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Saturday, 18 September 2010

Gerald Celente: even the Billionaires Soros and Buffett are worried


Gerald Celente: US Economy = Depression Famous investor and billionaire George Soros referred to the US economy as "blah," saying he expects a...

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Friday, 17 September 2010

Poverty: The American nightmare


One in seven Americans now live on or below the poverty line, according to figures published by the US Census Bureau. It is the sharpest annual ...


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Australians Warned About American Whooping Cough Epidemic


While our media plays down the epidemic, largely because the outbreaks are traced to un-vaccinated illegal immigrant populations and the politically correct anti-vaxxer movement in many cases, other countries are warning their citizens to be cautious if they travel to our shores: Australia Thursday warned travellers to the United States to watch out for a whooping [...]

Thursday, 16 September 2010

Record Level Of Poverty In U.S.


September 15, 2010 CNN

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Predicted Events Come Through…Coincidences One After Another?

Maya Calculations



The Maya used the Sunspot theory to countdown to December 21, 2012. The Sunspot theory is one of the 20 biggest mysteries on earth and one that is being unraffled by researcher Patrick Geryl. He is closer than anyone in our age to get to the truth of calculating the sunspots. No scientist alive has been able to get as close as he is now and out of this he has made calculated predictions in the past. One example is the prediction that on July 31st, 2010 a significant sunspot would impact our planet… He was wrong. It happened a few hours later on August 1st, 2010 instead!

In his book The World Cataclysm in 2012 (get your copy here >>), written several years ago, Patrick made more of such predictions. Today, having much more research and calculation done, a remarkable ‘coincidence’ has been discovered which indicates that on October 27th, 2010, we’ll have another significant sunspot event impacting our planet. Watch this short video:

Katla Volcano Caldera Earthquakes 2010-Sep

The Katla volcano located in Iceland, lies beneath the Myrdalsjokull glacier and is located next to its little sister volcano, Eyjafjallajokull, which erupted earlier this year on 14-Apr-2010.

Historically, Katla has always erupted not long after Eyjafjallajokull, the longest span being 1.5 years and the shortest time span being approximately 6 months. 5 months have now gone by since the clock started ticking so lets have a look at what has happened at Katla during that time.

The image above purposely only shows earthquakes that have occurred at or within the caldera itself. I have been casually tracking this particular volcano since 17-May of this year, so this data tracks the most recent 4 months. I have identified 58 earthquakes at the caldera, and there is no doubt that I have missed a few too. Of note, the total number of Katla earthquakes that I have identified including the region outside of the glacier, but still on Katla itself, is 307 so far (again, the accurate number is probably somewhat higher).

I am focusing on the caldera because apparently many of the other earthquakes, particularly those just outside the western rim of the caldera, are being caused by seasonal glacial water runoff stresses and are not themselves indicators of potential magma movement. There are a few technical papers written on that subject, and they made logical sense having read them.

The caldera has an area of about 42 square miles (108 square kilometers) and is about 6 x 9 miles across (10 x 15 km).

I am attributing the earthquakes that are shown here on the west caldera rim as being associated with the seasonal glacial water stress factors, because when looking at the larger map, you can see that the earthquakes continue on to the west as described in the technical papers.

That leaves three areas of interest: the northeast rim, the southeast region, and central-northeast region. The location of the 1918 eruption is in the southeast region while the location of the 1715 eruption is in the central-northeast region. I don’t have the data or the tools to show depth and 3-dimensional renderings of the earthquakes (I am not a vulcanologist, but an interested observer of geophysical events), but I’m sure that would be telling in some way.

The conclusion is that Katla has not yet concluded this portion of its history. The frequency of earthquake occurrence has been fairly constant with a few fits of exciting higher amounts once in a while. One of the real clues will be when the number of earthquakes begin to rise significantly, as what typically happens prior to any eruption.

There is nothing we can do to stop its present course, all we can do is stay aware of the natural dangers such as this one (a Katla eruption could be possibly up to 10 times that of Eyjafjallajokull). It never hurts to examine your survival preparedness plans, particular tailored to the risks that around your own geographical location. Obviously for those living in Iceland, the dangers are great, although that is a part of their everyday life. For those in northern and western Europe, Katla will likely cause much worse air travel problems than those recently experienced following Eyjafjallajokull, and there may be breathing problems associated with Katla’s heavy asshfall – depending on wind direction at the time. For the rest of the world, the impact will be economic due to Europe being directly affected, and there could possibly be some partial blockage of the sun from stratospheric ash. We will see.
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15 Bone Chilling Signs That Part Two Of The Double Dip Housing Crash Has Begun


