Blog Archives

Silver “Momentum Building” As “Supply Trouble Brewing”

Silver prices are likely to rise further as there is “supply trouble brewing” as strong industrial and investment demand are confronted by declining supply.

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“There are signs that this year could be a pivotal year for the silver market,” New York-based CPM Group said in its “Silver Yearbook 2016.”

“Silver mine supply is forecast to decline for the first time in 2016, since 2011,” CPM said, noting scheduled closures and planned production cutbacks.

More good news for silver bulls: there’s supply trouble brewing.

Output from mines will fall for the first time since 2011, while demand for the metal in uses including industrial products and jewelry is heading for a fourth straight gain, supporting prices, according to CPM Group. The market is entering what is “likely to be a pivotal year,” the New York-based researcher said in its “Silver Yearbook 2016” reported Bloomberg.

Bloomberg said that “momentum is building” as silver mine output is “seen falling for first time since 2011” at the same time that “investor holdings in silver ETFs rise at triple gold’s pace”.

Silver had its biggest quarterly rise in nearly 30 years in the first three months of 2016 as ETF investors, buying of silver coins (now VAT free in UK and EU) and bars and speculators in the futures market pushed prices higher.

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America’s Entitled (and Doomed) Upper Middle Class

Two recent articles describe America’s entitled (and doomed) upper middle class: the top 5% of households with incomes above $206,500 annually and individuals with incomes of $160,000 or higher annually. (source: Historical Income Tables: Households Census.gov) 

The first describes how businesses are responding to the new Gilded Age in which spending by the top 5% has pulled away from the stagnating bottom 95%:

In an Age of Privilege, Not Everyone Is in the Same Boat Companies are becoming adept at identifying wealthy customers and marketing to them, creating a money-based caste system.

With disparities in wealth greater than at any time since the Gilded Age, the gap is widening between the highly affluent — who find themselves behind the velvet ropes of today’s economy — and everyone else.

The Haven’s 95 staterooms were located so high up in the forward part of the ship that even guests in comparatively expensive staterooms might remain unaware of its existence. Depending on the season, a room in the Haven might cost a couple $10,000 for a weeklong cruise vs. $3,000 for an ordinary stateroom elsewhere on the ship.

Since the late 1990s, however, “there has been a huge evolution, maybe a revolution in attitudes,” Mr. Goldstein said. In addition to larger rooms or softer sheets, big spenders want to be coddled nowadays. “They are looking for constant validation that they are a higher-value customer,” he said. For example, room service requests from Royal Suite occupants are automatically routed to a number different from the one used by regular passengers, who get slower, less personalized service.

With a week in a top Royal Suite costing upward of $30,000, compared with $4,000 for an ordinary cabin, the focus is on “very affluent travelers, and we have no trouble filling these rooms,” Mr. Bayley said.

The second article is by an upper middle class writer who bemoans his declining income and status:

The Secret Shame of Middle-Class Americans: Nearly half of Americans would have trouble finding $400 to pay for an emergency. I’m one of them.

We are naturally sympathetic to anyone describing themselves as middle-class who is in such dire financial straits that they don’t even have $500 as an emergency fund.

But as we read further, we find the author is hardly a typical middle-class worker-bee: he was a substitute host on a national television program for a few years, received substantial advances for books he wrote (substantial enough for him to complain about the taxes due), got a Hollywood movie deal for another book he wrote, etc.

He was making enough money to suggest his film-producer spouse (yet another not-a-middle-class job) quit working, and to buy a house in the tony Hamptons which he poo-poos as nothing special. (A home in a pricey premier suburb is nothing special? In what circles is it nothing special?)

The solution to his poverty is obvious to the rest of us: sell his Hamptons home and moving to less tony digs. He could buy a house in a Midwest college town for a fraction of the Hamptons house and live happily ever after off the cashed-out equity.

The writer was never middle-class–he was upper middle-class, with upper middle-class income, assets and aspirations.

Then come his complaints: he made too much money for his kids to get financial aid to Stanford (fire up the sad violins of sympathy), so his parents had to pony up the $150,000 for each kid to attend an Ivy league university–oh, and then go on to earn Masters degrees or higher.

