"[T]he average American doesn't have a clue about what's in store for his own country. At this point, the man on the street is aggravated about the lack of job opportunities, as well as by the ongoing real estate debacle and by soaring prices at the pump. But the true disaster lurking in the big picture remains beyond his comprehension." - John Embry - 5/6/11
Dear All,
I have previously written about the critical role the drug trade plays in the banking system. Catherine Austin Fitts: Narco-Dollars for Beginners Other than central banks, the drug cartels are likely the banking system's most significant source of liquidity.
In the largest case of money-laundering in U.S. history Wachovia Bank (now Wells Fargo) admitted to laundering $378 billion -- one third of Mexico's GDP -- for that country's cartels from 2004 to 2007. SanFrancisoChronicle: U.S. banks' role in Mexican drug trade. The attendant prosecutorial pressures however created critical disruption to banking system liquidity flows -- a system highly dependent on the cocaine trade for its normal functioning. The matter of the banking system's drug addiction is a subject not discussed in polite circles. In this well done and intriguing report, Max Keiser and Stacy Herbert examine the connection between the severe drug cartel liquidity flow contraction in 2007 and the ensuing global banking liquidity crash. Keiser/Herbert: Cocaine Economy
The most revealing and least commented upon fact of le episode Strauss-Kahn concerns his removal from the Air-France jet at a New York gate: He was pulled out of the first-class cabin.
First-class is the manner in which the international political class lives. FoxNews: Ex-IMF Director set to receive 'Golden Parachute' from U.S. taxpayers Taking administrative cash from working U.S. taxpayers (The U.S. effectively controls the IMF and is its largest financial contributor) IMF elitists lead privileged lives as they rape the poor citizens of vulnerable developing nations through stealth-imperialism.* Strauss-Kahn is an economic terrorist and bag-man for the major oil companies. What he has allegedly done to this particular maid and predecessor females is, sadly, the least of it.
The press continues to portray the rebellions in North Africa and the Middle-East as calls for democracy. They are anything but. The populace under those regimes are hungry for food and frustrated by their deprivation of the basics of life. They could care less what political system delivers these things to them. These are not real countries anyway -- they are tribal compilations.
The Federal Reserve hides its activities from the public, lies about its deeds and intentions, misleads Congress and manipulates markets. Bloomberg: Fed Gave Banks $30 billion in Secretive Loans as Low as 0.01% Accordingly, When a former Fed governor states that gold and silver "are clearly in a bubble" and would "sell them and buy the dollar," you can be sure the dollar is going lower and precious metals higher. The claptrap commences at 1:37: Robert McTeer on CNBC
I realize this is hard to follow but the guy has a very active love life. The current revelation is not to be confused with Barney's prior admission that his then live-in lover (who was on probation for both drug possession and possession of child pornography and for whom Barney admitted abusing his House privileges by attempting to interfere in the pedophile's legal proceedings) was running a prostitution ring out of Barney's apartment. No, ma'am....different boyfriend -- different scandal. The latest: BostonHerald: Barney Frank admits to helping boyfriend land job at Fannie Mae
Extreme examples often illustrate a point best. Zimbabwe has had among the worst hyper-inflations in recorded history. Note the solution: CommodityOnline: Zimbabwe may sell diamonds to launch gold-backed currency
In this January 2010 post, Anatomy of a Seizure an analysis was made of the FDIC closing of Horizon Bank, Bellingham, WA, the agency's first bank shutdown of that year. Here is a more recent example of the rot that hasn't gone away in the banking system. On April 29th the FDIC seized Community Central Bank, Mount Clemens, MI, which reported assets of $476.3 million against deposits of $385.4 million, a margin of assets to deposits of 1.23 to 1.
(In $millions)
$ 385,400. Deposits
- 183,200. FDIC Estimated cost to cover deposits (asset shortfall to deposits)
202,200. Implied FDIC estimate of true asset value available to cover deposits
FDIC estimated asset value / Community's deposits 202,200/ 385,400 = 52.4%
FDIC estimated asset value/ Horizon stated asset value: 202,200 / 476,300 = 42.4% **
Not much has changed in either the state of bank balance sheets or the quality of FASB financial reporting. It is difficult to comprehend how a federally regulated banking institution can be permitted to value its assets at $476 million one day and on the following day have its Supervisor value those same assets at $202 million. But then you wouldn't understand the Federal Accounting Standards Board, a group of hookers serving the desires of the banking industry and the federal government (same thing, really) which officially endorses widespread fraud by allowing banks to assign whatever value they wish to deteriorated assets.
