Never before have I seen so many pieces of information to be put together in the span of just one week. This past week we were bombarded with connectable dot after connectable dot, nearly each and every one of them on their own would have caused a panic 30 years ago. I say “30 years ago” because this was before the 1987 crash, this was before anything and everything, nailed down or not …was levered many times over in what eventually became an inflation party. 30 years ago, black was not white, wrong was not right and “debt” was still in its infancy of being money. Fast forward to present day and we now have a monetary system with one foot on a banana peel and the other in a grave!
Let me list what I saw this past week as some very ugly dots to be connected, by no means is this list complete but I think you’ll get the point by the time you are done reading. Early in the week, China announced changes to their collateral rules for the credit quality necessary for corporate bonds to be accepted as collateral (now only AAA and AA bonds can now be used). This caused a 5.6% drop the following day in their stock market which did ripple around the world to other stock markets. This is significant because without a doubt it was an act of tightening credit and will directly decrease the liquidity available for the Chinese exchange. This is not a one day event as CNBC would lead you to believe.
Next, oil has outright crashed in price and finished the week under the recently unthinkable number of $60… and the repercussions have just started to be felt. The 130 year old firm Phibro announced they will be closing up shop while oil exporting currencies (including the ruble) were destroyed. There had been discussion over the last several weeks regarding the future of the shale industry, this discussion is now ended in that no one can say “this will blow over” any longer. $100’s of billions of extended credit is now impaired and this credit market has crashed to yields now over 10%. The crash in oil all by itself is enough to ruin the financial system but by no means was alone this past week.
The next dot to connect was the spending package passed by Congress. As Zerohedge reported Presenting the $303 Trillion in Derivatives That US Taxpayers Are Now on the Hook For, the U.S. public was sold down the river. Just a month after the Republicans won both houses of Congress, they have now allowed the banks to stuff their derivatives portfolios under the FDIC umbrella. Over $300 trillion worth! Prior to this, the FDIC insured over $6 trillion worth of bank deposits with a whopping $54 billion reserve… How could any “true American” have voted for this? Even a calculator with no batteries can understand this will unequivocally bankrupt the country, yet this law is passed little over one month after an election by the American public put trust in the Republicans as their “last hope?” Was this passed by mistake or do you think they knew what they were doing? Was Obamacare passed by mistake? Comically, the architect of Obamacare testified to Congress after calling the American public stupid …a traitor testifying to traitors, they should all be strung up for TREASON! Whether you know it or not, Congress just called the American public foolish also by passing this traitorous law.
I asked in the above paragraph if you thought they “knew what they were doing?” The Treasury Dept. this past week put out to a bid request to supply “survival packs” for their 3,800 bank examiners. For what possible reason could bank examiners need a survival “fanny pack?” Does the Treasury know something they are not telling us? I would also like to ask why the Chicago Fed is “bricking up” their ground floor windows. Are they expecting something? Rioting maybe?
If all of the above wasn’t enough for you, don’t worry, there is more …and even bigger news! Early in the week, Russia announced they are moving up the testing for their newly proposed currency clearing system. It had been planned for a May 2015 testing phase followed by going live, this is now moved up to Dec. 15th, yes, this Monday! Why? Why are they moving up the start date? Presumably they also know something or see the immediate need to be able to clear funds for trade outside of SWIFT. If you think this one through, Russia will have the ability to facilitate ANY trade between ANY two or more parties while excluding the use of dollars …and the prying eyes of America! This will mean whatever sanctions on Russia will be lessened, it also means SWIFT is no longer the only game in town. Maybe the BRICS et al will no longer care, or need to use SWIFT? No, not “maybe,” definitely.
So far I haven’t even mentioned gold but don’t worry, we got two huge pieces of news. In case you had not noticed, gold/silver were the best performing asset class for a truly dismal financial week. First, Austria is now considering repatriating all of her gold. I mentioned last Monday in “The Mother of all Bank Runs” that Austria could be next in line, and if so, the stage would then be set for a “northern euro” leaving the southern basket cases to fend for themselves. I plan to write about this tomorrow so I will leave this for a separate piece. While the ramifications are very wide, the “intent” seems to be very narrow, I will explain this tomorrow.
The other big gold news and one that can be categorized in the “do you think they know something” category came from CME/COMEX. They will begin with “collars” for nine different metals, including silver and gold. The collars will begin to kick in and trading will cease if gold moves $100 or silver $3 with ultimate daily collars of $400 and $12. I won’t bore you with the specifics, more importantly you must wonder “why?” and “why now?” How often have we seen $100 moves in gold, much less $400? I believe it has been only one time that gold moved over $100 in a day. We have seen $3 moves (almost all down) in silver but these were almost exclusively during evening trade sessions and almost always on Sunday nights. Does CME really see $12 moves in silver coming? Again, “are they expecting something?” we don’t know about …or maybe they are afraid silver could go to zero in less than two days trading and don’t want to see that happen (I believe if it was possible, this would have already been facilitated)? Or, more likely, are they expecting huge volatility and upside moves they would like to retard and slow down? Add this one to the category “they know something and are readying for it!”
