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This Is What Gold Does In A Currency Crisis

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by John Rubino | Dollar Collapse

To say that gold is in a bear market is to misunderstand both gold and markets. Gold isn’t an investment that goes up and down. It is money in the most basic store-of-value sense. Most of the time it just sits there, and when its price changes in local currency terms that says more about the local currency than about gold.

But when currencies collapse, gold shines.

Consider the above from the point of view of a typical Russian. The ruble is tanking (no need to understand why — all fiat currencies go this way eventually and the proximate cause is almost irrelevant). Russians who trusted their government and kept their savings in, say, a bank account, are losing their shirts. But those who own boring, doesn’t-pay-interest, in-a-bear-market gold have seen their capital appreciate in local currency terms by about 60 percent in just the past month. They’re not “making money,” but they are preserving wealth.

This is how it has gone always and everywhere when governments have destroyed their currencies. In the Roman Empire, revolutionary France, revolutionary America, most of Latin America in the 20th century, and now big parts of the developing world, local currencies evaporate but gold just sits there, buying the same amount of stuff as ever, impervious to the games governments play.

It won’t be long before this chart is replicated in a whole lot of other places. But by then it will be too late to prepare. The gold will be gone and those who trusted their governments will have to make do with promises.

Russian Trading System

Moscow Exchange (Russian: ОАО Московская Биржа) is the largest stock exchange in Russia, is also the No.9 largest exchange globally by derivatives trading, located in Moscow. In December 2011, it is established by the merger of the two largest stock exchanges, the Moscow Interbank Currency Exchange (MICEX) and the Russian Trading System (RTS). After the merger of Exchange, it became an open joint stock company (OJSC), named Moscow Exchange.

The Moscow Exchange Group operates the country’s largest clearing service provider, Russia’s Central Securities Depository (CSD) and National Clearing Centre. The Moscow Exchange offers professional institutions and the state-of-the-art infrastructure for investors to trade bonds, currencies, equities, mutual funds, commodities and derivatives on all asset classes. The gold products include Gold Futures and Gold Options.

Trading hours: 10:00 a.m. – 23:50 p.m. (MSK)



Gold Price Observations from Springtime

Dr. Jim Willie: Quantum Leap in the Gold Price, Ukraine-Russia Crisis and More



Dr. Jim Willie, Editor of The Hat Trick Letter, says big news on the progress of convertibility of the Chinese yuan is being ignored by the mainstream media. Dr. Willie says:

“Fully convertible capital account for the Shanghai Free Trade Zone is an enormous story, and it is not in the U.S. news. Why, because it signals that the yuan is about to become an extreme competitor to the dollar in trade settlement and, therefore, rival it as a global reserve currency. By that, I mean used in banks as a reserve item. . . . They are making steps; they are more like big strides toward making the yuan a fully convertible internationalized currency. You’ve got lots of countries with yuan swap facilities. You have Brazil, Australia, New Zealand, Japan, Germany and UK. These are big countries. These are Western countries, and they all have yuan swap facilities, which mean they are not going to conduct trade settlement in dollars. So, it’s already in our Western camp. With all these developments toward a gold backed currency, you are going to see quantum leaps in the gold price. You are going to see the big move in gold when China is no longer going to be able to get London and New York gold.”


This Is What Gold Does In a Currency Crisis


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December 19th, 2014 at 3:00 pm

Dark Age America: The Sharp Edge of the Shell

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by John Michael Greer

One of the interesting features of blogging about the twilight of science and technology these days is that there’s rarely any need to wait long for a cogent example. One that came my way not long ago via a reader of this blog—tip of the archdruidical hat to Eric S.—shows that not even a science icon can get away with asking questions about the rising tide of financial corruption and dogmatic ideology that’s drowning the scientific enterprise in our time.

Many of my readers will recall Bill Nye the Science Guy, the star of a television program on science in the 1990s and still a vocal and entertaining proponent of science education. In a recent interview, Nye was asked why he doesn’t support the happy-go-lucky attitude toward dumping genetically modified organisms into the environment that’s standard in the United States and a few other countries these days. His answer is that their impact on ecosystems is a significant issue that hasn’t been adequately addressed. Those who know their way around today’s pseudoskeptic scene won’t be surprised by the reaction from one of Discover Magazine’s bloggers: a tar and feathers party, more or less, full of the standard GMO industry talking points and little else.

Nye’s point, as it happens, is as sensible as it is scientific: ecosystems are complex wholes that can be thrown out of balance by relatively subtle shifts, and since human beings depend for their survival and prosperity on the products of natural ecosystems, avoiding unnecessary disruption to those systems is arguably a good idea. This eminently rational sort of thinking, though, is not welcomed in corporate boardrooms just now. In the case under discussion, it’s particularly unwelcome in the boardrooms of corporations heavily invested in genetic modification, which have a straightforward if shortsighted financial interest in flooding the biosphere with as many GMOs as they can sell.

Thus it’s reasonable that Monsanto et al. would scream bloody murder in response to Nye’s comment. What interests me is that so many believers in science should do the same, and not only in this one case. Last I checked, “what makes the biggest profit for industry must be true” isn’t considered a rule of scientific reasoning, but that sort of thinking is remarkably common in what passes for skepticism these days. To cite an additional example, it’s surely not accidental that there’s a 1.00 correlation between the health care modalities that make money for the medical and pharmaceutical industries and the health care modalities that the current crop of soi-disant skeptics consider rational and science-based, and an equal 1.00 correlation between those modalities that don’t make money for the medical and pharmaceutical industries and those that today’s skeptics dismiss as superstitious quackery.

To some extent, this is likely a product of what’s called “astroturfing,” the manufacture of artificial grassroots movements to support the agendas of an industrial sector or a political faction. The internet, with its cult of anonymity and its less than endearing habit of letting every discussion plunge to the lowest common denominator of bullying and abuse, was tailor-made for that sort of activity; it’s pretty much an open secret at this point, or so I’m told by the net-savvy, that most significant industries these days maintain staffs of paid flacks who spend their working hours searching the internet for venues to push messages favorable to their employers and challenge opposing views. Given the widespread lack of enthusiasm for GMOs, Monsanto and its competitors would have to be idiots to neglect such an obvious and commonly used marketing tactic.

