- Weather Channel Founder Slams Global Warming: "The Theory Has Failed"
If Bill Nye had his way, Weather Channel founder John Coleman would be heading for jail. Having spent more than 60 years as a meteorologist, Coleman penned a pointed rebuke to "the science guy's" vehement faith in the 'science' of climate change, exclaiming that "science has taken a back seat at The UN… get politics out of the climate debate."
On this Earth Day 2016, there is a great deal of frenzy about how our Earth is going to become uninhabitable, as the civilized activities of man allegedly trigger unstoppable global warming and climate change.
With the Obama administration set to commit the U.S. to the Paris climate agreement by signing our nation onto the document Friday, it is obvious that science has taken a back seat at the United Nations.
The environmentalists, bureaucrats and politicians who make up the U.N.’s climate panel recruit scientists to research the climate issue. And they place only those who will produce the desired results. Money, politics and ideology have replaced science.
U.N. climate chief Christiana Figueres has called for a “centralized transformation” that is “going to make the life of everyone on the planet very different” to combat the alleged global warming threat. How many Americans are looking forward to the U.N. transforming their lives?
Another U.N. official has admitted that the U.N. seeks to “redistribute de facto the world’s wealth by climate policy.” The former head of the U.N. climate panel also recently declared that global warming “is my religion.”
When all the scare talk is pushed aside, it is the science that should be the basis for the debate. And the hard cold truth is that the basic theory has failed. Many notable scientists reject man-made global warming fears. And several of them, including a Nobel Prize winner, are in the new Climate Hustle movie. The film is an informative and even humorous new feature length movie that is the ultimate answer to Al Gore’s An Inconvenient Truth. It will be shown one day only in theaters nationwide on May 2.
As a skeptic of man-made global warming, I love our environment as much as anyone. I share the deepest commitment to protecting our planet for our children and grandchildren. However, I desperately want to get politics out of the climate debate. The Paris climate agreement is all about empowering the U.N. and has nothing to do with the climate.
- Patrick Buchanan: Dishonoring General Jackson
Submitted by Patrick Buchanan via Buchanan.org,
In Samuel Eliot Morison’s “The Oxford History of the American People,” there is a single sentence about Harriet Tubman.
“An illiterate field hand, (Tubman) not only escaped herself but returned repeatedly and guided more than 300 slaves to freedom.”
Morison, however, devotes most of five chapters to the greatest soldier-statesman in American history, save Washington, that pivotal figure between the Founding Fathers and the Civil War — Andrew Jackson.
Slashed by a British officer in the Revolution, and a POW at 14, the orphaned Jackson went west, rose to head up the Tennessee militia, crushed an Indian uprising at Horseshoe Bend, Alabama, in the War of 1812, then was ordered to New Orleans to defend the threatened city.
In one of the greatest victories in American history, memorialized in song, Jackson routed a British army and aborted a British scheme to seize New Orleans, close the Mississippi, and split the Union.
In 1818, ordered to clean out renegade Indians rampaging in Georgia, Jackson stormed into Florida, seized and hanged two British agitators, put the Spanish governor on a boat to Cuba, and claimed Florida for the USA.
Secretary of State John Quincy Adams closed the deal. Florida was ours, and Jacksonville is among its great cities.
Though he ran first in popular and electoral votes in 1824, Jackson was denied the presidency by the “corrupt bargain” of Adams and Henry Clay, who got secretary of state.
Jackson came back to win the presidency in 1828, recognized the Texas republic of his old subaltern Sam Houston, who had torn it from Mexico, and saw his vice president elected after his two terms.
He ended his life at his beloved Hermitage, pushing for the annexation of Texas and nomination of “dark horse” James K. Polk, who would seize the Southwest and California from Mexico and almost double the size of the Union.
Was Jackson responsible for the Cherokees’ “Trail of Tears”?
Yes. And Harry Truman did Hiroshima, and Winston Churchill did Dresden.
Great men are rarely good men, and Jackson was a Scots-Irish duelist, Indian fighter and slave owner. But then, Presidents Washington, Jefferson, Madison and Monroe were slave owners before him.
To remove his portrait from the front of the $20 bill, and replace it with Tubman’s, is affirmative action that approaches the absurd.
Whatever one’s admiration for Tubman and her cause, she is not the figure in history Jackson was.
Indeed, if the fight against slavery is the greatest cause in our history, why not honor John Brown, hanged for his raid on Harper’s Ferry to start a revolution to free the slaves, after he butchered slave owners in “Bleeding Kansas”? John Brown was the real deal.
But replacing Jackson with Tubman is not the only change coming.
The back of the $5 bill will soon feature Martin Luther King, Eleanor Roosevelt, and opera singer Marian Anderson, who performed at the Lincoln Memorial after being kept out of segregated Constitution Hall in 1939.
That act of race discrimination came during the second term of FDR, Eleanor’s husband and the liberal icon who named Klansman Hugo Black to the Supreme Court and put 110,000 Japanese into concentration camps.
And, lest we forget, while Abraham Lincoln remains on the front of the $5 bill, the war he launched cost 620,000 dead, and his beliefs in white supremacy and racial separatism were closer to those of David Duke than Dr. King.
Alexander Hamilton, the architect of the American economy, will stay on the $10 bill, due in part to the intervention of hip-hop artists from the popular musical, “Hamilton,” in New York.
But Susan B. Anthony, Elizabeth Cady Stanton and Sojourner Truth, who fought for women’s suffrage, will be put on the back of the $10. While Anthony and Stanton appear in Morison’s history, Sojourner Truth does not.
Added up, while dishonoring Andrew Jackson, Treasury Secretary Jack Lew is putting on the U.S. currency six women — three white, three African-American — and King.
No Catholics, no conservatives, no Hispanics, no white males were apparently even considered.
This is affirmative action raised to fanaticism, a celebration of President Obama’s views and values, and a recasting of our currency to make Obama’s constituents happy at the expense of America’s greatest heroes and historic truth. Leftist role models for American kids now take precedence over the history of our Republic in those we honor.
While King already has a holiday and monument in D.C., were the achievements of any of these six women remotely comparable to what the six men honored on our currency — Washington, Jefferson, Hamilton, Jackson, President Grant and Ben Franklin — achieved?
Whatever may be said for Eleanor Roosevelt, compared to her husband, she is an inconsequential figure in American history.
In the dystopian novel, “1984,” Winston Smith labors in the Ministry of Truth, dropping down the “memory hole” stories that must be rewritten to re-indoctrinate the party and proles in the new history, as determined by Big Brother. Jack Lew would have fit right in there.
- Swedish Muslim Politician Quits After Refusing To Shake Women's Hands
As if Sweden wasn't troubled enough, The Local reports that another Green Party politician, who ignited a storm of controversy after refusing to shake hands with a female reporter on grounds that it violated his Muslim faith, announced on Wednesday that he was quitting politics. This follows the resignation of Sweden's housing minister following a week of mounting controversy over his contacts with Islamic organisations and Turkish ultranationalists.
During an interview with a female reporter from the TV4 broadcaster on Tuesday, Yasri Khan placed his hand over his heart instead of shaking her hand in greeting.
"People can greet each other in different ways. The most important thing is to show respect by seeing each other, to meet each other… to respect each other," Khan said during an interview with state broadcaster Swedish Radio.
Khan, also the general secretary of the organization Swedish Muslims for Peace and Justice, has faced strong criticism from within his party since the incident.
