Wednesday, April 15, 2009

Martin Armstrong on Goldman Sachs

Martin Armstrong takes a break from his usual cyclical talk to give us his description of what he has seen "behind the curtain". With nothing left to lose, sitting in prison, Martin is one who claims to have glimpsed behind the curtain, and who is able to talk about it.

You will likely find some of the things Martin says to be shocking. But I have noticed a consistency in his recollections that flows through his various articles. He often mentions different parts of the same stories from his past in his many articles. This makes me think that at least he is not making these things up. They are true recollections.

I believe that to Martin, this may be his most important article written while in prison. It is his "tell all". The following is a text version of his typewritten and scanned pdf which is available here.

Sincerely,
FOFOA
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Looking Behind The Curtain

The “Real” Conspiracy

April 9, 2009
by Martin A. Armstrong
former Chairman of Princeton Economics Int'l, Ltd.
and the Chairman of the Foundation for the Study of Cycles


Many people have written asking about Goldman Sachs and its conspiracy to control the Financial Markets. I have even been asked whether I believe that the attempt to assassinate me of May 10th, 2007, was connected to Goldman Sachs? Let me explain this subject very carefully. I realize that there is a storm cloud brewing with conspiracy stories with Goldman Sachs at the center. These theories are not perhaps absolutely correct, but they are not far off either.

The February edition of Portfolio Magazine ran an outline of the Goldman Sachs' "conspiracy" written by Matthew Malone. It reported eight (8) essential core elements to why people are beginning to suspect something is going on. Where I differ, what I was investigating was a group of houses and individuals who were banding together to manipulate markets. Goldman Sachs perhaps is the leader no doubt for they control what others cannot - politics! But the core element that is at issue is that we do not live in a world that we think we do. I have been behind the curtain. I was invited to join this "club" expecting me to bring billions of dollars from Japan. I was asked to bring $10 billion back in ·1998. That meeting was with Dov Schlein President of Republic National Bank. To put this in perspective, Republic National Bank was sold to Hong Kong shanghai Bank Corp ("HSBC") for about $10 billion. So these were the days when a billion really was a lot of money — the old days when the prime residential street in London by the Park was still known as millionaire's row, compared to today it is Billionaire's Row. So in modern terms, I was asked to bring over nearly a $100 billion in today's money that the bankers could have fun. with offering only a AAA guarantee from a consortium. I declined. I explained that I would have to personally guarantee such a project by my word, and I would not do that. They wanted to grab the commodities of Russia, and they as a group, did not believe in analysis — They believed in absolute control.

I must praise Portfolio Magazine and Matthew Malone for having the courage to even run this story. You will never see this even hinted at in the major Newspapers. You have no idea that behind the curtain, there is also no free press, for the US Attorney will call and ask for favors. It is like trying to negotiate with a criminal pointing a shotgun in your face. He who has the power, makes the rules. The Executive will not tolerate a free press that would ever expose them. Look at the case of the New York Times journalist Judith Miller thrown into contempt and held in prison until she was willing to testify and turnover the whistle blowers against the Government. D0 you really think there can be any remaining free press after that? who will now reveal the truth to the media? If they do, the journalist can be tortured until they testify against you. what that case did, was turn out the light on American liberty forever. we will never know the truth, because anyone who prints it, can now be imprisoned.

The courage to even print this story by Portfolio Magazine is remarkable. I can only hope that the spirit of independence will not die. We need desperately to restore the free press. In the instant matter, you are not likely to see this story in a major newspaper for two reasons (1) it exposes the truth about the game is rigged, and (2) Goldman Sachs is a powerful force that not merely controls the government in so many ways, but they can dictate the fate of a newspaper by the revenue and by implication with the criminal prosecutorial powers.

In the financial industry, just to get an interview at Goldman Sachs was like appearing before God himself. The image spun around the firm was one that somehow Goldman Sachs was just always better than everyone else, and was someone so smart, they were always able to one-up everyone else. Goldman Sachs got the biggest deals, was able to groom its employees for top level government jobs securing political control both in the United States as well as Europe. They paid the highest bonus deals that amazingly are never criticized even in this atmosphere. It is a popular view that Goldman Sachs is like a cunning cat that always lands on its feet, simply because it has developed an unfair advantage with regulators and politicians alike. As Portfolio Magazine reported, when their alumni were asked about the "some didn't appreciate the joke. Goldman said that such claims are ludicrous." Nobody would expect Goldman Sachs to admit what they have been doing. What we must understand, is why!

Goldman Sachs is not interested in controlling the world, just the world economy pulling the strings behind the scenes. We should not expect the SBC nor the US Attorney to admit they look the other—way. All we can do is examine the evidence, for those involved would never admit anything. The whole Sherman Anti—Trust Act was based on precisely this sort of activity. Never has anyone really found a corporation guilty in the essence of what the Anti.-Trust Act was suppose to prevent. The theory that corporations could band together to manipulate markets or industries, would be a bust unless they included members of government. The only way to succeed is by controlling the political powers. Unfortunately, we do not live in a real democracy, for we do not elect the treasurer, head of the Federal Reserve, SEC, or Attorney General. These are positions that are the spoils of politics that can be bought like a hooker.

The alleged Goldman Sachs Conspiracy

The alleged Goldman Sachs Conspiracy as reported by Portfolio Magazine last February, centered around eight (8) primary points.

(1) Hank Paulson let Bear Stems collapse, and be absorbed by J.P. Morgan at a mere $10 per share.

a) Rumors were that traders at Goldman Sachs were shorting the stock of Bear Stems to force its collapse.

b) Conspiracy was that Goldman Sachs and other firms retained a "grudge" against Bear Sterns since 1998 when Bear refused to join in the $3.6 billion bailout of Long Term Capital Management.

Truth:
Bear Stems was not part of the Investment Bank "club" and thus fought in competition against the organized market manipulations. This will be explained in greater detail below, but the stock of Bear Sterns was aggressively being attacked in an effort that appears to force its collapse.