Still, there’s more going on here than ordinary media manipulation in the hot pursuit of profits. There are plenty of people who have no financial stake in the GMO industry who defend it fiercely from even the least whisper of criticism, just as there are plenty of people who denounce alternative medicine in ferocious terms even though they don’t happen to make money from the medical-pharmaceutical industrial complex. I’ve discussed in previous posts here, and in a forthcoming book, the way that faith in progress was pressed into service as a substitute for religious belief during the nineteenth century, and continues to fill that role for many people today. It’s not a transformation that did science any good, but its implications as industrial civilization tips over into decline and fall are considerably worse than the ones I’ve explored in previous essays. I want to talk about those implications here, because they have a great deal to say about the future of science and technology in the deindustrializing world of the near future.

It’s important, in order to make sense of those implications, to grasp that science and technology function as social phenomena, and fill social roles, in ways that have more than a little in common with the intellectual activities of civilizations of the past. That doesn’t mean, as some postmodern theorists have argued, that science and technology are purely social phenomena; both of them have to take the natural world into account, and so have an important dimension that transcends the social. That said, the social dimension also exists, and since human beings are social mammals, that dimension has an immense impact on the way that science and technology function in this or any other human society.

From a social standpoint, it’s thus not actually all that relevant that that the scientists and engineers of contemporary industrial society can accomplish things with matter and energy that weren’t within the capacities of Babylonian astrologer-priests, Hindu gurus, Chinese literati, or village elders in precontact New Guinea. Each of these groups have been assigned a particular social role, the role of interpreter of Nature, by their respective societies, and each of them are accorded substantial privileges for fulfilling the requirements of their role. It’s therefore possible to draw precise and pointed comparisons between the different bodies of people filling that very common social role in different societies.

The exercise is worth doing, not least because it helps sort out the far from meaningless distinction between the aspects of modern science and technology that unfold from their considerable capacities for doing things with matter and energy, and the aspects of modern science and technology that unfold from the normal dynamics of social privilege. What’s more, since modern science and technology wasn’t around in previous eras of decline and fall but privileged intellectual castes certainly were, recognizing the common features that unite today’s scientists, engineers, and promoters of scientific and technological progress with equivalent groups in past civilizations makes it a good deal easier to anticipate the fate of science and technology in the decades and centuries to come.

A specific example will be more useful here than any number of generalizations, so let’s consider the fate of philosophy in the waning years of the Roman world. The extraordinary intellectual adventure we call classical philosophy began in the Greek colonial cities of Ionia around 585 BCE, when Thales of Miletus first proposed a logical rather than a mythical explanation for the universe, and proceeded through three broad stages from there. The first stage, that of the so-called Presocratics, focused on the natural world, and the questions it asked and tried to answer can more or less be summed up as “What exists?” Its failures and equivocal successes led the second stage, which extended from Socrates through Plato and Aristotle to the Old Academy and its rivals, to focus their attention on different questions, which can be summed up just as neatly as “How can we know what exists?”

That was an immensely fruitful shift in focus. It led to the creation of classical logic—one of the great achievements of the human mind—and it also drove the transformations that turned mathematics from an assortment of rules of thumb to an architecture of logical proofs, and thus laid the foundations on which Newtonian physics and other quantitative sciences eventually built. Like every other great intellectual adventure of our species, though, it never managed to fulfill all the hopes that had been loaded onto it; the philosopher’s dream of human society made wholly subject to reason turned out to be just as unreachable as the scientist’s of the universe made wholly subject to the human will. As that failure became impossible to ignore, classical philosophy shifted focus again, to a series of questions and attempted answers that amounted to “given what we know about what exists, how should we live?”

That’s the question that drove the last great age of classical philosophy, the age of the Epicureans, the Stoics, and the Neoplatonists, the three philosophical schools I discussed a few months back as constructive personal responses to the fall of our civilization. At first, these and other schools carried on lively and far-reaching debates, but as the Roman world stumbled toward its end under the burden of its own unsolved problems, the philosophers closed ranks; debates continued, but they focused more and more tightly on narrow technical issues within individual schools. What’s more, the schools themselves closed ranks; pure Stoic, Aristotelian, and Epicurean philosophy gradually dropped out of fashion, and by the fourth century CE, a Neoplatonism enriched with bits and pieces of all the other schools stood effectively alone, the last school standing in the long struggle Thales kicked off ten centuries before.

Now I have to confess to a strong personal partiality for the Neoplatonists. It was from Plotinus and Proclus, respectively the first and last great figures in the classical tradition, that I first grasped why philosophy matters and what it can accomplish, and for all its problems—like every philosophical account of the world, it has some—Neoplatonism still makes intuitive sense to me in a way that few other philosophies do. What’s more, the men and women who defended classical Neoplatonism in its final years were people of great intellectual and personal dignity, committed to proclaming the truth as they knew it in the face of intolerance and persecution that ended up costing no few of them their lives.

The awkward fact remains that classical philosophy, like modern science, functioned as a social phenomenon and filled certain social roles. The intellectual power of the final Neoplatonist synthesis and the personal virtues of its last proponents have to be balanced against its blind support of a deeply troubled social order; in all the long history of classical philosophy, it never seems to have occurred to anyone that debates about the nature of justice might reasonably address, say, the ethics of slavery. While a stonecutter like Socrates could take an active role in philosophical debate in Athens in the fourth century BCE, furthermore, the institutionalization of philosophy meant that by the last years of classical Neoplatonism, its practice was restricted to those with ample income and leisure, and its values inevitably became more and more closely tied to the social class of its practitioners.

That’s the thing that drove the ferocious rejection of philosophy by the underclass of the age, the slaves and urban poor who made up the vast majority of the population throughout the Roman empire, and who received little if any benefit from the intellectual achievements of their society. To them, the subtleties of Neoplatonist thought were irrelevant to the increasingly difficult realities of life on the lower end of the social pyramid in a brutally hierarchical and increasingly dysfunctional world. That’s an important reason why so many of them turned for solace to a new religious movement from the eastern fringes of the empire, a despised sect that claimed that God had been born on earth as a mere carpenter’s son and communicated through his life and death a way of salvation that privileged the poor and downtrodden above the rich and well-educated.

