Ukraine – Just More Political Bullshit
Ukrainian Prime Minister Mykola Azarov resigned on Tuesday. This much is true. Part of the compromise was to appoint a “member” from the opposition as Prime Minister. That is really a powerless position for the real power lies with the President Viktor Yanukovich. The former boxer-turned-politician Vitaly Klitschko and others have shied away from taking the position for it will be purely symbolic.
The protesters drove to Yanukovich’s residence and the very next day is when all these crazy laws were passed. This included a 2 year imprisonment if more than 5 cars traveled together. Yanukovich will simply not leave office. That is the bottom line. The symbolic steps to try to pretend he is yielding to the protesters are transparent. What he is hoping is that the movement will evaporate like the Occupy Wall Street movement.
The general undertone is that he and his gang are in power and they really take orders now from Russia. It was not as simple as buying gas from Europe who in turns buys its gas from Russia. There was a penalty applicable to Ukraine and they had to pay for the gas if they did not take it.
There is little chance of Ukraine actually emerging as any free type of society. The protesters have displayed signs that read bluntly – they will not follow laws enacted by criminals. There have been interruptions to the internet in Ukraine, but the government has realized that should they cut it off entirely as Obama has the power to do, that may cause the protest to explode with others joining in who are content to just watch what is going on. Others had signs in their cars – do not follow me; I am the fifth car. The distinction here is that the youth are unemployed. People will not protest if they are fat and happy. That is why Occupy Wall Street fell apart. You need real economic pain before anything will really happen. So when dealing with people who are unemployed, the game changes because they have no ability to get fat and happy.China Trade Misleading
QUESTION: Mr Armstrong; Can you explain why the Chinese share market has declined since 2007 yet China’s economic trade flows are only now starting to decline? This is extremely confusing when the mainstream press has touted China as supporting the world economy. I suspect you are the only one that can answer this question. Thank you so much.
JF
ANSWER: Well I am not sure I am the only one that can answer that question. I do agree it is very unlikely that you will get an answer from the mainstream press. It takes a bit of digging into the numbers.
China has raised interest rates in an attempt to cool its economy – primarily real estate. You can actually earn 6% on deposits there. The problem China is experiencing is how to also manage a domestic boom in the face of a global contraction. The answer to this dilemma illustrates the old saying applies – no one is an island.
Chinese importers can borrow dollars in Hong Kong at 1% and import those funds because of their status and earn 6% locally on deposits. It has become the dollar carry trade and has contributed to the broader dollar strength as was the case with the Japanese yen. The average Chinese individual cannot import cash like this due to currency controls. Therefore, the amount of money flowing into China APPEARS to be trade flows, but in fact it is really CAPITAL INFLOWS. This has also kept a bid for China’s currency.
The global accounting system is based upon money flows – not actual goods. This has been a huge problem I have been warning about for decades now. We simply need not just political reform, we need a complete overhaul of economic statistics worldwide. It does matter greatly how we account for trade. Calculating just money flows and ASSUMINGmore money equals more sales is bogus. Currency changes alter trade figures. Even employment is all screwed up. They count total government spending in GDP and total personal income. This amounts to DOUBLEcounting of government employees. This is very serious for it illustrates that France in heading into a Greek-Style Great Depression. Private sector job growth is actually hugely negative and the only up-tick in employment is purely government. There is no way out. France is imploding in the precise same manner a Greece.
Economic statistics are HUGELY inaccurate and we desperately need major reform. Politicians keep playing with the numbers to support their careers but have screwed up the world. They simply cannot ever be trusted. This is the very same reason Julius Caesar revised the calendar. The high priest inserted days to make leap-years at his discretion. Politicians routinely bribed the priest to add days to postpone elections in the Roman Republic. When Caesar crossed the Rubicon, what would have been winter was by then summer. This is the very same problem today. Let them haveANY power over ANYTHING, and it will quickly be corrupted to serve their political purposes. Money Laundering, that began to get drug dealers and Mafia, is now applicable to anyone even hiding gold in a safe-deposit box or carrying cash in your pocket. It is illegal to mail cash. They no longer need to prove anything – it is always now your burden to prove your money is even clean to withdraw from big banks.
Welcome to the world of total chaos. Just when you though there was a trade surplus – oops, it’s just never what you think it was supposed to be. China is not stupid. They too understand what is taking place. They have to choose between keep high interest rates and attracting capital inflows as the US did between 1981 and 1985, or backing off and allow its domestic markets to rise.
Global Market Watch Jan 27th, 2014
Iceland Let its Banks Fail & Has Proved to be the Best Decision Ever
While in the USA and Europe, this idea that banks have to be saved at all expense is quite absurd. Iceland let its banks fail and the collapse ended the process and a rebirth began. The same is true during the Great Depression. The collapse in the US share market was just 34 months and it was over. The more government gets involved, the worst it all becomes. Just look at Japan and you will see the price of government intervention. Europe is facing the same mistake and the EU Parliament is destroying the economy of Europe and there is no hope of preventing a massive depression just as we say in Japan. In the end, nobody will trust government again and the damage is profound for it typically lasts for a generation. Others are starting to notice this trend as well, albeit perhaps not articulated so bluntly.
Is it your Money? Are you sure?