So there you have it, we had a disastrous week for financial assets and huge news, most of which points to sides being chosen and “official readying” for upcoming events. I might add that a 6th Hindenburg omen was spotted on Thursday which most probably bodes very poorly for the stock market(s). With all of these events lining up, one might think the U.S. public is in a somber mood. But no, consumer sentiment numbers reported Friday saw a huge upswing …either the public is not very bright or the reported numbers are bogus …or both?
Let me finish by saying this, the market action is clearly showing we have entered a credit contraction. Any credit contraction is a death sentence to a system which is overleveraged and already standing on a banana peel. The markets are trying to say this at the same time “official” moves are portraying something very big is afoot. Central banks are now collectively “running the bank”. If one had no prior knowledge of anything financial prior to this week, what was learned this week alone is enough to know something is very wrong, something very bad is going to happen and it is going to happen very soon. I would suggest if your plans are not already finalized, do not wait until the new year to do so!
The good ole numb Americans just act like nothing is wrong. Let’s all watch sports games and not worry about our next meal as it will be at the store no matter what.
Any one who is reading your articles (and other authors as well) that think they have nothing to worry about had better go ahead and check into the nut house.
Those billions of rounds of hollow points purchased by Homeland Security were not for other countries, but for good old America. There will be no turkey shoot this year; only an American shoot. By the way you will run out of ammo before Homeland Security does!
If we are able to have a Thanksgiving and Christmas in 2015, I’ll be greatly surprised.
we are all in the nut house, even the sane ones.
Russia should speed it up because at this speed, the ruble will have disappeared by year end ie much before the awful yen !
they are pretty good at chess.
That’s not chess game, that’s war game and you cannot beat WS at their paper games !
I disagree, it is ALL part of the same game.
Putin is over/destroyed.
It looks like gold/silver will be collateral damage…
This was a great summarization post. It’s great to get these “snapshot” based posts to really appreciate the net effect of what has happened and where we are going.
Absolutely great job on this one.
Thank you Sean.
Bill, Your writing and arguments are good, even though you are talking your book. I just hope Putin is savvy enough to get through this rough patch without igniting WWIII If he and the Russians, and Chine, manage through this US and WS insanity, I think there’s a good chance for serious change and much higher PM prices.
since when is telling the truth with logic talking one’s book? Maybe my “book” is what it is because I am a genuine and very real person who acted on this logic 15 years ago? It astounds me how so many people believe there is ALWAYS an ulterior motive? Why can’t I just write what I believe like I did for the 5 years before joining with Miles Franklin? No matter who it was and for whatever amount of money, I would tell anyone to f__k off if they asked me to write what I do not believe. Do you understand now?
Bill, who do we believe? The Federal Reserve via AP announced this morning that manufacturing in the US was at a 6 year high….”that the US economy has thrived despite a global slowdown.” and “Manufacturing activity has continued to increase in the United States, even as it is struggling around the rest of the world.”
Also this morning the Empire State Manufacturing Report (for NY State) published the Dec. survey showing the index was -3.6 when the expectation was 10.2-14. I wonder what the index will be for January? I think readers should peruse the TASS website for more accurate reporting.
It’s all BS.
I couldn’t stand it, so I had to share this post on my 2 Facebook groups.
Do you really think Silver will take a jump to $100 /ozt like some guys are speculating?
$100 could e absurdly cheap in a dollar collapse.
“Presenting 303 trillion in derivatives the U.S. taxpayers are now on the hook for”
Bill, Does this mean both houses have passed this bill and it’s now headed for the President’s desk for signing?”
I remember awhile back the President said he ‘goes to sleep every night thinking of how he can protect the American people’. A veto of this bill would be a good start.
yes, I believe it has passed both treasonous Houses.
Turns out this bill that has the taxpayers on the hook for derivative losses is attached to the U.S. Budget. So if the President vetoes the bill….he’d be vetoing the U.S. Budget and I think at this point the gov’t would shut down. Is there a line item veto that he could use do you know?
you think he would veto the destruction of The United States?
What do you feel about Copper Bullion Rounds? I see a lot of Vendors selling out their inventories. I also see the CME is watching that metal as well? Is there value there when it hits the fan? No one has a crystal ball, but would be nice to know if I’m throwing money in the wrong direction.
I store my “copper” in a different form of “rounds”!
Bill, Vova Putin is rushing to implement his payment system, bacause they know they will be kicked out from Swift with next round of sunctions.