"It is unacceptable. You can't have a man in the party who can't greet women in the same way you greet a man. I'm upset," Stina Bergström, a Green Party parliamentarian, told Swedish tabloid Aftonbladet.
In interviews with Swedish media, Khan lashed out at his critics and said that the debate, and his fellow Muslim Green Party member Mehmet Kaplan's resignation, had caused him to run out of energy.
"In today's political climate, I wonder if politics is right for me, and if I want to be a media circus clown," he told the Nyheter24 news site.
Kahn's resignation from the Green Party follows the resignation of another Green Party member – Sweden's housing minister, Turkish-born Mehmet Kaplan…
Sweden’s housing minister has resigned following a week of mounting controversy over his contacts with Islamic organisations and Turkish ultranationalists, piling further pressure on the country’s already unpopular minority coalition government.
The Social Democrat prime minister, Stefan Lofven, said Turkish-born Mehmet Kaplan, a member of the junior coalition partner Green party and former spokesman for Sweden’s Muslim Council, had submitted his resignation and that he had accepted it.
Sweden’s centre-left coalition of Social Democrats and Greens has been severely strained by Europe’s migration crisis, with the arrival of about 160,000 asylum seekers in the country last year forcing Stockholm to impose border controls and tighter rules in a U-turn on decades of generous refugee policies.
Kaplan, 44, denied any wrongdoing and said he was stepping down because public and media criticism was making it impossible for him to do his job. He said he opposed “all forms of extremism, whether nationalistic, religious or in any other form” and supported “human rights, democracy and dialogue”.
The minister, who was born in Turkey and arrived in Sweden at the age of eight, has come under increasing pressure after local media last week published photos of him at a dinner with Turkish ultranationalists, including the Swedish head of the extremist Grey Wolves organisation, and a former leader of the main Turkish nationalist group in Sweden, who was forced to resign earlier this month after calling on Turks to kill “the Armenian dogs”.
The minister was further attacked for his links to a number of Islamic organisations, including the international Millî Görü? movement, that some suspect of promoting religious fundamentalism. Kaplan has acknowledged the ties, but said they “don’t mean I agree with them on everything”.
The pressure increased at the weekend when Swedish media published seven-year-old footage of him comparing Israel’s policies towards Palestinians to the Nazis persecution of the Jews.
It has not been a good week for the centre-left party, the junior partners of Sweden's ruling coalition. On Tuesday its co-leader and deputy prime minister, Åsa Romson, landed herself in hot water after using the Swedish word for 'accident' (which can also mean 'misfortune') to refer to the September 11th terror attacks.
- Why US Government And Saudi Arabia Don't Want Americans Knowing The Truth About 9/11
In a rare show of bipartisanship, President Obama and top Republicans in Congress have come together to shield Americans from knowing the truth about who was behind the 9/11 terror attacks, which took the lives of 2996 people in 2001. However strange it is for neoconservative members of Congress to agree with Obama on anything, there is no doubt the issue must be serious if it warrants this level of partnership.
The issue at hand is the classified, 28-page section of the 9/11 commission report, which many experts and politicians with knowledge of the documents have said point to Saudi Arabian government officials’ direct role in the terror attacks. This is why the Saudis put out a stern warning several days ago threatening to dump up to $750 billion in U.S. assets if Senate Bill 2040 becomes law; S.B. 2040 would make public the 28 pages and also allow for victims of 9/11 to sue foreign governments found responsible.
The Saudis’ warning seems to have worked, with Obama now in the nation to “mend ties” with the monarchy and top Republicans sounding the alarm about the 9/11 bill. In an interview with Charlie Rose, President Obama claimed:
“If we open up the possibility that individuals in the United States can routinely start suing other governments, then we are also opening up the United States to being continually sued by individuals in other countries,” apparently referencing the U.S.’ own attacks overseas that have taken the lives of countless civilians.
Currently, Saudi Arabia enjoys “sovereign immunity” with the U.S., meaning even if the 28 pages proved Saudi officials were indeed behind the 9/11 attacks, Americans would not be able to seek justice for their losses. The new 9/11 bill would change that, and the Saudi response to the legislation moving through Congress reinforces suspicions the kingdom is somehow behind the 9/11 attacks.
The video below further explains why both Saudi Arabia and members of the U.S. government don’t want the 9/11 bill to pass:
- Gundlach Predicts "Trump Will Win", Says "The Federal Reserve Has Basically Given Up"
In an interview posted on Swiss Finanz und Wirthschaft, Jeff Gundlach unleashes his deep ir, and in traditional style, offloads on both the Fed and all central banks, sayng that “negative interest rates are the dumbest idea ever“, adding that the Fed has given up both trying to normalize interest rates as well as trying to actually stimulate the economy:
What you see is that the same pattern has been in place since 2012: Hope for growth in the new year that ends up being revised downwards, over and over and over again. But now we have reached the point at which no one bothers anymore about the comedy of predicting 3% real GDP growth. Even nominal GDP growth isn’t probably going to be at 3% this year. Actually, nominal GDP is at a level that has historically been a recessionary level. It isn’t this time because the inflation rate is close to zero. But no one bothers anymore and the Federal Reserve has basically given up.
He also says the he has “been waiting for about two years for the Fed to capitulate on their interest rate increase dreams. Now, I think they did.“
As noted above, Gundlach has seen many stupid ideas in his time but nothing as bad as NIRP. “I think the next big thing will be that at some point central bankers in Japan and in Europe will have to realize that they need to give up on negative interest rates. Negative interest rates are the dumbest idea ever. It’s horrible. Look at how badly it’s been working. The day that the Bank of Japan went negative the Yen started strengthening like crazy and the stock market is down. That’s exactly the opposite of what they wanted. The same thing happened with the ECB.”
He then takes on the US stock market, saying it “seems egregiously overvalued versus other stock markets…. fundamentally, it’s very hard to believe in US stocks. Earnings and profit margins are dropping and companies basically are borrowing money to pay dividends and to buy back shares.” He spares no love for junk bonds either: “it’s likely that you are going to see declines in the US stock market and since the correlations are so high this means that probably the junk bond market will go back down, too.”
What about oil: “I predicted oil would make it easily to $ 40 and it did so very comfortably. But now it’s having a very hard time getting to $45. It bounces up a dollar, down a dollar and I think if oil is going back down to $ 38 people are going to be very concerned.“
His diatribe against conventional wisdom continues, when he blast that “the riskiest things are now stocks and other investments perceived to be safe. One of the most popular categories in US investing are low volatility stock funds. But there is no such thing! If you think that a stock like Johnson & Johnson can’t go down, you’re wrong. And if people own funds that invest in stocks which they think are immune from decline and they start to decline, all hell breaks loose.”
What does Gundlach like? Gold and TSYs:
“Gold is doing fine. It’s preserving capital in the US, it’s been making money over the last couple of years for European investors. That’s why I own gold. Because in a negative return environment anything that holds its value or makes a little is good.”
On the topic of who wins the election, he says that “Trump is going to win. I think Clinton and Sanders are both very poor candidates. I know the polls are signaling the opposite. But the polls said the opposite four years ago, too.”