His wife, out of the work force for the years he was raking in big bucks, couldn’t find a job as a film producer (how awful!)–and then she vanishes from the narrative:did she lower herself to take a “normal” job, or is she still a Hamptons Housewife?Are we not being told because it doesn’t fit the “poor me” narrative?

His 401K retirement was sacrificed to pay for one of his daughter’s wedding–and how much did that extravganza cost? Was that a wise decision?

The writer confesses he’s made poor financial decisions, but he lays the blame on economic ignorance rather than the real cause: his overwhelming sense of entitlement.

This is not simply hubris; it is a pathology that characterizes America’s upper middle-class, and those who aspire to membership in that class.

This article expresses the core belief of America’s upper middle class: I deserve to make more money every year until I decide to retire. Then I deserve a well-funded retirement in an upper middle-class neighborhood with all the usual upper middle-class trimmings.

The list of entitlements is practically endless: my wife shouldn’t have to work, even though writers’ incomes are notoriously uneven; my daughters deserve to attend Ivy league colleges without taking on $100,000+ in student loan debt; they deserve lavish weddings that they don’t have to pay for; I deserve a recent-vintage auto, numerous nights out to movies and dinner, annual vacations (we can assume overseas vacations, of course; how gauche to travel only in the U.S.), and so on–an endless profusion of entitlements that are completely unmoored from the realities of their chosen careers in writing (insecure) and film production (insecure).

Memo to the author: did you somehow not notice that the money to pay writers is drying up? Did you not notice that book advances are vanishing like rain in Death Valley? How clueless does a writer have to be not to be aware of the structural changes in his industry?

The writer sets out to illuminate the precariousness of middle-class life, using himself as an example: a high-end New York writer/author and his equally high-end New York film producer spouse, who made tons more money than the $50,000-per-year middle class household and managed to buy a home in one of the most desirable suburbs in America.

The writer is aware of the disconnect, and he attempts to mask this by downplaying his previous (high) income and the value of his Hamptons home. (I got the feeling he didn’t even want to disclose he owned a home in the Hamptons.)

Given prices in the area, the writer is sitting on hundreds of thousands of dollars in equity–and if he had drained the equity, we can be sure he would have disclosed this poor-me factoid.

Is this a household that is flat-broke, or a house-rich, cash-poor household that spent far beyond its means for years in the belief that the upper middle-class were magically entitled to a high income, regardless of economic realities?

As we look at the economic landscape, we find this class the fantastically entitled bourgeois dominating the technocrat / managerial / professional layers of our economy–the people who pen the editorials and edit the news reports, the people with tenure or high-paying government jobs–the people who claim the mantle of knowing what’s what.

The reality is this class of entitled bourgeois is utterly clueless about the financial realities that are about to hit the global economy like a tidal wave. The top 5% aren’t prepared to weather a mild storm, much less survive a tsunami. They are well and truly doomed by their self-delusion and their pathology of entitlement.

With this clueless class in positions of leadership, where does that leave the nation?

Meanwhile, the economic realities that the top 5% have evaded (thanks to the “recovery” that benefits the few at the expense of the many) have pushed U.S. Suicide Rate to a 30-Year High.

My new book is #2 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, a 20% discount thru May 1, $8.95 print edition) For more, please visit the book’s website.

 

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Jim Willie: Next Comes GLOBAL Lehman Moment!

The desperation is obvious, palpable, incredible, fascinating, and unmistakable. History is being made, as the last ditch is overrun. The banker cabal wishes to defend an indefensible $1300 gold price and to defend an indefensible $18 silver price.
The Gold price will find its true value and price over $10,000 per ounce. The Silver price will find its true value and price over $300 per ounce.
Silver will be part of the new asset backed global currency system.
NEXT COMES A GLOBAL LEHMAN MOMENT WITH BANK FAILURES AND A THREAT TO THE ENTIRE WESTERN BANKING SYSTEM…

Click Here For Jim Willie’s Full MUST READ Hat Trick Letter On The GLOBAL Lehman Moment & $10,000 Gold:

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[DD05] Double Down: The Toxic Book Cooking Legacy of Private Finance Initiatives

LISTEN to the latest Double Down podcast from Max and Stacy. Today’s topic:

The wacky idea proposed by Private Finance Initiatives was that we could magically offload risk onto the private sector for all our vital public services like schools, hospitals, transport and more… and save money doing so! With the government being paid to borrow, however, the notion that we could save money has turned out to be pure fantasy. Double Down asks Joel Benjamin to explain the dodgy history of how PFI provided New Labour with a bridge to the City of London, which has been paid back many times over via lucrative offshore harboured PFI contracts which have been ‘flipped’ many times for great profit.