(2) CEO of Merrill Lynch John Thain was once co-President at Goldman Sachs. Thain in the middle of chaos, sold Merrill Lynch to Bank of America for an actual premium when days later Lehman was bought for pennies by Barclays of Britain.

a) the conspiracy theory was that to protect a former Goldman co-president, the forces behind the curtain moved Geithner and Paulson to urge Bank of America to buy Merrill

Truth:
It is unlikely that this conspiracy to sell-off Merrill was designed to protect the reputation of Goldman Sachs or of John Thain. There was exposure interrelated and Merrill Lynch was the biggest retail client base.

(3) AIG Bailout of $85 billion, was later raised to $123 billion. It was Hank Paulson who installed who, Ed Liddy as AIG's new CEO who just happened to be another Vice Chairman of Goldman Sachs.

a) the Conspiracy theory claims that rescuing AIG was necessary to protect Goldman Sachs who had $20 billion exposure itself to AIG.

Truth:
AIG bailout was quite simple, they were one of the founding members of the manipulation club. Gretchen Morgenson of the New York Times reported that it was J .P. Morgan who took the whole idea to AIG about creating the CDS product. AIG participated in numerous market manipulations from London, for that operation was set up outside of the United States to ensure privacy from regulators.

(4) The Paulson $700 Billion Bailout package ended up extorting from Congress a vast amount of money far beyond what the banks needed, as a last ditch effort to grab while Paulson was there. Only $250 billion was drawn down of which $10 billion was given to Goldman Sachs, but Paulson refused to give only $6 billion to LehmanBr0thers, because Goldman wanted their clients.

a) Dick Fuld, CED of Lehman Brothers, was asked by Congress why AIG was bailed out but not Lehman? He responded: "Until the day they put me in the ground, I will wonder."

Truth:
Lehman had always been a fierce competitor to Goldman Sachs. The chance to put them out of business was far too tempting. Goldman Sachs through Hank Paulson, achieved its goal and took one step closer to eliminating the very competition they disliked so much. The dream at Goldman Sachs was always to be the dominant force no matter how that had to be achieved from the rumors that poured out of that firm.

(5) Goldman Sachs and Morgan Stanley are allowed to become bank holding companies allowing them to take deposits that are now FDIC insured.

a) Lehman was the first to approach the Federal Reserve with this idea, but was resoundingly rejected.

Truth:
It is amazing that the Federal Reserve would reject Lehman yet support Goldman Sachs and Morgan Stanley who dreamed up these nightmares and sold them to AIG to use their AAA rating and name as a major insurance company. Why did Goldman and Morgan need to become FDIC insured? They were huge in getting their money from money—market funds. That was cheap, but uninsured and the average maturity was at best 30 days. Both Goldman and Morgan needed long—term capital to play with. what they needed were bank deposits from the average person to keep the game going. The business model was changing, and they saw the light, and stole the idea from Lehman.

(6) Outlawing Short-Selling: On September 19th, 2008, the SEC Commissioner Christopher Cox announced a one month ban on short—selling financial companies. It is true that both Bear Stearn and Lehman Brothers long complained to regulators that "traders" were shorting their stocks trying to create a panic. The SBC protected Goldman Sachs and the key manipulation "club" yet when the share prices of Goldman Sachs fell by 20% in just three days, the SEC acted to protect the golden child.

Truth:
There is no explanation as to why the SEC would never act when the source of short—selling was from Goldman Sachs or friends. The SBC does not in any way protect the markets. They prosecute a lot of small-time offenders to create the image that they have teeth, but they are as corrupt as any third world Banana Republic. They do not audit any of the big houses, and yield to their desires. Even Hank Paulson when he was head of Goldman Sachs argued for greater leverage to stay competitive with overseas. Who was using the leverage overseas? Could it have been Goldman Sachs, Morgan Stanley and of course AIG?

(7) Bailing Out Citigroup: Yes it was true that even after a $20 billion injection for Citigroup, their stock fell by 60% in a single week. This led to another $25 billion package and then the government agreed to add more if their losses exceeded $29 billion.

a) Who was the Citigroup advisor? Robert Rubin, former US Treasury Sec. and another Goldman chairman who was paid $62 million in fees between 2004 and 2007.

Truth:
Citigroup was too big to fail, but they had Robert Rubin as their white knight. The conspiracy theories that claim this was to help Rubin, are a bit far-fetched.

(8) Obama was the golden Manchurian Candidate of Goldman Sachs, is perhaps a bit over the top. It is true that the employees at Goldman Sachs were among the largest donors to Obama as reported by Portfolio $884,000.

a) the Rumor was that Goldman Sachs manipulates Obama and is on its way to become its own superpower.

Truth:
Goldman Sachs did not only back Obama. You will see they supported McCain as well. They know how to play politics very well. Goldman Sachs works very hard at controlling government. They groom their own for positions within the executive branch. Yet don't forget New Jersey Governor Jon Corzine. Also do not for a moment think this is limited to the United States. We also see the World Bank run by Robert Zoellick, who was a managing director of Goldman Sachs. We find Mario Draghai, who is leading the European Union response to the crisis is yet an0ther..Vice President of Goldman Sachs previously. Hank Paulson, appointed a 35-year old Goldman Sachs vice president Neel Kashkari to head the $700 billion Troubled Assets Relief Program ('1'ARP). The Goldman Sachs power base is even on both sides of the Atlantic, and we find that the Merrill Lynch CBO John Thain was also a former co-president of Goldman Sachs and the head of Wachovia Robert Steel was a former Goldman Vice Chairman. This amazing group of political connections runs deep into the workings at the International Monetary Fund as well. The real question is; How Can a Treasury Secretary still have stock in Goldman Sachs?

