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Off The Cuff: Shades Of World War One

A similar powderkeg of geopolitical tension haunts us today
Thursday, February 12, 2015, 6:35 PM

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

  • The Seeds Of World War 3
    • Where our path in Ukraine, Syria, Afghanistan, Libya, Iraq may lead
  • Financial Conquest
    • A more bloodless form of war being waged round the world today
  • A Crisis Is Unavoidable At This Point
    • We're too far down the path of 'extend & pretend' to avoid consequences
  • Lack Of Leadership
    • Our system seems too broken to produce anymore courageous leaders
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America Vs Russia: What's At Risk

Guidance for the concerned citizen
Thursday, February 12, 2015, 2:26 AM

Executive Summary

  • Ukraine's economic free fall
  • The real risk of Ukraine igniting the next world war
  • Why a lasting peace is unlikely
  • What you should do in preparation of escalating conflict between Russia and the West

If you have not yet read Part 1: The US' Suicidal Strategy On Ukraine, available free to all readers, please click here to read it first.

What's At Risk

Now we come to the hard part of this report, the part where we have to discuss what might happen next.  My analogy for this period of history is the year(s) before WW I.  Historians still cannot quite say what led up to the immense human disaster that we now call World War I, but enough failed diplomacy, bugled treaties, inept leadership, and inflexible political institutions were all grating against one another that a single assassination of a single archduke was a sufficient spark to set the whole pile ablaze.

Were those other failures not all stacked up like so much try tinder, a dozen archdukes could have been shot without anything more serious than a dozen solemn state funerals would have resulted. 

Similarly, today we have a conflict in Ukraine which nobody can exactly say what the US's compelling interests are with Ukraine because nobody really knows.  It's more a matter of principle, with that principle being the US gets to do what it wants, when it wants, and nobody is supposed to challenge that.

Putin said as much on Feb 7, 2015:

“There clearly is an attempt to restrain our development with different means,” he told trade union activists. “There is an attempt to perturb the existing world order... with one incontestable leader [Obama] who wants to remain as such thinking he is allowed everything while others are only allowed what he allows and only in his interests. This world order will never suit Russia.”

(Source)

Clearly Russia is no pushover country and has no interest in having dangerous coups and rising ultra-nationalism on its borders go unchecked, and this is why we are in such dangerous territory.  The US has not been up against a legitimate foe for such a long time, it may be like the school yard bully that fails to properly evaluate the new kids at school before picking a fight.

Russia is making its position known to the world.  It has been... » Read more

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Off the Cuff: The Black Swans Are Getting Ready To Land

Incoming!
Friday, February 6, 2015, 2:13 PM

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

  • The Importance Of Greece
    • Exposing the fatal flaw of the global economy
  • The End Of The Fiat Currency Regime
    • Today's woes were predictable back in 1971
  • Horrible Time For Investors
    • Tons of risk and precious little safe havens
  • Timing For The Crash
    • Unknowable, but closer than ever
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The Approaching Great Unraveling - Are You Prepared?

Greece is just the start of the global insolvency crisis
Thursday, February 5, 2015, 4:54 PM

Executive Summary

  • Which countries are next in line to "go Greek"?
  • Which major countries will be hit by deflation next? Which will instead see massive inflation?
  • How individuals should start preparing
  • Why huge massive losses and wealth transfer are inevitable for many

If you have not yet read Part 1: Greece Exposes The Global Economy's Achilles Heel, available free to all readers, please click here to read it first.

At a high level, the suite of predicaments we face are as obvious as they are serious. 

Perhaps the largest predicament we face is that infinite economic growth on a finite planet is an impossibility and yet that's exactly what our monetary and banking systems require.

Not merely because the bankers and politicians want it, which they do, but because that's how the system itself is designed.  When you loan money into existence, you get an exponential increase of that money over time.  Actually you get an exponential increase in debt too, only at a faster pace which translates into larger quantities.

For as long as debts are growing at an exponential pace, everything is fine with the world, the economy hums along, politicians get re-elected and the big banks churn out profits year after year.