It was as a social phenomenon, filling certain social roles, that Christianity attracted persecution from the imperial government, and it was in response to Christianity’s significance as a social phenomenon that the imperial government executed an about-face under Constantine and took the new religion under its protection. Like plenty of autocrats before and since, Constantine clearly grasped that the real threat to his position and power came from other members of his own class—in his case, the patrician elite of the Roman world—and saw that he could undercut those threats and counter potential rivals through an alliance of convenience with the leaders of the underclass. That’s the political subtext of the Edict of Milan, which legalized Christianity throughout the empire and brought it imperial patronage.

The patrician class of late Roman times, like its equivalent today, exercised power through a system of interlocking institutions from which outsiders were carefully excluded, and it maintained a prickly independence from the central government. By the fourth century, tensions between the bureaucratic imperial state and the patrician class, with its local power bases and local loyalties, were rising toward a flashpoint. The rise of Christianity thus gave Constantine and his successors an extraordinary opportunity. Most of the institutions that undergirded patrician power linked to Pagan religion; local senates, temple priesthoods, philosophical schools, and other elements of elite culture normally involved duties drawn from the traditional faith. A religious pretext to strike at those institutions must have seemed as good as any other, and the Christian underclass offered one other useful feature: mobs capable of horrific acts of violence against prominent defenders of the patrician order.

That was why, for example, a Christian mob in 415 CE dragged the Neoplatonist philosopher Hypatia from her chariot as she rode home from her teaching gig at the Academy in Alexandria, cudgeled her to death, cut the flesh from her bones with sharpened oyster shells—the cheap pocket knives of the day—and burned the bloody gobbets to ashes. What doomed Hypatia was not only her defense of the old philosophical traditions, but also her connection to Alexandria’s patrician class; her ghastly fate was as much the vengeance of the underclass against the elite as it was an act of religious persecution. She was far from the only victim of violence driven by those paired motives, either. It was as a result of such pressures that, by the time the emperor Justinian ordered the last academies closed in 529 CE, the classical philosophical tradition was essentially dead.

That’s the sort of thing that happens when an intellectual tradition becomes too closely affiliated with the institutions, ideologies, and interests of a social elite. If the elite falls, so does the tradition—and if it becomes advantageous for anyone else to target the elite, the tradition can be a convenient target, especially if it’s succeeded in alienating most of the population outside the elite in question.

Modern science is extremely vulnerable to such a turn of events. There was a time when the benefits of scientific research and technological development routinely reached the poor as well as the privileged, but that time has long since passed; these days, the benefits of research and development move up the social ladder, while the costs and negative consequences move down. Nearly all the jobs eliminated by automation, globalization, and the computer revolution, for example, used to hire from the bottom end of the job market. In the same way, changes in US health care in recent decades have benefited the privileged while subjecting most others to substandard care at prices so high that medical bills are the leading cause of bankruptcy in the US today.

It’s all very well for the promoters of progress to gabble on about science as the key to humanity’s destiny; the poor know that the destiny thus marketed isn’t for them. To the poor, progress means fewer jobs with lower pay and worse conditions, more surveillance and impersonal violence carried out by governments that show less and less interest in paying even lip service to the concept of civil rights, a rising tide of illnesses caused by environmental degradation and industrial effluents, and glimpses from afar of an endless stream of lavishly advertised tech-derived trinkets, perks and privileges that they will never have. Between the poor and any appreciation for modern science stands a wall made of failed schools, defunded libraries, denied opportunities, and the systematic use of science and technology to benefit other people at their expense. Such a wall, it probably bears noting, makes a good surface against which to sharpen oyster shells.

It seems improbable that anything significant will be done to change this picture until it’s far too late for such changes to have any meaningful effect. Barring dramatic transformations in the distribution of wealth, the conduct of public education, the funding for such basic social amenities as public libraries, and a great deal more, the underclass of the modern industrial world can be expected to grow more and more disenchanted with science as a social phenomenon in our culture, and to turn instead—as their equivalents in the Roman world and so many other civilizations did—to some tradition from the fringes that places itself in stark opposition to everything modern scientific culture stands for. Once that process gets under way, it’s simply a matter of waiting until the corporate elite that funds science, defines its values, and manipulates it for PR purposes, becomes sufficiently vulnerable that some other power center decides to take it out, using institutional science as a convenient point of attack.

Saving anything from the resulting wreck will be a tall order. Still, the same historical parallel discussed above offers some degree of hope. The narrowing focus of classical philosophy in its last years meant, among other things, that a substantial body of knowledge that had once been part of the philosophical movement was no longer identified with it by the time the cudgels and shells came out, and much of it was promptly adopted by Christian clerics and monastics as useful for the Church. That’s how classical astronomy, music theory, and agronomy, among other things, found their way into the educational repertoire of Christian monasteries and nunneries in the dark ages. What’s more, once the power of the patrician class was broken, a carefully sanitized version of Neoplatonist philosophy found its way into Christianity; in some denominations, it’s still a living presence today.

That may well happen again. Certainly today’s defenders of science are doing their best to shove a range of scientific viewpoints out the door; the denunciation meted out to Bill Nye for bringing basic concepts from ecology into a discussion where they were highly relevant is par for the course these days. There’s an interesting distinction between the sciences that get this treatment and those that don’t: on the one hand, those that are being flung aside are those that focus on observation of natural systems rather than control of artificial ones; on the other, any science that raises doubts about the possibility or desirability of infinite technological expansion can expect to find itself shivering in the dark outside in very short order. (This latter point applies to other fields of intellectual endeavor as well; half the angry denunciations of philosophy you’ll hear these days from figures such as Neil DeGrasse Tyson, I’m convinced, come out of the simple fact that the claims of modern science to know objective truths about nature won’t stand up to fifteen minutes of competent philosophical analysis.)

Thus it’s entirely possible that observational sciences, if they can squeeze through the bottleneck imposed by the loss of funding and prestige, will be able to find a new home in whatever intellectual tradition replaces modern scientific rationalism in the deindustrial future. It’s at least as likely that such dissident sciences as ecology, which has always raised challenging questions about the fantasies of the manipulative sciences, may find themselves eagerly embraced by a future intellectual culture that has no trouble at all recognizing the futility of those fantasies. That said, it’s still going to take some hard work to preserve what’s been learnt in those fields—and it’s also going to take more than the usual amount of prudence and plain dumb luck not to get caught up in the conflict when the sharp edge of the shell gets turned on modern science.