25 Years in the Making

For at least the last 25 years, there has been a group of "professional" so called traders that have not really been interested in trading, but in manipulation. Perhaps it began with the Agricultural markets. Like the movie Trading Places with Eddie Murphy that centered on commodity brokers who were looking to get access to an agricultural report from Government that would move markets, there was some of that going on. But there were others who actually manipulated the inventories by moving product from one warehouse to another. Not all warehouses were within the official exchange inventory. Therefore, moving product in and out of the warehouse could manipulate markets on a short—term basis since the average traders tended to rely upon fundamental news. The advent of technical analysis was the early 1970s. It was a lost art after the 1929 collapse.

The manipulations of this sort dominated the 1970s and 1980s. There were even expansions into the tax arena. Commodity traders invented tax straddles whereby one could buy say gold in December and sell gold in March the next year simultaneously when gold was clearly declining. This would enable the loss in the December contract to afford a tax deduction while the profit offsetting the loss was then moved forward into the March contract for the next year. Thus, a fictitious loss could be taken in one year, pushing off the profit into the next year, avoiding taxation. The IRS then figured out what was going on and put a stop to that trick.

The 1980s, however, brought home a new invention — desk top computers. While I had gone to a computer engineering school back in the 1960s when they still filled a room. Integrated Circuits were born in the 1960s and it became clear that these huge computers that had already shrunk down from a football field running on vacuum tubes with the invention of transistors, the chips allowed us to see that a desk top would be possible. The problem strangely was not building the computer. The question was; what would someone do with it? The vision of just build the baseball field in the middle of the cornfield and they will come, was not exactly business policy. There was no one who could foresee Microsoft. The answer was, build it, and someone else would figure out how to use it.

IBM a decade later, created the desk top computer. During the late 1970s, there were companies creating word processors using 8" floppy disks like 3M Corp. But it was IBM that saw the future and gave it a shot. The first desk top computers that were the top—of-the-line were about $6,000 in the early 1980s. Nevertheless, this allowed much more sophistication that was soaked up by the Investment Banks.

The problem with the modeling employed by the Investment Banks, was the limited scope of data. They turned more to professional math genius types who lacked the experience in trading. This blending was a disaster and contributed greatly to the (hash of 1987. Models used by the industry were short-term. Even today, most system offering screens and charting for stocks and commodities, only now provide any long—term charts back as far as 1980. If your database is this short, then no model will ever be able to comprehend, no less forecast, an event like a Great Depression.

The modeling on derivatives was far too short-sighted to see the long-term trends. The mind-set of the Investment Bankers was still captivated by the 1970s and the efforts to rig the game. Like Leona Helmsley was quoted saying that taxes were for little people, the Investment Bankers view "speculation" was also for little players. The sure bet was the key to consistent success.

During the late 1970s, the silver market was claimed to be "cornered" by the Hunt Brothers. That was far from true, for what they failed to understand, was that the attitude of the major brokerage houses was not that you were a pure trader-customer, but someone to pick—off for profit. During the 1980s, I had to take on some hedging projects that were awesome. One was in platinum. When you are the largest trader in a narrow market, they watch everything you do. If I was to sell, they assume the whole lot is being sold and jump in front. You suddenly find yourself trapped. I was a witness to the Hunt collapse. They couldn't get out of the market at any price. The dealers were selling in front of them taking short positions looking to buy back when the Hunts were in a state of panic dumping at any price.

I learned early on that to professionally hedge, one had to navigate the brokers. The only way to deal with them, was to play one-off-against-another, use related markets to confuse and hide your strategy, or else fall prey to the Investment Bankers. In other words, if you had a large position of gold that you wanted to sell, you go to a broker asking for a market in silver. He gives you a quote, and you then buy taking what will become an intentional loss. You go back to the same broker and now ask for a quote on the real market you are trying to sell - gold. He will anticipate you intend to buy because of the silver, shifting the quotes to pick up extra profit assuming you are a buyer. when you sell the gold, you just got a higher bid, you are out of the position, and he is scrambling to cover with other brokers. If you hit all the brokers the same way at precisely the same time, they are all now short, and are trapped trying to get out selling back gold that they just bought from you.

These games are at times necessary in the cash markets because the brokers themselves are not satisfied with just making a real market. They need to create an edge. So when you are the 800 pound gorilla, you need defensive measures. It helps to understand the method to the madness of the game.

The market manipulations that really began back in the 70's with force, became intermixed among the Investment Bankers with technology. we began to see grouping of houses by the later 1980s and early 1990s. Perhaps at first, they were looking for another Hunt. They needed to sell some billionaire on the virtues of cornering and manipulating a market.

The first real coordinated scheme began back in 1993 that I could verify. The target market was silver, and the central player, broker-dealer, was Phillips Brothers who were a big commodity outfit in Connecticut, picked up by Salomon Brothers who was later absorbed as well. This ms known as PhiBro of the same fame relating to Marc Rich.

PhiBro had a huge client who they were acting for to buy up the silver market in 1993. This was an aggressive professional strategy. The Commodity Futures Trading Commission could easily see where the buying was centered in real force. They went to PhiBro demanding to know who their client was. PhiBro refused to give up the name. The CFTC ordered PhiBro to just get out of the market. They did. They just dumped everything at the market wiping out small investors in the blink of an eye.

The CFTC just walked away. Had this been a small broker or money manager, he would have been criminally prosecuted. But the CFTC is notorious for never even once bringing a complaint against a major house. The sources I relied upon, gave me the name of the client —Warren Buffett. Based upon this information and belief, when his name came up again in 1997, it ms not a shock.

Nevertheless, this incident set in motion the origins of our current debacle. It is why AIG set up its financial division in London, out of the way of US regulators and the freedom to manipulate whatever markets they desired. Moving to London, was caused by this CFTC failure to regulate.

Manipulations began to spread like wildfire. Rhodium, platinum, silver, British pound, Japanese yen, and even the Russian bond market just to mention a few. They began to move in packs, one to cover up a manipulation by making it appear to be a broad market move, and second, to buy strength in numbers. Yes, they even tackled oil and while oil should have gone up to about $100 for 2007, they had their analysts tout like those at Goldman Sachs that oil was headed to $300. The trick is always over-shoot the target to create sucking-in power.

