Greenspan: “This Is The Worst Period I Recall; There’s Nothing Like It”

Greenspan has nothing good to say about the economy or markets.-Lou

 

“This is the worst period, I recall since I’ve been in public service. There’s nothing like it, including the crisis — remember October 19th, 1987, when the Dow went down by a record amount 23 percent? That I thought was the bottom of all potential problems. This has a corrosive effect that will not go away.”-Alan Greenspan, speaking on CNBC about the Brexit vote

The Dreaded Death Cross Formation Just Hit Stocks

The next 6-7 months are going to to wild in so many ways.-Lou

From: ZeroHedge

The Dreaded Death Cross Formation Just Hit Stocks

Smart investors have noted that the S&P 500 just staged a very dangerous looking move.

That move was when S&P 500’s 50-week moving average broke below its 100-week moving average. You can see this in the green circle below.

This move is called a “Death Cross” and for good reason. The last time it happened was in 2008, right before the entire market CRASHED.

The time before that was right before the Tech Bubble burst, crashing stocks.

In short, going back over 16 years, this Death Cross formation has only hit TWICE before. Both times were when major bubbles burst and stocks Crashed.

Gold Plunges After “Someone” Suddenly Decides To Dump Over $2.3 Billion In 10 Minutes

Yea, the gold market is not rigged.-Lou

Gold Plunges After “Someone” Suddenly Decides To Dump Over $2.3 Billion Notional In 10 Minutes

A modest blip higher in the USD…

 

And commodities suddenly accelerated to the downside, led by precious metals.

 

While Copper and Crude are giving up gains, gold and silver and being monkey-hammered on heavy volume..

 

Over 18,000 contracts – or over $2.3 billion notional of gold has been dumped in the last 10 minutes…

Wealth Confiscation for the Digital Age: the New “Cash Tax”

As I have been warning you.-Lou

stealing

Wealth Confiscation for the Digital Age: the New “Cash Tax”

Directly from your bank account.

“Negative interest rates” have become a phenomenon with economists and the media. But I’m writing to tell you something about negative interest rates you haven’t heard. You certainly won’t hear about it in the mainstream press.

What’s coming at you is a historic event. It’s something our grandchildren will hear stories about, much like the Great Depression or the Cold War. It could send the price of gold much higher in the coming years.

If you know what’s coming, it could mean the difference between having lots of free cash in retirement and barely getting by. And please remember this warning: Social Security will help even less than you think.

To understand the gravity of this moment, let’s cover one of the most bizarre ideas in the world…

Negative Interest Rates.

In a normal world, your bank pays you interest on your savings. It takes your money, pools it with other people’s money, and loans it out. The bank makes money by paying out less in interest on your deposit than it earns in interest from borrowers. For example, it might pay out 3% to depositors while earning 6% from borrowers. This is how it has worked for decades.

Negative interest rates turn your “normal” bank account upside down. They could only exist in a crazy world where idiot politicians are in control. Unfortunately, that’s just what we’re dealing with right now.

Politicians all over the world are ordering banks to charge depositors (you) a fee for storing cash. It’s a perversion of saving. It’s a perversion of capitalism. It’s a perversion of planning for the future.

And it’s going to result in disaster.

Politicians think that by making it unattractive for you to keep money in the bank, you’ll save less money. Instead, you’ll spend more money on things like smartphones and cars. You’ll invest in things like stocks and real estate. This would “stimulate” the economy.

This thinking is very, very wrong. No matter what the government does, it can’t force you to spend money. It can’t force you to make investments if you don’t see good opportunities. Forcing people to pay banks to hold their money is a tax.

It is wealth confiscation for the digital age.

The government and the mainstream press won’t dare call it a tax. But that’s exactly what it is. A negative interest rate policy is a tax. Any time you hear a politician, central banker, or news anchor say “negative interest rates,” just think “TAX.” Think “TAX ON MY CASH.”

Negative interest rates are going to result in financial disaster that will wipe out many people. But you don’t have to be one of them. I’ll explain how you can sidestep this disaster—and even make a lot of money as a result of it—in a moment.

