Economic 9/11 in 2012

There have been many predictions of markets and economies crashing this year but in the Daily Mail today is a report from 3 well-known forecasters and authors Gerald Celente, Harry Dent and Robert Prechter that this year you had better prepare for an economic 9/11.

Just when you thought unemployment was dropping and stock markets were surging back, these three analysts today sent out a stark warning to Americans to brace for another financial crash.

Trend forecaster Gerald Celente advises buying a gun to protect your family, stocking up on gold if the dollar crashes and planning a getaway, so it’s no shock he’s preparing for an ‘economic 9/11’.

Share prices and unemployment are posting their best figures in four years since the recession hit, but Mr Celente, along with authors Harry Dent and Robert Prechter, says the rebound won’t last.

All three were profiled in a USA Today feature on Monday. Mr Dent, who had The Great Crash Ahead published last September, believes stocks are simply experiencing an artificial short-term boost.

Mr Prechter, who had a new version of Conquer the Crash published in 2009, is fearful of today’s economic similarities to the Great Depression and says the brief recovery will fail like in the 1930s.

‘The economic recovery has been weak, so the next downturn should generate bad news in a big way,’ he told USA Today, saying the markets look ‘very bearish’ for the third time in 12 years.

Mr Celente, who works as an analyst at the Trends Research Institute, which he founded in Kingston, New York, has been doom-mongering for years – so his latest concerns are hardly surprising.

But he told USA Today that a potential run on banks by savers could cause the government to invoke a national holiday and temporarily close them all, which happened during the Great Depression.

‘When money stops flowing to the man on the street, blood starts flowing in the street’

Gerald Celente, trend forecaster

It comes as billionaire Berkshire Hathaway chairman and CEO Warren Buffett today painted a happier picture of stocks, which he said are relatively cheap compared to other investments as the economy improves.

Meanwhile contracts to buy previously owned U.S. homes neared a two-year high in January in further evidence the housing market was slowly turning the corner, an industry group said today.

However oil prices have been spurred higher by worries over disruptions to Middle East supplies due to sanctions against Iran and expectations for greater demand from an improving U.S. economy.

On the stock market

But on the markets, the S&P 500 has risen nearly nine per cent so far this year and the Dow Jones is trading around the psychologically-important mark of 13,000. But the three experts aren’t happy.

Mr Prechter told USA Today both markets will crash back below their lows hit at the height of the financial crisis in March 2009. Unemployment fell last month to 8.3 per cent, a three-year low, and weekly jobless claims are at a four-year-low.

But Mr Dent believes that people will be left out of work again in 2013 or 2014 and U.S. markets will crash because central banks have been pumping so much money into markets that they are unrealistically strong.

Spain’s Woes Caused By Euro

Spanish economist Dr. Manuel Balmaseda gave an interview with RussiaToday outling the problems Spain find itself in and relates it to its membership of the euro. The key points are:

ECB set interest rates for core of Europe but too low for Spain.

Cheap money created a real estate bubble and brought in many unqualified immigrants.

When crisis happened, the real estate bubble collapsed causing the economy to collapse.

The cuts now won’t make a difference, it’s the euro that’s causing the problem.

There is about 6 – 9 months of goodwill left in the country after that the people will feel deceived when they realize that reality doesn’t meet their expectations.

Spain’s future does not lie in the euro zone, same for the PIGs.

Spain’s exit from eurozone is a political problem. Of Spain’s’ foreign debt of €900 billion, about half is owned by France and Germany so they don’t want Spain to leave the euro. Because if you leave the eurozone you must default.

It’s very simple, if I am a bank and you owe me money, then “STOP EATING, TAKE YOUR CHILDREN OUT OF SCHOOL AND PAY ME BACK”.

Devaluing is the solution and long as you make other structural changes also, but you can do nothing if you don’t devalue.

Politicians have FALSELY said if you leave the euro you are out of the EU.

In Spain nobody is aware that the crisis is caused by the euro and lack of competitiveness it brought. The banks and media blame overspending by the administration, although that didn’t help.

Its economics 101, if you have these countries in trouble and force cuts, this will cause them to go deeper into recession. You will never reach the goal of closing public deficit because the cuts keep reducing your income.

For full interview click here.