It was during the 1990s that the group began to be called behind closed doors, the "Billionaire's Club." For short, the word "club" was entirely sufficient. They relied upon the well known fact even among those that covered the prosecutions of the CFTC and the Securities and Exchange Commission ("SEC"), and admitted to me personally, that neither the SEC nor the CFTC would bring charges against the big New York houses. Just as you saw there were whistle blowers on Madoff that the SEC would never investigate, had those whistle blowers been a “club" member, the SEC and CFTC would then prosecute whoever the "club" handed them.

Michael Milken at Drexel Burnham is a classic example. Drexel was a Philadelphia firm originally, not New York. Milken created the junk bond market and was truly a brilliant visionary. But Drexel created a market those in New York wanted desperately. The way to get that market, was to instigate the powers of government to take down a competitor.

Drexel was not part of the "club" of "white shoe" members. Drexel embarked on creating a new market based upon debt popularly called "junk bonds" that were thus focused upon profit, rather than the equitable model employed by even the "club" and the Federal Reserve. There were companies with great potential, but could not qualify using collateral other than intellectual property so—to—speak. Alcoa Aluminum was perhaps a classic example of the problem. The inventor of aluminum went to all the banks, showing his discovery, but not a single bank would lend money. The last bank he went to was that of Andrew Mellon (1855-1937). Mellon personally called the inventor into his office. He told him his bank could not lend him any money. He then informed him, he would do so personally. The Fed model prevents innovation, the very source of economic growth.

What Milken did at Drexel was perhaps the most innovative advancement in the history of banking so to speak. He created a market for innovation that did not exist, and the "club" felt they were left behind. They conspired as always with those in power at the Department of Justice to bring down competitors These government lawyers are the people who dictate the fate of nations through their own personal greed and self-interest of furthering their career. They are responsible for so much economic damage that far more innovation has left the nation than many suspect. They were the sole reason for breaking up AT&T, and tried very hard to destroy Microsoft. They did destroy Drexel Burnham, and that was certainly not in the public interest.

The S&L Crisis was used as the excuse to destroy Drexel. To set the record straight, James Baker came up with the idea of creating a G-5, back in 1985. The whole idea was to manipulate the dollar down by 40% so they could increase US exports. I personally wrote to the white House warning that this was crazy, would lead to excessive volatility, that would end in a crash. Beryl Sprinkle, Chief Economic Advisor to Ronald Reagan, wrote back. He explained that Princeton Economics was the only firm with volatility models and until others concurred, they could not rely only upon one model. when the 1987 Crash hit, we were urged to immediately provide our analysis since now everyone agreed, "volatility is the number one problem." The 1987 Crash took place because of the G-5, and the failure to understand the offset of the Capital Account against the Current Account. The more foreign investment that poured into the United States, goes through the Capital Account, but the profits in the form of interest and dividends go through the current Account confusing many that the problem is trade that will result in declining sales and domestic jobs. They forgot, the Japanese had bought almost 33% of the National Debt, real estate, and stocks. Manipulating the dollar down 40% set—off a massive selling of US assets that resulted in the 1987 mash. When traders call their broker asking why the Dow was down 500 points, the answer was "I don't know!" It was a currency induced Crash caused by the formation of the G-5.

The Democrats gaining control of Congress, wanted more taxes from the rich. They altered the amortization of real estate. They created the S&L Crisis for they destroyed the investment trend in that sector that created a one-way market to just sell. Property values crashed and then their insane regulations of the S&L industry more-or-less required that they lend into the local market with the focus of real estate using the collateral equity model. Suddenly, the S&Ls had portfolios that the taxes wiped out and the mark-to-the-market accounting rendered many insolvent.

The Government prosecuted two people trying to blame them for their own mistakes. Charles Keating became famous for his S&L went broke defaulting on bonds that the prosecution theory was he knew 7 years in advance that he would default and thus it was a criminal fraud. Keating spent some time in jail, but his conviction was later quietly overruled and new prosecution was blocked as being political. The other high profile became Milken, targeted because many S&Ls purchased junk bonds that declined with the 1987 Crash. The "club" supported the destruction of Drexel to take the market they created, and my sources reported even instigated it.

The theory used to destroy Drexel on behalf of the New York institutions, was to flip inside trading upside down. Unfortunately, the Judiciary protects nobody and will allow the Executive to circumvent the law as if it were a dictatorship. The inside trading issue emerged from the Great Depression. The crime was that a director of a company knew it was broke. He then sold all his stock on inside information, and delayed his action of making a public announcement.

Rudolf Giuliani flipped it all on its head. Suddenly, if two people decided to take-over another company, the crime became that a third person was defrauded out of the same opportunity to make money. No one lost money. The courts should have applied the strict construction, but accommodated the will of prosecutors destroying over 50,000 jobs in the process. Office managers at Drexel came into trading—rooms and just told the people to go home. There was no company any more. Never had insider trading ever been used in reverse. Because you cannot win when the courts are not real but controlled by the same employer, everyone was forced to plead. There was one exception. A small timer went to trial, and the jury acquitted him.

The Club is probably the most powerful force behind the curtain. There have been conspiracy theories about secret groups; but they work together like Anti—Trust groups to just rig the financial markets. They do not aspire to control all governments. They evolved into professional market manipulators that led to both the 1998 Long Term Capital Management crisis, and now the current crisis that began from the very same source. Even Gretchen Morganson of the New York Times traced the idea for the Credit Default Swaps to J.P. Morgan Stanley, who took the idea to AIG in London.

The Club has been untouchable because they can hire government attorneys directly, or "recommend" a large law firm who relies on their business hire one as a favor. In Congress, a politician cannot go immediately work for a lobbyist. There are no such ethical restraints on government attorneys who truly control far more than anyone has been willing to expose.

We kept track of what the "club" was doing and warned our clients whenever their antics were conflicting. One of the big ones that blew the lid off, was again silver. In 1997, I warned that silver was going to rise from $4 to $7 between September and January 1998. I was even invited to join them, and told to stop fighting, and put out false forecasts. I declined. Their strategy became insane.