These are harrowing times for anyone trying to sell a home or for anyone who is trying to make a living in the housing industry. But unfortunately, there are a whole lot of signs that things are about to get quite a bit worse. U.S. home sales have hit record lows in recent months. An increasing number of sellers have started to reduce their asking prices, and there are signs that home prices are already starting to slip substantially in many areas of the country. Meanwhile, the inventory of unsold homes in the United States continues to rapidly increase. Home foreclosures and bank repossessions of homes continue to set all-time records. What this all means is that the U.S. housing market is being absolutely flooded with homes for sale at a time when there are very few buyers. There is way too much supply and not nearly enough demand and as a result home prices are being pressured downward. The home buyer tax credits that the U.S. government was bribing home buyers with helped stabilize the U.S. housing market for a while, but now the tax credits have expired and things are getting scary out there.

In a previous article about this housing crisis, I detailed how there simply is not going to be a "recovery" in the U.S. housing market until there is a jobs recovery. But at this point, even the most optimistic cheerleaders for the economy are admitting that unemployment is going to remain high for quite some time.

But if the American people do not have good jobs then they can't buy homes.

In addition, banks and lending institutions have dramatically tightened lending standards. It is now much, much, much harder to get a home loan than it was five years ago. It is even much harder to refinance a home loan at this point.

So if a large segment of the population is struggling to even find a job and if a lot fewer people are getting approved for home loans, then where are all of the buyers going to come from to turn the U.S. housing market around?

It just isn't going to happen.

In fact, as the U.S. economy continues to struggle greatly, even more Americans are going to lose their jobs and even more Americans are going to default on their mortgages. Already the number of foreclosures in the U.S. is alarmingly high, and so what happens if the U.S. economy experiences a significant downturn in the months ahead?

Right now there are very few reasons why anyone should expect improvement in the U.S housing market any time soon. But there are a whole lot of reasons why we could be looking at a very serious downturn in the U.S. housing market in the near future.

The following are 15 bone chilling signs that part two of the double dip housing crash has begun....

#1 The percentage of home sellers who have decreased their asking prices at least once has gone up for three months in a row.

#2 According to, 26 percent of all homes currently on the market in the U.S. have experienced a price reduction at least once.

#3 According to Bloomberg, housing prices in the United States are likely to decline for another three years as 12 million more homes get put on the market.

#4 Total housing inventory available for sale in the United States increased 2.5 percent to 3.98 million in July, which represents a 12 and a half month supply at the current sales pace. This is a stunningly high figure.

#5 According to Mark Fleming, chief economist for CoreLogic, 36 states experienced home price declines in July, twice the number in May and the highest number since last November when prices nationally were still declining.

#6 In July, sales of existing homes in the U.S. fell 27 percent and sales of new homes plummeted to the lowest level ever recorded.

#7 Fannie Mae, the biggest U.S. mortgage finance company, is now projecting that U.S. home sales will experience a 7 percent decline for the year.

#8 The Mortgage Bankers Association recently announced that demand for loans to purchase U.S. homes has sunk to a 13-year low.

#9 Construction of new homes in the U.S. and applications to build new homes in the U.S. both fell to their lowest levels in more than a year during the month of July.

#10 One out of every seven mortgages in the United States was either delinquent or in foreclosure during the first quarter of 2010.

#11 As of this March, U.S. banks had an inventory of 1.1 million foreclosed homes, which was a new all-time record and which was up 20 percent from one year ago.

#12 CNBC is reporting that the nation's banks repossessed a record number of homes in August.

#13 According to Mark Zandi, the chief economist at Moody’s Analytics, approximately 2 million more homes will be repossessed by mortgage lenders by the end of 2011.

#14 As of June 30th, 23 percent of all residential mortgages in the United States were "underwater". In other words, as of the end of June 23 percent of Americans with a home mortgage owed more on their mortgages than their homes were worth.

#15 The head economist for Fannie Mae, Douglas Duncan, recently stated during a radio interview that seven million homes in the United States are either vacant or are in the foreclosure process. That is one gigantic pile of homes. How in the world is the U.S. housing market possibly going to find buyers for all of them?

Wednesday, 15 September 2010

Al-Qassam Brigades Cmdr: We Expelled The Enemy From Gaza With Rockets And Martyrs


In a letter released at the end of Ramadan, Ahmad Al-J'abri, the commander of the Hamas' military arm, the 'Izz Al-Din Al-Qassam Brigades, stated that the occupation army had been expelled from Gaza forever by virtue of the power of ...
September 15, 2010, 6:06 pm

Foreign Affairs; World War III



JERUSALEM— As I restlessly lay awake early yesterday, with CNN on my TV and dawn breaking over the holy places of Jerusalem, my ear somehow latched onto a statement made by the U.S. transportation secretary, Norman Mineta, about the new precautions that would be put in place at U.S. airports in the wake of Tuesday's unspeakable terrorist attacks: There will be no more curbside check-in, he said. I suddenly imagined a group of terrorists somewhere here in the Middle East, sipping coffee, also watching CNN and laughing hysterically: ''Hey boss, did you hear that? We just blew up Wall Street and the Pentagon and their response is no more curbside check-in?''