It’s not because they see something BIG, it is just a matter of survival for them now at this point.
Putin thought he is an equal among the Club/Cartel/Tribe, but for now it must be crystal clear for him that he is just a pimp for them.
I think there is far more to it than Putin being played for a chump.
Rates increased to 17% in Russia. I wonder how industry will survive out of there without FX loan as getting a loan in ruble is now pure folly.
yes, I get it and know rates were increased by 650 basis points but I ask you again…do you really believe the Chinese will let Russia fail financially?
Thanks Bill… you have covered these point accurately and while some may not wish to draw conclusions, all of this is happening by design, and its comparable to rats starting to hunt out cover (China – bond ratings increase, US laws covering banking derivatives exposure, Russia advancing the implementation of an alternative to SWIFT, the CME/COMEX limits on precious metals upside !! (that one blows me away – how obvious)).
Bill Moyers broadcast last evening (interview of journalist John R. MacArthur) on how the bankers (Wall Street) controls congress(es) is just but another voice crying out the corrupt systems we are now forced to endure. http://billmoyers.com/episode/full-show-democrats-bow-wall-street/
thanks Jack, the conclusions are ugly yes but ignoring the obvious is a bad plan.
Good analogy of a country clearly on the ropes. What better way to end the week than citibank announcing it wil be closing its NYcity headquarters and moving into the Capitol building in DC. Like you said even if you knew nothing about finance that move tells it all and should raise millions of eyebrows.
not sure I saw this particular headline?
Seems there was a bidding war between who else, JP Morgan, Goldman and Citi.
you do realize this is sarcasm, right?
More dots connected between the sign posts. Not many sign posts left, the end of the road is in sight. Over the proverbial financial cliff!
Bill, looking over some stats from October, I find that as of October 16, 2014 traders in the technical funds sold 150,000 contracts of NYMEX crude oil futures contracts since June. That means the tech funds have sold the equivalent of 150 million barrels of oil in just four months!
Now we are witnessing the result in the derivatives/credit oil sector freeze up.
Could this be the defining moment of the derivatives tail, wagging the market dog?
I am writing about this for Wed.
Thank you for your prompt reply. Looking forward to your Wednesday article. Oil pumped. Gold dumped. Now reversed!
someone big is blowing up?
Yes, I think the entire global financial sector is on the cusp of imploding. Foreigners have sold the most stocks since 2007 and Russia along with China are dumping US Treasury’s. The Russian central bank has just raised rates by 650 bps from 10.50% to 17.00% The Russian bourse is now rebounding. Talk about volatility! Wow!
…AND margin calls!
Great summary of events Bill.
SOMETHING HUGE IS COMING FOR SURE….
The speed of frequency is increasing without a doubt..
There is always someone in the know…..
We all know that a major reset must happen.
We also know that there are some that would rather take us to war than to admit their mistakes.
There are bankers and politicians that have determined that the principle of Fiduciary Duty no longer applies.imho
Time for this video to be forwarded to every family member that refuses to recognize what is coming.
Tomorrow, the day after or next week…….that is the question.
I don’t know about you guys, but it looks to me like the stream of counterintuitive, rainbow-farting-unicorn propaganda spewing out of the media and governments the past couple of weeks has been stepped up.
And it’s been DUMP, DUMP, DUMP on anything that doesn’t support the “recovery/rate-rises-coming/jobs-created/under-control/stock-wealth” message…
Yes, they are in overdrive!
I recently saw the phrase ‘Grand Master Putin’ used in the context of a ‘global chess game being played’. I agree and applaud him for not taking the bait from any of the US provocations thrown in his face. Russia has a good leader who is acting with integrity to safeguard his country.
it was a fabulous article written about him and “the chess game”.
Putin should be cautious in not losing too many pieces at these chess game because its Financial strength is getting destroyed on a daily basis now.
And you really believe the Chinese will let them fail financially?
Thanks for fascinating remarks. What is your opinion on silver miners (certificates delivered and those not delivered), if you believe in silver of $100+ in near future?
they will return multiples in my opinion.
What do you mean by a differed form of Copper Rounds?
Also always remember this is a family reading and even if you get pissed try to keep. When you get mad is when you can make a mistake. call I feel like telling a lot of jerks to F–k Off same as you do. I don’t think you can write on this same subject every day with out beliving.
anyone who questions my motives have not read my work prior to Miles Franklin no know me in any fashion. As for copper “rounds”, this is the usual form I target shoot with.
Sorry but I made some wording mistakes above but I think you will understand.
Thank You Very Much Bill for All the Outstanding & Truthful Writing/Work You Do, To Help Keep us Informed Out Here in Cyberspace…
Below is a link to the Great Article about “Grand Master Putin’ & The Chess Game… That I Think the Above Reply was referring to… Someone May Want to read it…
thanks Robert, this is truly a great article. I mentioned it in my interview with Greg Hunter a few weeks back.
