"I wouldn't want to do without HSL. It's a must for global outlook and investing." - Ron Paul
In over 41 years of widely read investment advice service this bulletin from him is extraordinary:
Harry Schultz Letter. “Special Alert Flash Bulletin.”
“As warned for many months a major global “upheaval” is in progress – spurred by the one-two punch of runaway inflation & a collapse of the derivatives/credit markets – which will affect everyone. Many banks are at risk. Investors who continue to procrastinate or wait optimistically for storm clouds to dissipate, will in the main, see their assets deflate radically & at best risk losing much or most of their net buying power &/or capital. If not already done, we urge that you immediately reduce financial risk via 3 basic steps: exit the US$ (or hedge exposure to US$ assets of any kind via futures short selling &/or bank forward contracts), place approx. ½ of your assts into a mix of 90-day to 2-year govt bills/bonds (Swiss govt paper preferred, but any non-US$ 1st world govt paper OK), place almost ½ of your assets in gold (via a basket of gold futures &/or quality gold shares, with at least 15% in physical gold bars or coins). A small position in oil/food/commod stocks & special situations is justified.
Good luck to us all,
Uncle Harry and team”
In the months leading up to the currency controls and bank closures in Argentina there was a flight of money out of Argentina by the elites.
Eventually we will be paying $100 for a cup of coffee.
What should you do?
Reduce your standard of living now (while the situation is still under control), greatly increase your savings (in gold, or silver, which is real money) and rig for greatly changed patterns of production, consumption, employment and business for a considerable time. The hurricane that's just starting to hit the economy will both trigger and worsen problems in other areas. Starting with politics, because nearly everyone today believes the ridiculous notion that the government should guide the economy.
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
Phil,
I've been wondering how investing in silver & gold is going to shore me up when it's crunch time? Will the vendors accept it in exchange for goods? (I'm still pretty 'wet behind the ears' when it comes to investing.) And, if they accept it, will they recognize that it's more valuable than the fiat money they're used to receiving? <scratching head>
____________________ Politicians and diapers should be changed often - for the same reason!
_________________
Death and life are in the power of the tongue, and those who love it will eat its fruit. Proverbs 18:21
deRodes wrote: Phil,
I've been wondering how investing in silver & gold is going to shore me up when it's crunch time? Will the vendors accept it in exchange for goods? (I'm still pretty 'wet behind the ears' when it comes to investing.) And, if they accept it, will they recognize that it's more valuable than the fiat money they're used to receiving? <scratching head>
You have no idea the frenzy that will develop for gold and silver in a high inflation economy or when all the banks go on holiday. Shops will pop up everywhere offering to buy silver and gold. Any kind of silver and gold including jewelry and silverware. In fact for quick trades it is a good idea to have some lower quality gold and silver jewelry around to sell at any of the numerous small "I buy Gold, Pay Cash!" shops. If things get grim shop owners themselves will recognize the value of gold and silver coins and gladly accept them because paper money will either becomes worthless so fast (hyper-inflation) or people simply do not have any money (bank closure, or depression). In the event of disasters like Total World War, nuclear bombs, blockade, civil war, then staples like toilet paper, soap, whiskey, matches, tobacco, are some of the most easily traded. Short of those catastrophies coin dealers and bullion dealers will always exchange government minted gold and silver coin for dollars at spot minus their small fee. So if the economy collapses I am sure, judging from what people do in other countries under similar conditions, one would take some jewelry or whatever, well hidden on their person, travel to their exchange/dealer and convert it into the currency-of-the-day then go buy as much of what they needed as they could find.
I would hazard to say that in a hyper-inflation the problem will be that everyone will want to buy gold and silver. In the beginning, at first, they would lining up to sell their jewelry for the apparent easy big cash and then later inflation will get so bad they will be lining up to buy the precious metals back!
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
The Blueprint states “Foreign economies are maturing into market-based economies, contributing to global economic growth and stability and providing deep and liquid sources of capital outside the United States. The increasing interconnectedness of the global capital markets poses new challenges: an event in one jurisdiction may ripple through to other jurisdictions. The convergence of financial services providers [the Banking Modernization Act] and financial products has increased over the past decade. Financial intermediaries and trading platforms are converging. Financial products may have insurance, banking, securities, and futures components” (emphasis added). The Blueprint constitutes the final take-over by the Federal Reserve of our nation’s economy.
The Blueprint recommends changing the banking charter to include all financial institutions, thus effectively transferring, control over “national banks, federal savings associations, and federal [and state] credit union charters, and be available to all corporate forms, including stock, mutual and ownership structures.” While the Fed was originally given power over the banking system, they were not given power over savings and loans, state chartered banks, or credit unions.