But let’s quickly cover one more thing about negative interest rates…

If the government makes it unattractive for you to keep cash in the bank, you can pull cash out of the bank. You can simply store it in a safe or under the mattress. Politicians know this. That’s why they’ve created another dangerous policy that works hand-in-glove with negative interest rates.

That policy is banning cash.

You see, if you pull your money out of the banking system and stuff it under the mattress, you aren’t doing what the government wants you to do. You’re not spending money or investing in stocks. This is a major reason why governments are banning large cash transactions and large denomination bills. They are fighting a War on Cash.

In just the past few years…

  • Spain banned cash transactions over 2,500 euros.
  • Italy banned cash transactions over 1,000 euros.
  • France banned cash transactions over 1,000 euros, down from the previous limit of 3,000 euros.

And just a little while ago, former U.S. Treasury Secretary Larry Summers called for a ban on the $100 bill! Historians aren’t surprised by Summers’ idea. Franklin Delano Roosevelt banned $500 and $1,000 bills in the 1930s. You can bet that our politicians will do the same thing in a financial emergency.

More…

The Sub-Zero Club: Getting Used to the Upside-Down World Economy

The financial world has gone mad.-Lou

Interest Rate Crash

The Sub-Zero Club: Getting Used to the Upside-Down World Economy

Bloomberg

Japanese families seem to have a sudden affinity for home safes. According to the Tokyo-based manufacturer Eiko, shipments have doubled since last fall. And in Germany, insurer Munich Re has stashed some 10 million euros ($11.4 million) worth of its own cash into vaults.

Why the squirreling? One possible reason is the creeping imposition of negative interest rates across the world, which could make it more rewarding to bypass banks—and a safe or vault is, well, more secure than a mattress.

Welcome to the upside-down world of modern monetary policy. In this new reality, borrowers get paid and savers penalized. Almost 500 million people in a quarter of the global economy now live in countries where interest rates measure less than zero. That would’ve been an almost unthinkable phenomenon before the 2008 financial crisis, and one major economies didn’t seriously consider until two years ago, when the European Central Bank first partook in the experiment. Now the ECB and the Bank of Japan are diving deeper into the sub-zero world as they seek more ways to spark inflation.

ECB President Mario Draghi currently charges 0.4 percent on the euros deposited by banks in his coffers overnight. BOJ Governor Haruhiko Kuroda, whose country knows more than most about the perils of soft inflation, knocked his benchmark down to an unprecedented -0.1 percent in January. Their counterparts in Sweden, Switzerland, and Denmark have already been running negative campaigns for a while now. The U.S. Federal Reserve has, so far, remained on the sidelines.

The overall aim, of course, is to spur banks to look elsewhere when lending their cash, preferably to spenders such as companies and consumers, who should also benefit from low borrowing costs in markets. There’s also the hope—especially in Scandinavia and Switzerland—that currencies will fall as investors seek higher returns elsewhere, lifting exports and import costs.

The policy isn’t without risks. Bank profits could be squeezed, money markets may freeze, and consumers could end up with bulging mattresses to avoid paying to keep money in a bank account. The whole effort could wind up leaving inflation even weaker—hence the tiptoe approach to cutting rates.

“I’m skeptical about the efficacy of negative interest rates,” says Barry Eichengreen, professor of economics at University of California at Berkeley. “They increase the cost of doing business for the banks, which find it hard to pass on those costs to borrowers, given the weakness of the economy and hence of loan demand. Weaker bank balance sheets are not ideal from the standpoint of jump-starting growth, to put an understated gloss on the point.”