MISH wrote further about Spains worsening economy

Conditions in Spain have deteriorated at a rapid pace. As little as a few months ago the Spanish economy was foolishly projected to grow at .7%. Now it expected to contract 1%.

Likewise, Spain’s budget deficit was supposed to shrink to 6% in 2011 and 4.4% in 2012. Instead it rose to 8.51 percent in 2011, up from a revised estimate of 8.2% which was up from a revised estimate of 6.5%.

Spain must explain soon to the European Commission why its 2011 budget deficit was substantially higher than expected and deliver clear future budget plans, the Commission said on Tuesday.

Spain’s 2011 budget deficit came to 8.51 percent of GDP, the finance minister said on Monday, up from early estimates of 8.2 percent and far above forecasts from the Commission for something nearer 6.5 percent.

Specifically, Spain’s budget deficit is 91.3 billion euros, 8.51% of GDP. So it should not take a wizard to realize the simple mathematical fact that team Rajoy has not yet begun with budget cuts and tax increases, if by 2012 Spain is to meet the 4.4% of GDP deficit target set by creditors.

The measures announced in December were only an appetizer. Instead of sharpening the blades, I think a good lawn mower would be more practical.

The announced cuts and tax increases of last December (income tax, capital gains), are expected to generate about 14,900 million.

To meet the objective of a 4.4% deficit, in 2012 the government deficit should not exceed 46,500 million euros.

To do so requires a nearly 30 billion euros hole to be filled, with the aggravating circumstance that it’s now March and those 30 billion euros need to come in the next 9 months.

This figure is double the cuts and tax increases approved last December. So Rajoy has quite imagination if he expects this to happen.

Iran Calls For Gold Instead Of Dollars For Oil

Now we know what happened to Saddam and Gaddafi when they went down this route, but Iran are a different prospect. In recent months Iran has announced that it is to trade its oil with Russia, China and India in their own currencies but the Iranian state news agency IRNA has stated that it will accept payment in gold instead of dollars as a result of being unable to make the transactions in dollars due to sanctions. As Reuters put it

Significant difficulties in making dollar payments to Iranian banks have forced Iran’s trading partners to look for alternative ways to settle transactions, including direct barter deals.“In its trade transactions with other countries, Iran does not limit itself to the U.S. dollar, and the country can pay using its own currency,” central bank governor Mahmoud Bahmani was quoted as saying. “If a country should so choose, it can pay in gold and we would accept that without any reservation.”

The sanctions include a phased ban on importing oil from Iran, which EU member states are to implement by July.

China and India, two of the largest consumers of Iranian oil, have said they will continue imports, but Japan and Korea have announced cuts to quotas following pressure from the United States. As a result the value of Iran’s rial has plummeted, pushing the price of goods sharply higher across the country.

Iran also has another way around the sanctions

Iran imports commodities from China and India in exchange for the countries’ currencies. Tehran’s move is aimed at bypassing the upcoming freeze on CBI’s assets and the oil embargo, which the European Union’s foreign ministers agreed to impose on the Islamic Republic.

 

US Water Bills Set To Triple

A basic requirement in life is water. It looks in future years this is going to be a lot more expensive. A story is coming out of the US regarding the cost of water tripling. As if gas prices rising isn’t enough. The time to upgrade the water system was 6-7 years ago. The timing is just lousey.

A shocking new report about the nation’s crumbling drinking water system says that Americans should expect their bills to double or triple to cover repairs just to keep their faucets pouring. That means adding up to $900 a year more for water, nearly equal the amount of the newly extended payroll tax cut.

Fixing and expanding underground drinking water systems will cost over $1 trillion in the next 25 years and users will get socked with the bill, according to the American Water Works Association.

………

Families can expect to pay at least $300-$550 more for water in taxes and fees just to keep their current systems operating. Add growth and improved systems, and that bill jumps to $900 for a family of three, said the report.

Currently, Americans pay about $400 a month in water taxes and fees.

 

 

Referendum For Ireland

Great news for Ireland. The Irish Constitution wins again and ensures the Irish have one last crack at an EU treaty. Predictably TPTB in Ireland will use the same tactics as the last time. The message as usual will be

If it’s not passed, the sky will fall in, the world will end, everyone in europe will hate you.