To give you a sense of the immense transfer of wealth that is taking place, understand that the U.S. insurers hold $6T in assets, the U.S. banking sector holds $12.6T, and the U.S. securities sector holds $12.4T, for a total of $31T in assets. Are you seeing what they see? Dollar signs and control—control of our financial future, control of where we can live, and control of how we will live. In Medieval times this was called feudalism.
Moreover, the Feds are to be given authority over the U.S. Payment and Settlement System thereby controlling the settlement process for securities, which is the three-day waiting period for the processing of payment, proper paper documentation and titling of the shares.
Once the last vestiges of American financial sovereignty are transferred to this private corporation, Congress becomes obsolete and useless. Up until this time, they were needed to help approve the various incremental transfers of financial sovereignty. Now, they will not be needed and if they think they have any power, they will find that they gave it all away. How pathetic of them, they should all be hanged for treason.
As for you and me, all of the safety nets that once protected our freedoms and sovereignty as a product of local, county, state and federal government are in effect gone. We are now left to fend for ourselves in a country where the American government has abandoned their responsibility to us, their citizenry. So that we may survive, we will need to don our own lifejacket—one of faith in the God who rules over the affairs of men.
____________________ Politicians and diapers should be changed often - for the same reason!
_________________
Death and life are in the power of the tongue, and those who love it will eat its fruit. Proverbs 18:21
The State could, if it desires, take sovereignty back from the Fed. The US could nationalize the Fed and put it in the Treasury to salvage whatever is of value and put the rest into bankrupcy court. The financial system is already dead! What we see is its final throes.
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
I will have to read and re-read those posts to get it down a lot better than my cursory first time.
Yes, truly scary.
Phil, it strikes me that they don't grasp "sovereignty" or "autonomy" or anything about psychology or the soul. They only grasp "institution" and "the bottom line".
Money is their "word made flesh" and that is that.
Maybe it is "what does it profit a man if he gains the whole world and loses his soul" and then "ironically enough goes broke anyway".
No soul and on the dole!
____________________ "The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
They have Power and they are neurotic. Cross even a mid-level bureaucrat and they can make your life a living hell. These politicians and bureaucrats have far more power than ever before and they will do whatever it takes to stay in power. Well, what can we say about what next this government will bring us? You can be sure something really stupid is about to happen.
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
Actually, reading about Freddie Mac and the other, you get it that no one really assumed the risk for our mortgages.
Now, the US taxpayer will get to be the bagholder.
Meanwhile, with a ton of corporate fail-safe welfare, we are "protectionist" if we don't want the Burger King drive-up worker to be outsourced to an Indian in the Asian sub-continent.
____________________ "The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
Sen. John McCain had it all wrong when he claimed while campaigning in Michigan that the American jobs lost overseas never were coming back. The examples of American jobs returning home are growing. A privately-held company that makes heaters to keep football players warm while on the sidelines recently moved production from China back to Kentucky. A family-owned foundry in Bremen, Ind., is being reactivated once again to manufacture pumps after moving work to China just two years ago. And Crown Battery Mfg. is shuttering a plant in Mexico and adding work to its Ohio factory.
But if you're John McCain, you need some sort of sound byte that attempts to justify your ongoing, mindless support of a trade policy that has resulted in the massive slaughter of American manufacturing jobs in this country.
States like the ones mentioned above have been absolutely hammered by globalization and free trade policies. Michigan, Ohio, Indiana, and Pennsylvania have collectively lost 200,000 manufacturing jobs in just the last two years. It doesn’t sound to me like John McCain's claim that "free trade is the best thing that can happen to our nation" (Wall Street Journal, May 19, 2008) possibly could be true.
First we decided to unilaterally make blue-collar workers sacrificial lambs to the new global economy and replace them with workers in China and elsewhere who don't pay a dime's worth of taxes to America. Then the formerly-employed American workers who aren't paying taxes anymore draw taxpayer-funded unemployment benefits while they look for another job. No wonder we have endless budget deficits.
What is John McCain's answer to this massive loss-of-tax-revenue mess? Along with a Trade Adjustment Assistance program (TAA), which uses hundreds of millions more taxpayer dollars to retrain American workers for the privilege of putting them in unemployment lines, McCain wants massive tax cuts for all corporations (not just ones in manufacturing) to help us "compete." If McCain really wants to do the sensible thing and level the playing field (it's doubtful that he does) so all market participants play be the same set of rules, which would be consistent for any other competitive activity like baseball, badminton or blackjack, the right thing to do is increase the taxes on foreign producers for access to our markets and bring them in line with what our domestic producers are paying.
