Jimmy Goldsmith sees the future

Faber fiction & the Goldman gang

Marc Faber seems to make a rather common mistake: that of making a distinction between the free market and government, without recognising that the "third way" is the way the world works now - that is to say, the merger of state and corporate powers, aka fascism.
He even says this:

I think Goldman Sachs is a very honest firm. They have a very strict compliance department compared to the others — they're like an angel. But they targeted Goldman as it stands as a symbol of Wall Street.
Maybe the intention is not to hurt Goldman Sachs, but just to gain popularity with the middle class and the lower class of America, so they will perceive Mr. Obama to have done something against the evil of Wall Street.


What. The. Fuck. Like an angel? I had to play that bit twice to see if any irony was being projected, but no.
Let's have a look at some key players here.

• Henry Paulson - 74th United States Treasury Secretary. Previously served as the Chairman and Chief Executive Officer of Goldman Sachs.
• Lloyd Blankfein - current Chief Executive Officer and Chairman of Goldman Sachs. After the nomination of Hank Paulson as Secretary of the Treasury under George W. Bush, Blankfein was announced as his replacement.
• Greg Craig - former White House Counsel under President Barack Obama. He has represented Goldman Sachs.
• Gary Gensler is the chairman of the U.S. Commodity Futures Trading Commission under President Barack Obama. Spent 18 years at Goldman Sachs, becoming the company’s co-head of finance.

The list goes on, but you get the picture. It's other banks too, they're all complicit, but calling Goldman Sachs an angel because it complies with regulations (???) is an enormous misunderstanding of the situation. The government is in bed with the bankers, and scared of the CIA-military complex, and acts accordingly. It's like a symbiotic organism of bully-boys, back-scratchers and back-slappers - an old boys club. Like Celente says, Harvard Princeton Yale, bullets, bombs, banks.

They're like an international gang of financial terrorists, as Max Keiser has often said. They hid billions of debt for Greece when they joined the EU, and you can bet the farm they are short Greek bonds right now, all the way, leveraged up to the hilt. They are going to make a lot of money when Greece defaults, like they did with Iceland. Actually, they will be doing Greece a favour, like Soros did when he knocked us out of the ERM. But when the debt is all re-financed, it will be the Greek people who suffer most in the short term, because that's essentially their money that Goldman Sachs just sucked out of the system. The fact that it's measured in euros is good for GS because it will keep its value - if it were drachmas, the currency would inflate and the play would be less lucrative, which is the only reason Britain is safe from this kind of predatory action, unlike the PIIGS (Portugal, Ireland, Italy, Greece, Spain).

You hear the defence, often from people in the industry, that they're smart, they're good at their jobs, they work hard, they're a money making machine, that's what they do, and you must be jealous to attack them, or ignorant - implying that they're doing "God's work" to use Blankfein's phrase, some mysterious mission that we're not able to comprehend.
There's no mystery. These guys simply don't know how to make money. They're not entrepreneurs. They don't create wealth. What are investment banks? They're casinos that gamble. With other people's money. They certainly don't respect their clients, they don't genuinely go out looking for worthy ventures to invest in. They invent derivatives instead. They front-run, they short the things they're telling their clients to buy - all this is well-documented.
So no, they're not smart, they're autistic. They're not a money-making machine, they're a money-sucking parasite. They contribute nothing to society but bribes and corruption. They would not exist were it not for their buddies at the Fed and in government, and in their alliance with the military elements.

Indeed, bad as GS are, the major problem is central banks, particularly Fed policy, and indeed the existence of the Fed. Everything else, all the corruption, is just a symptom of that. You give a select few unelected people complete control of the money supply, and what do you expect? It will only all come to a head when everyone realises that dollars are just that - pieces of paper, backed by a government's promise which, as we all know equals... zero. It never ceases to amaze me just how long these fiat currencies have managed to last. I guess it's a mass hypnosis, a big waking dream, or nightmare, that we're all a part of and are on the verge of waking up from.

The trigger could be anything. Drop in the dollar. Chinese revaluation. Commercial property bubble burst. It doesn't matter - the system is so out of balance now, the pinprick to the bubble could come from anywhere, at any time. And the longer this eerie calm exists, the bigger will be the pop.

Rich Dad

His books may not be Great American Novels, but his analysis here is spot-on and his recommendation to buy silver compelling. His face when asked if Obama is running the country like a Rich Dad is priceless:

Argie Bargie

Doug Casey's favourite place, Argentina, has reverted to their 2001 ways:

The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.

Credit Default Swaps on Argentine bonds reached 2,900. Do we have a Latin Iceland on our hands, but with 100 times the population?

The Merval index of stocks in Buenos Aires is down 12.6pc as I write. Telecom Argentina took it badly (-25pc), so did Grupo Financiero Galicia (-13pc) and Banco Frances (-20pc).