He also thinks Trump would be the best candidate for the US economy:
In the short term, Trump winning would be probably very positive for the economy. He says a lot of contradictory things and things that are not very specific. But he does say that he will build up the military and that he will build a wall at the border to Mexiko. If he wins he’s got at least to try those things. Also, he might initiate a big infrastructure program. What’s his campaign slogan? Make America great again. What that means is let’s go back to the past, let’s go back to the 1960s economy. So he might spend a lot of money on airports, roads and weapons. I think Trump would run up a huge deficit. Trump is very comfortable with debt. He’s a debt guy. His whole business has had a lot of debt over time and he has gone bankrupt with several enterprises. So I think you could have a debt-fuelled boom. But the overall debt level is already so high that you start to wonder what would happen after that.
Finally, here is Gundlach’s explanation on what it takes to be a good investor:
I made a name for myself primarily because in March of 2005 I was convinced that there would be a complete collapse of the credit market. When it was still hypothetical, people argued with me. They said that this would never happen. But I was right. So you have to find a center piece idea that will be important in driving the market. And you have to have an intuition about how other investors will react if you’re right and they wake up to that idea. Such opportunities do not happen very often. It is not always so obvious. So you have to pick your moments. In the financial markets, 80% of the time it’s a coin flip. But the other 20% of the time you have very high confidence and it’s not a coin flip. For instance, I don’t think the stock market is a coin flip. Especially in the United States stocks are very expensive, particularly low volatility stocks.
In short, Gundlach doing what he does best: holding nothing back.
* * *
His full interview with FuW below:
Jeffrey Gundlach, CEO of the investment firm DoubleLine, expects central bankers to capitulate on negative interest rates and is bearish on US stocks.
In the global financial markets the bulls have taken over once again. In the United States, stocks are even flirting with a new record high. Nevertheless, Jeff Gundlach doesn’t trust this recovery and expects a severe setback. «The riskiest things are now stocks and other investments perceived to be safe», says the CEO of the Los Angeles based investment firm DoubleLine. The star investor, who is celebrated on Wall Street as the new bond king, is surprised that nobody seems to care anymore about the worldwide growing mountain of debt. Especially in the junk bond market, he sees a massive wave of defaults on the horizon. Mr. Gundlach likes gold and thinks the Federal Reserve has given up on its plans to normalize interest rates. Next, he expects central bankers elsewhere to capitulate on negative interest rate policies.
Mr. Gundlach, it is getting suspiciously quiet in the global financial markets. What is your assessment of the current situation?
What you see is that the same pattern has been in place since 2012: Hope for growth in the new year that ends up being revised downwards, over and over and over again. But now we have reached the point at which no one bothers anymore about the comedy of predicting 3% real GDP growth. Even nominal GDP growth isn’t probably going to be at 3% this year. Actually, nominal GDP is at a level that has historically been a recessionary level. It isn’t this time because the inflation rate is close to zero. But no one bothers anymore and the Federal Reserve has basically given up.How serious is this slowdown? Could the US even fall into a recession?
We will be on watch for that in the coming months. But it doesn’t really matter. Recessions don’t drive financial markets. It’s the other way around. People are so focused on this «recession-yes-or-no-question». What really matters is that we are in a low nominal growth environment and global growth keeps getting marked down. It is going to be slower in 2016 than in 2015.What does that mean with respect to monetary policy in the United States?
I have been waiting for about two years for the Fed to capitulate on their interest rate increase dreams. Now, I think they did. Federal Reserve Chair Janet Yellen basically capitulated on March 29th. So far she had been acting as if each voice at the Fed carried the same weight: One official would say this, and another official would say something different. And because there were contradictory statements being made, the markets were getting very confused. But Janet Yellen took control with her speech at the Economic Club of New York. She did a good job and said that she is not going to raise rates at the next Fed meeting in April despite all these other Fed officials saying that April is a possibility. But it’s not going to happen. We’re not going there. So you’ve gotten about as much capitulation as you can get.But what about a rate hike at the more important Fed meeting in June?
The Fed has already reduced its forecast to two rate hikes. And that’s going to turn into one hike pretty quickly because we’re getting close to mid-year and I really doubt that they are going to do a rate hike in June. But what they are going to do is a rolling twelve month two hikes type of thing. So in June they will signal two hikes by June 2017 and then they will just keep pushing it forward. That’s a movie we’ve seen before. The Fed has pushed forward such decisions for years. We were always going to get to a Federal Funds Rate of 3% and it was always going to be starting in six months. But it never happened.But actually, the Fed raised interest rates in December for the first time since the financial crisis.
Well, that didn’t work very well. The stock market crashed and the credit markets were a disaster. The Fed’s dots of four rate hikes this year made no sense and they’ve capitulated. The markets have humiliated the Fed into abandoning their pretty idiotic forecast.So what’s next for the financial markets?
The capitulation of the Fed is pretty much fully priced in. But I think the next big thing will be that at some point central bankers in Japan and in Europe will have to realize that they need to give up on negative interest rates. Negative interest rates are the dumbest idea ever. It’s horrible. Look at how badly it’s been working. The day that the Bank of Japan went negative the Yen started strengthening like crazy and the stock market is down. That’s exactly the opposite of what they wanted. The same thing happened with the ECB. Around a year ago, the consensus recommendation was to sell US equities and to buy European stocks because of negative interest rates in Europe. That turned out to be the most common mistake that was made in 2015. It’s been a horrible outcome. So there is mounting evidence that negative interest rates do the opposite of what the central bankers were hoping for.Why don’t negative interest rates work?
Negative interest rates are designed to fight deflation. But they are the very definition of deflation: Your money is disappearing. As an investor, you are going to have less money in the future than you have today with negative interest rates. That’s deflation! So negative interest rates are deflationary and they are tremendously negative for monetary velocity. For instance, in Japan they’re issuing huge amounts of high denomination Yen notes. That’s because of negative interest rates people don’t want to put their money in the bank and they don’t want to invest in Yen denominated bonds. That’s why I think eventually you are going to get helicopter money.Are you concerned about that?
I’m not concerned about anything. My job is not to set policies. I’m not an economist or a politician or a central banker. I invest people’s money. So I’m agnostic as to what’s good and what’s bad in terms of policy. I just deal with it.So how do you deal with negative interest rates and central bank capitulation?
It’s all about capital preservation. If you can get a few percent return in a deflationary environment you’re doing fine. Because if you invest in European government bonds your base case is that you are going to have a negative return. The same applies if you invest in Japanese government bonds. So gold is a high yielding investment. You are getting zero yield versus negative yields in the case of short term European bonds and most Japanese bonds. Gold is doing fine. It’s preserving capital in the US, it’s been making money over the last couple of years for European investors. That’s why I own gold. Because in a negative return environment anything that holds its value or makes a little is good. Also, US bonds look relatively good. You have a positive yield of 2 or 3% this year from a bond portfolio in the US. Of course, that’s not great for European investors because the dollar has been weakening.And what about stocks? Especially in the US, equities have staged a surprising comeback since the heavy turmoil at the beginning of the year.
The US stock market seems egregiously overvalued versus other stock markets. Emerging markets look vastly better, Japan looks better and Europe does too. That’s because they’re all down. It’s remarkable that the US stock market is within about 2% of its all-time high and every other significant stock market is down substantially. Also fundamentally, it’s very hard to believe in US stocks. Earnings and profit margins are dropping and companies basically are borrowing money to pay dividends and to buy back shares. That’s completely non-productive borrowing and just creates a bigger debt burden. So it’s likely that you are going to see declines in the US stock market and since the correlations are so high this means that probably the junk bond market will go back down, too.There’s also a strong correlation between junk bonds and oil. What’s your take on the recent rally in crude?