All that is needed is a simple application of tariffs that McCain's mentor Teddy Roosevelt once said, "…should never be reduced below the point that will cover the difference between the labor cost here and abroad." Increasing taxes (tariffs) on foreign producers is revenue-positive. Decreasing taxes on our domestic producers is revenue-negative. I'm not saying we should raise taxes on domestic producers. I'm saying they should be left alone and we should bring taxes paid by foreign producers up to the same level. That's the best way to level the playing field and provide the U.S. Treasury with needed revenue at the same time to stem the tide of our growing national debt.
But for any jobs to be able to come back to American shores once again, capacity, supplier networks, and factories have to still be here to come back to. Christina Lampe-Onnerud of Boston-Power has a fast-charging, long-lasting notebook computer battery that she thinks just might revolutionize the industry, and she wanted to make it here in the United States. Trouble is that she couldn't find anyone in America to even make a prototype, let alone do the manufacturing in the quantities she envisioned. As Belen, New Mexico-based CEMCO’s CFO put it, "American foundries now can compete head-to-head on cost, but there aren't many foundries, welders, machinists, and quality-control engineers. What we had 10 years ago is gone." CEMCO makes rock-crushing and farm equipment.
Of course we can't expect to recapture all the production that has gone to China in years past. But the recent fall of the dollar and the rise in fuel and transportation costs might influence decisions in our favor in the future. The value of the dollar has decreased 30% since 2002 against many major currencies and wage rates in China are increasing 10% to 15% a year. The cost of shipping a 40-foot container to San Diego from Shanghai, for example, has increased 150% since 2000.
Iron castings manufacturer Donsco previously laid off hundreds of American workers as customers transferred production of oil rig parts, gear boxes, and more to Chinese competitors. Now, Donsco Chairman Art Mann Sr. says his company is flooded with orders from U.S.-based clients. "All of a sudden our customers are saying, 'Whoops, it's cheaper to buy in our backyard.'"
Another example is Tesla Motors, which transferred battery pack assembly work from Thailand back to San Carlos, Calif. The battery packs will be used in the production of Tesla's electric-powered sports car which carries a price tag of $109,000. The low cost of Thailand's factory wages weren’t enough to offset the costs of shipping heavy battery packs across the Pacific Ocean. Tesla's marketing vice-president Darryl Siry said, "It was one of those things that became obvious all of a sudden, and you said, 'Why are we doing this?'"
Hopefully soon most Americans and their legislators will wonder not only, "Why are we doing this?" but also, "Why did we ever start?" The answers to America’s economic problems are right in our own backyard. The answers are to truly level the playing field so all competitors play by the same rules and to buy American whenever possible.
I'm sure the workers of American and foreign companies alike would find it heartening and encouraging that all players in the world economy were playing by the same rules. Of course it's alluring to win in a competition where you're the underdog, swimming upstream against the tide and prevailing anyway, but there's no sensible reason to intentionally stack the deck against ourselves to begin with like we have with our current trade policies. Everyday working Americans will continue to pay the price until the playing field is level and patriotic consumers have the option to buy American in any industry they choose to.
____________________ Politicians and diapers should be changed often - for the same reason!
_________________
Death and life are in the power of the tongue, and those who love it will eat its fruit. Proverbs 18:21
McCain is going to have to do to government what has already happened to its citizens: reduce wages, downsize, off-shore, cut programs, cut jobs, stop borrowing, stop taking on additional obligations, eliminate defined-benefit pensions. This is it, this is the hard truth.
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
"Secretary Henry Paulson said the government is planning to expand its current line of credit to the two companies should they need to tap it and Treasury could buy equity captial in the companies - if needed. The moves will require congressional approval.
The Federal Reserve saids in a separate statement that it will lend to Fannie Mae and Freddie Mac if they need additional funds."
%80 of all home mortgages are guaranteed by these two Government Sponsored Entiites. Close to $6 trillion in obligations. Basically they are the counter party risk takers in OTC Credit Default Derivative contracts. Paulson and Bernanke are taking the Weimar solution. I said before the System is already dead - the poison dose was lethal and it is working its way throughout the financial systems. It is just a matter of watching the organs shut down one by one. The Wall Street people who peddled the poison got extremely rich and are very happy about their millions but besides the ordinary people some very powerful scary people got hurt too and they will get the names.
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
``They're ruining what has been one of the greatest economies in the world,'' Rogers said. Bernanke and Paulson ``are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this.''