In my last post I discussed the bubble in higher education. Just as scandalous is that colleges are preparing students for the wrong kind of jobs and in many cases, non-existent ones. NYTimes: Many College Grads Find Job Market Humbling HuffPost: Moving Home: When College Grads Face Uncertain Futures
Perhaps the worst advice one can give the average high school student is to attend college. Rather, she would be better off learning a trade and avoiding debt she'll never be able to repay. For those who have already started college it may well be that the smart choice would be to drop-out immediately. A college degree is no longer a good financial investment for most Americans. Moreover, the quality of the product has deteriorated markedly.
The problem is not limited to colleges: NYTimes: Is Law School a Losing Game? NYTimes: At Well-Paying Law Firms, a Low-Paid Corner
The following is a must watch. The administration of higher education has become a corrupt and credit-driven enterprise: College Conspiracy
As America's college graduates find themselves on the front line of reduced job market expectations, it is part of a larger trend of lower American living standards. HuffPost: Recession Destroyed Savings of One Out Of Four Older Workers. Unfortunately it is only the first of two waves. Lower nominal incomes will be compounded by lower real incomes once inflation hits in earnest
The trend...
FORTUNE: Pimco: 'The largest position in the fund is gold'
Bloomberg: Global Food Prices Extending Gains Set to Raise Costs for Tyson, Kellogg
WSJ: China now world's largest gold buyer
Take a look at this absolutely stunning chart prepared by GMO's Jeremy Grantham:
China's Share of World
Commodity Consumption
CHINA % | |
COMMODITY | OF WORLD |
Cement | 53.2% |
Iron Ore | 47.7 |
Coal | 46.9 |
Pigs | 46.4 |
Steel | 45.4 |
Lead | 44.6 |
Zinc | 41.3 |
Aluminum | 40.6 |
Copper | 38.9 |
Eggs | 37.2 |
Nickel | 36.3 |
Rice | 28.1 |
Soybeans | 24.6 |
Wheat | 16.6 |
Chickens | 15.6 |
PPP* GDP | 13.6 |
Oil | 10.3 |
Cattle | 9.5 |
GDP | 9.4 |
*Purchasing power parity Source: GMO |
When you hear a politician refer to his career as a "public service" your gag reflex should kick in. The business of public service is self-enrichment. As long as Americans continue to naively embrace the notion that there are meaningful differences between the two major political parties nothing will change for the better in the U.S.
Participation in today's political process no longer occurs at the ballot box; Cash is what drives the system. Voting has become a quaint activity, to paraphrase Leona Helmsley, "for the little people." United States elections have become an illusory exercise for the masses in which participants are made to feel they are practicing some sort of self-determination. It is a grand exercise in the placebo effect.
Elections decide only which group shall have the privilege of profiting from the machinery of government. Mencken referred to elections as "advance auctions on stolen goods." Believing they are catalysts for change, voters are disappointed when it doesn't happen and then, another election cycle begins: WashingtonExaminer: Obama skirts rule of law to reward pals, punish foes
Worth the read...
John Embry: Washington's tub-thumping fools no one
This is Wall Street's modus operandi. Absolutely nothing on Wall Street has changed: NYTimes: Joe Nocera - Was LinkedIn Scammed?
Regarding gold...
I'm hearing from readers questioning my judgment as to how much upside potential remains in the prices of silver and gold. It is the wrong question. Gold's value is not measured by dollars or any paper currency. Gold measures currency value. The appropriate question is: How much further deterioration in the dollar's purchasing power should we expect? The issues reviewed here for the past two years should make it clear that the dollar is a disaster and that there is neither the political or populist will to make the tough choices in order to change its trajectory. The world's creditors have lost their appetite for U.S. debt. Notwithstanding the bluffing, the deluge of new dollars cannot cease. The Fed is trapped and the dollar's darkest days are ahead. As I have stated previously, the dollar prices of both gold and silver are much closer to their bottoms than their tops. Gold is still in the early stage of its re-emergence into the monetary system. The price it will reach within the next several years will take your breath away, but remember -- that will be a function of the dollar's deterioration. Gold is the constant.