To listen to show click on image below:

Double-Down-UP

Lessons from Japan: Decades of Decay, Unavoidable Collapse

Japan’s fiscal and monetary extremes are in the news again: this time it’s the Bank of Japan’s extraordinarily large ownership of Japanese stocks, a policy intended to boost “investor sentiment” and prop up sagging equity valuations:

The Tokyo Whale Is Quietly Buying Up Huge Stakes in Japan Inc.

The core failure of Japan’s central bank and state is they have attempted to substitute monetary games for desperately needed social, political and economic reforms. This is the Keynesian ideology and project in a single sentence:

Keynesian policy holds that expansionary monetary and fiscal policy can be substituted for structural social, political and economic reforms, enabling the status quo to retain its power and privileges without disruption.

In effect, Japan has pursued a vast monetization campaign for 26 years. The Bank of Japan creates money out of thin air and uses the free money to buy government bonds, funding the state’s enormous fiscal deficits (also known asmonetizing government debt). The BoJ has extended this monetization to corporate bonds and the stock market– effectively propping up government debt, corporate debt and the stock market with newly created money.

That these were once private-sector markets has been set aside, as the only thing that matters now is keeping them propped up, regardless of the cost. As I note in my new book Why Our Status Quo Failed and Is Beyond Reform, when emergency measures become permanent policies, you know the status quo is on life support.

Longtime readers know I have a long history of studying Japan, starting with language and cultural studies in university (mid 1970s) and continuing into the 2000s with economic, financial and social analyses. We have many friends in Japan (representing all age groups), and maintain an on-the-ground situational awareness of cultural/social trends.

If you seek a data-based grasp of Japan’s fiscal and financial decay, I recommend the following documents: the first is an easy-to-digest series of slides from an OECD study, the next two are detailed official Ministry of Finance reports in English, and the fourth one is an article describing the political resistance of the status quo in Japan to any real, systemic reform:

OECD Revitalizing Japan 2015 (Slideshare)

Japanese Public Finance Fact Sheet

Japan’s Fiscal Condition

Japan’s powerful prime minister still can’t get the economy going

The key takeaway here is that decay can last for decades, enabling the status quo of the state and media to maintain the illusion that superficially all is well.As visitors and paid pundits never tire of exclaiming, Japan remains a wealthy nation where everything works wonderfully well–public transport, etc.–and the average lifestyle is enviable: long lives, good health, an abundance of consumer goodies, etc.

But this well-being has been maintained at a high cost. Social cohesion is fraying (beneath the surface, of course), birthrates continue to decline (and what does that say about a culture, that young women no longer want children?) and the signs of economic stagnation are visible to anyone who peeks beneath the hood.

The Keynesian fantasy that Japan has embraced holds that every problem can be solved by printing more money. The Keynesian faithful (a.k.a. the Keynesian Cargo Cult of Paul Krugman et al.) hold that there is no problem that can’t be solved by printing more money and issuing more credit.

Not only are some problems immune to printing/borrowing more money, the reliance on printing/borrowing vast sums of money year after year creates a new set of intractable problems. Just to give one example of many: over 80% of Japan’s farmers are over 60 years of age and are poised to retire in the next decade. Printing money hasn’t printed new young eager farmers, nor has it changed the perverse incentives and political imbalances that are exacerbating the problem.

Decades of borrowing money in a futile attempt to avoid structural reforms has crippled Japan’s fiscal future. Even at effectively zero rates of bond yields, Japan now spends roughly a quarter of its government budget on debt service–and servicing of existing debt now consumes 41% of all tax revenues.

Tax revenues only cover 64% of spending; 35.6% of the government’s spending is borrowed.

These are staggeringly unsustainable policies, yet the status quo’s refusal to accept fundamental structural changes dooms Japan to the TINA Trap: there is no alternative to endless monetary expansion and central-planning control of markets.