I predicted oil would make it easily to $ 40 and it did so very comfortably. But now it’s having a very hard time getting to $45. It bounces up a dollar, down a dollar and I think if oil is going back down to $ 38 people are going to be very concerned.Energy companies are playing an important role in the junk bond sector. What would oil at $ 38 mean for the credit markets?
Just like oil, the high yield market has enjoyed the easy rally. I think it’s basically over. I don’t see how you are supposed to be all fond off high yield bonds, since they are facing enormous fundamental problems. I thought people would learn their lesson but the issuance in the years 2013/14 was vastly worse than the issuance in 2006/07. Also, in the bank loan market covenant lite issuance rose to 40% in 2006/07. In this cycle it climbed to 75%. The leverage in the high yield bond market is enormous and you’re about to have a substantial increase in defaults. I wouldn’t be surprised if the cumulative default rate in the next five years were going to be the highest in the history of the high yield bond market.What would be the consequences of that?
We are now in a culture of default. There is no stigma about defaulting anymore. During the housing crash, homeowners walked away from their mortgages. That was the beginning of a massive tolerance of default. Today, people talk about Puerto Rico defaulting like it’s nothing. But if Puerto Rico defaults why won’t some clever person in Illinois say: «Let’s default, too! » Constitutionally, Illinois is not allowed to default, but Puerto Rico wasn’t either. For Illinois it just seems impossible to pay their pension obligations. And then, what about Houston, what about Chicago, what about Connecticut? I am surprised that people have lost their focus on the enormity of the debt problem. Remember, in 2010 and 2011 there was such a laser focus on the debt ceiling in the US and we were worried about Greece. Nobody is worried anymore. People are distracted by this negative interest rate experiment.That’s also interesting with respect to the presidential elections. In contrast to 2012, this time there is not much talk about national debt and budget cuts.
What you see this time is only child’s play. The next election is going to be much more transformative than this one. Because in this election, both parties are kind of clinging to the belief that they can keep the genie in the bottle. But we’re on the cusp of big change and, unfortunately, it’s all wrapped up in generational problems. The big problem that is coming, of course, is the unfunded liabilities that have been promised to the baby boomers. According to one calculation, the unfunded liabilities of all these entitlements on a present value basis are $ 60 trillion in the United States, just at the federal level. But in this election, nobody is talking about addressing them. Donald Trump wants to keep social security the same, Bernie Sanders says make it even bigger, while Hillary Clinton represents more of the same.So who do you think will win the race for the white house?
Trump is going to win. I think Clinton and Sanders are both very poor candidates. I know the polls are signaling the opposite. But the polls said the opposite four years ago, too.How would the financial markets react should Trump win?
In the short term, Trump winning would be probably very positive for the economy. He says a lot of contradictory things and things that are not very specific. But he does say that he will build up the military and that he will build a wall at the border to Mexiko. If he wins he’s got at least to try those things. Also, he might initiate a big infrastructure program. What’s his campaign slogan? Make America great again. What that means is let’s go back to the past, let’s go back to the 1960s economy. So he might spend a lot of money on airports, roads and weapons. I think Trump would run up a huge deficit. Trump is very comfortable with debt. He’s a debt guy. His whole business has had a lot of debt over time and he has gone bankrupt with several enterprises. So I think you could have a debt-fuelled boom. But the overall debt level is already so high that you start to wonder what would happen after that.How do you explain that a guy like Trump might actually win the election?
His popularity is very similar to the popularity of unconstrained bond funds. About two or three years ago, unconstrained bond funds became the most popular thing in the United States retail market and in the institutional market probably, too. Because when investors analyzed all the bond segments they were familiar with, they didn’t like what they saw. They didn’t like treasuries, they were scared of the Fed, they didn’t like traditional strategies. So, if everything you think you know looks unattractive, you go for something that you have no idea about. And that’s an unconstrained bond fund. The thinking was: «Don’t even tell me what you are doing, I do not want to know. Because if I know, I won’t like it. » The same is true with respect to the elections: «Don’t give me a traditional candidate. Give me someone who I have no idea what he is going to do» – and that’s basically Donald Trump.That shows that it is not easy to invest your money these days. What does it take in general to be a good investor?
I made a name for myself primarily because in March of 2005 I was convinced that there would be a complete collapse of the credit market. When it was still hypothetical, people argued with me. They said that this would never happen. But I was right. So you have to find a center piece idea that will be important in driving the market. And you have to have an intuition about how other investors will react if you’re right and they wake up to that idea. Such opportunities do not happen very often. It is not always so obvious. So you have to pick your moments. In the financial markets, 80% of the time it’s a coin flip. But the other 20% of the time you have very high confidence and it’s not a coin flip. For instance, I don’t think the stock market is a coin flip. Especially in the United States stocks are very expensive, particularly low volatility stocks.What exactly is the problem with low volatility stocks?
The riskiest things are now stocks and other investments perceived to be safe. One of the most popular categories in US investing are low volatility stock funds. But there is no such thing! If you think that a stock like Johnson & Johnson can’t go down, you’re wrong. And if people own funds that invest in stocks which they think are immune from decline and they start to decline, all hell breaks loose. - Albert Edwards Finally Blows Up: "I'm Not Really Sure How Much More Of This I Can Take"
Earlier this week we described the personal come to non-GAAP Jesus moment of trading commentator Richard Breslow, who confessed in no uncertain terms that he has had it with endless central banking intervention: “a portfolio built to only withstand stress thanks to central bank intervention is one destined to blow-up spectacularly. The embedded flaw in this new logic is that central banks give investors perfect foresight. And nothing can go wrong… You don’t need to be a Taleb or Mandelbrot to calculate that we have been having once in a hundred year events on a regular basis for the last thirty years.“
Today it is another famous skeptic, SocGen’s Albert Edwards who has had enough and says he feels “utterly depressed” because he has not “one scintilla of doubt that these central bankers will destroy the enfeebled world economy with their clumsy interventions and that political chaos will be the ugly result. The only people who will benefit are not investors, but anarchists who will embrace with delight the resulting chaos these policies will bring!”
As he openly warns his readers :
“I have long recognised my own contrariness (or is it bloody-mindedness) and hopefully put it to good use in my chosen profession. If you want the consensus bull-market cheerleading nonsense, readers know it is amply available elsewhere.”
With that warning in place, here is why the man who popularized the deflationary “Ice Age” blows up.
I am neither monetarist nor Keynesian. I see merit and demerit in both sides of a very fractious argument. But what I do know is when in the last few weeks I have heard that Janet Yellen sees no bubble in the US, when Ben Bernanke hones and restates his helicopter money speech, and when Mario Draghi says that the ECB’s policy of printing money and negative interest rates was working, I feel utterly depressed (I could also quote similar nonsense from Japan, the UK and China). I have not one scintilla of doubt that these central bankers will destroy the enfeebled world economy with their clumsy interventions and that political chaos will be the ugly result. The only people who will benefit are not investors, but anarchists who will embrace with delight the resulting chaos these policies will bring!
We said in 2010 when the Fed launched QE2 that the ultimate outcome would be civil (or more than civil) war, so we thoroughly agree with Edwards “depression” because sadly he is right, but since stocks keep rising, few others seem to care.