Dark Age America: The Sharp Edge of the Shell

John Michael Greer ]

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Written by testudoetlepus

December 18th, 2014 at 3:22 pm

Treasury Department Seeks Survival Kits For Major Bank Employees In Coming Collapse

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by J. D. Heyes
December 16, 2014

(NaturalNews) The Treasury Department is looking to buy survival kits for all of its employees who are proprietors of the federal banking system, according to a new government solicitation posted online.

As reported by The Washington Free Beacon (FB), the emergency goods and supplies are for every employee at the Office of the Comptroller and Currency — the OCC — which is in charge of conducting on-site reviews and audits of banks around the nation.

According to the solicitation, each survival kit contains everything from water purification tablets to solar blankets. And the government is willing to spend up to $200,000 on the kits, the solicitation says [which can be viewed here in PDF format:].

The FB noted that the Treasury Department specified that the kits come in either a fanny pack or backpack that can hold all of the requested items, which include a 33-piece personal first aid kit containing "decongestant tablets," many different bandages and other medicines.

Why do bank examiners need survival kits?

In addition, the Treasury wants each kit to include a "reusable solar blanket" that is 53 inches by 84 inches long, as well as a 2,400-calorie food bar, "50 water purification tablets," a "one-size fits all poncho with hood," a "dust mask," a rechargeable lantern with a built-in radio and an "Air-Aid emergency mask" to help the wearer guard against airborne viruses.

These are serious kits for personnel you would never imagine should need one — in normal circumstances.


Read More . . . .


Treasury Department Seeks Survival Kits To Prepare Employees At Every Major Bank For Coming Collapse

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Written by testudoetlepus

December 17th, 2014 at 4:24 pm

Crash-O-Matic Finance

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“Oil prices have dropped $50 a barrel. That may not sound like much. But when you take $107 and you take $57, that’s almost a 47 percent decline…!”
– James Puplava, The Financial Sense News Network


by James Howard Kunstler

May not sound like much? I guess when you hunker down in the lab with the old slide rule and do the math, wow! Those numbers really pop!

This, of course, is the representative thinking out there. But then, these are the very same people who have carried pompoms and megaphones for “the shale revolution” the past couple of years. Being finance professionals they apparently failed to notice the financial side of the business, for instance the fact that so much of the day-to-day shale operation was being run on junk bond financing.

It all seemed to work so well in the eerie matrix of zero interest rate policy (ZIRP) where investors desperate for “yield” — i.e. some return more-than-zilch on their money — ended up in the bond market’s junkyard. These investors, by the way, were the big institutional ones, the pension funds, the insurance companies, the mixed bond smorgasbord funds. They were getting killed on ZIRP. In the good old days of the late 20th century, before Federal Reserve omnipotence, they could depend on a regular annual interest rate churn of between 5 and 10 percent and do what they had do — write pension checks, pay insurance claims, and pay clients, with a little left over for company salaries.

ZIRP ruined all that. In fact, ZIRP destroyed the most fundamental index in the financial universe: the true cost of borrowing money. In doing so, it twerked and torqued the concept of “risk” so badly that risk no longer had any meaning. In “risk-on” financial weather, there was no longer any risk. Imagine that? It also destroyed the entire relationship between borrowed money and the cost-structure of the endeavors it was borrowed for. Take shale oil, for instance.

The fundamental limiting factor for shale oil was that the wells were only good for about two years, and then they were pretty much shot. So, if you were in that business, and held a bunch of leases, you had to constantly drill and re-drill and then drill some more just to keep production up. The drilling cost between $6 and $12-million per well. What happened the past seven years is that the drillers and their playmates on Wall Street hyped the hoo-hah out of the business — it was a shale revolution! In a few short years they drilled to beat the band and the results seemed so impressive that investment money poured into the sector like honey, so they drilled some more. It was going to save the American way of life. We were going to be “energy independent,” the “new Saudi America.” We would be able to drive to Wal-Mart forever!

Be careful what you wish for, the old saw goes. The shale oil “miracle” was an epochal stunt. They goosed so much oil out of the ground in a short period of time that they killed the goose — demand for oil at a price that made it worth drilling for. Now, much of the junk financing will default, and the result of that is no more junk financing for a long, long time, meaning that a lot of planned wells will not be drilled and completed, meaning that the current crop of short-lived wells will crap out in the 24 months ahead, and production will not be replaced by new wells, which will not be there. When and if the riggers get busy again in the Bakken and the Eagle Ford, you can be sure it will be at a much lower level of activity than the glorious year 2014. Of course, it remains to be seen how much financial illness the spoiled junk bond paper will spread through the derivatives markets, not to mention the boring old stock and bond markets and the big banks that traffic there. You can only fool reality so long. Eventually risk-on returns for real and swipes the ground with its mighty tail.

Finance was the lifeblood of the global economy and scam after scam left it riddled with wormholes of fragility. That fragility has been waiting to express itself and the ability of bank wizards to squelch and conceal it may have come to an end. There will be no quick cure for cratering oil prices and the damage it will wreak among the shale drillers. Does that sound like much?



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Crash-O-Matic Finance

Jim Kunstler

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December 15th, 2014 at 3:46 pm

Oil Prices Fall, OPEC In Chaos, Derivative Markets In Hysteria

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Goldman Sachs Loses Money So Gold Prices Fall | Culture of Life News

OPEC was from day one, a cartel. Like all cartels, they made lots of money at first. But over time, everyone under the sun began competing because prices were artificially high and this lead to the inevitable gluts and sudden price collapses. The only tool to fix this for the Saudis and Texans was to generate wars against energy producers and boycotts like the one against Iran. This has now failed utterly. Also, rich bankers cooked up a stupid commodity futures scam called ‘derivatives’ which originally was only for wheat and corn, betting on the weather. Now, it is everywhere and utterly toxic and extremely prone to create price bubbles and collapses. This stupid market always goes rapidly to infinity and infinity is the bane of humans because it always ends with nothing instead of everything.

I have written extensively about all this and here are some past examples. The present situation is due to the very same causes as past deflation events: Infinite Money Kills Real Wealth | Culture of Life News

Instead of a new model, all sorts of goofy tricks have been introduced to explain away this obvious proof that the universe is not expanding, it is collapsing. Eventually the new model will emerge but only after enough astronomers literally die off so that younger upstarts can finally ask the proper questions (and thus, eventually answer them with new theories).

