The plan for today was to pen an article regarding silver. I believe silver to be the cheapest, most undervalued asset on the planet. From these current levels I believe any capital in silver is a no brainer. Let’s hold off on this thought until next week however, a more pressing thought has come up.
Let’s start with a question. Would you ever lend money to someone you knew for a fact was bankrupt? Or, would you lend money to someone who told you to your face they were cooking their own book? Isn’t this exactly what you are doing any time you deposit money into most any bank? Without getting long winded on this aspect, you do remember back in 2010 or thereabouts our banks in the U.S. were allowed to outright cook their books? The banks were no longer required to price their portfolios at “marked to market” prices. Since then, they can simply “make up” whatever prices they choose and report those.
It is the same situation in Europe but they have had a little “help” in their fraud. For example let’s look at Greek bonds that are held in banks all over Europe. Greece without a doubt cannot mathematically pay back their debt. They do not have enough cash to even make next month’s “credit card payment” without an infusion from somewhere. I use this term credit card payment because that is exactly what these are, this week for example is a miniscule 500 million euros, not even half a ham sandwich in the global scheme of things. If they cannot make a payment or they go through a restructuring, or in all probability they cut a deal with the Russians and Chinese followed by “we quit and we aren’t paying you” …what are these bonds really worth? Ten cents? Five? Zero?
My point is this, these bonds are carried on balance sheets at 100 cents on the euro! Banks, including the European Central Bank itself values these bonds at par as if they were pristine a credit. The BIS has allowed sovereign credits within Europe to be carried at par on bank balance sheets. This is clearly bogus. It was my intention to also speak about Spain’s short term interest rates just went negative. They were my original thought to “would you lend money to a bankrupt entity?”. While writing this, two pieces of news have come out and spotlights my point. Greece has in fact made the April payment, now we wait for the next due date which finance minister Varoufakis says “will be different”, what does he mean by “different”? Mr. Tsipras concluded his meeting in Moscow, what exactly was discussed? Greece has also surprised us yesterday by contemplating calling all new debt taken on since 2012 as “odious” . I believe the new amount of debt taken on is over 100 billion euros, does this mean they will just walk away from this post 2012 debt and only service the earlier debt? Was this a part of the discussions in Moscow? Greece will continue to pay on pre 2012 debt but not post debt? Is this debt “justified” being priced at 100% or par or should a minor adjustment be in order?
As you know from previous writings, the Austrian banking system is wobbling because of the rise in the Swiss franc versus the euro. This was caused by Hypo Alpe Adria bank not being able to make a 600 million euro payment. This has affected their counter parties and has since spread. Could this paltry amount take down the Austrian banks?
Do you see what today’s exercise is all about? It looks like amounts as small as “millions” which only amount to credit card monthly payments may be enough to torpedo individual banks …and even a country! The fact that the world is so levered and interconnected means very small “non payments” have the ability to spread and take everything down with it… and it looks like this is exactly what is happening!
I have said all along that our entire financial system was about “collateral” and it would be the realization the collateral was “bad” as the reason for collapse. This is where we are today, extremely small interest payments which cannot be made are about to expose the true value of the underlying “collateral”. Just because the regulators have allowed banks to mark their assets to fantasy levels does not mean the bad collateral will not fail. It will. IT ALL WILL! This is the reason “bail in” legislation has been written and put into place all over the world. Because they KNEW when they wrote the legislation they would be forced to use it.
The white knight of “bail outs” will not and can no longer ride in to save ignorant depositors. I use the word “ignorant” because who in their right mind would lend their money at a negative interest rate …in a debasing currency …to a bank that lies about their asset quality …in a system where if one fails they all fail? And on top of this, the regulators, central banks and governments themselves have already written legislation saying “when it comes down, we will take your money to make ourselves whole”. Who would do this? I’m pretty sure holding gold is a safer bet but that’s just me and everyone knows I wear a tin foil cowboy hat.
as much as the debtor want and wish to called it “odious debt”
if the creditor disagree and outright reject such lame and stupid proposition
what to do then?
war to decide the “victors”?
however “odious” it was, greece (by extension us of a) did spend all the money
which is translation of blood and sweat of human labor of people from another country
they too deserve a fair pay back
“odious”? what to do about that?
and if Greece falls into the SinoRuso fold? Then what?”
this is for pure discussion only
so pls understand I hold you with great respect bill
i hope such sharing of different points of view
may help your side see and thus prepare differently
if that be any help
If that be the case
we may have 2 systems one country like china and HK?