If you do pass it, everybody will get a job and the Celtic Tiger will come back.

or some thing like that.

Constantin Gurdgiev had this to say on the Fiscal Compact

As a whole, to comply with the Pact parameters, the Euro area economy will have to shrink by some €535-540 billion every year between now and 2020 – an equivalent of reducing euro area growth by a massive 3.9% annually.

………………

Ireland will be one of the worst impacted economies in the group courtesy of our excessively high structural deficits, debt to GDP ratio and cyclical deficits. In 2012, Ireland is forecast to post a structural deficit in excess of 5.5% of potential GDP – the highest structural deficit in the entire Euro area. To cut our structural deficit to 0.5% will require reducing annual aggregate demand in the economy by some  €7-8 billion in today’s terms. Debt reductions over the period envisioned within the pact will take an additional €12 billion annually. For an economy with huge private sector debt overhang, paying some 12% of its GDP annually to adhere to the Fiscal Pact is a hefty bill on top of the already massive interest bill on public debt.

So, looking at the past will give an indication of likely countries will be able to stick to the constraints

My own research based on the Euro area data shows that during 1990-2008, only two euro countries – Finland and Malta – have complied with the Fiscal pact criteria more than 50% of the time. The rest of the member states, including Germany and France, have run sustained deficits more than 60% of the time. Once a euro state found itself stuck in twin current and fiscal deficits in one decade (the 1990s), transitioning to a twin current account and fiscal surplus in the next decade (the 2000s) was virtually impossible. For example of all states in EA17 who were in current account deficit throughout the 1990s, only 2 have managed to achieve current account surpluses during the following decade. Only one country that experienced fiscal deficits in the 1990s has managed to generate fiscal surpluses over the following decade. No country has been successful in restoring fiscal and external balances after a decade of twin deficits.

Gurdgiev sums it up as

In short, the Pact our Government so eagerly subscribed to is at the very best a continuation of the status quo. At its worst, Ireland and other member states of the Euro are now participants to a fiscal suicide pact, having previously signed up to a monetary straightjacket as well.

Senator Shane Ross had the following comment

Mr Ross said it was a fiscal pact on austerity and was dictated by the French and Germans without any input from Ireland.

He also said it was a road we should not go down and the debt reduction has to be tied into the ratification process.

Silver Manipulation Attempt Fails

Excellent news for Silver when a paper contract attack on silver price failed. The cartel dumped 102.5 million ounces in paper silver over 7 minutes in an attempt to manipulate the silver price down but failed.

Silver has put in a monster rally this week, and much to the cartel’s dismay, was preparing to close the week above $35.50 today, preparing a break-out next week that could potentially fill the gap from the September smash to $40, and see silver off to the races back to challenge the all-time nominal highs near $50.  Obviously, the cartel stepped in with a massive paper raid to prevent such a bullish weekly close.
That’s where things got interesting and likely induced more than a few Myocardial Infarctions today among JPMorgan execs.
Check out the following price and volume chart screen shot on this 1-minute silver chart courtesy NetDania.
Notice the massive volume that began at approximately 14:47, with 4,000 paper contracts dumped on the market in a single minute, followed by 2,500, 1,800, 3,200, 3,000, 2,900, and 3,100 over the next 6 minutes.

 

Elliot Wave Prediction For Gold

Elliot wave prediction for Gold from Jesse’s Cafe Americain.

USA – Have You Moved Your Money Yet?

Angry at Wall Street bank, churches in San Fransisco have moved their money to smaller banks or credit unions. It seems to be a growing trend across the USA and probably the best way to give banks the message.

 More than 650,000 people moved to credit unions in one month last year, and 5.6 millionAmericans switched banks in the last three months.

Religious organizations have been at the forefront of movements to get consumers to move their money. The New Bottom Line, a coalition of faith groups, pledged to move $1 billion this year, and before Thanksgiving, churches moved $55 millionaway from Wall Street banks with pledges to remove as much as $100 million more. This week, churches in San Francisco announced they were moving another $10 million, Faith in Public Life reports:

This week, a group of clergy in San Francisco added another $10 million to that total with an Ash Wednesday press conference calling on Wells Fargo to put an immediate freeze on its foreclosures and repent for their misconduct.