Meanwhile, the fiscal realities become more unsustainable every year. While tax revenues increased 14.7% from 51 trillion yen (TY) at the peak of the property and stock bubble in 1989 to 57.6 TY today, social security spending has tripled from 10 TY to 32 TY.

While tax revenues rose a modest 15% in 26 years, total government spending soared from 60 TY to 96.7 TY–an enormous 60% gain.

Even as the BoJ repressed interest rates paid on government bonds to near-zero, national debt service more than doubled, from 11.6 TY to 23.6 TY.

Cutting income taxes–another Keynesian staple–failed to accomplish anything but further weaken the fiscal outlook. The percentage of personal income taxes as a share of all tax revenue has plummeted, to no avail: all the conventional measures of economic vitality have continued their downward trend.

Every status quo and every nation has pursued the same fantasy: that playing monetary games such as quantitative easing and buying stocks and bonds to prop up over-valued markets can be substituted for painful structural reforms in the core fiscal, social and financial sectors.

Japan has proven that decay can be stretched into decades, but it has yet to prove that gravity can be revoked by central bank monetary games.

My new book is #2 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, a 20% discount thru May 1, $8.95 print edition) For more, please visit the book’s website.

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“Fixing” the Gold Price

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Cyber Fraud At SWIFT – $81 Million Stolen From Central Bank

SWIFT_LogoSwift, the vital global financial network that western financial services companies, institutions and banks use for all payments and transfer billions of dollars every day, warned its customers yesterday evening that it was aware of cyber fraud and a number of recent “cyber incidents” where attackers had sent fraudulent messages over its system and $81 million was apparently stolen from a central bank.

As reported by Reuters, the disclosure came as law enforcement agencies investigate the February cyber theft of $81 million from the Bangladesh central bank account at the New York Federal Reserve Bank. Swift has acknowledged that the scheme involved altering Swift software on Bangladesh Bank’s computers to hide evidence of fraudulent transfers.

Jim Rickards, the leading expert on currency wars and risks posed by cyber fraud to people’s, company’s and indeed nation’s wealth commented to GoldCore about the cyber theft:

“Bangladesh is one of the poorest countries in the world. $100 million of their money disappeared. The money was on deposit with the Federal Reserve Bank of New York, the safest bank in the world. The culprits hacked SWIFT, one of the most secure message traffic systems in the world. If the Fed and SWIFT aren’t safe, nothing is safe. If Bangladesh had held physical gold, they would still have their money. The case for owning gold in an age of cyber-financial threats is compelling.”

Read More Here

As predicted, IMF (central bank) rolls up all central banks; issues $100 tr. in currency

Seymour Hersh – Saudi Government Paid Pakistan to Hold Osama bin Laden to Prevent U.S. Interrogation

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In the aftermath of the most signifiant geopolitical event of my lifetime, the attacks of September 11,2001, the U.S. government proceeded to concoct a fairytale for public consumption in order to advance imperial ambitions overseas and a implement a domestic surveillance state at home. This should be obvious to everyone by now.

The official 9/11 story has been filled with holes since the very beginning, but a traumatized American public was too gullible and emotionally damaged to see them. Those of us who saw such inconsistencies and pointed them out have been derided as “conspiracy theorists” for years, yet fifteen years later, the biggest “conspiracy theory” in modern American history is rapidly becoming conspiracy fact.

Read more here.

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The Status Quo Has Failed and Is Beyond Reform

That the status quo–the current pyramid of wealth and power dominated by the few at the top–has failed is self-evident, but we can’t bear to talk about it.This is not just the result of a corporate media that serves up a steady spew of pro-status quo propaganda–it is also the result of self-censorship and denial.

Why do we avoid talking about the failure of the status quo? We know it is beyond reform, and we’re afraid: afraid that the promises of financial security cannot be kept, afraid of our own precariousness and fragility, and afraid of what will replace the status quo, for we all know Nature abhors a vacuum, and when the status quo crumbles, something else will take its place.

We all prefer the comforting promises of vast central states. No wonder so many Russians pine for the glory days of the Soviet Union, warts and all.

But the central bank/state model has failed, and history can’t be reversed. The failure is not rooted in superficial issues such as which political party is in power, or which regulations are enforced; the failure is structural. The very foundation of the status quo has rotted away, and brushing on another coat of reformist paint will not save our societal house from collapse.