I suppose Doug would say:

Sometimes people, who haven’t been there, look at me in a questioning way when I mention Argentina, because they’ve heard of the government. But it’s not evil, or dangerous, like many. It’s just corrupt, incompetent, and inefficient — which is actually much better than the alternatives, when we’re talking about governments.

I'm not sure, but I suspect that South America has held out against the rest off the global elitists for some time. I hope so, at least. I'd like to think that there's a corner of the world which offers safe haven. If so, then the fortunes of the Latins could be on the up, whilst the West slips into chaos and ruin.

IMF: Inflation Maximising Fund

Pretty much spot-on.

The joint rescue between the IMF and the EU would turn the Bundesbank into a "money-printing machine" for the purchase of Greek bonds, according to Rundschau. This would breach the EU's 'no-bail clause'.

And I don't blame the Greeks for taking advantage of the system. They invented anarchy too, after all.

Buying food is throwing your money away

According to the Telegraph, UK house prices face a prolonged bear market.
Bear market? See, that's the whole problem. Houses aren't financial instruments. They're not even assets, for Christ's sake - they're places to live. What was ever wrong with renting, anyway?
I still hear the argument that renting is "throwing your money away." Who made this one up, and what were they on? I guess buying food is throwing your money away, too, right? You could have bought some tech stocks instead and got rich!
People say that mortgage payments are the same as rent, so you might as well be buying more and more of it each month, instead of none. Incorrect, for four reasons.
Firstly, mortgage payments are almost always higher than rent payments.
Secondly, as an owner you have to pay: property taxes, maintenance (repairs, utilities replacement, etc), permits, council tax, stamp duty, licences, etc.
Thirdly, you are paying interest on the mortgage to the lender.
Fourth, what if the house stops gaining value on the market? What if it falls, and you end up owing more than the house is worth, with interest rates at sky-high levels? You are screwed, and you will lose the house, and be worse off than if you had been renting all along.

It's pretty clear that real estate is due a fall of around 90% at some point. It's proven remarkably difficult to forecast the timing of the adjustments. In 2003 the Economist magazine was already calling the housing bubble the largest of all time. And then prices continued rising, doubling or even tripling for another five years.
Then they started to pop, and stimulus money arrested it.
But not for long, this time, I think. When the dam bursts, there will be a dollar crisis, followed by inflation, sky-rocketing interest rates, a flood of foreclosures, ghost towns, and nobody will be able to sell their houses anymore. It will be accompanied by the popping of the commercial real estate bubble, of course, which has also started to become apparent, as I've shown in earlier posts.
Naturally mortgage lenders will implode in the hundreds, there will be more cries for bailouts, but the government has no more money.
Then they'll take us to war. There will be riots, and the police and military will be called out to deal with those involved. Lots of deaths.
What can we do? Buy gold. Have an escape route in mind. Spread information any way you can. Get in shape.

"It's important to show that Alan Greenspan is full of it..."

Peter Schiff has been around for a while, but this is the angriest I think I've seen him. And rightly so. Greenspan is an obvious crook, who was bizarrely hailed as some sort of oracle during his tenure. And he won't 'fess up, even now.
If Schiff were to debate Alan Greenspan live on TV, I have little doubt he would tear him to pieces. Let's hope he gets his spot on ABC. You can help - just go to abc.com, at the bottom of the page click "contact us", where you can fill out a form and request they show Peter. Takes 30 seconds max.

Politics is the second oldest profession

Celente on form, as always.

30 months at most until The Big One hits...

Did someone say something about Mayans and 2012?
Dire warnings from Porter Stansberry:

The big problem we face right now is the Treasury has moved more than half of our total debt into the very short end of the yield curve. It did this to minimize interest expense. But as a result, we'll have to "roll over" roughly $4 trillion in the next 30 months. That's in addition to funding another $3 trillion or so in additional annual deficits. It's an interesting question, whether or not we can actually do this. We cannot do it if China stops buying massive quantities of Treasury bonds.

And as of today, China is a net seller of Treasury debt. If we can't fund our debts in the bond market, the Federal Reserve will be forced to monetize our deficits by buying Treasury bonds. If that happens, inflation will soar and the price of gold will double or triple almost overnight.(emphasis mine)

Aaaand, it's gone

Angus Laundrettes

It was on one of my regular strolls through the West End of London that I yet again considered the conundrum that is the Aberdeen & Angus Steak House chain. It's a series of restaurants taking up prime real estate that is yet so bad that Jay Rayner, the restaurant critic of The Observer, has described it as having “the mass appeal of herpes but none of the laughs”.
Indeed, it is almost laughably bad, even looking in from the outside. Tacky, red, and empty.
If this doesn't say money-laundering, I don't know what does. I mean, the biggest lies are always dangled right in front of people noses. Even the KFC at Leicester Square has closed down. Yet the ASHes remain.
Did a little research on this, but didn't find much, just this:

The man behind the 23-strong chain, one Ali Shah, failed to respond to interview requests (he is notoriously media shy). One restaurant expert argued that the chain survived by catering for undiscriminating tourists (which didn't explain the apparent paucity of customers), while another suggested that it was all down to a cheap long-term deal on the premises (for which he had no proof).