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DEAR RNC: AN EVERYDAY AMERICAN WRITES A LETTER TO EXPLAIN THE TRUMP PHENOMENON TO THE WASHINGTON ELITE We’re sick of politicians. We’re sick of the Democratic Party and the Republican Party

I read this letter on my radio show. A listener asked me to post it on the blog. It says all you need to know about the rise of Trump.-Lou

trump

DEAR RNC: AN EVERYDAY AMERICAN WRITES A LETTER TO EXPLAIN THE TRUMP PHENOMENON TO THE WASHINGTON ELITE

We’re sick of politicians. We’re sick of the Democratic Party and the Republican Party

This letter was sent to 100% FED Up! by an anonymous author:

It doesn’t matter who you support for President in 2016. This letter will make you want to stand up and cheer for the 80 year old American who expresses what most of us are feeling right now. Enjoy…

Dear Representative,

From the time I was able to vote I voted Republican. I am 80 years old, and have a great deal of respect and influence with hundreds of senior ball players who also network with thousands of others around the country.

I received your questionnaire and request for money and strongly agree with every question, as I have since Obama was elected. Unfortunately the one question that was missing is “What have the Republicans done for the American people?” We gave you a majority in the House and Senate, yet you never listened to us. Now you want our money.

You should be more concerned about our votes, not our money. You are the establishment, which means all you want is to save your jobs and line your pockets… Well guess what? “It’s not going to happen” You shake in your boots when I tell you we’re giving our support to TRUMP and he hasn’t asked for a dime.

You might think we are fools because you feel Trump is on a self destruction course, but you need to look beyond Washington and listen to the masses. Nobody has achieved what he has, especially in the liberal state of New York.

You clearly don’t understand why the Trump movement is so strong, so I’d like to share with you an analogy to help explain the Trump phenomenon. By the way, it’s not just the Republicans who feel ignored and disrespected, there are plenty of Democrats and Independents who also feel let down by the Washington elite. You seem to have forgotten about “We The People” and who hired you to represent us.

So here it is, the best analogy I could come up with. Here is the reason so many Americans have boarded the Trump Train, and why you’re pleas to come back to the party who deserted us, is falling on deaf ears:

You’ve been on vacation for two weeks, you come home, and your basement is infested with raccoons. Hundreds of rabid, messy, mean raccoons have overtaken your basement. You want them gone immediately…You call the city and four different exterminators, but nobody could handle the job. There is this one guy however, who guarantees you he will get rid of them, so you hire him. You don’t care if the guy smells, you don’t care if the guy swears, you don’t care how many times he’s been married, you don’t care if he was friends with liberals, you don’t care if he has plumber’s crack…you simply want those raccoons gone! You want your problem fixed! He’s the guy. He’s the best. Period. Here’s why we want Trump: Yes he’s a bit of an ass, yes he’s an egomaniac, but we don’t care. The country is a mess because politicians have become too self-serving. The Republican Party is two-faced & gutless. Illegal aliens have been allowed to invade our nation. We want it all fixed! We don’t care that Trump is crude, we don’t care that he insults people, we don’t care that he had been friendly with Hillary, we don’t care that he has changed positions, we don’t care that he’s been married three times, we don’t care that he fights with Megan Kelly and Rosie O’Donnell, we don’t care that he doesn’t know the name of some Muslim terrorist.

This country is weak, bankrupt, our enemies are making fun of us, we are being invaded by illegal aliens and bringing tens of thousands of Muslim refugees to America, while leaving Christians behind to be persecuted. We are becoming a nation of victims where every Tom, Ricardo and Hasid is part of a special group with special rights, to the point where we don’t even recognize the country we were born and raised in; “AND WE JUST WANT IT FIXED” and Trump is the only guy who seems to understand what the people want.

We’re sick of politicians. We’re sick of the Democratic Party and the Republican Party. We just want this thing fixed. Trump may not be a saint, but he isn’t beholden to lobbyist money and he doesn’t have political correctness restraining him. All we know is that he has been very successful, he’s an excellent negotiator, he has built a lot of things, and he’s also not a politician. He’s definitely not a cowardly politician. When he says he’ll fix it, we believe him because he is too much of an egotist to be proven wrong or looked at and called a liar.

Oh yeah…I forgot…we don’t care if the guy has bad hair either.

We just want those raccoons gone.

Out of your house.