This is happening in economic matters. The Marxist/Capitalist model began to actively collapse with the triumph of communist rebellions which showed the weaknesses of Marxism. The triumph of capitalism in Marxist countries has led to the collapse of capitalism in the non-communist countries and the only people able to figure out that capitalism has collapsed has been the new capitalist communists.

The ideology about the Great Depression of the mid-20th century was, protectionism created this event. So insidiously, the elites in the capitalist West worked nonstop to eliminate trade barriers and this was elegantly exploited by the new capitalist communists. We then had a global banking collapse nearly identical to the one in 1930 and this proved that the ideology of ‘trade barriers create depressions’ to be false.

Instead of realizing free trade makes global banking collapses inevitable still isn’t the new ideology. The old one which totally misreads how and why depressions happens continues unabated in power in our universities and our government. Not one soul seems to have grasped that the economic model they are using is totally useless. Worse than useless, actively destructive.



Infinity=Death: Economics On The World Chess Board | Culture of Life News

The US merrily shipped most of our production and jobs overseas. We still do this, Obama has spent the last year going around the planet, making this even easier than before. The rich get richer and tax cuts and own Congress while the GOP screams about Obama not creating jobs. Well, the theory is, if we open up more trade, we get more jobs. After losing many millions of jobs with Free Trade, I would think someone would figure out, this is a stupid plan! But no, we had a ‘debate’ in the GOP last night and as always, they are more upset with gays kissing and teens getting abortions instead of appearing on Teen Mom with a baby in tow! Yup, anyways, INFLATION is now taking off in her usual leisurely way and has spread her gossamer wings to the rising winds of ZIRP interest rates to bankers. This is a problem, too, never discussed realistically.

Dr. Krauss Struggles To Understand Infinity And Nothingness…And Fails | Culture of Life News

Finances and astronomy are hand in glove thinking: it is all about infinity and zero! Motion, time and space are given numbers and rules and humans then try to riddle out what the Sphinx is telling us: mortality. The excitement about where we are going and where is the center of the universe are real questions humans cannot answer since we really, emotionally think that we are the center of the universe if not our own galaxy or solar system.



Some people like to think that Goldman Sachs and other gnome operations love to have depressions. They don’t, actually. They love the bubbly. They love lots of fizz. They grimly hang on and enjoy cheaper prices in depressions but they are not happy with these, they want infinity, not sloshing along picking up pennies in the gutter. Commodity markets are viewed as a desperate, last chance for money operation. This is due to it being stubbornly physical.

This is why the carbon CO2 trade business made them all hysterically happy. It was an invisible gas! And it was everywhere and nearly everything produces it! Whoopee! They even enthused that this could lead to infinite derivative deals. Then, it got too cold, too many people got too angry about high energy taxes and it has fizzled badly. So, back to buying gold and then trying to swindle someone down the line in desperate, dirty gold market deals.

Goldman Sachs couldn’t manipulate this market nearly as well as they do say, the derivatives market. They love derivatives, they hold their noses to do gold. And now, they are out of the gold since they have no profits to park there, temporarily. So gold drops like a rock. Oil, on the other hand, depends on wars. If we attack an oil producing nation like Iraq or Libya, the price of oil soars. Now that these wars are winding down, it is back to preventing Iran from selling oil. This pleases Saudi Arabia which is desperate for higher prices for oil. And it pleases the big gnomes playing the oil futures markets.

Alas, high oil prices=economic recession in the US. So, I expect this to worsen, not get better any time soon.

And so much for the past! The price of oil finally reached its saturation moment when even the most marginal processes and systems were profitable and now it has collapsed and this is bringing lower energy costs which is in the whole, very good for most of us consumers but bad for energy producers like the US, Russia, Saudi Arabia, etc. On the other hand, this makes manufacturing powers like CHINA and even Japan, better off! Since the US has offshored its manufacturing and has relied on food and fuel exports, this will make things worse for our trade deficit.

Duh! We used to be the world’s #1 manufacturing power. All tossed into the crapper by the bankers and politicians who wanted cheap foreign labor and big profits with zero interaction with irritable workers going on strike for better wages.

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Oil Prices Fall, OPEC In Chaos, Derivative Markets In Hysteria

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December 15th, 2014 at 3:10 pm

Crashing Crude’s First Casualty: One-Time Commodities Giant Phibro Liquidating

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While we were expecting that one-time “god of crude oil tradingwould have a poor year as a result of his consistent bullishness on the crude space, we were quite astounded to learn, as Bloomberg first reported yesterday, that Andy Hall – the man whose name was for a decade legendary in the commodity space – would call it a day. And yet that pales in comparison to the WSJ report overnight than Phibro itself, Andy Hall’s 113 year old employer currently owned by Occidental Petroleum after its sale by Citigroup, would liquidate in the US after it failed to buy a buyer, marking the end of an era.


Phibro Trading’s Andrew Hall and his daughter, Emma, in 2012

What is paradoxical, and as we reported yesterday, Hall’s hedge fund Astenbeck, has not done badly in 2014. In fact, it was up another 1.2% in November and was up 7.2% year to date despite a roaring bear market in commodities.

Alas, that is cold comfort for Phibro. As the WSJ reports, “the 113-year-old company, founded in Germany by two scrap-metal dealers, is winding down its U.S. operations after it failed to find a buyer, according to a person familiar with the situation. The sale process for units in London and Singapore continues, the person said. Phibro specialized in physical trading of oil and other raw materials, seeking to profit by moving actual barrels and acting as an intermediary between producers and consumers. The pool of potential buyers for these kinds of operations has dwindled in recent years amid a regulatory crackdown on Wall Street banks’ involvement in these markets.”

As for Hall, while he will sever his relationship with Phibro, he will continue working for his $3 billion hedge fund Astenbeck, of which Occidental owns 20%.

Mr. Hall is expected to continue trading energy derivatives through his $3 billion hedge fund, Astenbeck Capital Management LLC, which has avoided taking much of a hit from this year’s plunge in oil prices because Mr. Hall curtailed bets and shifted to holding cash.

The end of Phibro is another stark reminder, that bull markets make geniuses out of everyone, but it is when the bear markets tide flows out that we truly learn who was swimming naked.

The effective demise of Phibro underscores investors’ fading interest and the challenging trading conditions in many energy and commodity markets, which in recent years have been pummeled by the combination of rising supplies and tepid demand growth. Mr. Hall reaped huge profits by correctly betting on rising commodity prices in the 2000s, which was driven by rapid growth in China.