Edwards’ lament continues:
I?m not really sure how much more of this I can take. So here we are 5, 6 or is it now 7 years into this economic recovery and it still remains pathetically weak. And so it should in the wake of one of the biggest private sector credit bubbles in history. The de-leveraging hangover was always going to be massive and so it is. Quick-fix monetary QE nonsense has made virtually no difference to the economic recoveries other than to inflate asset prices, make the rich richer, inequality worse and make Joe and Joanna Sixpack want to scream in rage. They are doing so by rejecting the establishment political parties and candidates at almost every electoral turn and seeking out more extreme alternatives at both ends of the political spectrum. And who can blame them apart from the chattering classes?
I have just returned from Germany on a marketing trip. I absolutely agreed with their Finance Minister Schäuble when he blamed ECB loose money policies for contributing to the rise in the extremist right Alternative for Germany party. Schäuble, “said to Mario Draghi…be very proud: you can attribute 50% of the results of a party that seems to be new and successful in Germany to the design of this [monetary] policy,” And this is not just a German phenomena – it is a global one. The people are angry and they are lashing out. But central bankers have painted themselves into a corner with their overconfident rhetoric and monetary experiments. They have now committed us all to their road to perdition.
Finally for those convinced in central bank ultraomnipotence, Edwards has the following parting words:
As investors hung on the words of ECB chair Mario Draghi once again, I was reminded when reading the excellent monthly newsletter of Graham Summers at Phoenix Capital just how desperate Central Bankers will become once they are painted into a corner. Graham writes “Whereas another Central Banker might state, “we are ready to act if warranted,” Mario Draghi says things like he’ll “do whatever it takes… and believe me it will be enough.” Bear in mind that famous statement was made entirely off-the-cuff as former Treasury Secretary Timothy Geithner revealed.
Geithner:
[T]hings deteriorated again dramatically in the summer which ultimately led to him saying in August, these things I would never write, but he off-the-cuff – he was in London at a meeting with a bunch of hedge funds and bankers. He was troubled by how direct they were in Europe, because at that point all the hedge fund community thought that Europe was coming to an end. I remember him telling me [about] this afterwards, he was just, he was alarmed by that and decided to add to his remarks, and off-the-cuff basically made a bunch of statements like ‘we’ll do whatever it takes’. Ridiculous.
Interviewer: This was just impromptu.
Geithner: Totally impromptu?. I went to see Draghi and Draghi at that point, he had no plan. He had made this sort of naked statement of this stuff. But they stumbled into it. (Source: Financial Times)”
Here is former Secretary of the Treasury, Timothy Geithner, stating openly that Mario Draghi had “no plan” and was simply bluffing when he claimed, “we’ll do whatever it takes.” Lets not kid ourselves, these “guys” are literally making it up as they go along!
There is little more to add, suffice that all of the above explains the relentless thrust by the mainstream media to pain central bankers as nothing less than supermen, or in the case of Roger Lowenstein’s famous op-ed, “Heroes.”
- Valued At $16 It Sold For $68 Million "In 7200 Seconds" – The Inside Story Of Vancouver's Wildest Property Deal
For the past four months we have been closely following the sheer bubble panic, if not outright insanity, that has gripped the Vancouver housing market (here, here, here, here, here and many more) which has been over the past year, converted into the personal offshore piggybank of wealthy Chinese oligarchs seeking to park laundered money outside of their home nation. On the way, the story took an odd detour into the outright bizarre when we reported the curious story of the Chinese tycoon found “chopped up into 100 pieces” in a Vancouver mansion.
But nothing compares to this fascinating story reported first by the South China Morning Post, in which the paper’s investigation revealed the obscure transactions behind a commercial real estate frenzy, including a two-hour stampede by investors desperate to pay C$60m for a site valued at C$16m. Then, a month after taking ownership, they resold it for C$68m.
Presenting, the inside story of Vancouver’s wildest property deal, gone in 7,200 seconds
Julia Lau (inset) boasted on social media that the October sale of C$60 million
worth of shares in 1059 and 1075 Nelson Street (main picture) in Vancouver
had been sold out to investors in “7,200 seconds”.It was in fall last year that Bruno and Peter Wall received an offer too good to refuse.
The prominent Vancouver property developers behind Wall Financial Corporation had spent C$16.8 million (HK$102 million) to buy two ageing walk-up apartment blocks on adjacent lots on Nelson Street in 2013. They had big plans for the downtown site: a glittering 60-storey residential skyscraper, taking advantage of the location within the city’s West End Community Plan, where a building could rise 168 metres tall under new zoning. The project was dubbed “Nelson on the Park” and the Walls turned to favourite designer Chris Doray to come up with what they hoped would be a new Vancouver landmark.
But now a consortium of investors was proposing something even more remarkable.
They would pay the Walls C$60 million for the site alone, which had just been valued at C$15.6 million by BC Assessment. The huge profit was impossible to resist, and the sale was completed in late January.
Doray, a 25-year veteran of the Vancouver development scene whose design has now been shelved, said he was “astonished” by the transaction, which he said set a new benchmark for commercial real estate in the city.
“The price on this block of land has now thrown everybody in the industry out of whack,” said Doray. “The property is worth, what, C$20 million, and somebody pays C$60million? One wonders what’s going on. Is this New York? Is this Hong Kong?”
1059 Nelson Street in downtown Vancouver, where property developers
Bruno and Peter Wall had once hoped to build a 60-story skyscraper.The scale of the purchase, orchestrated by Sun Commercial Real Estate (Suncom) – a firm that specialises in pooling wealthy investors from Vancouver’s Chinese immigrant community – was exceptional enough.
The now-shelved design for ‘Nelson on the Park’.
But an investigation by the South China Morning Post now reveals the strange and frantic backdrop to the transaction – including a two-hour stampede by Suncom’s investors, desperate for a slice of the deal. It is a transaction that also sheds light on the rush of Chinese money fuelling Vancouver’s soaring real estate market.
The Post interviewed key players and pored over land titles, company directorship and address changes, and English and Chinese social media postings to understand a transaction that looked, from the outside, incomprehensible – and potentially disastrous.
But Suncom, whose activities are being reviewed by the BC Securities Commission, knew exactly what it was doing.
Because on February 29, one month after taking ownership of the Nelson Street site, the Suncom consortium flipped it, corporate records show.
The price was C$68 million. And the Post met the new buyer, a rich Chinese immigrant named Gao Shan, last month.
‘Prepare the bank draft tomorrow. The shares will be sold out on Monday’
The blocks of apartments at 1059 and 1075 Nelson St could not be more nondescript. On a recent afternoon, there was a broken ground-floor window at weary-looking 1075, a Canadian flag draped as a makeshift curtain. Next door, at 1059, a waft of marijuana smoke drifted out of an open window.
But as she considered the apartments last October 8, Suncom’s self-professed vice-president, Julia Lau Chi Yuen, told her Facebook friends she was feeling excited.
Julia Lau (centre) with performers at a Suncom party last July 19.
Once among the most successful realtors in Vancouver, the Hong Kong immigrant had been prohibited from practising the previous January, after voluntarily surrendering her license ahead of a disciplinary hearing by the Real Estate Council of BC.
Nine months later, she was busy rounding up investors for 1075 and 1059 Nelson Street, the site still owned by the Walls, which Suncom was promoting as “1065 Nelson St”. Lau was a good fit with Suncom, having fostered close connections with the city’s rich Chinese immigrant buyers; in a 2013 interview, she told the SCMP they made up 80 per cent of her customers and later boasted on her website of selling more than C$560 million worth of homes from 2009 to 2014.