NOW

The Gold Market Is On Fire

If you are inclined to buy gold or silver you should do it now while you can still get in at a decent price.-Lou

The Last Time Gold ETF Flows Were This Strong, The Fed Was Starting QE

From: ZeroHedge

The cracks are starting to appear in the ‘paper’ gold market.

BlackRock’s rather shocking decisision to halt ETF creation due to gold demand (i.e. being unable to source enough physical gold to meet mandated requirements given the inflows) follows the largest gold ETF inflows since Feb 2009 (just as The Fed started QE1 and unleashed trillions of freshly digitized exuberance into the markets). 

As BloombergBriefs reports, investor flows into the two largest gold exchange-traded funds topped $5 billion for February. 

State Street’s SPDR Gold Shares ETF attracted $4.186 billion for the month and BlackRock’s iShares Gold Trust fund raked in $887 million. 

The last time flows were higher the S&P 500 had fallen more than 18 percent for the year and the U.S. Federal Reserve was just three months into its first quantitative easing program to stimulate demand and shore up the financial sector. That was February 2009.

In fact, transparent gold holdings across all instruments has been soaring since the start of 2016.

Source: ShareLynx.com

Given these extremes in demand, and clear signals of discontent with the monetary and fiscal authorities, Casey Research’s Justin Spitttler had some interesting perspectives on what could happen next…

If you’re buying gold right now…the government could be tracking you.

If you’re buying gold, you’re likely not doing it to make money. You’re buying it to make sure you don’t wake up poor one day.

Gold has been used as money for thousands of years because it is easily divisible, easily transportable, has intrinsic value, is durable, and has consistent form around the world. And, as Doug Casey reminds us, it’s a good form of money because governments can’t print it on a whim. You can’t “Bernanke your way” to wealth with gold.

When today’s dramatic central banking experiment blows up, gold will hold its value…unlike paper currencies such as the dollar.

That’s exactly why the government will try to take it from you.

The last time the government confiscated gold was during the Great Depression. In 1933, President Roosevelt outlawed owning most forms of gold. He claimed that people “hoarding” gold were making the Great Depression worse. The penalty for not turning your gold in to the government was a $10,000 fine and 10 years in jail.

Of course, Roosevelt gave his closest supporters notice before issuing the ban. They had time to move their gold to another country. Most folks weren’t that lucky.

This time around, the confiscation will be digital.

Most people own gold through a fund like Sprott Physical Gold Trust (PHYS) or Central Fund of Canada (CEF). The former will give you physical gold in exchange for your shares, once a month, if you own enough shares. The latter won’t give you the physical gold.

Because this gold is owned through a brokerage account, it will be easy for the government to confiscate.

What about physical gold? If you bought it from a dealer and paid with a wire transfer, the banking regulators have plenty of documentation. They’ll likely let you keep the gold. But it will be illegal to trade. If you don’t obey, you’ll be subject to a 99% tax on its value.

But there’s one way to buy gold so the government can’t track you. I’ve been doing it for years. You can do it, too. It’s buying at a locally owned jewelry store. These stores get a few common gold coins in every week. If you know what you’re looking for, it’s a great way to buy gold with cash.

However, the window of opportunity is closing quickly. In fact, I went to buy gold today…and saw this new sign.

It says, “CASH transactions are limited to $6,000 within a 48 hour period.”

$6,000 seems like an arbitrary number. And 48 hours seems even more contrived. This is a sign of the times. Governments are cracking down on cash. They want to know every detail of your financial life. They want to know what you buy and what you sell.

Paper cash is hard to track. So, little by little, governments are getting rid of it. Notice the $500 bill featuring President McKinley to the left of the sign. Years ago, $500 bought you a brand new car. Today, it barely buys a steak dinner for a family of five.

Cash is on its way out of existence. The government stopped issuing $500 bills in 1969. Last week, Harvard professor Larry Summers wrote an article titled “It’s time to kill the $100 bill.” The New York Times published an article arguing the same thing. Their reasoning is, big bills make it easier for criminals to commit crimes. If you’re not a criminal, you shouldn’t have a problem with the government knowing everything you buy and sell.