I don't mean to criticize Mr. Mineta. He is doing what he can. And I have absolutely no doubt that the Bush team, when it identifies the perpetrators, will make them pay dearly. Yet there was something so absurdly futile and American about the curbside ban that I couldn't help but wonder: Does my country really understand that this is World War III? And if this attack was the Pearl Harbor of World War III, it means there is a long, long war ahead.

And this Third World War does not pit us against another superpower. It pits us -- the world's only superpower and quintessential symbol of liberal, free-market, Western values -- against all the super-empowered angry men and women out there. Many of these super-empowered angry people hail from failing states in the Muslim and third world. They do not share our values, they resent America's influence over their lives, politics and children, not to mention our support for Israel, and they often blame America for the failure of their societies to master modernity.

What makes them super-empowered, though, is their genius at using the networked world, the Internet and the very high technology they hate, to attack us. Think about it: They turned our most advanced civilian planes into human-directed, precision-guided cruise missiles -- a diabolical melding of their fanaticism and our technology. Jihad Online. And think of what they hit: The World Trade Center -- the beacon of American-led capitalism that both tempts and repels them, and the Pentagon, the embodiment of American military superiority.

And think about what places in Israel the Palestinian suicide bombers have targeted most. ''They never hit synagogues or settlements or Israeli religious zealots,'' said the Haaretz columnist Ari Shavit. ''They hit the Sbarro pizza parlor, the Netanya shopping mall. The Dolphinarium disco. They hit the yuppie Israel, not the yeshiva Israel.''

So what is required to fight a war against such people in such a world? To start with, we as Americans will never be able to penetrate such small groups, often based on family ties, who live in places such as Afghanistan, Pakistan or Lebanon's wild Bekaa Valley. The only people who can penetrate these shadowy and ever-mutating groups, and deter them, are their own societies. And even they can't do it consistently. So give the C.I.A. a break.

Israeli officials will tell you that the only time they have had real quiet and real control over the suicide bombers and radical Palestinian groups, such as Hamas and Islamic Jihad, is when Yasir Arafat and his Palestinian Authority tracked them, jailed them or deterred them.

So then the question becomes, What does it take for us to get the societies that host terrorist groups to truly act against them?

First we have to prove that we are serious, and that we understand that many of these terrorists hate our existence, not just our policies. In June I wrote a column about the fact that a few cell-phone threats from Osama bin Laden had prompted President Bush to withdraw the F.B.I. from Yemen, a U.S. Marine contingent from Jordan and the U.S. Fifth Fleet from its home base in the Persian Gulf. This U.S. retreat was noticed all over the region, but it did not merit a headline in any major U.S. paper. That must have encouraged the terrorists. Forget about our civilians, we didn't even want to risk our soldiers to face their threats.

The people who planned Tuesday's bombings combined world-class evil with world-class genius to devastating effect. And unless we are ready to put our best minds to work combating them -- the World War III Manhattan Project -- in an equally daring, unconventional and unremitting fashion, we're in trouble. Because while this may have been the first major battle of World War III, it may be the last one that involves only conventional, non-nuclear weapons.

Second, we have been allowing a double game to go on with our Middle East allies for years, and that has to stop. A country like Syria has to decide: Does it want a Hezbollah embassy in Damascus or an American one? If it wants a U.S. embassy, then it cannot play host to a rogue's gallery of terrorist groups.

Does that mean the U.S. must ignore Palestinian concerns and Muslim economic grievances? No. Many in this part of the world crave the best of America, and we cannot forget that we are their ray of hope. But apropos of the Palestinians, the U.S. put on the table at Camp David a plan that would have gotten Yasir Arafat much of what he now claims to be fighting for. That U.S. plan may not be sufficient for Palestinians, but to say that the justifiable response to it is suicide terrorism is utterly sick.

Third, we need to have a serious and respectful dialogue with the Muslim world and its political leaders about why many of its people are falling behind. The fact is, no region in the world, including sub-Saharan Africa, has fewer freely elected governments than the Arab-Muslim world, which has none. Why? Egypt went through a whole period of self-criticism after the 1967 war, which produced a stronger country. Why is such self-criticism not tolerated today by any Arab leader?