In a Facebook post that Thursday, Lau claimed “we just bought” 1065 Nelson St. Suncom was offering C$60 million worth of “shares” in the property that were poised to go on sale the next week – and they would go fast.
“Whoever want [sic] to invest has to prepare the deposit with bank draft tomorrow. The shares will be sold out on Monday,” she predicted.
“The shares will be sold out on Monday”. An October 8, 2015,
Facebook posting by Suncom’s self-professed vice president Julia Lau.It was no idle brag.
The Nelson Street sale was not the biggest that Suncom had promoted, but with its prominent downtown location and massive price-to-valuation mark-up, the transaction represented a culmination of efforts.
On February 21 last year, Suncom had pitched C$30 million worth of shares in two lots at Tisdall Street on Vancouver’s Westside, that had a BC Assessment valuation of only C$11.7million. Investors snapped up the shares in one day, Lau said on Facebook. Land titles show 5826 and 5860 Tisdall Street are now owned by a holding company (“5826&5860 Tisdall Holding Ltd”) whose directors are Suncom president Davidson Guo and Denise Dan Wei She.
A Chinese language flyer posted online by Julia Lau declares that shares in
1065 Nelson Street sold out in just “7,200 seconds”Then, on May 22, Suncom put the site of Richmond’s Silver City entertainment complex up for grabs, with C$103 million worth of shares selling out in one week. Guo and She are also the directors of the company (“14111 Entertainment Blvd Investments Ltd”) that now owns that sprawling 10-hectare site.
Meanwhile, capital outflows from China were reaching a fever pitch, as companies and individuals scrambled to send money overseas last year in record volumes ahead of a feared yuan devaluation. The Canadian dollar was also plummeting, making Canadian property relatively more affordable to yuan earners, and average detached house prices in metro Vancouver soared more than 40 per cent last year, hitting an average of C$1.8 million.
Peer-reviewed research had previously indicated how Vancouver’s property market had decoupled from the local economy, and was instead being steered by recent immigrants’ foreign earnings and wealth. The vast majority of those rich immigrants have been Chinese.
And so, against this heady backdrop on the morning of October 12, Suncom threw open the gates for the Nelson Street sale.
The result was nothing short of a frenzy.
“The 60million dollars project at 1065 Nelson St Vancouver’s shares sold out in two hours! Thank you very much for the supporting from all my clients!” Lau announced on Facebook on October 14.
A Chinese-language flyer on Suncom letterhead she posted at the same time trumpeted the sale as her “perfect success”.
“Sale of C$60 million property project completed in 7,200 seconds,” it said. “My perfect success – thanks to the strong support and love of shareholders. My only return – the maximum returns I can bring to you.”
The Post has no evidence that Lau received remuneration for providing real estate services while unlicensed, as prohibited under the Real Estate Services Act; her Facebook posting from October 14 suggests that she claims not to have been paid. Nor does the Post suggest that Lau was selling shares in real property at the Nelson St site, as opposed to shares in a company that owned the site. Neither Lau nor her lawyer, Joe Carangi, responded to SCMP questions about her role in the Nelson Street sale and her other activities on behalf of Suncom.
“I’m so proud to call myself the vice president!” Julia Lau at a Suncom
party in photos she posted online last September. The firm has since
claimed she was never an employee or officer of the firmFundraising tactics used in deals involving Suncom have previously drawn the attention of the BC Securities Commission, which in January announced it was reviewing the firm’s activities, partly in response to an SCMP article about whether the firm was involved in crowdfunding. In BC, crowdfunding – the mass online recruitment of investors – is limited to C$250,000 per project and a maximum of two projects per year. Individual investors are limited to C$1,500 per project. The BCSC told the Post this month that the review of Suncom was ongoing.
In a statement issued on March 12 via lawyer James Carpick, the company said that “as far as Suncom knows, Ms Lau was never involved in ‘crowdfunding’.”
But the firm distanced itself from Lau, saying that she was never formally employed by Suncom, but was “allowed to use the title ‘Vice President’ for a few months in the summer of 2015”. “Suncom terminated her use of that title, although she may have placed ads that used it that could not be recalled instantly, and she may have used it for a longer time than she was permitted to do, but, if that happened, this was not something within Suncom’s control or done with its approval,” the statement said.
Suncom refused to discuss the identity of its investors, and whether they qualified for exemptions from prospectus-issuance, normally required in the case of securities sales.
As for Suncom’s plans for the site, the firm revealed that it had “no ongoing involvement” in the property.
The site had already been resold – and with speed that suggested negotiations were underway even before the purchase from the Walls had closed at the end of January.
Who owns 1065 Nelson Street?
Keeping up with the changing ownership of the Nelson Street site has been no simple matter.
The changes do not show up in land titles for the two lots, because they remain to this day in the hands of Nelson Street Residences Ltd, a firm set up by the Walls in 2013 which was added to the titles in March 2014.
Instead, it is ownership of Nelson Street Residences that has changed hands, thereby avoiding property transfer taxes of C$1.78 million for Suncom’s consortium. The share-transfer tactic is common among commercial real estate deals and perfectly lawful.
These transfers are depicted in directorship and mailing address changes for the company, which switched on January 30 from Wall Financial Corp’s office, to a multimillion-dollar penthouse in the downtown Shangri-La Estates. The new director was named as “Peter She”; Suncom refused to discuss his connection, if any, to the firm, and Peter She did not respond to SCMP questions delivered via a registered letter that was accepted at his address.
The land title for 1075 Nelson Street, obtained in January 2016, lists the
owner as Nelson Street Residences, whose address is the Burrard Street
offices of Wall Financial Corp
A corporate search for Nelson Street Residences, conducted on February 10,
2016, lists Peter She as the new director, with the mailing address switching
to a penthouse in the Shangri-La Estates on West Georgia St.However realtor David Taylor, the Colliers International vice-president who acted as a consultant to the Walls on the sale, confirmed that they had sold the Nelson Street site to Suncom’s consortium for C$60 million.
Joanne Liu, vice-president of Wall Financial, said she was prohibited from discussing the sale by a confidentiality clause, although she confirmed that Peter She did not represent the Walls.
In any case, Peter She did not last long in his position at Nelson Street Residences, because on February 29, directorship again changed, to a man named Gao Shan, whose address was listed as an accountancy office on West Broadway.
By keeping his name off the land titles, Gao legally avoided paying more than C$2million in property transfer taxes.
Another corporate search, conducted on March 24, shows that on February
29, 2016, Peter She was replaced by Gao Shan as the sole director of
Nelson Street Residences, with its address moving from She’s downtown
penthouse to an accountancy office on West Broadway.‘The whole industry is astonished’
Chris Doray, who designed Vancouver’s Wall Centre and was again commissioned by Bruno and Peter Wall for the ill-starred Nelson on the Park project, has watched the site change hands with a mounting sense of disbelief.
His innovative design for the site, nicknamed the “pixelated tower”, was shortlisted at the 2015 World Architecture Festival in Singapore. It features a lattice-like façade that seems to dissolve into the sky.
But Doray now considers the plans shelved. “[They] weren’t so much interested in the project, but more in the land, as an investment,” Doray said of the consortium that bought the site off the Walls.