According to consulting firms, the nation’s 10 biggest banks could lose $185 millionin customer deposits because of customer defections.

Presidential Election 2012

Which candidate would you pick?

German Interior Minister Calls For Greece To Leave Euro

Bloomberg reported that German Interior Minister Hans-Peter Friedrich has said that Greece would have a better chance of recovering its economy if it was to leave the euro. He is the first cabinet minister to call for Greece to leave the euro. More interesting was the point made by automaticearth.org which basically said if Friedrich hasn’t resigned his position by Monday, then it looks to be the german position.

Whatever else happens, rest assured: if Hans-Peter Friedrich still has his job by Tuesday morning, Germany has a new -albeit unofficial – policy towards Greece in place. 

Ireland Could Write Off €75 Billion And Nobody Would Lose

Peter Mathews writes in the Irish Independent about loaned losses to Irish banks from 2008 amounted to €75 billion. Currently Ireland has to pay back a promissory note of €31 billion to cover losses for Anglo-Irish Bank. The Irish Central Bank originally created €45 billion out of fresh air called Exceptional Liquidity Assistance to help out the Banks. This created money was not owed to the ECB in any way. When the money was paid back to the Central Bank, these loans would disappear. The ELA created to cover the promissory note in Anglo Irish Bank, i.e €31 billion could be simply written off. This can only be vetoed by a 2/3 majority of the  ECB.

Throughout 2008 and 2009 there was a slow motion run and controlled implosion of the Irish banking system. In response, the ECB advanced massive loans to the Irish banks and in turn the Central Bank of Ireland responded by providing Exceptional Liquidity Assistance (ELA) to the Irish banks.

Professors Karl Whelan, Brian Lucey and Dr Stephen Kinsella recently made excellent presentations to the Oireachtas Committee on the issue of the promissory notes and ELA.

They showed how the Central Bank of Ireland effectively created €45bn ELA money “out of thin air”. The Central Bank of Ireland doesn’t owe any of this money to the ECB, they said.

On a once-off basis, money was created and pumped into the Irish banks to keep them solvent.

When the Irish banks repay these ELA loans, the Central Bank of Ireland simply retires them. The money literally disappears.

Therefore, the €31bn ELA money created by the Central Bank of Ireland, and advanced to IBRC to cover promissory notes, can and should be written off.

The Irish taxpayer was completely shafted.

Losses which should have been borne by bondholders have, wrongly, been dumped on the people of Ireland.

Normally, when banks collapse, their funders do not get all their money back. In Ireland, bondholders were redeemed all their money with interest at the insistence of the ECB.

Since the end of 2008, as payments to bondholders fell due, neither the banks nor the State had the resources to pay them.

That is where the ECB stepped in. It lent approximately €135bn to our banks to enable them to repay the bondholders and also to replace lost deposits.

The bill for the banking woes fell on the Irish taxpayer but under normal capitalist rules bond-holders would take the hit. Mathews proposes a solution, that the Irish Central Bank tops up its ELA to the tune of €75 billion and writes this off. All that’s required is the consent of 7 other members of the ECB. 

The ECB became fully complicit in dumping this bill onto the people of Ireland.

Under normal capitalist principles, the ECB would not have shielded bond- holders from the consequences of their investments. They would have to accept that Ireland is “taking one for the team”.

Taking all this into account, again under normal capitalist principles, the ECB could not object to writing off up to €75bn of the loans it advanced to the Irish banks.

If the ECB is unwilling to do this, then the Central Bank of Ireland should top up its Exceptional Liquidity Assistance loans to the Irish banks to €75bn (in the case of AIB and Bank of Ireland substituting ELA for ECB loans) and then write it off.

The ELA can be writted off as follows

The ECB has a limited ability to prevent the Central Bank of Ireland from doing this. It can only veto a proposal by the Irish Central Bank with a two-thirds majority of its governing council.

There are 23 members of the governing council, including Ireland’s representative, Governor Patrick Honohan.

So, if he and seven other members of the governing council support the proposal to write off the ELA money there is nothing Ms Merkel, Mr Sarkozy, Mr Draghi or anybody elsecan do about it.