In 2003 it was then reported that they had gone into administration. But then:

A Google search subsequently revealed that not only was the Aberdeen and Angus Steak House back - with fresh online reviews from customers complaining about everything from the use of tinned mushrooms to waiters clearing tables before meals had finished - but had been so for five years!

The startling development seems to have been covered by only two publications, one of which was The Estates Gazette, which explained in April 2003 that “a newly created private firm controlled by Noble Organisation, a Gateshead-based amusement arcade operator, had cherry-picked the most prominent Central London sites in the Aberdeen Steak House chain”.

Newly-created private firm? You don't say?

I hit the phones, although it quickly became evident that the Noble Organisation, a family firm best known for owning the Brighton Pier, would make Ali Shah seem as shy as Russell Brand. I rang one of the restaurants and was informed by an Eastern European voice that he was forbidden to give out the head office phone number. Another restaurant gave a contact number, but it was connected to a fax.

I left a message for David Biesterfield on his voicemail and he called back several hours later.

“Do you handle the Aberdeen and Angus Steak House?”

“Yes.”

“How's business?”

“We are upgrading and refurbishing the restaurants.”

“Great. I'm interested in writing about the brand for The Times. Could you give me an idea how it manages to survive, given the - erm - obvious challenges?"

“We're not ready to talk just yet about that particular business.”

And that was the end of the conversation.

So let me get this straight. No attempt at publicising or marketing, no explanation, the most extraordinary secrecy. Does it sound like a free market operation? Or corporatocracy? I'd like to think that it's "honest" money laundering, ie a genuinely private company avoiding the government's theft. But it's too big, too blatant, and has all the usual signs of corporatism.
Naturally there's a deafening silence from the media, and even the reporter above ends with a glib, lame "joke", intended to undermine everything she just said:

But it was when I put the phone down and once again began to wonder whether I should extend my research into paying the firm a visit as a diner that I had a revelation. The Aberdeen and Angus Steak House's longevity is surely due to the low-level but perpetual trade of journalists, all trying to work out how on earth it survives. Think about it. It's the only possible explanation.

Of course, if she had said it's a fraud, an accounting shell, and come up with evidence, she may have ultimately lost her job.

WA-wah

For all those who think that the housing boom was caused by a "shortage of housing":

With boom times returning to WA, the housing market is once again overheating. The median house price in Perth is now $512,000, according to the December quarter figures from Australian Property Monitors, putting it beyond the reach of any new homeowner without substantial savings or parental support.

It is not difficult to pinpoint the cause of this price escalation.

During the second half of last year, new lots approved for building in Perth and Peel were running at an annual rate of under 9000. This is extraordinarily low. Even in the mid 2000s, when supply was being far outpaced by demand, annual new lot releases were running at more than 15,000.

The reasons for this were shown to lie squarely with the Government's land-starvation policy. The Government just won't allow enough blocks to be developed for housing, thereby preventing competition from driving down prices.

This has stemmed from unfounded fears of the high cost of providing new infrastructure, a mania for central planning and groundless opposition to urban sprawl in a State that has more natural bush and farmland than anywhere else in the world.

Government resistance to allowing land to be used for housing has also been abetted by ministerial dreams of creating a compact city with teeming inner suburbs populated by bohemian theatregoers and by downright contempt for new-homebuyers' preference for McMansions on individual lots.

OK, so we have Western Australia. The most remote least populated area on earth, barring the two poles. All that land, just waiting to be put to use.
But they're not allowed.
So yes, there is a shortage of houses. And no doubt, the government might spin that and say, look, we're going to build a bunch of new houses! In urban areas, so we can all be bohos! But, as with the Credit Crunch and every other damn thing, they were the cause of the problem in the first place. They created a shortage of houses. And they will make it worse with their so-called fixes.

Why the US is finished pt 2

U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion

Continued genius from The Onion:

WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.

Calling it "basically no more than five rectangular strips of paper," Fed chairman Ben Bernanke illustrates how much "$200" is actually worth.

What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world's largest economy.

"Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…" said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. "You know what? It doesn't matter. None of this—this so-called 'money'—really matters at all."

"It's just an illusion," a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. "Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless."

Gold Man Sacks

If you want to know exactly how Goldman Sachs et al have ripped us off (other than the blatancy of the bailout itself), Matt Taibbi's done an excellent job of telling us.