The widespread industry rumour – since confirmed by the SCMP – that the site had already been flipped seemed to validate Doray’s suspicions that the previous sale was a purely “speculative purchase”.
“I cannot believe that people will pay that kind of money for a plot of land”.
Chris Doray, designer of the shelved “Nelson on the Park” skyscraper.A source familiar with the initial C$60 million sale said “this is Chinese money, looking for an increase in value of the land”. “It seems crazy to think that someone might pay more, say a year from now, but it’s happening all the time,” the source said – apparently without realising that a subsequent sale had already taken place.
Doray said Wall Financial had attempted to persuade its buyers to press on with the skyscraper project, which he said had been “quite well received by the City” last summer.
“It was there, pretty much ready to go, but they were not interested. They just sold it to another party,” he said.
He said that in a quarter century of involvement in Vancouver’s real estate scene he had seen nothing like the transactions linked to the Nelson Street lot. “I cannot believe that people will pay that kind of money for a plot of land. The whole industry is astonished.”
The now-shelved design for ‘Nelson on the Park’, and its “pixelated” roof.
Meeting Mr Gao
In a strange twist, the new buyer of the site, Gao Shan, shares his name with a well-known Chinese embezzler who lived as a fugitive in Vancouver before surrendering in 2012 to authorities in the mainland, where he is less than two years into a 15-year jail term.
A third Gao Shan, meanwhile, is listed by Interpol as a fraud suspect and international fugitive.
And so the SCMP requested to meet the director of Nelson Street Residences, to confirm that he was not acting on behalf of either of his dubious namesakes by using their identity documents. An April 4 meeting took place at the office of Gao’s accountant, Jonathan Wong.
Gao, tanned and dressed casually in a long-sleeved polo shirt, bore no resemblance to either of his namesakes, who are aged 50 and 52; he appeared younger than both. “[There are] many people named Gao Shan,” he joked in English, glancing at the Interpol notice.
Wong handed over his client’s BC drivers’ licence as identification, but the date of birth had been covered with an opaque piece of tape, which the SCMP asked to be removed. Wong was reluctant, citing concerns about identity theft, but Gao waved away his worries and the tape was briefly peeled off to show a 1971 birthdate matching neither that of the convicted embezzler nor the fugitive fraud suspect.
The SCMP makes no suggestion of any wrongdoing by Gao or Wong; nor does it suggest any connection between the Nelson Street Residences director and either of the two men who share his name.
Wong was keen for the meeting to end but the SCMP asked Gao for an on-the-record interview. The accountant demurred, but Gao gave a grin. “One question only,” Gao said, holding up a finger.
Why would Gao pay C$68 million for the Nelson Street properties, when this was so far in excess of the valuation? After a brief discussion in Putonghua, Wong answered on Gao’s behalf, without disputing the sum.
“It is an investment that Mr Gao sees will give him a good return, and that’s why he made the purchase. I hate to give such a general answer but that’s how business decisions are made. If it’s not going to make money, he’s not going to invest,” Wong said.
The Post managed one follow-up question, asking Gao if he intended to develop the site. “Yes, this is a development site, it’s for development,” said Wong, after a nod from Gao. Wong also allowed that his client be described as a property developer. “I don’t believe there is anything more,” Wong said, and the meeting was adjourned.
In a subsequent email, Wong said: “Historical price and government assessment values were irrelevant in setting the purchase price of the two properties. Only the projected net profit was relevant.” He added that “you may be amazed” by checking the potential development returns on the site.
Designer Doray, who understands the potential of the site as well as anyone, isn’t so sure. “If the developer pays C$60 million for the piece of land, can you imagine what any condos on it would sell for, if they finally finish this project?” Doray said, laughing. “It will be untouchable – well, for the local market. It could only be an elite group of people at this price.”
- "A Scramble For Gold Has Begun"
Authored by James Rickards, originally posted at The Telegraph,
For a century, elites have worked to eliminate monetary gold, both physically and ideologically.
This began in 1914, with the UK’s entry into the First World War. The Bank of England wanted to suspend convertibility of bank notes into gold. Keynes counselled wisely that the bank should not do so. Gold was finite, but credit elastic.
By staying on gold, the UK could maintain its credit, and finance the war effort. This transpired. The House of Morgan organised massive credits for the UK, and none for Germany. This finance was crucial, and sustained the UK until the US abandoned neutrality and tipped the military balance against Germany.
Despite formal convertibility of sterling to gold, the Bank of England successfully discouraged actual conversion.
Gold sovereigns were withdrawn from circulation and turned into 400-ounce bars. This form of bullion limited gold ownership to the wealthy, and confined gold’s presence to vaults. A similar disappearance of gold as a circulating currency occurred in the US.
The price of gold has jumped in recent years Credit: London Metal Exchange
In 1933, US President Franklin Roosevelt issued an executive order making ownership of gold a crime. FDR relied on the Trading with the Enemy Act of 1917 as statutory authority for this edict. Since the US was not at war in 1933, the enemy was presumably the American people.
In 1971, US President Richard Nixon ended convertibility of US dollars into gold by trading partners of the US. Closing the gold window was said by Nixon to be temporary. Forty-five years later the window is still closed.
In 1973, the G7 nations, and the IMF demonetised gold. IMF members were no longer required to hold gold reserves. Gold was now just another commodity. The view of the monetary elites was that gold was dead.
Yet, like Banquo’s ghost, gold insists on its seat at the monetary table. The US holds 8,133 tonnes of gold. The members of the eurozone and ECB hold 10,788 tonnes. China reports holdings of 1,788 tonnes, but actual holdings are closer to 4,000 tonnes, based on reliable data from Hong Kong exports and Chinese mining.
Russia has 1,447 tonnes, and has been acquiring over 200 tonnes per year. Mexico, Kazakhstan, and Vietnam, among other nations, have added to their gold reserves recently. (Pity the UK, which sold more than half its gold at rock- bottom prices between 1999 and 2002).
After decades as net sellers of gold, central banks became net buyers in 2010. A scramble for gold has begun.
What drives gold’s new allure? In some cases, central banks are constructing a hedge against US dollar inflation.
China has $3.2 trillion in reserves, over half of which is denominated in US dollars, mostly US Treasury notes. The dollar has no greater friend than China because its wealth is held in dollars. Still, inflation looms. China cannot dump its Treasury notes; the Treasury market is deep, but not that deep.
If Chinese selling of Treasuries became a threat to US interests, a US president could freeze Chinese accounts with a phone call.
The Chinese know this. They are stuck with their dollars. They fear, rightly, that the US will inflate its way out of its $19 trillion mountain of debt.
China’s solution is to buy gold. If dollar inflation emerges, China’s Treasury holdings will devalue, but the dollar price of its gold will soar. A large gold reserve is a prudent diversification. Russia’s motives are geopolitical. Gold is the model 21st century weapon for financial wars.
The US controls dollar payments systems and, with help from European allies, can eject adversaries from the international payments system called Swift. Gold is immune to such assaults. Physical gold in your custody cannot be hacked, erased, or frozen. Moving gold is a simple way for Russia to settle accounts without US interference.
Countries are also acquiring gold in advance of a collapse of the international monetary system. The system has collapsed three times in the past century. Each time, major financial powers came together to write new rules.
This happened at Genoa in 1922, Bretton Woods in 1944, and the Smithsonian Institution in 1971. The international monetary system has a shelf life of about 30 years.