With all the congratulations Ireland gets about paying back the bank’s its loans and the austerity cuts, its actions from the ECB / EU not words are what count. Here is a simple solution being completely ignored, yet trillions can be lent to banks.

If the European political establishment really believes we’re doing such a good job, the best way to show it is to agree to lighten the debt load on the people of Ireland by €75bn.

EU Bank Scam Explained

The video below from David McWilliams explains brilliantly how the EU has gotten itself into the position it finds itself and where we are heading. The main points are as follows:

Because a Greek default would have bankrupted European banks the ECB used LTRO to pump money into Banks

Banks (via cash for trash) borrowed at 1% and bought sovereign debt at 6% (making 5% profit)

Germany will gets eurozone in its own image minus Greece(when its dumped out)

Banks continue on until another country breaks down under pressure and crisis starts all over again.

BRILLIANT PLAN!

AND WE PAY FOR IT ALL

 CONTINUALLY

 

Oil To Go Higher As $10 Trillion Printed In 2 Years

When you see the chart below its not hard to see why oil, gold and food prices are going forever higher. $10 trillion expansion (20%) increase in money supply in two years. I wouldn’t mind but I have seen any of it. My wages haven’t increased 20%, have yours? 😉 Funny how the inflation figures don’t reflect this. This begs the question, how accurate are the inflation calculations? Ireland’s Central Statistics Office just changed the way they calculated inflation this week. 

The sad thing is the global economy has gotten worse and not better. Its obviously not just helicopter Ben who is in on the act but also BOE and ECB’s LTRO. Unfortunately we have only one solution currently i.e. CTRL+P.

Source: ZeroHedge

Check Greek Bailout Small Print – Right To Seize Gold By Creditors

As the saying goes, always check the small print and in the case of the Greek bailout the creditors have the right to seize gold. Although the amount of gold reserves held are quite small, many economists suspect gold could play a major role in any future change to the US dollar’s status as world’s reserve currency.

The New York Times reports that Greece’s lenders may have the right to seize the Bank of Greece’s gold reserves.

“Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.”

The Reuters Global Gold Forum confirms that in the small print of the Greek “bailout” is a provision for the creditors to seize Greek national gold reserves. Reuters correspondents in Athens have not got confirmation that this is the case so they are, as ever, working hard to pin that down.

Greece owns just some 100 tonnes of gold. According to IMF data, for some reason over the last few months Greece has bought and sold the odd 1,000 ounce lot of its gold bullion reserves. A Reuter’s correspondent notes that “these amounts are so tiny that it could well be a rounding issue, rather than holdings really rising or falling.”

It was done in a sneaky way

While many market participants would expect that Greece’s gold reserves would be on the table in the debt agreement, it is the somewhat covert and untransparent way that this is being done that is of concern to Greeks and to people who believe in the rule of law.

Its not just Greece who may have to give up their gold reserves.

Recent months have seen many senior German government officials calling for so called “PIIGS” nations gold reserves to be used as collateral. Such as Angela Merkel’s budget speaker and his opposition counterpart who urged Portugal to consider selling their gold. 

Norbert Barthle, Germany’s governing coalition budget speaker and his counterpart Carsten Schneider from the Social Democrats, the biggest opposition party, urged Portugal to consider selling some of its gold reserves to ease its debt problems. They called for a review of Portugal’s request for financial aid to include gold and other potential asset sales.

Irish Constitution Used To Defeat House Repossession

Learn how the local sherrif who came with a repossesion order from the bank was defeated by the Irish Constitution. Under the constitution, nobody is allowed on your property unless by permission or if you break the law.

1st collector for Irish Constitution Used To Defeat House Reposse…
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Trokia Start Asset Strip Of Ireland

Ah well, it was only a matter of time, but today was officially announced by Minister for hardshipReform, Brendan Howlin that Ireland would begin the process of selling off the crown jewels. They hope to raise in the region of €3 billion. When you put that in context,  Ireland currently owes €120 billion, so its it won’t make the slightest dent in the banker’s bill that Ireland has been handed. And saving the best for last, they would not be sold off cheaply but would start to be sold next year. As if things are going to get better 😉 The following were announced by the minister:

THE GOVERNMENT is planning to sell off parts of the ESB and Bord Gais in a bid to raise €3bn – €1bn of which will be put towards job creation.

