mark St.Cyr asks (and answers), is China about to begin pre-emptively devaluing the yuan?

Remember when any member of the Federal Reserve, regardless of the action be it a speech, interview, what they had for breakfast et cetera, was met with panting breaths by the financial media? You know, like it was back in the old days, say around 90 days ago more or less. My how time both flies and changes.

Today? Like it or not (and I presume they disdain it) the President as opposed to a Fed. president, has reclaimed all the oxygen, print, airwaves, bandwidth, and more from not only the general news, but the business/financial news as well. I have a feeling that’s not sitting well within the confines of the Eccles Building. Remember: Elites don’t like sharing stages, especially with those they deem as “outsiders.”

So what does the above have anything to do with March and the Yuan you may be asking? It’s this:

You or I may be enjoying a respite from the media where the Fed. (or central bankers in general) aren’t dominating every topic of business/financial discussion. Yet, the one audience I’ll contend that’s still hanging on every syllable for meaning and intent is China. And China is the, and I mean just that – the – only audience that matters. The reasoning is simple:

China, overnight, can bring the entire global markets crashing to its knees via one wrong move, exponentially faster than any Fed. misstep, intentional, or otherwise. Period.

In other words, the Fed. more often than not will signal first (yet they can surprise) and the move would cause turmoil, but the move (and resulting chaos) itself would be more reaction to surprise than substance, where knee-jerk-selling is met with horns-over-hooves buying from Bulls just itching to buy the next dip. (i.e., 1/4% unannounced or unanticipated hike or something else in kind.)

China on the other hand could intentionally devalue the Yuan in whole number, even double-digit percentages, unannounced overnight, and the chaos could quickly transform into unstoppable monetary bedlam. And there’s recent precedent for clues. e.g., August of 2015.

So with the above for context the question that should be first and foremost in everyone’s mind is this:

If China believes there’s a rate hike in March, regardless of what the rest of the world (and academia) might think. Will it force  China into delivering a monetary strike first, and deal with its aftermath later, rather, than simply waiting around to then deal with any potential monetary aftermath or chaos unleashed by the Fed. later?

I believe not only will they move first – the move borders on inevitable.

I base this on no other reasoning than watching the Fed. continuing to throw ever-the-more fuel onto this “monetary powder keg” that brings that response on quicker, rather than later. For the more they pile on, the more this “monetary powder keg” moves from in-need-of-a-match, into self-igniting.

I am of the opinion China’s ever-growing capital flight problems, and more can not withstand another rate hike, let alone one so close after December. And the tell-tale signs for this to be more plausible than not have been occurring in plain sight with far more telling frequency (and I’ll imply: intent) than previously. And the ones who seem to not be reading the “tea leaves” is none other than the Fed. itself.

Here’s some of my reasoning from the article, “Feb’s FOMC Meeting: A Powder keg In Search Of A Match” To wit:

“If China feels that it is in a no-win situation (and it’s easily conceivable using the Fed’s latest words, speeches, shift in policy signaling and a whole lot more) They might decide after coming back from their New Year holiday and – act first – question later.”

Guess what the politburo did when they returned? Hint: Everything and anything but (and it’s a very big but) the one thing they always did in unison – defend the Yuan.

Everything in China went ballistic. Bonds, stocks, commodities, all up. The Yuan? Tumbled to one-month lows.

I’ll contend this is an overt signaling action which screams warning signs everywhere. For why did China, this time, throw so much money everywhere else except for the one place it basically threw the “kitchen sink” at only a month or so prior? (e.g., The Yuan as to strengthen it away from the much dreaded psychological USD/CNH 7.00 cross.)

Was this a test to see what reaction (both market and political) would take place doing something other than something solely Yuan centric? Or, was this a move of desperation as to subside further capital flight? After all: This is precisely the exact opposite of what one should/would do if the plan was to strengthen, rather than weaken one’s currency, correct?

Again: Why would you throw enormous sums of money into actions which not only have a negative effect, but a canceling effect on what you just threw (again) enormous sums of money only a month prior? Does the old joke “Drilling holes in the bottom of the boat to let the water coming in out.” come to mind here? Which is why I’m siding on the side of desperation – first, as opposed to  a test. And here’s why, as stated by economist, and China watcher Andy Xie (one of the few economists I admire) to wit:

“China’s domestic woes and international challenges are largely due to its inefficient system. The government is obsessed with concentrating economic resources in its own hands, and asset markets are like casinos, sucking people in and making them lose money. The government uses its vast resources inefficiently. Hence, China’s currency has a tendency to depreciate.”

