As for this week, I’ll be leaving Thursday morning for Freedom Fest in Las Vegas with Andy Schectman, so it’s unclear if I’ll be able to tape an Audioblog. If so, it will have to be on Wednesday.
Regarding today’s article, given the myriad of “horrible headlines” over what appeared to be a quiet weekend, I’m writing in list format to make sure you’re aware of the “countless” reasons we could not be more urgent of what’s coming; as “reserve currencies” like the dollar, Euro, and Yen are shunned, and the “once and future monetary kings” – i.e., gold and silver – return to prominence. Following the Cartel’s 52nd Sunday night attack in the past 53 weeks, we’ll let you judge if such blatant suppression can be maintained much longer.
1. To start, let’s return to last week’s “bullish” NFP jobs report, which we eviscerated in Thursday’s “Island of Lies.” For one, recall that such “strong” numbers were not only “seasonally adjusted,” but included 120,000 phantom “birth/death” jobs. Moreover, as usual, essentially all incremental jobs emanated from the 55+ age group – as scant savings, and seven years of zero interest rates cause more and more seniors to delay retirement by taking (largely minimum wage) jobs. However, what should really terrify economists and real people alike is the fact that the BLS itself admits such “job growth” consisted of 799,000 new part-time jobs offsetting the loss of 523,000 full-time jobs. Think about that for a moment. We’re supposed to be giddy because 523,000 real jobs were lost, replaced by 799,000 “half-jobs” – none of which pay benefits, and most of which pay minimum wage. Consequently, U.S. entitlement spending is exploding whilst the economy is materially contracting, and will continue to do so ad infinitum; in turn, creating a vicious circle of deficits requiring increased government borrowing, of Treasury bonds no one wants except “Belgium.” And by the way, can anyone tell us why the first quarter GDP contraction of 2.96% was rounded down to 2.9%, instead of up to 3.0%?
2. Speaking of fraudulent numbers, we’re still chuckling at how a year ago, the Fed said it would raise rates when “unemployment” fell to 6.5% and “inflation” rose to 2.0%. Here we are at “6.1%” unemployment – in actuality, closer to 23% – and no interest rate hikes. And now, with the Fed desperately clinging to a “2.0%” measure of current inflation – despite its own surveys coming in at twice that rate, and Shadow Stats at a multi-year high of 10% – nothing but crickets on the rate hike front. Whirlybird Janet says recent food and energy price increases are simply “noise”; such as the 24% first quarter increase in the “Breakfast Index,” consisting of coffee, eggs, bacon, cheese, milk, and the like. Not to mention, surging energy prices – as Iraq and the Ukraine, among others, are likely “non-recurring” events.
3. And no discussion of fraudulent numbers could be concluded without the take on said “diffusion indices” – which we have railed against for years – from none other than Wall Street prostitute, and leading TARP recipient, Bank of America. In this case, they’re referring to Chinese PMI reports, but just as well could have been discussing the fraud regularly published here in the States. Of course, B of A will never say a bad thing about the U.S. economy, which is assumed to always be “recovering.”
“It is important to understand how crude these surveys are. Each month, a few hundred purchasing managers are asked if a variety of activity variables are up, down, or the same relative to the prior month. Note that there is some guesswork involved – as the survey is taken before the month is over, and some of the questions cover variables that are difficult for a purchasing manager to get a timely read on. For example, a purchasing manager may not have a very precise idea of what is happening to hiring in a large, diverse firm. Moreover, since they don’t gather specific numbers for each series, they may have to make a rough guess, particularly if the trend is slightly up or down.”
4. This year, the process of global “de-dollarization” has exploded in breadth. Starting with the PBOC’s infamous November 2013 statement that it is “no longer in China’s favor to accumulate foreign-exchange reserves,” the anti-dollar drumbeat has grown deafening, particularly after the U.S. suicidal provocation of Vladimir Putin regarding Russia’s interests in the Ukraine. Not only has a powerful, anti-dollar Sino-Russian axis developed – along with the emerging BRICS alliance – but the rest of the world is starting to fall in line. This weekend, as discussed by Bill Holter in great detail, the French joined the fray, when its top Central banker averred that America’s ugly bullying of French bank Paribas will “encourage diversification from the dollar.” Next, its Foreign Minister said “now is the right time to bolster use of the euro. We sell ourselves aircraft in dollars. Is that really necessary? I don’t think so.” And finally, the CEO of French oil behemoth Total – following Russia’s Gazprom last month – made the ominous statement that “there is no reason to pay for oil in dollars.” For those that refuse to take heed, we can only warn of the dangers of “whistling past the graveyard.” Remember, France is supposedly one of America’s strongest allies!