Let the good times roll

It's worth pointing out that although dark times are ahead, in terms of economics, politics and war, actually it's the correct times, the real times, the good times. As Schiff has pointed out, it's not the decade from hell that's ahead of us. It's the decade of sin behind us, and the decade of re-adjustment ahead. And as Celente points out, there's going to be good times in many ways. There will be an accent on quality, just as in the last depression there was some of the happiest, freest music ever made. And the 70s were pretty funky, too.
We've had a long period of having our creative and productive capacities eroded by the sloth of not needing to, of relying on credit, of listening to corporate-government propaganda on how to live our lives. All that's due for a change, and a corresponding exponential increase in happiness, even if, on paper, we're not as wealthy as we were in the "good times."

The golden rule: whoever has the gold, rules

Just responded to a query by Obo:

I don't have any particular reason to disagree with John Redwood when it comes to rigged exchange mechanisms, but I found part of this curious:

History shows that rigged exchange rates do not work. The Gold Standard…bankrupted many businesses and created mass unemployment.The snake in the 1970s failed to keep the pound at a constant value against the Continental currencies. The Exchange Rate Mechanism caused a bad recession, and then collapsed.

Since there is a wing of the LPUK that wants us to go back to a gold-based currency, I wondered if they would comment on this and point out why he might be right or wrong. Or if I'm just misunderstanding what he's saying.

Yeah he probably just means that we were in at the wrong rate, as we were in the ERM.

The only "real" gold standard is the use of gold itself as currency, or private storage and receipts representing it.

Any state-created "gold standard" will be essentially fake, because they have always, without exception, sought to manipulate and debase the currency for their own ends (mostly to finance war, but also to extort for themselves). They may say, for example, that they will bring out a note which is redeemable for a certain amount of gold. And perhaps at first this works - this would nearly be a real gold standard. But it is inevitable as gravity that eventually they will impose restrictions on the exchange of notes into gold, through fees and taxes and increased red tape, forms to fill out, etc. These will pile up until the redeemability is all but gone - and they will then do away with it entirely. And keep the gold. As they have done. Bastards.

Why the US is finished, part 1

We've got Dubai, we've got the homeless in California, we've got the ghost town known as Detroit... all of this is coming your way. Ladies and gentlemen, our most respected and noble governments are beyond broke. Buy gold, buy pork and beans, buy guns and ammo, and head for the hills.

Why China won't rule the world, part 1

A city. Built in 5 years. For 1 million people. And no-one's moved there. The prices are too high. The response? "They don't look at it as a place to live... they see it as a place to put their cash."

That right there, ladies and gents, is the basis of the whole global property boom... and the reason its going to fall flat on its arse. And it's the reason why state intervention is comical, and why China will not be the oft-predicted powerhouse of the 21st century.

Property has never been an asset. Because of tax avoidance reasons, etc, it's been useful for some. But it's a liability. It's a place to live. You never own property anyway. Just try not paying your property taxes - you'll soon find out who really owns it.

Bernanke joins the ranks of Hitler & Stalin

Time magazine has made Bernanke person of the year. Jesus wept. Let's leave it to Peter Schiff to tell us what he thinks of that.



By the way, a disappointing thing for me has always been that, while I revere Milton Friedman in many ways, especially his Free to Choose, it's actually his ideas that Bernanke follows. Friedman was, bizarrely, a staunch and articulate libertarian, in every area except monetary policy. He seemed to change his mind in later years, but while writing his most influential works he always suggested that government's big mistake in the Great Depression was not inflating the money supply!

Of course, the real issues here are this. Government monopolised issuance of the currency, making it fiat (i.e. funny) money. They inflated the bubble through policies of easy credit. (By the way, every bubble in history has been caused by government - don't believe theories such as the "madness of crowds" - they were all down to the madness of those in power.) They also took over the role of insurer or lender of last resort in the event of bank runs. They made it illegal for any private body to do this.

So what they did wrong is not performing this role properly. And of course they weren't going to to. They don't have the first clue - their incompetence is unbounded.

But not printing enough money? Just generating more worthless, paper money off the presses? Excuse me? It's a shame, and it's baffling, that Friedman took this view, as it shows he didn't actually understand what money is, at all. And that's a hard thing to say, as he is a great man in many ways. He was a great debater, and by all accounts a genuinely great guy. I'm reminded of an anecdote whereby a fellow academic said he was worried about people plagiarising his ideas. Friedman told him that people plagiarising his ideas was a good thing - it showed his ideas were working.

How libertarian is that? And there are many other examples of his greatness. But if only he hadn't thrown the Fed that bone - that of "stimulating" the economy by printing phantom money backed by nothing. Because a lot of people listened to him. Like Bernanke, who said on the occasion of Friedman's birthday - you're right. we caused the last Depression - sorry, we won't do it again. And instead, they're going to cause a bigger one, by doing exactly what Friedman said to do.