Using the above for a prism it’s easy to see how the politburo can do two things at the same time which seem diametrically opposed to what was professed (or signaled) only weeks prior. Why? Because when elites panic – they’ll throw money everywhere and anywhere first, because that’s all they know. And I believe this demonstrates China is beginning to panic.

The real question (and problem) now is: How far, and how fast, from the “beginning” to “end game” they decide to proceed going forward from here? I believe all we have to do is look to our own Fed. for clues, for they appear utterly clueless to what is taking place right before their own eyes.

So what kind of signaling (hence exacerbating China nervousness) is forthcoming from the Fed you ask? Fair question, to wit:

From Reuters™ “Dollar Index Rises As Yellen Signals More Rate Hikes”

“Waiting too long to remove accommodation would be unwise,” Yellen said in prepared remarks before the U.S. Senate Banking Committee, the first of her two-day testimony before Congress.

That was just a few days ago from Fed. chair Janet Yellen’s televised two-day testimony before Congress.

But what went along with the above was what went nearly unreported (as I implied when stating “the old days”) when none other than the Fed’s Dennis Lockhart (another Fed. president retiring at the end of the month) stated in an interview with Bloomberg™ “March meeting is live.”

That’s a lot of confirmation that March is to be considered live, is it not?

As I’ve iterated before, I believe the rest of the world (or “markets”) are still of the idea that the Fed. is once again “crying wolf” as they did all throughout 2016. For China? I think they’re back to an August 2015 frenzy caught between what to do next, never-mind, what not to do. And it’s getting more complicated for them by the day.

Think I’m over exaggerating? Fair point, so here’s just a few “other” headlines China returned from holiday to read and think about, let alone, needing a response to:

“…Trump Backs Japan Over Disputed East China Sea Islands”

 

Or how about this from the WSJ™ implying further retaliation, “U.S. Eyes New Tactic To Press China”

So where are we now? As I stated in my previous article, I believe it’s all about the Fed. minutes, to wit:

During that time I believe China will wait for the minutes to be released, and if it is made apparent that there was indeed further discussion as to bolster the inferences that the Fed. may be actively considering a path as to embark on a march towards higher rates, along with the thinning of its balance sheet, which would inevitably send the $Dollar rocketing skywards?

They’ll act first and ask (or maybe not) questions later. Sending everything that is now taken for granted in the “markets” (e.g., “It’s good to be long!) into total chaos. All before March 15th’s next meeting. Again, which just so happens to be the exact date originating the “Ides of March” warning.”

If the actions by China after returning from their holiday break are any clue? Than the possibility for a “monetary first strike” is all the more plausible, if not probable, than these “markets” are signaling, let alone contemplating.

China has thrown buckets of capital at not only the Yuan, but its credit markets in unison – and capital flight is accelerating still on all fronts. All while the $Dollar strengthens, and Yuan weakens seemingly against the will of both monetary bodies.

So again, with all the above for context, as I said in the title…

If March Is indeed “live?”  Then so too is the mother of all monetary shocks.

We shall see our first clues for the minutes of the latest FOMC meeting are to be released this week. And if they are indeed “hawkish?” I believe it will force China’s hand before the next meeting. Whether anyone is prepared for it, or not.

And if any clues are to be extrapolated by current “market” action? The answer is self-evident: nobody thinks such a thing is possible anymore, let alone – positioned for it, making things more problematic than they already are. If that’s even possible.

*  *  *

Finally we wonder if - just as was the case after the Shanghai Accord had fulfilled its Plunge Protection Team role in Q1 2016 - whether the same is about to occur...

Notice that the Yuan has been strengthening against the USD for the last 2 months (despite all the gnashing or political teeth over its manipulation). A Fed rate hike is the perfect excuse to let that pretense slide again.

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During the weekly interview, Bill and Jim discussed President Trump and wondered whether he truly understood gold. The following YouTube video from three years ago suggests he does.

The post Trump On Gold appeared first on Jim Sinclair's Mineset.

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Posted: 19 Feb 2017 09:18 AM PST

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[[ This is a content summary only. Visit http://financearmageddon.blogspot.com http://www.figanews.com for full links, other content, and more! ]]

Breaking News And Best Of The Web

Posted: 19 Feb 2017 01:37 AM PST

Inflation is spiking on stronger growth, higher oil. Fed likely to raise interest rates next month. US stocks at all-time highs, gold and silver near multi-week highs. Trump national security adviser quits under Russian cloud, labor secretary nominee withdraws under pressure. Debate over Putin and fake news intensifies.   Best Of The Web China credit […]

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