Where are the Muslim leaders who will tell their sons to resist the Israelis -- but not to kill themselves or innocent non-combatants? No matter how bad, your life is sacred. Surely Islam, a grand religion that never perpetrated the sort of Holocaust against the Jews in its midst that Europe did, is being distorted when it is treated as a guidebook for suicide bombing. How is it that not a single Muslim leader will say that?

These are some of the issues we will have to address as we fight World War III. It will be a long war against a brilliant and motivated foe. When I remarked to an Israeli military official what an amazing technological feat it was for the terrorists to hijack the planes and then fly them directly into the most vulnerable spot in each building, he pooh-poohed me.

''It's not that difficult to learn how to fly a plane once it's up in the air,'' he said. ''And remember, they never had to learn how to land.''

No, they didn't. They only had to destroy. We, by contrast, have to fight in a way that is effective without destroying the very open society we are trying to protect. We have to fight hard and land safely. We have to fight the terrorists as if there were no rules, and preserve our open society as if there were no terrorists. It won't be easy. It will require our best strategists, our most creative diplomats and our bravest soldiers. Semper Fi.

Drawing (Angus McWilton)

Tuesday, 14 September 2010

Gerald Celente : The Big Banks never lose


Gerald Celente : It is a rip off from the top these big corporations stealing from us down to the people that are ripping it off at the welfare level .... the whole game is rigged and the reality is that we the people are so far removed from the facts hey have these things called dark pools , high frequency trading , they trading of fractions of the penny and with all these computer geeks running these programs anybody to me that buy stocks deserves what they got , they might as well go to Las Vegas and bet on Black Jack or Roulette or whatever because that what it is ...they are always blaming the little people ...the Big Banks never lose....the whole thing is on credit there is too much credit ...too many people buying things they cannot afford...a lot of people have over spent over borrowed and put themselves into this position and now we are bailing them out at every level


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Sharia Law for the Non-Muslim


Posted in Intel by Rob Taylor on September 13th, 2010

You will increasingly be interacting with theocratic Muslim communities in the future, especially if there is a collapse of some kind. In the cities most people already know this.

Because you will need to be able to both recognize danger from those communities and at times work with them it is important that you have a clear understanding of Muslim behavior that is not colored by liberal sentimentality. Bill Warner, author of The Political Traditions of Islam and The Simple Koran put together this brief overview of Sharia law and how it is practiced by Muslims. Read it and use it as a reference for your interactions with Muslims.

One caveat I will put forward is that more than understanding or tolerance Islam respects strength so even f you can accommodate Sharia avoid making concessions where possible to show that you are not weak:

English: Syariah bagi Non Muslim

End of the World 2012 and What To Believe


I choose to look at the world ending 2012 hype from a scientific point of view as I search and read information on the subject. There are lots of differing explanations regarding the various galactic alignments and their significance. There are many religious viewpoints, predictions, and prophecies that are swirling around the topic, any of which I do not wish to challenge as people have the right to think and decide for themselves, and who am I to say one way or the other…

Looking at the physics of what will be happening during the 2012 time period is curious in that it does present some interesting galactic alignments and perhaps some plausible arguments that things could get interesting, or maybe not.

All galaxies are flat and circular, apparently with very few exceptions. Much of the scientific community apparently believes that the energy source which drives the rotation and shape of each galaxy consists of a supermassive black hole which exists in the center. The black hole spins at an incredibly high rate because of its incredible mass, and projects a gravitational field that is more or less flat and thin as it spins, a galactic gravitational plane, rather than a spherical gravitational field.

Our galaxy’s galactic plane is easily seen at night away from city lights, and viewed as a dark band slicing lengthwise through the center of the Milky Way itself, although somewhat irregular in appearance. It is thought to be filled with dust and mass.

Our solar system moves up through the galactic plane and then back down through the galactic plane in reoccurring cycles through time. In fact ancient civilizations like the Mayans evidently based their calendars on this cycle and called the time when we appear to pass through the galactic equinox to be the end of each age. Some believe this brings worldwide devastation while the Earth is sitting on what they call “the dark rift”. There is some controversy regarding the cycle time of the solar system passing through the galactic plane, and there are some that say we aren’t even close. I personally haven’t sorted out all of the angles myself yet, so I’m not suggesting either way at the moment.

The implications of the Earth passing through the galactic plane and its gravitational influence is speculative, although ancients have described periods of devastation. My instinct tells me that the strength of this gravitational influence would be very small considering the vast distances involved, but I always try and keep an open mind while gathering more facts.

One might think that the earth-changes that we may be experiencing at the present time are the beginnings of the influences of the very thin but perhaps powerful band of forces produced along the gravitational plane projected out from the black hole in the center of our galaxy. The band is so thin and concentrated (relatively compared to the massive size of the galaxy itself), that it may only take one or maybe two years to transit through the dense region (I have also read reports of lesser time to transit through – months, rather than a year or two).