At first, a friend of mine who had been Prime Minister Thatcher's economic advisor became a board member of AIG in London. He called one day and asked if he could drop in to Princeton the next morning when he arrived from London. I naturally said OK. To my surprise, he arrived with the head trader from AIG London who then proceeded to try to convince me to stop talking about the manipulations. I told him I would not ever reveal any names, and the government didn't care anyway.

Things got insane thereafter. An analyst on the payroll of PhiBro had a main contact at the Wall Street Journal. They decided to slander me and get the press to target me claiming I was trying to manipulate the market. It was an interesting strategy, but one I cared nothing about since I was primarily a institutional and corporate advisor, and they were not really interested in silver.

The journalist from the Wall Street Journal called me. He accused me of this nonsense and we argued. It got quite heated. He said if silver was being manipulated, then give him the name. I told him he wouldn't believe me anyway. He demanded the name and so I said fine, go ahead, let me see you print it, knowing he never would. The name I gave him was Warren Buffett. He laughed. Told me everyone knew Buffett did not trade commodities I told him that was how much he knew.

The Wall Street Journal published the article. The London newspapers were fed stories by the "Club" that I was now the largest silver trader in the world. This became all a joke to me. Even the CFTC could look at positions and knew I was not a big player in silver.

The mistake made by the "Club" by turning out the press against me, was they actually created such a worldwide story that the CFTC was forced to call me. They knew I was not the source. They asked me, where was the manipulation taking place? I told them it was in London, out of their jurisdiction. They told me that they could pick up the phone and find out. I told them that they had to make that clear decision. I hung up. Never did I expect that they would really do anything.

A few hours later, my phone rang. It was a good source in London who also was helping to monitor the "Club" actions. He told me that the Bank of England had called an immediate meeting of all silver brokers in London in the morning. I was shocked. The CFTC had made the call. But then again, I had given them no names so perhaps in their mind, this was fair game.

Within the hour, Warren Buffett made a press announcement. He admitted he had purchased $1 billion worth of silver, in London. He denied he was manipulating the market. Claimed the silver was a long—term investment. Everyone was shocked that Buffett was suddenly exposed as a commodity trader after all The next day, the wall Street Journal called me. The writer asked — "How did you know?" I told him it was my job to know! Silver thereafter declined and made new lows going into 1999. So much for the long-term investment.

Curious enough, Warren Buffett has now been exposed to be human. He has lost about 50% like everyone else. But there is the curious purchase regarding oil. Buffett invested in 011 at; the very top at the same time Goldman Sachs was forecasting oil would nearly double. The burning question is; Did Buffett get trapped in at the top in oil along with those manipulating oil this time around?

Warren Buffett has admitted he was "dead wrong" in his oil purchase. Buffett had to post a 62% decline in net income, but the revealing loss comes from oil and derivatives that he publicly criticized others for getting involved in. The so called "Oracle of Omaha" had to explain his derivative losses suddenly claiming he was just managing the risk. Yet the other contradiction is the huge purchase of Conoco Phillips stock when oil prices were at their high. Does this have anything to do with his old contacts at PhiBro at a time that all the "club" members were seriously long oil and had their analysts telling the public it would still double? Its called talking your own book.

There have been organized market manipulations in search of that perfect trade based upon inside information for a long time. The whole inside information crime is bogus. It is one thing for a director of a company to sell his shares before he announces the company is broke, but it is a difference concept when the inside info is to get your hands on government reports or watching what someone else does. There is no 100% guarantee in such a setting. In fact, the movie wall Street with Michael Douglas portrayed inside information as a young broker following executives around and guessing correctly what the merger would be. Sorry, that is not a crime unless the prosecutors want to make a name for themselves.

What we are talking about is much more close. to corruption than inside trading. There have been major manipulations of markets such as rhodium and then there was the manipulation of Platinum. Cornering a supply is far too risky. What the "club" did was to join forces with Russian politicians. The deal struck was to recall the Russian supply of platinum to suddenly take an inventory. Platinum soared in price. Of course the long positions were already laid in before the announcement. Russia had never before recalled its entire supply to take an inventory. Nevertheless, it worked. They were able to force platinum up for the auto—industry were buyers. At the top, the "club" sold their long positions, reversed into short positions, and then instructed the Russians to end the inventory. Platinum crashed. Even Ford Motor Company sued over that one.

The first major failure was 1998 - the Long Term Capital Management bailout. It has been widely reported that this was a failure of their derivative trading. That is only partially correct. The derivatives were E the cause of the chaotic event, but merely the domino in a complicated chain. The real target was Russia. The "club" was deeply involved with Russia and saw this as an opportunity that was perhaps a once in a lifetime.

You will recall that Russia was borrowing heavily from the International Monetary Fund ("IMF"). The interest rates were exceptionally high for short—term paper. I was again approached to join the "club" and was invited to Washington, DC where Edmond Safra of Republic National Bank had rented the entire National Gallery for a party he paid for in honor of the IMF. Everyone was there. Both current and past politicians and dignitaries, right down to Paul Volker.

They were trying persistently to get me to join the "club" for it was not just money, they were trying desperately to get me to join to tout their ideas. You must understand. Princeton Economics was renowned for our independence. We provided key research to governments, but mostly in times of crisis. We never charged for our service, but always contributed our .time as a public service. The primary reason for this generosity, was self preservation. Once you accept government funds, you suddenly find requests attached. Suddenly, you are asked to generate reports that support predetermined outcomes. You are quickly turned into a Economic Prostitute. This is why when the European Union was forming, a request for a delegation to attend an institutional lecture in London was received. When the Asian Crisis hit, I was requested to fly to Beijing to meet with the Central Bank. China did not pay anything, we would never accept any funds from any Government. This was the primary reason for our stellar reputation, but it was also a target to destroy the messenger, when the result cannot be controlled.