Stake in National Electricity and Gas companies

However, the strategically important networks of both companies, which carry gas and electricity, will be remain in State control.
In the case of Bord Gais, the company’s energy business, excluding its gas transmission and distribution systems and two gas interconnectors, are for sale.
Some of ESBs non-strategic power generation capacity has also been put on the block but the Government has held back on selling a minority stake in the firm.

National Forestry

Other sales include some forests owned by Coillte but not the land on which they are planted.

Stake in National Airline

In addition, the remaining state-controlled stake in Aer Lingus will be sold when conditions are favourable and the stock market price is acceptable to the Government.

Greece Default Update From The Slog

Last week “The Slog” reported that the Greeks were due to officially be declared in default by the rating agencies on March 23. Today Fitch downgraded Greece to C from CCC but his sources have since clarified further information:

“The main bond swap is scheduled for March 10,” a Washington insider told me within the last hour, “and at that point, they [Fitch] will name the event as a technical default. So now everyone wants to know what the ramifications are for insurance. That’ll depend on what deal, say, Hedge Funds have signed with specific insurers. But you could certainly speculate that some insurance will be triggered.”

And then to add insult to injury for the Greek people, it looks like their general election is to be postponed.

Meanwhile, following the Greek Environment minister’s suggestion that the elections in Greece be further postponed, there is widespread speculation in Athens that Goldman Sachs implant Prime Minister Lucas Papademos is under pressure to announce this formally.

Greek Workers To Work For Free

Seems like a trend that has taken off from the US to the UK and now in Greece where they are being asked to work for free. In other countries its nicely wrapped up in the guise of gaining work experience but not so in Greece. Then again, there is no requirement to look after the people’s interest as long as the technocrats run the show.

Salary cutbacks (called “unified payroll”) for contract workers at the public sector set to be finalized today. Cuts to be valid retroactively since november 2011. Expected result: Up to 64.000 people will work without salary this month, or even be asked to return money. Amongst them 21.000 teachers, 13.000 municipal employees and 30.000 civil servants.

Click here to read similar story from the UK. 

 

Nightshift Work – Pay Zero

Want a night-shift job and work for free? Well its yours in Tesco in the UK. After the below advert, there was a major backlash from the public over the Government’s “Workfare scheme”. As the UK unemployment rate has soared, Tesco has taken their opportunity to take advantage of cheap labour. The good news is people power is having an affect.

Several high street names, including Waterstones and Sainsbury’s, have already pulled out of the workfare scheme after trade unions branded the use of unpaid workers ‘unfair’.

The GMB said it was ‘essential to maintain the distinction between employment and unemployment’, adding: ‘Employment means getting paid for doing work that the employer needs to be done. There is absolutely no justification for using jobless people to do these jobs and paying them nothing.’

Applicants for the unpaid jobs are paid the standard rates of Jobseekers’ Allowance – £53.45 a week for under-25s, £67.50 for older staff. If they refuse to complete the work they risk losing their benefits.

 

It gets better. If you think the UK Government had contempt only for the unemployed, check out the plans they had for the sick and disabled.

Meanwhile, it has emerged that up to 300,000 long-term sick and disabled could be forced into unpaid work under plans drawn up by the Department for Work and Pensions.

But the proposals have been met with criticism from charities and mental health experts who suggest forcing people to do even a limited amount of work could be detrimental to their health, the Guardian reports.

Easy To Rig The Gold Market

Below is a comment from Eric Sprott on gold production versus what was traded on the LBMA. The key point is when you look at what is traded in paper against what is traded in physical gold, its not hard to see how easy it is to rig the spot price.

In the LBMA market, for example, market participants traded an average 19.6 million ounces of gold PER DAY in July 2011.^1,2 Keep in mind that the total gold mine production in 2010, globally, was approximately 86.5 million ounces. Global gold mine production is not expected to increase significantly year-over-year, so the LBMA is essentially trading a year’s worth of production in less than a week. And this is just ONE market.

When you add the COMEX futures and gold ETFs, the paper trading volume becomes absurdly high. When price discovery is dictated by levered paper contracts with no physical backing, it’s extremely easy and relatively inexpensive to jostle the spot price around.