which could be increasingly popular “product”
but no debt is ever “forgiven”
in history there are many examples where
the losing/weaken country reduce to a statehood
perhaps like the british colonialism once b4
they rule whatever “country” like their state
except now as technology financial laws/game rules all “advance”
nobody that is the “citizen” need to know the details
so it will be call country except its all empty shells – pseudo country by title only
even india was printing “reverse colonialism” call in their msm
when cameron visit them last yr or so.
on a higher note and bigger picture again
you probably abhor at the idea/plan of one world (no country)
or singularity of humanity (w representative of human species to the outside earth)
put it another way at a lower lever of “thinking”
did not god want to unite all people (aka his children) and bring them home?
what that all about if not singularity?
that BIG ONE is for another day 😀
so for the time of NOW my sense is
from a different point of view from the east
no debt/history has been forgotten
everything is shaping as planned
as part of the will of god/gods/supreme beings
rightly and wrongly
according to each of our individual point of view
its still sadden to me
the story is written such way
its friday
so back to my cave/hole again
away from the civilization which in its name is rather ironic
nothing civil about the last few hundred years
or ever… isnt it?
an animal is still an animal, inside and outside
however they want to call themselves “human”
and exist in a series of increasing overlapping complex self-certify “artificial systems”
just to tell themselves how great they are
how “advance” they have become
like the gods they imagine to/should be
but on a deeper more intelligent scrutiny
why would god need/want a animal body
and be confine to corporeality/matter?
if god/gods want to save us
then he just think and it is
just like he thought and creation in “born”
so why cant this god thinks and we are “saved”?
thats the mystery each individual must ponder and choose
if he were to become human
in this stepping stone world
may your god/gods be with you
all these crisis around are merely pointers to who are we
if Greece fall into SinoRusso fold
then there may be no more EU
everything will be reset, redefine and “reallocate”
and the war of dragon, bear and tiger will accelerate
until singularity or termination
just my 2cents as I check out….
good luck
Woo! Woo! Bill. Give ’em hell! And by the way, the tin foil hat looks good on you…
Forest Gump’s mom said, “Stupid is as stupid does.” Loaning your money to a bankrupt entity (the banks) surely qualifies one for that moniker.
Most of my friends, even the “smart” ones, still have their money invested in paper assets; expecting some Deus ex machina solution to resolve the errors in their flawed allocation strategy.
We are truly in deep kimchi…
yes.
Hi Bill ,
Another great article.
I am currently in Athens, Greece for a ten day break, where life seems to be seemingly normal.
Everyone prefers cash but there seems to be no queues at the banks and no restriction on amounts you can get from any ATM machine.
Greece banks shut down for FOUR days starting tomorrow ( Friday 10th) for the Easter holiday.
Have had several conversations about finance with people but they all seem oblivious to the big picture. Putin was on every TV channel in our hotel last night but unfortunately I understood none of it . There is a large police/ security presence but that may be normal for Athens.
There are silver coins available in the bullion shop which are only slightly more expensive than what is available in the UK.
If or when the banking haircut comes to Greece most of the sheeple are going to be very surprised.
enjoy your trip and thanks for the info!
Giddy up cowboy! Bet that lasso rope you use is made from hemp too! This whole Ponzi is beyond comical at this point. This fall it all comes down. The satanist money masters have gotten the green light from their occultic belief systems (#’s, stars, moon et). Don’t matter if you believe in it because they do! And they’re behind the levers.
yes, probably by or before fall, we’ll see?
You hit the nail on the head! The world is running out of COLLATERAL!!!
Without collateral, you can not do anything, because nobody would extend credit (labour, services, materials, goods, etc.) which means you can no longer run a business. Employees work for you, with the impied assurance of being paid the salaries ON TIME. Companies deal with each other, exchanging goods & services, on an implied understanding that both will be paid, IN TIME.
Which leaves all of us with the question – what happens when all financial instrument become worthless AND goods are not being SOLD because there is NO REAL MONEY? CHAOS is just the beginning of the total collapse.
BUT there is a COLLATERAL that is acceptable to all people, worldwide. This COLLATERAL just needs to be OFFERED at the right VALUE/PRICE in various currencies, and Financial Stability would come.
So what is this COLLATERAL that needs to RESET to where – The Price Is Right? It is a four letter word, that is hated by bankers and their ponzi schemes. It is GOLD.
exactly G8, thank you.
Today was a good day.
Got delivery of my small collection of silver rounds.
I recently purchased a small amount of silver coins and or rounds from mints from all over the world.
USA, Canada, UK, Australia, China to name a few.
Put them all in a collector book of sorts to display and sure makes a nice coffee table book.
Hopefully I will not have to eat this book after the reset occurs.
Collateral… this is now in short supply all over the world.
I no longer argue with my friends on the subject of our broken Fiat System.
There is a saying…When you argue with an idiot, there are now two idiots.
From Robert Kiyosaki Book Second Chance…
In regards to our broken and rigged financial system.