Yet those who benefit from our status quo (or hope to benefit from it upon retirement) naturally deny it has failed, for the reason that it has yet to fail them personally.

So we pretend to not understand that all unsustainable systems eventually collapse, and hope that the next central bank policy–negative interest rates, or bank bail-ins or helicopter money–will postpone it.

But the writing is already on the wall for us to read: these are the tell-tale signs of systemic failure leading to systemic collapse:

 

  • We keep doing more of what has failed spectacularly.
  • What began as emergency measures are now permanent policies.
  • The returns on status quo solutions are diminishing to less than zero.
  • Social mobility has eroded.
  • We have lost social cohesion and shared purpose.

 

But the failure runs even deeper: Our status quo is not only failing to solve humanity’s six core problems– it has become the problem.

To explain why this is so, I wrote Why Our Status Quo Failed and Is Beyond Reform, a new book that’s focused (90 pages) and affordable, i.e. the cost of a latte ($3.95 Kindle ebook, $8.95 print edition).

Why can’t our status quo be reformed? There are two primary reasons:

1) Those benefiting from the current arrangement will resist any reforms that threaten their share of the pie–and meaningful reforms will necessarily threaten everyone’s slice of the pie.

2) Reforms that actually address the structural flaws will bring the system down, as the status quo can only continue if its engine (permanent expansion of debt and consumption) is running at full speed. Once the engine stalls or even slows, the system collapses.

This is unwelcome news not just to privileged insiders–and the harsh reality is thatour status quo exists to protect the privileges of the few at the expense of the many–but to everyone who hopes to benefit in some way from our status quo’s cornucopia of promises.

So we cling to the dangerous hope that all the promises can be met by some future magic, and cocoon ourselves in an equally dangerous denial that collapse is inevitable. We don’t just want to avoid the decay and collapse of all the happy promises–we want to avoid the responsibility of taking part in shaping the replacement system.

We all want to wallow in the false security of one form of the old Soviet Union or another. Call it Japan, or the Eurozone, or the U.S.A., or Russia, or the People’s Republic of China–they’re all versions of the doomed Soviet model of central planning, propaganda and supression of anything that isn’t supportive of the status quo, i.e. dissent.

The truth is the usual menu of reforms can’t stop this failure, so we have to prepare ourselves for the radical transformations ahead. The decay and collapse of our status quo is not the disaster we assume; rather, it is good news for the planet and everyone who isn’t in the privileged elites, as the collapse will clear the way for a much more sustainable decentralized system that is already visible to those who know where to look (crypto-currencies, local community economies, etc.).

The decay phase of the status quo (i.e. the present) offers us a magnificent opportunity to fashion alternative systems that operate in the shadow of the status quo, making use of technologies such as the Internet. Alternative systems can arise without challenging the status quo; indeed, sustainable, decentralized systems offer open-minded elements of the status quo new models and new partners.

My own proposal for a replacement system is called CLIME–the Community Labor Integrated Money System. Whether you agree with my proposal or not, the point is that we have to wake up from our propaganda-induced slumber and take responsibility for being part of the solution rather than passively clinging to the problem, i.e. our status quo.

You can find our more about Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle ebook, a 20% discount thru May 1, $8.95 print edition) on the book’s website. The book is #2 on Kindle short reads -> politics and social science.

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Why Can Vulture Funds Act With Virtual Impunity?

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Q&A: Vulture funds and why they can act with virtual impunity- Up to 90,000 Irish loans are now owned by foreign investment funds

As many as 90,000 Irish loans are now owned by foreign investment funds. The largest tranche went into vulture funds when about 15,000 mortgages were sold as part of the liquidation of IBRC. This was made up of many loans that originated with Irish Nationwide Building SocietyBank of Scotland has also sold its loan book, while Bank of Ireland and Ulster Bank have sold portions of their non-performing loans to such funds.

Apart from the banks, who are selling loans to such funds? The vast majority of asset disposals by Nama – in the region of 90 per cent, in fact – have been to US vulture funds.’

 

Dancing Psychiatrist [email protected] Message for the public: #JuniorDoctorsStrike pt. 1 and pt. 2