That kind of strategy worked well during the commodities boom, but fared more poorly during a period of relatively stable oil prices that ended in the middle of this year. The price of benchmark U.S. oil futures has plunged about 40% in the past six months. On Tuesday, the front-month contract rose 1.2% to $63.82 a barrel on the New York Mercantile Exchange. The decline in prices accelerated in November after the Organization of the Petroleum Exporting Countries agreed to maintain its production target.

Phibro employees were being notified of the developments Tuesday, according to the person. Analysts have said Phibro added little to Occidental’s financial performance and that executives were uncomfortable with the volatility it sometimes brought to results. Earlier this year, Hess Corp. also sold its internal trading arm, Hetco.

In retrospect perhaps the liquidation of Phibro shouldn’t come as a surprise: “Occidental in February said it was pulling back from proprietary trading of crude oil and other commodities amid a corporate reorganization, and a spokesman on Tuesday reiterated the Houston company’s plans to reduce exposure to these activities. Phibro executives had been shopping the operation to prospective buyers since the February announcement, according to another person familiar with the situation.”

Still the complete lack of interest for a legendary name in the commodity trading space is somewhat stunning.

Founded as Philipp Brothers in the early 1900s, Phibro went on to become at one point the largest supplier of raw materials in the world. In 1981, it acquired investment bank Salomon Brothers, and the trading firm became part of Citigroup in 1998.

Mr. Hall and his traders were known for placing big, long-term bets. In 2007, Phibro accounted for 10% of Citigroup’s net income.

As for Hall, who as recently as September went “all in on a bet that the shale-oil boom will play out far sooner than many analysts expect, resulting in a steady increase in prices to as much as $150 a barrel in five years or less”, what is his outlook now?

Mr. Hall cut back sharply on his wagers in August, moving much of his portfolio to cash. “We think longer-term oil prices are supported in the $70-$80 range,” Mr. Hall said in a Dec. 1 letter to investors, which was reviewed by the Journal. But for now, near-term prices “will stay under pressure and could become very volatile as the market strives for equilibrium without intervention” from OPEC, he wrote.

And, like yesterday, we leave it off with the $64K question: has Hall [and Phibro] already liquidated his long positions yet, or is he yet to liquidate them? Judging by the relentless slide in Brent and WTI, with the latter just touching on a $61 handle, the market is less than eager to wait around for the answer.


Crashing Crude’s First Casualty: One-Time Commodities Giant Phibro Liquidating


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December 10th, 2014 at 4:42 pm

Jim Willie: The Western Banking Cabal’s Stranglehold

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December 4, 2014
Special Guest: Jim Willie

Vlad Putin reminded the West today that the Nazis could not defeat the Russian Army. Is anybody in the USA paying attention? Financial analyst Jim Willie spends one hour with Rick today. Mr. Willie said we are in the final stage of the break-up of the Western banking cabal’s stranglehold on the world. You’ll hear a financial analysis that you won’t read in the Wall Street Journal or hear Jim Cramer say on CNBC.



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Jim Willie: The Western Banking Cabal’s Stranglehold

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December 8th, 2014 at 8:41 pm

Temporal Cloaking Problem Solved . . . And More High Octane Speculation On All That Missing Hyper-Inflation

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by Joseph P. Farrell
Giza Death Star
December 7, 2014

Many regulars here shared this article, and it grabbed my attention not only because of the inherent significance of its contents, but because of a dilemma that I have been wrestling with over the past few months and years. Indeed, today’s “high octane speculation” goes far beyond those parameters, and might best be qualified as “totally wackadoodle” speculation. But back to that in a moment.

Consider first this article about temporal cloaking – a subject we’ve talked about before on this website – and a recently discovered “solution” to some of its inherent problems:

Time cloak used to hide messages in laser light

In other words, not only have technicians and scientists been able to remove information from the temporal stream, they are now able to recover it, provided they know the right frequency by which to do so:

“Last year, a team at Purdue University in Indiana built a cloak that could transfer hidden data at 1.5 gigabits a second, fast enough to make it theoretically useful for real communication. The only thing was, the message was hidden so well that no one could actually read it. That problem has now been solved.

“‘With this new device, we don’t just limit ourselves to thinking about cloaks as a way of preventing somebody from getting information, but also as a way to enable communication,’ says Joseph Lukens, an electrical engineer at Purdue. ‘One guy sees nothing, the other guy sees everything.’

“Lukens and his colleagues created two different communications channels using lasers tuned to two different frequencies. One is a regular frequency and the other is a time-cloaked channel that remains hidden unless you know it’s there. Photons from each laser traveled along the same fibre, but the intended recipient just needs to tune in to the right channel to reveal the secret information.”

Now for regulars here, I’ve been saying for quite some time that any implicit ability to engineer the fabric of (observable) space-time on the laboratory bench gives a potentially cosmic capability for destruction. But alternatively, it also gives a potential for cosmic re-engineering of reality at the most fundamental level, that of observed information. In effect, what the Purdue experiments imply is two levels of reality: the “matrix” reality of the everyday world you and I live in, and a hidden reality accessible to the “sysadmins” with the requisite keycode or frequency to tap into “temporally veiled information.”

One can easily extrapolate where this might go: information could possibly be temporally cloaked until some time in the future, when it could be unlocked or accessed only at that time…

. . . like an old-fashioned time lock on a bank vault.

Now imagine, for a moment, this type of technology applied to international and/or domestic financial clearing. Have some “bad paper” on the books that you need to shred? Why not “shred” it in the most effective way possible, via some sort of temporal cloaking, with the information – in this case in the form of trillions or quadrillions of dollars of electronic liquidity – only accessible to those with the right frequency, to be applied at the right time… ?

Why am I bothering you with all of this? Well recall, over the past several years, like many others I have wondered why all the predictions of hyper-inflation and the collapse of the dollar that we’ve heard the vast majority of conventionally-minded financial analysts making since Nixon took the USA off the Bretton-Woods agreement, have never occurred? Under normal circumstances, such predictions would have caused any scientist to go back and check the assumptions of his model. But neither has happened, neither the dollar-collapsing hyper-inflation, nor the re-examination of the “conventional” models of economics (which seem stuck in some Newtonian-like equivalent of “financial mechanics”, unable to enter the age of “quantum economics”). Lots of current continues to be put into the circuit, but the hyper-inflation has yet to show up on the load end, a problem of analysis magnified many times over with all the QE (“quantitative easing” is the euphemism) undertaken in recent years. This failure has led me and a few others(Catherine Austin Fitts to name but one) to hypothesize that the money is in fact going “elsewhere,” and we have speculated that it may be going off world in some form of trade or tribute.