The $6,000 limit will soon be $1,000. The local jewelry shop is the last place you can buy gold without the government tracking you. Take advantage of it while you can.

Deutsche Bank: It’s time to buy gold

It certainly is time.-Lou

Deutsche Bank: It’s time to buy gold

Gold is still expensive, but rising economic risks and market turmoil mean investors should buy it for insurance, Deutsche Bank said Friday.

The recovery since the global and European financial crises had put theprice of gold under some pressure. The yellow metal, which some analysts view as a safe haven or as a protection against rising inflation, typically underperforms during periods when the economy is growing or inflation is low. However, in a note issued Friday, the German Bank said economic signs are pointing in gold’s favor.

“There are rising stresses in the global financial system; in particular the rising risk of a U.S. corporate default cycle and the risk of a sharp one-off renminbi devaluation due to the sharp increase in China’s capital outflows,” Deutsche Bank added.”Buying some gold as ‘insurance’ is warranted.”

However, even though gold has fallen from levels over $1,900 an ounce in 2011 to around $1,200 an ounce currently, Deutsche Bank said it still looks expensive, ranking as the most expensive commodity relative to its 15-year trading history.

“A bit like insurance, which is often a grudge purchase for many, some investors may balk at the current levels,” it said. “We would, however, argue that given the plethora of negative deposit rates globally, the holding cost of gold is now negligible in many jurisdictions, and therefore gold deserves to be trading at elevated levels versus many other assets.”

More…

The Subprime Auto Loan Meltdown Is Here

Will they ever learn?-Lou

 

The Subprime Auto Loan Meltdown Is Here

 

Michael Snyder

The Economic Collapse Blog

Uh oh – here we go again.  Do you remember the subprime mortgage meltdown during the last financial crisis?  Well, now a similar thing is happening with auto loans.  The auto industry has been doing better than many other areas of the economy in recent years, but this “mini-boom” was fueled in large part by customers with subprime credit.  According to Equifax, an astounding 23.5 percent of all new auto loans were made to subprime borrowers in 2015.  At this point, there is a total of somewhere around $200 billion in subprime auto loans floating around out there, and many of these loans have been “repackaged” and sold to investors.  I know – all of this sounds a little too close for comfort to what happened with subprime mortgages the last time around.  We never seem to learn from our mistakes, and a lot of investors are going to end up paying the price.

Everything would be fine if the number of subprime borrowers not making their payments was extremely low.  And that was true for a while, but now delinquency rates and default rates are rising to levels that we haven’t seen since the last recession.  The following comes from Time Magazine

People, especially those with shaky credit, are having a tougher time than usual making their car payments.

According to Bloomberg, almost 5% of subprime car loans that were bundled into securities and sold to investors are delinquent, and the default rate is even higher than that. (Depending on who’s counting, delinquency is up to three or four months behind in payments; default is what happens after that). At just over 12% in January, the default rate jumped one entire percentage point in just a month. Both delinquency and default rates are now the highest they’ve been since 2010, when the ripple effects of the recession still weighed heavily on many Americans’ finances.

The chart below was posted by David Stockman, and it shows how the delinquency rate for subprime borrowers has hit the highest level since 2009.  In fact, we are not too far away from totally smashing through the previous highs that were set during the last crisis…

Subprime Auto Loans

It is quite foolish to try to sell expensive cars to people with bad credit.  This is especially true now that the economy is slowing down significantly in many areas.  But people are greedy and they are going to do what they are going to do.

The most disturbing thing to me is that many of these loans are being “repackaged” and sold off to investors as “solid investments”.  The following description of what has been happening comes from Wolf Richter

The business of “repackaging” these loans, including subprime and deep-subprime loans, into asset backed securities has also been booming. These ABS are structured with different tranches, so that the highest tranches – the last ones to absorb any losses – can be stamped with high credit ratings and offloaded to bond mutual funds designed for retail investors.