You cannot get out of the way of things that you cannot see moving towards you.(R. Buckminster Fuller)
We see what is coming but most cannot see what is coming and that is why they see us as the idiots.
all in all a good day.
Bill,
I have much respect for David Stockman for giving hell to central bankers, especially Fed. But he recently gave an interview to KWN which had me extremely confused. He talked about how precious metals are guaranteed to retain value & have done so for thousands of years – but only did so after prodded about them. Otherwise, he kept saying how under current conditions holding physical cash (as in physical printed paper notes outside of banking system) is going to be the safest bet. He doesn’t foresee a Weimar hyperinflation etc.
I realize David Stockman isn’t exactly from Austrian school. He is a supply-side guy I believe (whatever that means). Care to comment on what is he even thinking? I can post link to audio interview if you would like.
if he believes that, I disagree.
Bill,
As always thanks for sharing your questions and the thoughts that work towards an answer.
Daily I look forward visiting some favorite sites to “sit in the room” and hear the thoughts of great thinkers. You never dissapoint. In this era of history your perspectives are of extreme value to me and I appreciate your prolific writings.
COLLATERAL!!, of the very few things I have on my wall one of the most important is a colorful and enlarged print of an updated Exters Pyramid.You know,the one with the tiny little point of gold and silver supporting everything above it. I kinda view it as a funnel.Man!I like that collateral!
a wise man John Exter!
Hi Bill,
looking forward to your piece on silver.
However will you also be taking into consideration the fact that JP Morgan has spent the last few years acquiring the largest hoard of physical silver in the world, and what the potential impact may be in the future ?
but have they really?
as mike from the north says – to argue with an idiot, makes you a idiot.
i am running out of friends that dont think – i am the idiot.
getting very lonely out in the “real world” (?).
I know the feeling.
On the subject of gold exchanges, I’m still trying to understand how the soon-to-open Shanghai exchange will foster arbitrage. I understand the paper/physical spread concept but will China bid up the price of physical gold to jump start arbitrage or will it begin a life of its own as all participants use ‘physical gold only’ Shanghai to more quickly deplete the ‘paper charade’ western vaults of its remaining physical gold to the point of a paper collapse?
I am trying to get a handle on this, it is open now but not fully functional as I understand it, hard to get information on this.
IMHO much of the factual or economic unpredictability in these PM markets stems from the Comex situation where far more volume is traded on paper than actually held by the players, this causes a distorted perspective of the physical in volume, price, and location.
Again, IMO this will all clear up when some deep pocket demands large delivery of the physical. This would do two things: 1. create a scramble for the physical, bidding the price up with no consideration of Comex limit controls, thus true price discovery and 2. expose the roose of the game.
yes.
Observable facts not supporting hard money theories: there is plenty of silver coins for sale all over the earth at $16/ounce. Check EBay. Industry no where is out of silver, nor hoarding it because their smartest planners sense a shortage. Thousands of very rich Americans have been stacking millions of ounces of silver each month for years without impacting available supplies.
Production from silver mines is decreasing, medical uses of silver is ramping up— yet no shortages.
No one has any idea of how much silver the very rich families have accumulated in the past 1000 years. It’s fashionable to quote some government estimates, but as Sterling Seagrave shows, governments have been but the puppets of the rich families.
it is a head scratcher.
Bill…..so the Federal Reserve Bank and other huge big U.S. Banks buy all the treasuries that China, Russia and any one else sells…….and noone knows who is holding them and how much. It goes on to infinity but noone knows because this info is not available. The financial world goes on without a blip.
What is crazy is China and Russia sell U.S. Treasuries and they get back U.S. Dollars….they can’t win. If they say we refuse to accept U.s. dollars, we say we do not accept Rubles and Yuan. Everyone has to accept everyone else’s currency. So the U.S. Dollar lives on.
poor logic.
Talk about “crazy” Bill! The new issue of Swiss 10 year bonds paying a ‘negative’ rate are being quite well received! Never could I have imagined paying a government to hold your wealth.
An even “crazier” event in the bond market has just occurred in Mexico. The Mexican’s have just issued a 100 year bond denominated in Euros! Will the Euro even exist in 100 years? Or for that matter in 10 years?
Countries issuing bonds in foreign currencies, with a one hundred year maturity! This is no longer just crazy! A new adjective must be found to describe this! The present ones are just not descriptive enough! And, DON’T take that to the bank! lol
has any fiat currency ever last 100 years?
Good Read Bill
Also, good interview on Watch Dog.
Prez Run Update:
Set of writings posted. Next to gain US/Foreign exposure & plans are in the works.
https://www.facebook.com/derrickmichael.reid/posts/1634480650113995:0