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The China Syndrome – In Reverse

The start of a meltdown that might gut the world?
Monday, July 27, 2015, 9:52 PM

The China Syndrome is alive and well. In todays' world, it just has more to do with nuclear levels of margin debt, not runaway radioactive decay.

If China really gets into worse shape, we’ll see them panic and do everything from weakening their currency to support trade (which will export deflation via prices of manufactured goods), to imposing capital controls, to selling US Treasury bonds to pay for the rescue efforts.

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Assume The Crash Position

What this means for gold, oil, copper & real forms of wealth
Friday, July 24, 2015, 11:03 AM

Executive Summary

  • The entire commodity complex is breaking down
  • What to expect next
  • What will happen with gold
  • What all this means for the future

If you have not yet read Part 1: Deflation Is Winning – Beware! available free to all readers, please click here to read it first.

Commodity Bust

Copper

'Dr. Copper' is so named for the metal's uncanny ability to both diagnose current economic activity and deliver a prognosis on future activity. Right now, it's saying the patient is very sick and not likely to recover any time soon:

Copper has just broken through key support (in dotted circles) and looks like it could fall further. Notice the behavior of copper in 2008/09 and you’ll see that paying attention to copper is a good idea.

Oil

Oil has obviously fallen by a lot, with WTIC crude well under $50 again today, signaling ...  » Read more

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Off The Cuff: Why Commodities Are Getting Crushed

Reports of econonic growth are 'fluffed-up fakery'
Thursday, July 23, 2015, 8:17 PM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • The Commodity Beat-Down
    • Why are gold, oil, etc so weak?
  • Fluffed-Up Fakery
    • Official economic reports are just pure fiction these days
  • The End Of The Long Cycle
    • The devastation when this bubble pops will be epic
  • Stock market roll-over?
    • It's increasingly looking like we'll finally see a material correction

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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Gold Assaulted (Again)

But don't expect the authorities to care
Monday, July 20, 2015, 9:48 PM

Over and over again, and with increasing frequency, we’ve seen “”markets”” behave in ways that defy common sense but align perfectly with the goals of the central planners.

Stocks up. Bonds stable. Commodities down. And especially: Gold down -- practically every month since the commencement of QE3, the largest money printing operation in world history. » Read more

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Off The Cuff: We Pledge Allegiance, To The Banks...

It's the banks' world. We just live in it.
Thursday, July 16, 2015, 6:45 PM

In this week's Off The Cuff podcast, Chris and Charles Hugh Smith discuss:

  • We Live To Serve The Banks
    • Greece is now a nation of slaves for the banking system
  • Instability Risk Is Sky-High These Days
    • When central planners lose control, it's going to be bedlam
  • As Ever, Access To Resources Will Determine Everything
    • We're seeing the resource-poor countries now faltering first
  • Debt-based Money
    • As long as we have it, we'll never be free
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Greece Humiliated

The Troika wants Greece to be a warning to the other PIIGS
Monday, July 13, 2015, 7:50 PM

Well, that went badly. For the Greeks in general and for Tsipras specifically. After many years and rumors and brinksmanship, and a powerful "No" referendum from the people of Greece, Tsipras managed to ‘secure’ for Greece a deal worse than any other offered to date. » Read more

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More Sovereign Defaults Are Coming

Prepare for the turmoil beforehand
Friday, July 10, 2015, 11:47 AM

Executive Summary

  • Energy plays a key role in sovereign economic (un)sustainability
  • The export boom is imploding
  • The neofeudal model is collapsing as 'serf' nations enter default
  • Take preparation now, while it still matters

If you have not yet read Part 1: Why Greece Is The Precursor To The Next Global Debt Crisis available free to all readers, please click here to read it first.

In Part 1, we examined the core dynamics that expanded Greek debt to its current unmanageable size—currency/trade deficits and bailouts—and the enormous transfer of private bank debt to the public ledger via the Troika bailouts, only 10% of which trickled down to the Greek people.

There are two other dynamics beneath the surface theater, dynamics which are not unique to Greece but are characteristic of the most heavily indebted nations.

Food and Fuel Imports Drive Structural Imbalances and Debt/Currency Crises

In our recent podcast, Chris mentioned this chart of imported energy by nation. Note that the nations with crushing structural debt loads (the so-called PIIGS—Portugal, Ireland, Italy, Greece and Spain) also happen to be major importers of energy.

What does this have to do with Greece’s debt crisis? Let’s go back to the key driver of Greek debt—imports that far exceeded exports, not occasionally but structurally, year in and year out.  Money was borrowed to pay for those imports, interest accrued on the loans and then austerity was pressed on the debtor nations by the lenders as a means of extracting interest on the rising debts.

If a nation does not generate a significant percentage of its own energy and food needs, or export enough goods and services to offset its imports of energy and food... » Read more

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Off The Cuff: The Ghosts Of 2008 Have Returned To Haunt Us

Not only are the same risks still here, they're bigger
Thursday, July 9, 2015, 4:18 PM

In this week's Off The Cuff podcast, Chris and Nomi Prins discuss:

  • The Ghosts Of 2008
    • Are suddenly returning en masse to haunt us
  • Growing Central Bank Insecurity
    • Beginning to realize that they've cornered themselves
  • The War On Cash
    • Central planners continue to tighten restrictions
  • No Solutions For The Status Quo
    • A massive reset is the best we can hope for

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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Greece: Where To From Here?

Amidst the turmoil, some hard predictions can be made
Monday, July 6, 2015, 10:23 PM

It’s pretty hard keeping up with the rapid-fire developments in Greece. Things change every hour it seems; rumors abound and confusion runs deep.

At this point, it all depends on what Greece is prepared to accept and what the EU is prepared to offer. So from here, we could see anything from a full financial pardon from the EU (very unlikely) to a full Greek exit (still quite possible). » Read more

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They're Coming For Your Cash

Liquidity-starved banks will take your savings via bail-ins
Friday, July 3, 2015, 12:19 PM

Executive Summary

  • The banking system runs on liquidity
  • Banks will do anything to keep it flowing -- including raiding their depositors
  • The risks of a global liquidity crunch are dangerously high today
  • Why extracting physical cash from the system is highly advised

If you have not yet read Part 1: In A World Of Artificial Liquidity – Cash Is King available free to all readers, please click here to read it first.

It's All About Liquidity For The Banks

Liquidity is the buzz-word that central banks used to justify their policies of keeping short term rates at zero (give or take) percent and buying bonds from banks in return for giving them more of it. Central banks say their primary responsibility is to balance full employment with low inflation, but that’s just code for being able to keep the largest banks solvent in times of emergency by all means possible. This current emergency has lasted nearly seven years and counting.  

Here are my laws of liquidity behavior:

The first law of liquidity – when it is most needed, it will be least available.

The second law of liquidity – the easier it is to get, the less value it holds for the recipient.

The third law of liquidity – the harder it is to find, the greater its systemic cost.

Banks gain on multiple fronts from “accommodative” monetary policy with respect to their liquidity needs. First, they can borrow money at next to nothing. Second, they can hoard that extra cash under the guise of complying with capital reserve requirements and get brownie points for passing stress tests because they are holding the cash or high quality assets bought with the cash, that central banks provided them to begin with. Third, they can sell bonds they don’t want or need at full value to central banks, and afterwards mark similar bonds at higher levels than the market would otherwise value them.

This is all shell-game finance. It is why people should be diligent about... » Read more