If we are truly about to pass through the dense portion of the galactic plane, we conceivably could experience the effects of earth stresses, assuming that the galactic plane forces are strong enough. In addition, our Sun will also be experiencing whatever influence that the plane will have on it. Not only that, but it will coincide with the sun’s solar cycle which will also be peaking in the approximate 2012 time frame. There may be the potential for extra powerful solar phenomenon including solar flares and filament eruptions.

We are presently experiencing a much higher than average number of earthquakes in several earthquake-magnitude categories, given the same amount of time averaged over the last 10 years or even the last 110 years. The tectonic plates, a thin crustal layer floating on top of an ooze of hot molten rock, are moving and shifting, causing earthquakes and volcanic activity. This is nothing new, however an increase in activity is logically caused by something… or maybe anomalous.

The Earth’s spinning core of molten iron creates our magnetic field and pole, which is now drifting out of position faster and faster. Again, this phenomenon is nothing new, however something is happening now which is speeding up the process. Pole shifts have happened in the past, and will happen again. It is somewhat unclear how fast it can occur and to what extent it will cause disruption.

If the “dark rift”, or the gravitational dark band that we are apparently approaching truly contains dust, debris, and objects caught up by the swirling gravitational influence of the galaxy’s central black hole, then we may experience the risk of collisions with such objects, if in fact we transit through debris rather than just the theoretical plane itself. Most of us know that an asteroid, if large enough (several miles wide), has the potential to wipe us out all together. We have managed to map a lot of the larger asteroids within our own solar system, but we have no idea what we will run into if we begin to pass through the galactic plane of our galaxy.
Having said all that, I am not a scientist or astronomer, simply an Engineer by trade with a curiosity of natural occurring events such as these. These are only my observations or opinions of the moment. There are a ton of websites with all sorts of information on the subject, many of which are probably hype while others seem to point out possible truths. Make up your own mind about it, or simply keep an open mind.

If it turns out that we are not actually about to pass through the dark band (dust and debris), or the galactic plane itself, or if the gravitational influence of the galactic plane is not a concentrated energy source as some predict, then good… there are enough other potential disaster scenarios to worry about to keep one’s preparedness plans up to date.

If nothing ‘bad’ happens, I will be thrilled. On the other hand my survival preparedness tendencies will continue to keep me ready as I am able for whatever may come my way.
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Debating the Flat Earth Society about Hyperinflation


Over the past few weeks, many people have asked me to comment on John Hussman's August 23, 2010 post Why Quantitative Easing is Likely to Trigger a Collapse of the U.S. Dollar.
Most wanted to know how that article changed my view regarding deflation. It didn't.
Several others went so far as to tell me that Hussman was calling for hyperinflation. They were point blank wrong.
Here is the pertinent section from Hussman's September 6, 2010 post The Recognition Window.