For anyone who did not read the Putin check-mate article, be sure you do. Here is is again as Robert linked it too.
As Bill says, it is a great article. To me it is all telling and shows how the Russian currency falling matters little since Russia’s energy sales go from US dollars to gold which is highly under-valued. Gold is so under-valued that it will one day dwarf the fall of their own currency (which I think is temporary). It truly is a masterful chess match and check mate is coming to the WEST.
a checkmate of our own doing.
Thanks so much for this article, Bill.
Between the Russian SWIFT, Turkey turning, oil dropping, and the Congressional dump on Americans, it’s clear that the racial events could be pure theatre to distract us.
BUT, Americans cannot be liable for tax liabilities that they did not agree to. Remember, the Constitution was hijacked, therefore, every piece of legislation since The Act of 1871 can be nullified. We can WALK OUT on the derivatives, and all the rest of it. China knows that, so they are taking assets. We, the people, still hold a trump card. We can pull an Iceland. NO way, we won’t pay.
Easy to say this Rose but blood will be shed under this scenario.
Bill, great article. I’ve become hooked on your articles and Andy’s. Great insights and summary with the dots. The FDIC is one of the biggest con games. I’d love to see someone interview William Issac on his thoughts, now that he is further removed. In this Congressional hearing, he seemed fed up with the system. What amazes me about Issac is that he was an FDIC board member before FDIC Chairman and didn’t know how it worked until he asked the Treasury Secretary if he could see the reserves:
thanks Brad, it works until it doesn’t.
I hate to say this or even admit it but the gangster banksters, the Fed and Congress and the Prez have seem to be on the verge of winning the financial war against Russia and China. All the markets are their playground, they own it, no one else has the sophistication, firepower, know how, and the advantage of the worlds reserve currency and the petro-dollar to carry out the continuous fraud in all markets. Russia and China have shown that they are incapable of stopping the U.S. criminals. Look at what is being done to oil and the Ruble. They won’t stop until Russians starve, can’t buy any food & cause a gov’t overthrow. Don’t know if China can take care of Russia’s needs, they have 1.3B of their own they cannot satisfy. I wish it were different but reality says – it is what it is. It is all insane.
sorry Snoop, I disagree with this. They can pull our financial plug anytime they’d like, I think they are hoping it can be done peacefully. You are too browbeaten from watching the “marvelous markets”. They will be marvelous until they aren’t …then we lose the system.
77,66 USD/RUB, that’s not crazy that’s surreal.
Maybe time to launch a gold standard in Russia ???
…or peg the ruble to a gold backed yuan?
It will be some Genius coup but after years, still nothing directly on sight.
I hope that they will speed because some people in russia are going to suffer a lot.
That’s also my concern Snoopdog, Russia and China are always waiting a better day to break the anglo hegemony on the world but they will be dead before the perfect moment and so do we…
Ruble is crashing again despite 17% rates at more than 72 with USD.
It seems Putin just want gold in safe or sold for western fiat but do not want use it for making a new Financial system in the old USSR land.
Putin will not sell gold for Western fiat.
It was a rumour released yesterday which probably “helped” the gold smash down.
Kitco wrote about Russia selling their gold, this is laughable. If they were selling gold for fiat, they would be selling directly to China.
Having an idea why Russia not trying to sell its gas to europe in part in ruble with a slight discount regarding the spot exchange rates : it could be less costly to make open FX interventions ?
Besides having a supply of PM and fiat currency in hand, is the best option to place remaining currency in small local bank which does not play in the derivative market? What our your thoughts?
everything will fall, large or small, derivatives or not. Have only enough on deposit to pay your bills.
Is land or real estate a good place to put your money.
is it productive? Will you use it? Please remember, real estate is valued as it is because banks have lent money for its purchase, another aspect is that real estate can be taxed away from you. It’s a personal decision.
The problem for the U.S. population is that they’re aiming their ire at the puppets, instead of the puppet-masters…
“Banks of issue are more dangerous than standing armies.” Thomas Jefferson – US. President;
“Give me control of a nation’s money and I care not who makes the laws.” – Mayer Amschel Rothschild: [Née Bauer] (1744 -1812), (Godfather of the Rothschild Banking Cartel of Europe);
“The world is governed by far different personages than what is imagined by those not behind the scenes” – Benjamin Disraeli – UK. Prime Minister;
“Whoever controls the volume of money in any country is absolute master of all commerce and industry” – James A. Garfield (1831-1881) – US. President;
See how it all began – http://www.scribd.com/doc/231404161/The-Coming-Battle-2013
They’ve been stealing your birthright for over 200 years. U.S. citizens are like frogs sitting in a pan of water on the stove… Just waiting to be boiled.
all great quotes.