But what if “somewhere” is, in fact, “somewhen”? Admittedly, this is speculation of such a “high octane” nature as to be “totally wackadoodle”. It does, however, have a certain simplistic elegance to it, for after all, if all debt-based fiat currency is a borrowing in the present from the future, against a principle that can under such circumstances never be repaid (at least in the present), then the way to “balance the books” is to shift all that liquidity to the future (where it will presumably be needed). Perhaps it is more than just coincidental that all those physics graduates of the 1970s and 1980s found themselves in the world of finance as “quants,” designing the high frequency trading algorithms that employed their mathematical models from quantum mechanics. Perhaps one is looking at a bit of quantum mechanical financial alchemy, where one bit of information can not only be present at two different places at the same time, but in two different times at the same place, a kind of financial time machine. After all, delta t functions have as much presence in the mathematics of finance, as they do in physics… It does make one wonder.

See you on the flip side…


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December 7th, 2014 at 3:46 pm

Jobs, Shale, Debt and Minsky

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by Raul Ilargi Meijer
via The Automatic Earth blog,

OK, I don’t see a whole lot of comprehension out there, so let’s try and link the obvious: employment to shale to plummeting oil prices to the debt the shale industry was built on (and which is vanishing). I know, people look at the US jobs report today, and at the stock exchanges (Europe up some 2% across the board), and think salvation has landed on their doorstep, but the true story really is very different.

The EU markets are up because of US job numbers + the expectation that Draghi will launch a broad QE in January. But US jobs are far less sunny than meets the eye at first glance, and the Bundesbank will not all of a sudden do a 180º on ECB stimulus options. Ergo: a lot of European investors are set to lose a lot of money.

Anyone notice how quiet Angela Merkel has become about the QE debate? That’s because she doesn’t want to be caught stuck in a losing corner. Even if the Bundesbank would give in to Draghi, and chances are close to zero, there would be multiple court cases in Deutschland against that decision, and chances are slim the spend spend side would win them all. That’s the sort of quicksand an incumbent leader like Merkel wants to avoid at all cost.

But let’s leave Europe to cook itself, and its own goose too.

What’s happening stateside is more important today. First, Marc Chandler has a good way of putting what I have said for as long as oil prices started testing ever deeper seas: the danger to the industry is not even so much falling prices, it’s financing both existing and future endeavors. Shale is a leveraged Ponzi, that’s its most urgent problem. Even if shale could break even at low prices, financiers and investors would still leave the building.

Both shale oil and gas have two big problems:

1) projects are based on highly optimistic returns, and

2) they are financed with very large and leveraged debt loads.
With WTI prices now at $66 a barrel, and the first Bakken prices below $50 a barrel having been signaled, the entire industry starts resembling a house of cards, a game of dominoes and/or a pyramid shell (pick your favorite) more by the day. Chandler:

This Is Oil’s ‘Minsky Moment’

Marc Chandler says the energy sector has just suffered its own Minsky moment. And while he doesn’t expect it to take down the stock market, the slide in oil could have a serious impact on the high-yield bond market. Minsky moment is a term coined by Pimco economist Paul McCulley in 1998, and it refers to a point when a period of rapid growth and risk-taking leads to a sudden turn lower and a crisis. Chandler, global head of markets strategy at Brown Brothers Harriman, says that is precisely what is happening in crude oil.

“Many people a couple years ago, a year ago, were saying that oil prices could only go up – ‘we’re in peak oil’ – meaning that we’re running out of the stuff. So a lot of things were leveraged based on oil prices that can only go up. Sort of like house prices—’they can only go up.’ So what happened is, because people held this as a deep conviction, they leveraged up,” Chandler said.” “The big risk now to our shale is not going to be that the price of oil drops so far that it’s not going to be profitable,” he said. “The weakness, the Achilles’ heel, is that they don’t get the cheap funding anymore.”

Even Nature magazine this week gave it a shot, and tried to lend scientific credibility to a certain view of shale. Here’s the editorial:

The Uncertain Dash For Gas

The International Energy Agency projected in November that global production of shale gas would more than triple between 2012 and 2040, as countries such as China ramp up fracking of their own shale formations.

Academic journals are filled with earnest projections about future energy dynamics, which usually turn out to be wildly inaccurate. Even worse, governments and companies wager millions of dollars on dubious bets. This matters because investment begets further investment. As the pipework and pumps go in, momentum builds. This is what economists call technology lock-in.

Nature has obtained detailed US Energy Information Administration (EIA) forecasts of production from the nation’s biggest shale-gas production sites. These forecasts matter because they feed into decisions on US energy policy made at the highest levels. Crucially, they are much higher than the best independent academic estimates. The conclusion is that the US government and much of the energy industry may be vastly overestimating how much natural gas the United States will produce in the coming decades.

The EIA projects that production will rise by more than 50% over the next quarter of a century, and perhaps beyond, with shale formations supplying much of that increase. But such optimism contrasts with forecasts developed by a team of specialists at the University of Texas, which is analysing the geological conditions using data at much higher resolution than the EIA’s.

The Texas team projects that gas production from four of the most productive formations will peak in the coming years and then quickly decline. If that pattern holds for other formations that the team has not yet analysed, it could mean much less natural gas in the United States future.

And then an article:

Natural Gas: The Fracking Fallacy

When US President Barack Obama talks about the future, he foresees a thriving US economy fuelled to a large degree by vast amounts of natural gas pouring from domestic wells. “We have a supply of natural gas that can last America nearly 100 years,” he declared in his 2012 State of the Union address. [..]

Over the next 20 years, US industry and electricity producers are expected to invest hundreds of billions of dollars in new plants that rely on natural gas. And billions more dollars are pouring into the construction of export facilities that will enable the United States to ship liquefied natural gas to Europe, Asia and South America.

All of those investments are based on the expectation that US gas production will climb for decades, in line with the official forecasts by the US Energy Information Administration (EIA). As agency director Adam Sieminski put it last year: “For natural gas, the EIA has no doubt at all that production can continue to grow all the way out to 2040.”