A note on quantitative easing
One of the things I'm increasingly dismayed to learn is that no matter how much detail, data, and qualification I might include in these commentaries, my conclusions will often be summed up by writers or bloggers in a single sentence that often bears no relation to my point. For instance, my view that quantitative easing will trigger a "jump depreciation" in the dollar has evidently placed me among analysts warning of hyperinflation and Treasury default (a club whose card is nowhere in my wallet).
To clarify once again - I emphatically do not anticipate inflationary pressures until the second half of this decade. As I've repeatedly emphasized, the primary driver of inflation - historically and across countries - has been growth in government spending for purposes that do not expand the productive capacity of the economy.
Quantitative easing does not pressure the dollar by fueling inflation. It has a much more subtle effect (but one that can be expected to be amplified if fiscal policy is long-run inflationary as it is at present). Normally, equilibrium in capital flows between countries is achieved through changes in interest rates. As a result, countries with greater capital needs or higher long-run inflation tendencies also have higher interest rates. If interest rates can adjust, exchange rates don't have to. But notice what quantitative easing does: by sitting on long-term bond yields (and creating a negative real interest rate differential versus other countries), quantitative easing prevents bond prices from acting as an adjustment factor, and forces the burden of adjustment on the exchange rate.
While some observers have noted that the value of the Japanese yen did not deteriorate dramatically over the full course of quantitative easing by the Bank of Japan - from its beginning until it was finally wound down - this argument misses the point. The exchange rate depreciation occurs as a jump adjustment in order to set up a subsequent appreciation over time. That gradual appreciation is needed to offset the lost interest difference caused by the policy of zero interest rates.
In the Octagon
Some of the arguments that people have recently presented for hyperinflation are so silly they are not worth discussing.
Yet, I have been drawn into discussing such arguments because of an unfortunate off-the-cuff statement I made on a recent podcast, and because of a misrepresentation of another statement I made in the same podcast.
Zero Hedge writes The Deflation vs Hyperinflation Debate On Steroids, Or Mish vs Gonzalo Lira In The Octagon
A recent guest post by Gonzalo Lira on Zero Hedge, providing a theoretical framework for the arrival of hyperinflation, went viral, generating over 75k views and over 1,000 comments, further confirming that the biggest and most confounding debate in all of finance is what will the final outcome of the Fed's market manipulative actions be: deflation, inflation or, and not really comparable, hyperinflation (which is a distinctly different phenomenon from either of the above). The post infuriated some hard core deflationists who continue to refuse to acknowledge the possibility that in its attempt to inspire inflation at all costs, the Fed may just push beyond the tipping point of monetary imprudence away from mere target 2-3% inflation, and create an outright debasement of the world's reserve currency.
One among these was none other than Mish himself, who a week ago recorded a podcast on Global Edge with Eric Townsend and Michael Hampton (link here), in which his conclusion was that Hyperinflation is the endgame, "so it is unlikely."
Hyperinflation Ends The Game
Actually what I said is "Hyperinflation Ends The Game" NOT as Zero Hedge stated "Hyperinflation is the endgame". The difference between those phrases is enormous.
In the podcast I was asked about a guest post by Gonzalo Lira on Zero Hedge. I had seen the article and I made an off-the-cuff statement that the post was so silly it was not worth commenting not.
How Hyperinflation Starts According to Lira
Please consider the following snip as to how hyperinflation starts according to Gonzalo Lira.
So this is how hyperinflation will happen:
One day—when nothing much is going on in the markets, but general nervousness is running like a low-grade fever (as has been the case for a while now)—there will be a commodities burp: A slight but sudden rise in the price of a necessary commodity, such as oil.
This will jiggle Treasury yields, as asset managers will reduce their Treasury allocations, and go into the pressured commodity, in order to catch a profit. (Actually it won’t even be the asset managers—it will be their programmed trades.) These asset managers will sell Treasuries because, effectively, it’s become the principal asset they have to sell.
It won’t be the volume of the sell-off that will pique Bernanke and the drones at the Fed—it will be the timing. It’ll happen right before a largish Treasury auction. So Bernanke and the Fed will buy Treasuries, in an effort to counteract the sell-off and maintain low yields—they want to maintain low yields in order to discourage deflation. But they’ll also want to keep the Treasury cheaply funded. QE-lite has already set the stage for direct Fed buys of Treasuries. The world didn’t end. So the Fed will feel confident as it moves forward and nips this Treasury yield jiggle in the bud.
Debating the Flat Earth Society
Supposedly ... A slight rise in oil will cause a "jiggle" in treasury yields.
As a result of that jiggle "asset managers will sell Treasuries because, effectively, it’s become the principal asset they have to sell."
Since when are much despised treasuries the "principal asset" of asset managers? And pray tell, why would the asset managers "have to sell"?
Oil at $140 did not start a chain reaction before. Why would a "slight but sudden rise" in commodity prices start such a chain reaction, now?
I do not know how anyone could keep reading after those statements, but it goes on and on, getting sillier and sillier about who has to sell what and why, and in turn what the Fed's response will be.
One interesting aspect of Lira's post is that I agree with his definition of hyperinflation: a complete loss of faith in currency. Yet, Lira never even discusses how a selloff in treasuries causes a loss of faith in the dollar.
However, Lira does go on to say "....That’s why I think there’ll be hyperinflation in America—that bubble’s soon to pop. I’m guessing if it doesn’t happen this fall, it’ll happen next fall, without question before the end of 2011. "
Commenting on the above is tantamount to debating the flat earth society. The premise is so silly it's not worth discussing, yet here I am trapped into discussion by a mischaracterization of my statement "Hyperinflation Ends The Game".
How Does Hyperinflation Occur?
"FOFOA" hops into the hyperinflation debate with Just Another Hyperinflation Post - Part 1
First of all I would like to clear up probably the most common misconception about hyperinflation. What most people believe is that massive printing of base money (new cash) leads to hyperinflation. No, it's the other way around. Hyperinflation leads to the massive printing of base money (new cash).
Hyperinflation, in most people minds, conjures images of trillion dollar Zimbabwe notes. But this image is simply the government's reflexive response to the onset of hyperinflation, which is actually the loss of confidence in the currency. First comes the loss of confidence (hyperinflation), then, and only then, comes the massive printing to keep the government and its obligations afloat.
Zimbabwe vs. Weimar
In the case of Zimbabwe, a loss of faith in currency occurred before the printing occurred. The Weimar Republic is a different story.
In Zimbabwe, the Mugabe government initiated a "land reform" program intended to correct the inequitable land distribution created by colonial rule. Ultimately, Mugabe's attempt to to bail out the poor at the expense of the wealthy is what triggered capital flight and loss of faith of the currency.
His reforms not only caused a flight of capital and human capital (the wealthy), they also led to sanctions by the US and Europe. In response, Mugabe turned on the printing presses but the loss of faith in the currency had already occurred.
In Weimar Germany, printing for war reparations kicked off hyperinflation. Wikipedia provides a good accounting in Inflation in the Weimar Republic.
It is sometimes argued that Germany had to inflate its currency to pay the war reparations required under the Treaty of Versailles, but this is misleading, because the treaty did not allow payment in German currency. The German currency was relatively stable at about 60 Marks per US Dollar during the first half of 1921.[1]
But the "London ultimatum" in May 1921 demanded reparations in gold or foreign currency to be paid in annual installments of 2,000,000,000 (2 billion) goldmarks plus 26 percent of the value of Germany's exports. The first payment was paid when due in August 1921.[2] That was the beginning of an increasingly rapid devaluation of the Mark which fell to less than one third of a cent by November 1921 (approx. 330 Marks per US Dollar).
The total reparations demanded was 132,000,000,000 (132 billion) goldmarks which was far more than the total German gold or foreign exchange. An attempt was made by Germany to buy foreign exchange with Marks backed by treasury bills and commercial debts, but that only increased the speed of devaluation. The monetary policy at this time was highly influenced by the Chartalism, and was notably criticized at the time from economists ranging from John Maynard Keynes to Ludwig von Mises.[3]
Hyperinflation is a Political Event
The commonality between Zimbabwe and Weimar is they are both political events. In Zimbabwe a political event triggered capital flight, in Weimar a political event started massive printing, triggering hyperinflation.
Interestingly, FOFOA's commentary seriously weakens the hyperinflation case once one dives into the politics of the cause.
Can The Fed Cause Hyperinflation?
I do not think the Fed can cause hyperinflation and more importantly I am sure they would not if they could. The reason is "Hyperinflation Would End The Game"
  • Hyperinflation by definition would destroy the currency and thus the banks
  • Hyperinflation would destroy the wealthy and all their corporate bond holding
  • Hyperinflation would destroy the Fed
  • Hyperinflation would destroy the wealthy political class