However, when the debt growth stops, financial panic sets in, the banking system threatens collapse, and the fiscal and monetary authorities pull out all the stops in their efforts to prevent these various ills from getting any worse.

What the political and banking folks are desperately seeking to prevent is nothing less than a Great Unraveling.

Their task is impossible.

The Great Unraveling will be a set of related economic and financial crises that end up taking inflated expectations and reducing them to match reality.  Perhaps this process will take years, or maybe it will take decades, or maybe it will take months.  Nobody knows.  But the longer that... » Read more

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The Oil Crunch Begins To Bite

The repercussions are going to be vicious
Monday, February 2, 2015, 10:39 PM

While much of the financial press has been working to cast the drop in oil prices as 'unambiguously good' for US and global economies, the reality is, well, a lot more ambiguous. » Read more

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Off The Cuff: An Important Shoe Just Dropped In Europe

The Greek election is a clear rejection of the status quo
Wednesday, January 28, 2015, 9:11 PM

In this week's Off the Cuff podcast, Chris and Alasdair Macleod discuss:

  • Greece: What Will The Syriza Win Bring?
    • A rejection of kow-towing to the Troika
  • Stresses Across The Eurozone
    • Running out ways to delay the inevitable
  • Gold & Inflation
    • Rising prices for both are likely from here
  • Slowing Global Growth
    • But a deflationary wave may need to sweep the globe first
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Do You Have Your Escape Plan Ready?

(They do)
Monday, January 26, 2015, 9:56 PM

It's time to face a few unpleasant truths.  

The 'super wealthy' are well-along in their plans to hightail it to safety when the system crashes. » Read more

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Off The Cuff: Central Banks Gone Wild

Big moves this week by the ECB, Switzerland & Canada
Friday, January 23, 2015, 11:41 AM

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • The ECB Bazooka
    • Making sense of Draghi's QE announcement
  • The Swiss Surprise
    • A massive shock to the status quo
  • The Canadian Cut
    • Suddenly panicking about their asset bubbles
  • Making Sense Of The Madness
    • We're suddenly a lot closer to the endgame
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The Consequences Playbook

What will happen as central banks lose control
Wednesday, January 21, 2015, 11:45 PM

Executive Summary

  • Desperate central banks are dangerous central banks
  • Why wealth disparity will get worse
  • The list of what comes next as central banks lose control
  • What you should do in advance

If you have not yet read When This Ends, Everybody Gets Hurt available free to all readers, please click here to read it first.

What’s really happened since 2008 is that central banks decided that a little more printing with the possibility of future pain was preferable to immediate pain.  Behavioral economics tells us that this is exactly the decision we should always expect from humans. History says as much, too.

It’s just how people are wired. We’ll almost always take immediate gratification over deferred, and similarly choose to defer consequences into the future, especially if there’s even a ridiculously slight chance they won’t materialize.

So instead of noting back in 2008 that it was unwise to have been borrowing at twice the rate of our income growth for the past several decades -- which would have required a lot of very painful belt-tightening -- the decision was made to ‘repair the credit markets’ which is code speak for: ‘keep doing the same thing that got us in trouble in the first place.’

Also known as the ‘kick the can down the road’ strategy, the hoped-for saving grace was always a rapid resumption of organic economic growth. That’s how the central bankers rationalized their actions. They said that saving the banks and markets today was imperative, and that eventually growth would return, justifying all of the new debt layered on to paper-over the current problems.

Of course, they never explained what would happen if that growth did not return. And that’s because the whole plan falls apart without really robust growth to pay for it all.

And by ‘fall apart’ I mean utter wreckage of the bond and equity markets, along with massive institutional and sovereign defaults. That was always the risk, and now we’re at the point where... » Read more

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What To Believe Anymore?

Mainstream media requires a huge dose of salt these days
Tuesday, January 20, 2015, 10:40 AM

Well, here we are in the late hours of the latest and biggest bubbles that central banks can blow. The whole world is involved and no country will be immune from the aftershocks when these nested bubbles in virtually all asset classes burst.

In fact, the whole scheme requires that political and monetary solidarity be maintained. If anyone breaks ranks, then the whole thing could come crashing down. » Read more