But a careful examination of the assumptions behind such bullish forecasts suggests that they may be overly optimistic, in part because the government’s predictions rely on coarse-grained studies of major shale formations, or plays. Now, researchers are analysing those formations in much greater detail and are issuing more-conservative forecasts. They calculate that such formations have relatively small ‘sweet spots’ where it will be profitable to extract gas.
The results are “bad news”, says Tad Patzek, head of the University of Texas at Austin’s department of petroleum and geosystems engineering, and a member of the team that is conducting the in-depth analyses. With companies trying to extract shale gas as fast as possible and export significant quantities, he argues, “we’re setting ourselves up for a major fiasco”.

The scientific ring to it is commendable, but this misses quite a few things. They cite David Hughes, but leave out the work of Rune Likvern, without whom in my opinion no true – scientific or not – view of the shale industry is complete. But okay, they tried, in their own way, and their conclusions may be a bit softened, but they’re still miles apart from those of either the industry’s PR, or the EIA.

And then we move to the next link: that between shale and jobs. Because that’s where falling oil prices start to go from joy for the whole family to something entirely different.

What happens if the US shale industry crumbles under the weight of its own leverage? Most people will probably think: we’ll just start buying from that oversupplied world market again. But it’s not that easy, that leaves out one big issue. American jobs.

And we can take it straight from there to today’s hosannah heysannah BLS report. Which, however, has issues that don’t show up at the surface. Tyler Durden:

Full-Time Jobs Down 150K, Participation Rate Remains At 35 Year Lows

While the seasonally-adjusted headline Establishment Survey payroll print reported by the BLS moments ago may be indicative of an economy which the Fed will soon have to temper in an attempt to cool down, a closer read of the November payrolls report shows several other things that were not quite as rosy. First, the Household Survey was nowhere close to confirming the Establishment Survey data, suggesting jobs rose only by 4K from 147,283K to 147,287K, and furthermore, the breakdown was skewed fully in favor of Part-Time jobs, which rose by 77K while Full-Time jobs declined by 150K.

And then for those keeping tabs on the composition of the labor force, the same adverse trends indicated over the past 4 years have continued, with the participation rate remaining flat at 62.8%, essentially the lowest print since 1978, driven by a 69K worker increase in people not in the labor force.
So according to the BLS Household Survey, the US lost 150,000 jobs, while the Establishment Survey, prepared by the same BLS, shows a gain of 321,000 jobs. Yay! pARty! But we’ve been familiar with all the questions surrounding the jobs reports for a long time, so that’s not all that interesting anymore.

Still, when you see that again most of the jobs that were allegedly created are low paid service jobs, and that wages are not going anywhere, you have to wonder what is really happening. Well, this. The vast majority of new US jobs since 2008/9 have come from energy and related industries, which makes them a dangerously endangered species now oil prices or down 40% and falling.

Tyler Durden ran the following on Wednesday, and I think this is very relevant today:

Jobs: Shale States vs Non-Shale States

Consider: lower oil prices unequivocally “make everyone better off”, Right? Wrong. First: new oil well permits collapse 40% in November; why is this an issue? Because since December 2007, or roughly the start of the global depression, shale oil states have added 1.36 million jobs while non-shale states have lost 424,000 jobs.

The ripple effects are everywhere. If you think about the role of oil in your life, it is not only the primary source of many of our fuels, but is also critical to our lubricants, chemicals, synthetic fibers, pharmaceuticals, plastics, and many other items we come into contact with every day. The industry supports almost 1.3 million jobs in manufacturing alone and is responsible for almost $1.2 trillion in annual gross domestic product. If you think about the law, accounting, and engineering firms that serve the industry, the pipe, drilling equipment, and other manufactured goods that it requires, and the large payrolls and their effects on consumer spending, you will begin to get a picture of the enormity of the industry.

Simply put, this means 9.3 million, or 93% of the 10 million jobs created since the recession/depression trough, are energy related.

The links above, jobs to shale to oil prices, are intended to give people an idea of what’s in store if oil prices stay where they are or fall more. It’s 4 to 12 for US shale, and its saving grace is nowhere to be seen. And if 93% of all new American jobs since the recession, even if they are burgerflipping ones, come from the oil and gas industry, what’s going to become of either of the BLS reports?

I’ve been saying for weeks that lower oil prices would not be a boon but a scourge for the US economy, for several different reasons, and this is a big one. The losses to investors, the restructurings and bankruptcies, and perhaps even the bailouts, are a very much interconnected and crosslinked other. There’s no resilience – left – in a system like this, it bets all on red, and that makes it terribly brittle.


Jobs, Shale, Debt and Minsky

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December 7th, 2014 at 3:20 pm

Jim Willie: Oil Crash to Accelerate the Coming Global Financial Crisis!

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December 4, 2014

In this MUST LISTEN interview with Hat Trick Letter Editor Jim Willie, the Golden Jackass discusses whether the oil price is intentionally being moved lower by the US government and Wall St to hurt the Russians. Willie discusses the recent bombshell that the Netherlands has successfully repatriated over 120 tons of gold, and explains why the Dutch got their gold back while zee Germans received nichts.

Willie breaks down Japan’s path towards hyperinflation, and what it portends for the rest of the debt-ridden Western world. Willie advises that the low oil price combined with a relatively strong US Dollar is killing the global economy, and will accelerate a change to the next global financial system.

Jason Burack of Wall St for Main St had on as a returning guest editor of The Hat Trick Letter at Goldenjackass Jim Willie.

During this hour+ interview, Jason asks Jim about OPEC, the Saudis and if the oil price is intentionally being moved lower by the US government and Wall St to hurt the Russians.

Jim doesn’t think the US is moving the oil prices lower because lower oil prices mean most US shale oil producers will go bankrupt.

Jason and Jim discuss why the Dutch got their gold back and why the Germans did not.

They discuss what the Saudis are doing, why Japan is printing so much money and why every developing world country seems to be announcing bilateral trade agreements and currency swap lines with each other.

Jim thinks the low oil price combined with a relatively strong US Dollar is killing the global economy faster and will accelerate a change to the next global financial system. He goes in depth about why during this interview.



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Jim Willie: Oil Crash to Accelerate the Coming Global Financial Crisis!

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December 6th, 2014 at 2:50 pm