That is what I meant by it would "end the game" and that is why the banks, the Fed, the politicians, and the wealthy would not let "the game" progress that far.
Fiat World Mathematical Model
The above addresses the question of "Would the Fed Cause Hyperinflation?"
"Could the Fed cause hyperinflation?" is a different question. I have my doubts.
To understand how powerless the Fed is, one needs to understand the difference between credit and money, how much the former dwarfs the latter, and what the Fed's role is in getting banks to lend. I discussed those ideas in Fiat World Mathematical Model.
Unlike Congress, the Fed has no power to give money away. Nor would they do so if they could.
By the way, I did see Quantitative Easing, ZIRP, and various Keynesian silliness in advance and stated they would not work.
October 30, 2008: ZIRP Coming To Fed?
ZIRP did not help Japan and it will not help US banks either. In fact, the rate cuts appear to be counterproductive. However, one cannot rule out the Fed cutting rates to 0% anyway. Bernanke is in academic wonderland and appears to be hell bent on sticking with his models regardless of how poorly those models perform in actual practice.
March 06, 2009: Groping In The Dark' With Quantitative Easing
Excuse me but has anyone looked at the success rate of Bernanke's quick slash of interest rates from 5.25 to 0 and the fast $trillions Congress, Paulson, Geithner and Obama have thrown down various black holes?

Of course the Keynesian clowns will always come back with "It would have worked if only we threw money away faster". They do every time. Krugman Still Wrong After All These Years is the perfect example.