Government has not been the only one who wants to control forecasting. As early as 1983 I was invited to Geneva where the Gaon family held a huge party for me and was trying to impress me by introducing me to the mover & shakers of Europe. They had :offered we $5 million to use my name to create "Armstrong" Financial or brokerage of something like that. I hesitated, confused why someone would offer me so much to just use my name. I was invited to the grand opening of Herald Square in New York that I was led to believe was owned and built by the Gaon family.

For those who are not European, you may not know who the Gaon family was. They owned the Hilton Hotel Chain in Europe known as the Noga Hilton. They had also owned the Nigerian oil reserves before the coup and nationalization. It was the Nigerian issue that caused the GALN family to bake in silent partners. 'Do show how "conspiracy" theories are not always nuts, the events that followed was like receiving a shock treatment.

It turned out that Herald Square in New York was really the property of the renown Ferdinand Marcos who was President of Philippines between 1965 and 1986 who lost power just as the Economic Confidence Model shifted from a Public to a Private Wave causing a revolution right on time. The other silent partner was the head of Libya — Mu'ammar Muhammad al-Qaddafi. when Marcos fled the Philippines, the FBI was helping to search the world for missing gold reserves. I had long been viewed as an expert on gold after the model accurate pick the precise day for the 1980 at $875 on January 21st, 1980. Adding to the coincidence, I was on the list of invites for the grand opening of Herald Square. If this was not enough, suddenly when the FBI came knocking on my door citing these links, I told then I did not know Marcos, nor did I ever advise him of the Philippines. They then pointed out Marcos had purchase a house in Princeton, New Jersey.

Conspiracy theories are what the FBI and government rely on. It is hard to convince them to the contrary. what the Gaon experience taught me, nothing is always what it seems. We had a client in Geneva, Grainedex, who I believed was a major grain dealer common to Geneva. It turned out they were a front for the KGB. I soon realized, things were different behind the curtain.

Edmond Safra

Edmond Safra of Republic National Bank, has always been one of those nebulous bankers whose reputation was in a constant state of flux. There were rumors that he even assisted the CIA in the Reagan years with Iran Contra laundering of money. This has never been substantiated, but his right hand man, a Mr. Zucker, seems to have been caught up in the whole mess.

Yes, Princeton Economics did business with Republic National Bank to my regret. But they had a AA rating and were too cheap to try to compete with us in Japan. The problem about dealing with Goldman Sacks, they try to steal not merely your clients, but the very business plan itself. One cannot deal with those who are constantly trying to defraud you no matter what.

Edmond Safra was not one of the ranks of Goldman Sachs, but he was clearly one of the main players in the "club" and I believe his death, or better put his plain assassination, was retaliation for lot of questionable dealings. Through Republic I was solicited several times to join the "club" and was told specifically to stop fighting them. The "club" was so well structured, they held literally the keys to government regulation. No one would ever question them, and never would the press utter a single word. To wield such power was truly awesome. But we clashed for one primary reason - I believed in forecasting and modeling - they believed in control and domination.

Based upon solid information and belief, Edmond Safra was deeply involved in a bold plot to control the government of Russia. Boris Yeltsin, former head of Russia, was convinced to take $7 billion from the IMF loans to Russia. Two friends of Edmond were involved, Barisnofsky and Gazinsky. One owned all the media in Russia and the other was a partner with Yeltsin's daughter in the national airline.

The scam was to set up a company in Geneva to pretend it was doing the refurbishing of the Kremlin. $7 billion was wired, and Republic steered the wire through the Bank of New York. The rumor was that Mr. Zucker organized this one for Sara. As soon as the wire took place, Republic National Bank contacted the US Attorney and alleged that Bank of New York, a hated rival, was deeply involved in a $7 billion money laundering scam. The Feds ran in, and the biggest money laundering case was created.

Once Republic got the Feds to go after Bank of New York (not a member of the "club"), they then turned to Yeltsin, instructed him that they would protect him, but he was not to run again, and to appoint either Barisnofsky or Gazinsky as the new head of Russia. Yeltsin, realizing he had been set up, surprisingly turned to former KGB head Putin, who promised to clean up the affair if he was appointed as the new head of Russia. To the shock of the world, Yeltsin, who was preparing for reelection, stepped down, and this is how Putin really came to power.

Almost overnight, Barisnofsky and Gazinsky fled. Their assets were confiscated. On December 3rd, 1999, Edmond Safra was assassinated. All his bodyguards were given the night off. Monaco didn't respond to an alarm at Safra's apartment for nearly 3 hours, and in the end, they charged criminally his male nurse who spent 6 years in prison for starting the fire to try to pretend to save his boss. Nearly 6 years later, a truly amazing event took place. The criminal charges were dropped, the sentence was vacated, and the high court merely stated that the judge and the prosecutor colluded to deny him a fair trial. He was put on a plane and sent home. Never would such a result take place in a Federal American court. They just cannot bring themselves to rule against the government very often. In a high profile case, it is the old Puritan view it is better to admit no wrong, kill them all, and let God then sort it out.

It was August 1999 when Republic banged on the door of the US Attorney to turn in Bank of New York. Again, after nearly 6 years, the two brokers at Bank of New York were sentenced to no jail time, Lucy Edwards and her husband. When the judge asked who was the $7 billion for, they responded, it was a ransom for some rich Russian businessman. The judge asked no more questions. The American courts will hide the truth more so than any other country.

Eliminating Princeton Economics

It was also Republic National Bank that started the case against Princeton Economics and myself . They lied to the US Attorney, SEC and CFIC telling them that we were managing money and hiding losses. what they failed to explain, it was their own staff that were illegally trading in the accounts. On August 29th, 1999, I went to local counsel Richard Altman who sent an email to Dov Schlien, President of Republic National Bank giving them 1 week to return missing funds or we would file suite. By the end of that week, the US Attorney was storming the office, taking as much as they could, including a computer on which I did personal computer modeling. Republic has issued several hundred Net Asset Value letters to Princeton, confirming when funds arrived or how much were in accounts. They were on file and audited by Republic beginning in 1995 up to 1999. To escape these, they told the US Attorney they were false to escape liability. But if they were false, why would they actually be on file within Republic?