It has been 30 years since the Louvre Accord (an upgrade to the Smithsonian Agreement). This does not mean the system will collapse tomorrow, but no one should be surprised if it does. When the financial powers next convene to reform the system, there will be no appetite for the dollar’s exorbitant privilege.
The Chinese yuan and Russia ruble are not true reserve currencies. The only feasible benchmarks for a new system are the IMF’s world money, called special drawing rights, and gold.
Critics claim there is not enough gold to support the financial system. That’s nonsense. There is always enough gold, it’s just a matter of price.
Based on the M1 money supplies of China, the eurozone, and the US, and with 40pc gold backing, the implied non-deflationary price of gold is $10,000 per ounce.
At that price, a stable gold-backed monetary system could be sustained. When it comes to monetary elites, watch what they do, not what they say.
While elites disparage gold at every opportunity, they are buying it, hoarding it, and preparing for the day when one’s gold determines one’s seat at the table of systemic reform.
It’s past time to claim your seat with an asset allocation to physical gold.
- Depression, Debasement, & 100 Years Of Monetary Mismanagement
From the archives of Bill Bonner at Bonner & Partners (annotated by Acting-Man.com's Pater Tenebrarum),
Lost From the Get-Go
There must be some dark corner of Hell warming up for modern, mainstream economists. They helped bring on the worst bubble ever… with their theories of efficient markets and modern portfolio management. They failed to see it for what it was. Then, when trouble came, they made it worse. But instead of atoning in a dank cell, these same economists strut onto the stage to congratulate themselves.
The scalawag himself. Keynes provided governments with the “scientific” fig leaf fore interventionism that economists had previously denied them. The cost in terms of economic and technological progress is incalculable.
“The Greatest Depression that could so easily have happened in 2009 but did not is the tribute that the world owes to economics”, wrote Arvind Subramanian in The Financial Times.
Arvind Subramanian: congratulating mainstream economists (a sub-set of society that includes him) for failing to foresee a mess their own advice has produced. The chutzpa of this guy is really admirable. He is of course correct that it is difficult to make forecasts (in fact, economics as a science has nothing to do with making predictions), but anyone who didn’t see the 2008 crisis coming had to be blind as a fricking bat. Even housewives could see it coming, but a very long list of prominent professional economists and “policymakers” evidently couldn’t. Fine, but these are the same people that insist that they know what to do about it. That is decidedly not so. They have now produced what will turn out to be an even greater mess.
We were lost from the get-go, trying to interpret the sentence. It is as tangled and puerile as the staggering conceit behind it. Then, Mr. Subramanian sets up the stage props:
“In 2008, as the global financial crisis unfolded, the reputation of economics as a discipline and economists as useful policy practitioners seemed to be irredeemably sunk. Queen Elizabeth captured the mood when she asked pointedly why no one (in particular economists) had spotted the crisis coming. And there is no doubt that, notwithstanding the few Cassandras who had correctly prophesied gloom and doom, the profession had failed colossally…”
He then brushes off the Queen’s very sensible question:
“But crises will always happen, and even if there is a depressing periodicity to them as Professors Reinhart and Rogoff have catalogued, their timing, form, and provenance will elude prognostication.”
The Queen, here seen shortly after being apprised of Mr. Subramanian’s excuse in the FT
Of course, the record doesn’t show that the crisis eluded prognostication; any dope could have seen it coming. But the prognosticators who had contributed so mightily to the crisis had blinded themselves with their own claptrap. Still, Mr. Subramanian figures that they “vindicated” the profession in the way they responded to the crisis.
“On monetary policy, Bernanke was true to the word he gave to Milton Friedman on the occasion of his 90th birthday: ‘Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.’
Bernanke, the pre-eminent student of the Great Depression, found conventional and some very unconventional ways of not doing ‘it’ again. At the peak of his interventions, the U.S. Fed came to resemble the Soviet Gosbank, more a micro-allocator of credit than a steward of macroeconomic policy.”
It probably wasn’t the point he intended to make, but the Fed does resemble the Soviet era Gosbank – manipulating, meddling, and micro-managing the economy toward destruction.
Gosbank building in Rostov-on-Don (??????????????? ???? ????, Gosudarstvenny bank SSSR, State Bank of the Union of Soviet Socialist Republics). It is interesting that Mr. Subramanian didn’t even bat an eye over the Fed’s similarities with Gosbank. Of course these similarities didn’t just pop into the open on occasion of the 2008 crisis. “Gosbank” is precisely what the Fed is. It is a socialistic State-run central planning agency. What else is it supposed to be? Don’t be misled by the often stated assertion that it is a privately owned cartel. Its charter is from the government and its board of governors is government-appointed. It is the link between the banking cartel and the State, but it would not exist or have any power without the State.
Led by a Scalawag
Meanwhile, Congress is doing some Soviet style management too; it is now owner of the nation’s largest automobile company and its largest insurance business:
“They took their cue from the writings of the academic scribbler of yore – Lord Keynes – and provided massive public demand for goods and services where private demand had collapsed…”
Chief economics quack of the FT, Martin Wolf (another one of those who didn’t see it coming, but know all the solutions). It is no surprise that he invoked the scalawag Keynes.
We were still gasping for air when, on the 30th of December, columnist Martin Wolf called upon Keynes’ ghost again. He, too, shuddered to think how horrible things would have been if the financial authorities had not taken resolute action:
“We could not, in such times, even take the survival of civilization itself for granted. Never before had I felt more strongly the force of John Maynard Keynes’ toast ‘to the economists – who are the trustees, not of civilization, but of the possibility of civilization.’”
Is there any doubt that Keynes was a scalawag? Civilization flourished for thousands of years before anyone made a living as an economist. Crises came and went.
In the 19th century, for example, there were panics followed by depressions in 1819, 1837, 1857, 1873, and 1893. Not one of the depressions seemed worthy of the “great” modifier. Hundreds of banks failed. Civilization didn’t seem to care. The rich and powerful took their lumps along with everyone else; most people enjoyed watching them go down. Business went on.
The ominous newspaper headline that announced the passage of the Federal Reserve Act. A “constructive act to aid business”?. It took just 15 years under the stewardship of this “constructive” agency to bring about one of the greatest economic catastrophes in history.
In 1913, on Christmas Eve, Congress passed the Federal Reserve Act, setting up America’s central bank. Only then did economists get their hands on the economy’s throat. The dollar was worth about the same thing it had been worth 100 years before.
Now, almost a hundred years later, it is worth only 3 cents. And only 16 years after economists took their positions at the Federal Reserve came a depression worse than anything the nation had ever seen – at least, it was worse after government economists finished with it.
After the dollar had been stable for a century, it was decided that central planners could do better. This is the result, along with far weaker economic growth and far greater inequality – click to enlarge.
The Great Depression may have been an accident, but the debasement of the dollar certainly was not. It was a matter of policy. Economists, led by Keynes, had the idea that they could spur the economy forward by creating phantom demand – in the form of additional units of purchasing power. The gold standard stood in the way; it was abandoned like a bad neighborhood.
First, temporarily, then partially, then, in 1971, completely. The first consumer credit boom came in the ’20s… leading to the Great Depression. By the 1980s, 50 years later, Americans had lost their residual fear of debt. Consumer credit boomed again.
Then it bubbled. Economists didn’t understand what was going on. They rarely do. But they had created a hundred-year flood of consumer debt. Now, they congratulate themselves; households sink… but civilization floats.
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