Deep-subprime borrowers are high-risk. Typically they have credit scores below 550. To make it worth everyone’s while, they get stuffed into loans often with interest rates above 20%. To make payments even remotely possible at these rates, terms are often stretched to 84 months. Borrowers are typically upside down in their vehicle: the negative equity of their trade-in, along with title, taxes, and license fees, and a hefty dealer profit are rolled into the loan. When the lender repossesses the vehicle, losses add up in a hurry.

It almost makes you want to tear your hair out.

This is exactly the kind of thing that caused so much chaos with subprime mortgages.

When will we ever learn?

Meanwhile, we continue to get even more numbers that indicate that a substantial economic slowdown has already begun

More…

Monopoly Is Going Cashless. Could We Be Next?

It’s all about control. A cashless society is easy to surveil. It also prevents a run on the insolvent banks.-Lou

 

US Global Investors

Monopoly Is Going Cashless. Could We Be Next?

February 22, 2016

Monopoly is going cashless could we be next

 

 

Nearly everyone can recall playing Monopoly as a child, and for many, the game served as their first exposure to handling different denominations of cash. It was exhilarating to have someone land on your Park Place property, complete with hotel, and in turn receive a fistful of $50s and $100s.

A new generation of players might never get the chance to experience this, however, as Hasbro Gaming just released an “Ultimate Banking” version of the popular board game that nixes the funny money in favor of play credit cards and an electronic scanner.

You could argue it’s just a game, but Monopoly has always had a reputation for being a reflection of capitalism as it operates in the “real” world (which is why it was banned in communist states such as the Soviet Union). The cashless version of the game is no exception, as it comes at a time when calls to limit—or in some cases eliminate—the use of cash are intensifying. And to be clear, “cash” here means cash in your pocket, not cash in the bank.

Just last week, former treasury secretary Larry Summers published an op-end in the Washington Post arguing it’s time to “kill the $100 bill,” the reason being that it’s preferred by those involved in money-laundering, corruption and other illegal activity. (One million dollars denominated in $100 bills weighs 2.2 pounds, he points out, whereas the same amount in $20 bills weighs a much more cumbersome 50 pounds.) The European Union, he argues, should also consider getting rid of the 500-euro note, a position that’s echoed by European anti-fraud officials.

Bye-Bye Benjamin?

Having had the opportunity to hear Secretary Summers speak when I visited Harvard recently, I respect his opinion and believe his intentions are good. But ultimately the argument to eliminate the $100 bill is based on the presupposition that anyone using such a note is a drug trafficker or money launderer. This seems to go against one of the main tents of common law, namely, that we’re innocent until proven guilty.

The risks far outweigh the benefits when you consider where this anti-cash sentiment is leading us—a cashless society. As I discussed back in December regarding Sweden’s own trend toward a cashless economy, every transaction could be monitored, not to mention taxed and charged a fee. Accounts could be frozen, which, in a cashless world, would leave you with nothing.

I’ve experienced the inconvenience that sometimes comes with electronic transactions, as I’m sure many of you have. Occasionally my credit card couldn’t be read for one reason or another, and if you’re not carrying cash, what do you do? When I’m traveling, domestically or abroad, I always carry cash with me, and $100 bills are much more convenient than a pound of $20s.

Capital controls are nothing new, but they would be much easier to impose. In Colombia, a tax is levied on every transaction, whether it is a direct deposit from your employer, transfer of funds between accounts or a purchase. Since 2003, Venezuela’s government has significantly regulated the amount of money citizens can take with them on trips abroad, in effect blocking access to foreign travel. Currently the limit is $2,000, but for travelers headed to the U.S., it drops to $700. This, along with a labyrinthine exchange rate (there are three), has only created a black market currency exchange. And since credit cards in Venezuela are issued by state-run banks, there’s no stopping the government from restricting payment on any goods or services, or from any vendor, it wishes.

Colombia and Venezuela are extreme cases, and there’s no reason to expect the same would ever happen in the U.S. At the same time, scrapping the $100 bill would further debase Americans’ economic liberty.

More…