The government arrested me without ever speaking to a single note holder. They admitted there was no default. They also admitted that the notes were meaning that they were not the accounts of any client. The notes were issued for (1) purchasing preexisting portfolios of Japanese stocks as part of a bailout plan whereby the face value of the note owed, was not the net asset value when sold, but the original purchase price of the portfolio. The allegations of the Government made no sense insofar as the accounting reported by the note holder was always time face value, not net asset value because this was a bailout no different than buying depreciated mortgages from banks today; and (2) we issued fixed rate notes paying 3-4% in Japanese yen, repayable in yen, and again, no trading with such funds would be the property of a note holder. Hence, the clear allegations were false - these were not managing money for investment purposes with profits or losses flowing back to the note holder.

Removing All Lawyers

I was raised to believe in the United States, that we were a honest and decent country, the beacon of liberty to the world. Then you step behind the curtain and you see a pervasive wholesale corruption. Justice Stevens wrote, "disposing of lawyers is a step in the direction of a totalitarian form of government." Walter v Nat'l Ass'n of Radiation Survivors, 478 US 305, 371 (1985). Indeed, this is the very objective of the government - to win at all costs and cover-up all mistakes. This is why not only is America the largest penal colony in the world even exceeding Russia and China combined, America has risen since 1987 from a 72% conviction rate to 99% exceeding the worst tyrannical institutions in history like the Star Chamber, Spanish Inquisition, Hitler, and we are nearly tied with Joseph Stalin. Prosecutors are very proud in never losing, for they cannot see beyond their own self-interest that what they have done is destroy everything that made us a great nation.

Part of what we call Due Process of law is being served so you are given notice of an action to defend against. In the case of Princeton Economics, there was never any service. The SEC and CHC insisted upon no lawyers, and then appointed their own equity receiver entering into a secret written Memorandum of Agreement directing the receiver Alan Cohen to withhold all evidence from myself, my family, and any partners to prevent any defense whatsoever:. This alone was a criminal act for it amounted to an illegal seizure without notice.

Within about 30 days, Alan Cohen then pled Princeton Economics essentially guilty without ever allowing any defense, investigation, or counsel. Can you image if you were criminally charged, denied any lawyer, and then Alan Cohen stands up and pleads you guilty with no right to even speak?

Alan Cohen also seized all evidence gathered in our investigations of the "club" that was still in the office, and more than 40 tapes recording sources. Alan (then threatened my personal lawyer Richard Altman to imprison him on contempt if he refused to turnover that evidence. This seizure was truly astonishing, for the major firm we were keeping track of Goldman Sachs, and then after seizing the evidence, he was given a job at Goldman Sachs — Executive Vice President in charge of all things, "Global Compliance." How does an Executive Vice President of Goldman Sachs end up running Princeton Economics under court order? And you still believe in Santa Claus?

Martin Weiss had offered to rent Princeton Economic Institute to keep its staff and the publication and forecasting operating. Suddenly, Alan Cohen's counsel had revealed that, just perhaps, this case had something to do with other than fraud. In an email, Tancred Schiavani of O'Melveny & Myers, LLP, to Charles Heck, counsel of Martin Weiss, he insisted that now I had to turnover the source code of the model.

"So that there is no misunderstanding, we are going to ask the Court direct that any compensation payable to Armstrong, Sr. by Weiss be deposited into a frozen escrow account pending a determination of title and compliance relevant portions of the PI. In part, we are doing this because Armstrong Sr. has refused to turn over the uncompiled source code for the model that is being licensed. Without the uncompiled source code, no one can repair the model other than Armstrong. Accordingly, it looks like Armstrong structured the 'consulting‘ agreement to benefit indirectly from a corporate asset that he has withheld. Among other things, we are concerned about leaving him in a position to constantly blackmail Weiss who have no other choice but to turn to Armstrong to maintain the software as long as it remains missing.

Never would the Government ever admit that they were holding me publicly until they forced me to tum over the model to them. I also believe, that Alan Cohen gave every stitch of programing materials he could uncover to Goldman Sachs. Of course, neither would ever admit to that one. Mr. Weiss made it clear, they did not require the source code, and that a complied version of the model had been running well for years and did not require routine repairs.

Alan Cohen and Tancred Schiavoni threatened our London lawyers with contempt, and put border watches on all partners just in case they tried to come to the United States to assert their property rights. Let one person enter the United States, and they were prepared to have them arrested and thrown in prison without trial for perhaps life under the pretense of contempt. This is the real America most people do not see nor do they even believe is possible. In a letter dated January 25, 2002 from one of our London partners, he quoted the view of our London counsel who said he "hoped he never had to deal with such unprincipled people again." This dynamic duo, have been so oppressive, one cannot even imagine that they would believe in God for they care nothing, and will argue against every Constitutional right shifting the burden to a citizen to prove there is even a Constitution.

How is it possible to pretend publicly that there is a fraud when there was no trading for any third party, and how can they pretend the model is a fraud, yet when the curtain is down, demand that source code as well? By stacking courts with former prosecutors, there is just no hope of ever obtaining a fair trial. There are no rights to liberty or property when the Government is your adversary. To pretend that they are so fair, justice, and magnanimous in front of the curtain, and so evil when you step behind it, is certainly not the America the general public believes in.

When I was thrown in jail on civil contempt on January 14th, 2000, it was for an alleged failure to turnover $1.3 million out of an alleged $3 billion. This was so minor, but when friends were willing to put up the whole $1.3 million in cash for bail, Cohen and Schiavoni objected and prevailed. I was denied bail at any price that could mean only one thing - it never was about money, it was about shutting down Princeton Economics at all costs.

Whatever illegal act it takes to win, Cohen and Schiavoni engaged in based upon my belief. All civilized nations agree in 1992 to prohibit "torture" and of course we know that Bush and Cheney did whatever they wanted in Cuba. They failed to respect that whatever they viewed they could do even to an alleged terrorist, others could do the same to American soldiers. Either we respect International Law, or we have no right to demand others do so when we cross that same line.