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
I read an interveiw with the US Mint Director of Public Affairs where he was asked about the Mint running short of new Silver Eagles:
The United States Mint does not issue American Eagle Silver Bullion Coins directly to the public. The United States Mint distributes all Silver Bullion American Eagle Coins through a network of Authorized Purchasers (APs) who have agreed to maintain a two-way market for their customers. This arrangement assures liquidity in the silver bullion investment market. The United States Mint has employed this arrangement throughout the history of its modern bullion coin programs and the current unprecedented demand for silver American Eagles has not changed that.
The United States Mint has sufficient production capacity to meet the current demand, and is not restricting the issuance of Silver American Eagle Coins. Rather, the United States Mint has not been able to acquire a steady volume of silver bullion coin blanks to immediately fulfill all AP orders. Therefore, the United States Mint is allocating the coins available for issuance among the APs based on various factors, including each AP's past sales performance for silver bullion coins in the last three fiscal years and their ordering history.
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
July 14 (Bloomberg) -- At an investor presentation in May, Citigroup Inc. Chief Executive Officer Vikram Pandit said shrinking the bank's $2.2 trillion balance sheet, the biggest in the U.S., was a cornerstone of his turnaround plan.
Nowhere mentioned in the accompanying 66-page handout were the additional $1.1 trillion of assets that New York-based Citigroup keeps off its books: trusts to sell mortgage-backed securities, financing vehicles to issue short-term debt and collateralized debt obligations, or CDOs, to repackage bonds.
Now, as Citigroup prepares to announce second-quarter results July 18, those off-balance-sheet assets, used by U.S. banks to expand lending without tying up capital, are casting a shadow over earnings. Since last September, at least $100 billion of assets have flooded back onto Citigroup's balance sheet, accompanied by more than $7 billion of losses.
``If you start adding up all the potential exposures, it's a huge number,'' said Sam Golden, a former ombudsman for the U.S. Office of the Comptroller of the Currency who now heads the financial-industry practice for restructuring adviser Alvarez & Marsal in Houston. ``The banks will say that it was disclosed. Investors are saying, `Yeah, but it was cryptic. We really didn't know what you were telling us.'''
U.S. banks already are reeling from more than $165 billion of writedowns and credit losses, so shareholders are wary of unknown obligations that might force them to take responsibility for additional troubled assets. The risks have become so obvious that accounting officials are proposing new rules -- some of which Citigroup opposes -- that would force many assets back onto balance sheets.
On the Hook
Seven of the biggest U.S. banks, including Citigroup, are on the hook for at least $300 billion of credit and liquidity guarantees for off-balance-sheet loans and bonds, according to a June 30 report from consulting firm RiskMetrics Group Inc. in Rockville, Maryland. Such guarantees were remote when pledged as an inducement to bond buyers. Now, the first year-over-year decline in housing prices since the Great Depression and rising home-loan, commercial-mortgage and credit-card delinquencies have begun to trigger them.
``You will rapidly realize what a farce these off-balance- sheet things are,'' said Ladenburg Thalmann & Co. analyst Richard X. Bove. ``You could pick up a lot of loan losses with the stuff you're putting back on.''
It's impossible to predict what the losses might be from off-the-books assets or liabilities because disclosures a thin relative to what is required for balance-sheet assets, said Neri Bukspan, chief accountant for Standard & Poor's in New York.
``A lot of information tends to disappear or becomes second or third class,'' Bukspan said.........more..
____________________ "The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
All the high-falutin mark-to-model and wierd arrangments go into the off the books - "level 3" - category. A lot of the SIV, CDO, and packaged derivatives created and sold by Citigroup and the others have links to their "parents" in the form of contingent funding lines, partial guarantees, and reputational risk. Now that things did not work out according to their modern computerized models (but based on traditional economics and measures) they have to take these toxic messes back on their books.
All this stuff was created (and still is being created) while several anomalous economic situations emerged; for example Greenspan's famous Conundrum where he increased short term interest rates but the long bond responded by declining rates and even inverted the yield curve, the world stock markets were strangely corollated and monotonically increasing, developing countries began financing the industrialized nations, and all the traditional measures of risk declined steadily to historic lows. The finance business all ignored the anomalous signals and took on hugely leveraged and funding mismatched deals because of the consistently low risk readings. Curiously while the USA and the developed west are having major upheavals the developing countries are sailing merrily along - a complete reversal of the historic norm of crises at the periphery and the developed countries stepping in the stabilize them.
We are undergoing what economists call a secular transformation. Nobody really understands what is going on except that the traditional methods and analysis no longer work. Citigroup and the other major institutions such as the central banks and government are figuratively and literally and at a loss.
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
In the 1950's the USA was the world's Cool Cat. In the new millennium the pussy died and USA shows the world the Dead Cat Bounce.
The National Australia Bank’s decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a "meltdown".
We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates.
We've gone from being:
to this:
____________________ Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