January 02, 2009: How "Something For Nothing" Ideas Become Policy

Bernanke Correctly Judged Nothing
Bernanke considers himself an expert on the great depression and on the Japanese deflation as well. Trying to act quickly, Bernanke has come out blazing with 8 new policy tools, including the TALF, TARP, PDCF, ABCPMMMF, CPFF, TAF, and MMIFF to go on top of Open Market Operations, Discount Rate setting, and setting reserve requirements.
The result so far is deflation. The result in Japan was deflation.
There is only one way to defeat deflation and that is to not let the conditions that foster it to build up in the first place. What caused this deflationary bust is the credit boom that preceded it. What caused the great depression was the credit boom that preceded it. Hoover's policies and FDR's policies made the great depression worse.
Bernanke's policies are going to make this depression worse. Yes, I used the word depression. It may not be as big as the great depression, but the word "recession" does not do justice to what we are in and what is coming down the pike.
Contained Depression
I agree with Hussman that Quantitative Easing will not cause hyperinflation. Nor will "jiggling" of treasury yields, nor would a "slight but sudden blip" in commodity prices, nor would another $1 trillion stimulus effort.
Kevin Feltes and Jerome Levy, economists for the Jerome Levy Forecasting Center, have come to the same conclusion.
For an discussion of ideas from the Levy institute, please see "Contained Depression"
For Now, It's Deflation
For a full discussion of where we are today please see Are we "Trending Towards Deflation" or in It?
Unlike hyperinflation, deflation does not "end the game" (destroy the currency). The Great Depression and Japan both provide proof enough.
Given that hyperinflation is a complete loss of faith in currency, tangible goods, any tangible goods must by definition rise exponentially in such a situation. Yet amazingly many hyperinflationists are bearish on housing.
Hyperinflation accompanied by a housing collapse is simply impossible - by definition.
What Could Cause Hyperinflation?
As noted above, the Quantitative Easing will not cause hyperinflation. Moreover, it is doubtful the Fed can cause it at all. The Fed cannot give money away nor can the Fed force banks to lend or consumers to borrow. Those who disagree must still address the difference between theory and practice.
Unlike the Fed, Congress could give money away.
I do not know if giving everyone in the US $60,000 would do it or not, but announcing a plan to give everyone $60,000 a month indefinitely would sure do it.
How likely is that?
The answer is 0%. Congress struggles right now extending unemployment insurance. There is little political will for more stimulus. The next Congress is a guaranteed bet to be more conservative.
To be sure, more stimulus and more Quantitative Easing are coming but the latter does not matter and the former will be in insufficient quantity.
Theory vs. Practice
Please note that banks do not want hyperinflation or even massive inflation. The reason is simple: Banks will not want to be paid back with cheaper dollars, especially worthless dollars, and Congress is beholden to itself and the banks.
Hyperinflation could theoretically come from massive sustained political will to bail out the little guy at the expense of the banks, the wealthy, and the political class. However, unlike Mugabe and Zimbabwe, neither the banks nor the Fed nor the political class wants to bail out the poor at the expense of the wealthy.
Indeed, Bernanke's, Paulson's, and Geithner's actions to date have done the exact opposite!
We have bailed out the banks at the expense of the ordinary taxpayer (keeping the little guy in debt).
This is what it comes down to: In theory, Congress can easily cause hyperinflation. In practice, they won't, and neither will the Fed. As Yogi Berra once quipped "In theory there is no difference between theory and practice. In practice, there is."

Monday, 13 September 2010

Overdose: The Next Financial Crisis


This documentary is featuring Trends master Gerald Celente and economist Peter Schiff amongst others...In times of crisis people seek strong leaders...

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Tips on Surviving a Home Invasion


This clip is from a show called Shooting Gallery that runs on The Outdoor Channel which my lousy cable company doesn’t carry. However there are clips of the shows floating online which are chock full of good advice. This is a quick clip (a little over 7 minutes)that talks about civilian techniques of surviving a home invasion. Watch it a couple of times because there’s a lot here, including gun placement, when you should clear a room and why in most cases not stay put in a fortified position is a bad idea:

Inside FRONTLINE: The Merchants of Cool - VIEW


A report that's more relevant than ever, raising important, scary questions about societal and market forces targeting our kids. Millions have watched --

Anti-Muslim Sentiments Rise in US


Muslim leaders and rights activists in the U.S. warn of growing anti-Muslim feeling provoked for political reasons. "We are Americans. We are doctors. We are investment bankers. We are taxi drivers. We are store keepers. We are lawyers. We are -- we are part of the fabric of America, Imam Feisal Abdul Rauf said. "And the way that America today treats its Muslims is being watched by over a billion Muslims worldwide."

Sunday, 12 September 2010

Celente : Do Not go to Wall Mart , Cosco , support your local Merchant


Gerald Celente : ...People are finally looking and seeing for themselves what's going on the second American revolution is under way , we call it the twenty percent solution ...twenty percent of the people out there , they do not buy corporate food they do not eat eggs from these factory farms ..that are like concentration camps for chickens the Auscwitz Farms mass produced , mass consumed mass murder.... Do Not go to Wall Mart , Cosco , support your local Merchant break the chains , literally and metaphorically , twenty percent can break the back of all the chains not take another sip of Coca Cola , Pepsi Cola not go to MacDonald do not go to Burger King , eat local support your local restaurant ...the country will turn around...

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