HSBC is denying people the right to withdraw their own money and are demand you prove why you even want it. The arrogance of these people knows no bounds. They are all getting full of themselves when it comes to this nonsense of Money Laundering demanding you have to PROVE it is your money, WHERE it came from, and did you PAY TAXES before you can even take it. The real conspiracy is simply government against the people as it has always been since the dawn of recorded history.
This is why people are buying real estate and equities. They are getting off the grid and away from the big banks that seem to be losing their mind. This is one time you may be better off with a real local bank and away from any of the big money center banks that trade with other people’s money. They will lose their shirt and your pants after 2015.75.
Bank Manipulations Coming to an End?
I have stated for years that the banks are NOTgreat traders – they are manipulators. You can tell the bias and untrustworthiness of mainstream press for just about every organization criticized Greg Smith’s book – Why I Left Goldman Sachs. Any journalist who dared to support Goldman and diminish what Smith wrote about is not worth reading and may be even a paid propagandist. What Smith wrote about was by ABSOLUTELYNO means limited to Goldman Sachs. As a major hedge fund manager, you simply cannot for one second let your guard down and think that ANY bank dealing desk is there to provide a service. They are all proprietary traders and they ALL trade against clients to make money. Those who create these grand conspiracies of all-powerful groups that seek to control the world are most likely disinformation that has provided these proprietary schemes with cover. The best way to hide such activity is exaggerate it so at the end of the day it sounds absurd and then anyone who writes a book about the truth gets thrown into the same vat and ignored.
I get all sorts of absurd emails on conspiracies insisting they have to exist and it is some grand plot to rule the world. That may be fit for a James Bond movie, but in reality, such schemes have been to manipulate markets for brief periods to make a quick buck. These schemes will goose the metals up and whenever I have said this is a manipulation, the hate mail starts forALL UP-MOVES are always REAL and declines are onlyMANIPULATIONS. This seems to be deliberate misinformation. The banks are not stupid. Every manipulation I have EVER watched them do the precious metals has been ALWAYS, and without exception, to the upside. That gets everyone buying where you cannot get that type of widespread action on the downside.
The LIBOR scandal unleashed a firestorm right on time with our model. Our Model of when the Bank Manipulations would begin to turn against them was February 2013. The issue that demonstrated that what Smith wrote about, and was ignored by most of the US media, was proven correct in that London scandal. In June 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the interest rate submissions that lead to the scandal of manipulation. The banks are supposed to submit the ACTUAL interest rates they are paying, or would expect to pay, for borrowing from other banks. Therefore, LIBOR is supposed to be the total assessment of the health of the financial system on a wholesale level. Since the banks being polled set rates based upon the level of their confidence about the state of the economy, they would report a lower number as confidence increased. If the member banks felt that caution was warranted, then they would report a higher interest rate number.
LIBOR could therefore be manipulated to increase their profits by altering the spreads. LIBOR was used in US derivatives markets and therefore any attempt to manipulate LIBOR amounted to an attempt to manipulate US derivatives markets. This would include the forward rates in futures that some called BACKWARDATION and touted this manipulation as reason to buy gold when the banks played with this spread as well.
Additionally, mortgages, student loans, financial derivatives, and other financial products often rely on LIBOR as a reference rate, the manipulation of submissions used to calculate those rates can have significant negative effects on consumers and financial markets worldwide. Since this rate is set in London, it was for centuries a Gentlemen’s Market. Once the banks got involved in proprietary trading after 1981 as their main profit center, ethics went out the window.
It was on July 27th, 2012, when the London Financial Times published an article by a former trader which stating that LIBOR manipulation had been common since at least 1991. Further reports on this have since come from the BBC and Reuters. This coincides with what I wrote about in Behind the Curtain that once PhiBro bought Solomon Brothers and inspired Goldman Sachs to buy J.Aaron, the manipulating culture of the commodity world took over financial world and Wall Street. By November 28th, 2012, the Finance Committee of the Bundestag held a hearing to learn more about the issue.
Proprietary Trading among the money center banks has been devastating to the global economy. It would have been nice if there was some conspiracy to rule the world for at least then the world might have been stable. But these people are in it for the quick buck and as a result, there is no long-term plan and that is why everything is going nuts. They have been totally irresponsible and only look at how much can be made on a deal to deal basis. They fail to grasp the consequences of their actions. Those who believe their wild all-powerful conspiracy theories are providing shelter for the real manipulation. They are not interested in long-term goal – this is all about show me the money NOW!
The whole MF Global collapse was serious. They take clients funds from the states and post them to their London office. In London, they cannot sell money in REPO without the client signature. So the US office takes the client accounts and posts them in London pretending they are their funds and that meets and the US branch signs meeting the London regulation. The US simply allowed the banks and brokers to take client funds looking the other way. This is why the Mortgage scandal centered around AIG, but that was their London office – not USA. We have to understand that the US media will NEVER print the truth. This is why Snowden turned to the Guardian in London. What US major newspaper would have EVER broke that story?
These people are hell-bent on profits SHORT-TERM. There is no long-term plan for had there been, they would have prevented their own demise. The game is over. Expect volatility to rise sharply after 2015.75. The day of the Money Center Proprietary Trading Banks is on the path to becoming extinct. Now investigations have moved into foreign exchange and Europe is considering outlawing short-selling. Keep in mind, the NY banks still control the US press. They will NEVER expose the truth until it is obvious. They are part of the ESTABLISHMENT and know their place in the game.