5. In recent weeks, we have highlighted how European bank stocks are experiencing “the first visible signs of bank distress since 2011,” despite record official support. After all, government entities have quietly accumulated half the world’s equities, whilst Central banks have pushed interest rates to record low levels – in Europe’s case, below zero! The most notable declines have been in Barclays, Paribas, and “horribly undercapitalized” Deutsche Bank; and just last week, the fourth largest Bulgarian bank was seized, followed by a crash in the stock of Austria’s largest bank – Erste Bank – following Friday’s disclosure of a 40% surge in loan-loss provisions. With Europe’s economy at its literal low point of our lifetimes, why anyone wouldn’t realize how insolvent its banking system is is beyond us. There’s a reason the ECB just instituted negative interest rates, with the promise of outright QE right behind it. Not to mention, as the IMF this weekend stated its intention to reduce its global growth expectation. And thus, we’re just saying – where’s there smoke, there’s bound to be fire.
6. Global financial markets have been so consumed by government intervention, they are trading at unprecedented, borderline hyperinflationary valuations. U.S. equity valuations now exceed nearly all 2000 and 2007 peak metrics, despite the worst global debt, inflation, and economic stagnation in generations. Not to mention, blatantly “massaged” economic and earnings metrics that vastly overstate the hideous reality. And best yet, the U.S. “VIX” – or volatility index – has declined to 2007’s lows, bringing to mind a Katrina like “eye of the hurricane.” Not only that, we just learned that essentially all S&P 500 earnings of the past five years have been “returned to shareholders” via stock buybacks. Never have we seen such epic moral hazard in play, nor the “1%” benefitting so mightily at the expense of the “99%.”
7. Finally, “commercial” naked shorting of COMEX gold and silver contracts has reached epic levels, to the tune of $12.8 billion and $4.5 billion in the past month alone. Clearly, the Cartel is desperate to slow the rising global tide of precious metals’ interest; and for those that believe they “always” win, we remind you that sometimes they are in fact overwhelmed by physical demand – as in April 2011, when “commercials” like JP Morgan scrambled to cover shorts as silver rocketed toward $50/oz. Only the May 2011 “Sunday Night Paper Silver Massacre” saved them then; but one day soon, nothing will be able to do so. Sooner or later, the tide of reality will overwhelm them; and if Jim Sinclair is right, that time is this Fall. Sorry to our temporary editor, but I’m going to end today’s article with a graphic – care of the great Steve St. Angelo. And thus, to those that believe silver is in “plentiful supply,” we ask you to explain this.
Money printing, market manipulation, and propaganda aside, there is no doubt TPTB are fighting an increasingly uphill battle. If Sinclair is indeed correct, the time to protect yourself may be painstakingly thin. Irrespective, the odds of inevitability becoming imminence sooner rather than later grows stronger each day. And thus, we ask, what are you waiting for?
Andy, I’m here in Denver, I went to a Rockies’ fireworks show on Friday, and I was wondering why you think things here in Colorado seem so good. There are buildings going up everywhere, inflation isn’t so bad, unemployment is down, and roads are being repaired like crazy. Cars are selling, the real estate market is on fire, and there doesn’t seem to be much in the way of pain. I understand the illusion we’re living in, but when it comes to all things close to home, I’m not seeing here what’s happening in a lot of other places. What say you???
I agree with you that on the surface it’s not obvious, but when you look at the fundamentals just below the surface it’s out of control. What’s not obvious is that we are in a historical massive debt/leverage bubble (gigantic transfer of wealth) that most people won’t visually see until it rolls over them! With interests rates at near zero pushing more air in the biggest debt bubble in history. As far as inflation, I’m not sure which country you’re living in. Inflation in the US is most likely running around 8-10% or greater. I’m not genie, but from what I see all over the globe I would get ready for a roll over within the next 12-24 months. Good luck and please get prepared!