Congress enacted the 'Torture Victim Protection Act in 1992, and accepted the world definition of constituted "torture" as the deliberate coercion of indicted persons regarding alleged crimes. This mattered not to the American Government, nor to Cohen and Schiavoni, for they publicly had me thrown into cells along side of alleged terrorists. For more than 7 years, they argued to keep me in jail, even when there was clearly no justification. Instead, they did their best to mislead the press, the public, and the courts to cover up their shenanigans. They had signed secretly a Memorandum of Agreement on or about October 14th, 1999, agreeing with the SEC, CFTC, and the US Attorney, to deprive me of any ability to present a defense by refusing to produce any discovery, including my own files they confiscated. This document set it out plainly and is part of the official court record.

§13(b)
The Receiver and the JPLs acknowledge and agree that they shall not and they shall direct their respective agents and representatives not to provide any non—public information regarding Group or its Assets to Martin Armstrong, Martin Armstrong, Jr., Victoria Armstrong, any person or entity known to be under their direct or indirect control or acting in concert with any of them, any other former officer, director or employee of PEI or PQI, unless the provision of such information is either (a) agreed to by the Receiver and the JPLs, (b) required by applicable law, or (c) required by order of Either Court.

This was about as unconstitutional as you can get. Yet they still would not obey the Constitution or recognize any rights at any time. when Republic National Bank pled guilty in January 2002, they admitted guilt and agreed to pay back what was taken, $606 million, in return for absolute immunity. The "club" was caught, but still the Government would not criminally prosecute and only made them pay back what was missing - nothing else. This should have ended the contempt since why should I remain in prison if all victims were made whole? Cohen and Schiavoni then lied to the court claiming there were still huge losses that predated doing business with Republic, that were not included, yet strangely, there was no actual description of any such fraud. But one existed, as Cohen told the court, and I was then held for another near 5 years without any indictment or even civil complaint describing the alleged crime. There was nothing at all!

ALAN COHEN: Losses that occurred in the Prudential period and at the period at Republic prior to the first false NA[V] letter [by Republic] are not embraced within the restitution of HSBC because obviously they weren't in the predeposition period, they weren't involved in it, and in the period before the false NA[V] there is no as description of criminal liability.
(Transcript; 1/7/02, p17, L1—4)(99—Civ-9667)

Cohen, now Executive Vice President of Goldman Sachs, is informing the court that in his opinion there are huge losses not included, but there is no list of alleged losses, no list of victims, and no charges either civilly or criminally. You may think that in America there has to be at least some charge before we hold people in jail. Think again.

What proof do I have that Cohen and Schiavoni knew they were lying to the court to keep me in prison for another 5 years? The US Attorney was deeply involved and I believe did their best to protect the "club" not merely giving HSBC and Republic Bank absolute immunity for that implies there must have been criminal conduct: at the highest levels or else why even give immunity, but when lies are told consistently for so many years, they slip, and the truth springs forth like a weed in the crack of a sidewalk. Assistant US Attorney Alexander Southwell was so eager to get Judge McKenna to recuse himself when he heard that his wife had represented HSBC in some real estate settlements,the truth came out in 2005, more than 3 years later.

ALEXANDER SOUTHWELL: So to be clear, in the event of a conviction, we will request, your Honor, that there be an order of contribution reimbursing ultimately HSBC, who basically made good and paid out these losses for whatever reasons that they did. They compensated the victims ... We frankly think that there is money available, which is part of the reason why Mr. Armstrong has been held in civil contempt. . .
(Transcript 6/24/05, p11-12)(99—Cr-997)

Suddenly, in 2005 the US Attorney admits that there are no other victims and that any restitution they would want to be paid to the very criminals that they had given absolute immunity. Not only was there no alleged huge losses prior to dealing with Republic, but there was never any such criminal or civil charge. The "club" did what it had to do to prevent me from ever being released, regardless if there was not even an alleged crime.

Conclusion

We are just not the honest and God fearing country we believe we are. The fact that ever since the Willy Horton advertisements, the Judiciary is so afraid of being viewed as "liberal" that the entire Constitution has been reduced to a scrap of dust.

Even when the "club" gets caught with their hand in a cookie jar, they still are told to give the money back and walk away. _The Goldman Sachs Conspiracy as is now being talked about is far broader than most suspect. One must ask; How does Alan Cohen end up running Princeton Economics when we were investigating the "club" that included Goldman Sachs? The answer is simple. The "club" does more than influence politicians, they also control the Judiciary and the Justice Department well beyond anything the most outrageous conspiracy theory can create.

On May 10th, 2007, a murderer pending trial was allowed in my cell. He came in and strangled me from behind. After I passed out, he beat me with a typewriter breaking into pieces. He then jumped up and down on my chest trying to cave—in the bone structure to pierce my heart. His name was Mr. George. Inmates yelled for the guard, but I was told he did not push the panic button and waited for Mr. George to finish and he came out proudly yelling he had killed me. I was taken to Beekman Hospital. I obviously did survive after 1 week in intensive care. Mr. George was never criminally charged. Why? Many people, including my family, believe this was an assassination attempt to get rid of me. Of course, when the Feds prosecute everything, and would not prosecute this event, I am myself skeptical about why it took place. I write today because they do not want me to write. I have no doubt that they would kill me if they could. So I sort of have resolved myself to living only for the moment. When you are in the belly of the beast, there is not much else you can do.

© Martin A. Armstrong
_____________________________________________________

Related:
Conspiracy? Is Goldman Sachs Running the Plunge Protection Team?

_____________________________________________________




How Goldman Sachs reported a profit this first quarter...

2008 fiscal year for GS ended Nov. 30, 2008.

In 2009 they switched to a calendar year, making Dec. '08 an "orphan month".

They took a bunch of writedowns in December, which will not show up on either year.

Then with the help of the new FASB rules they had an INcredible profit of $1.8bn in the first quarter of '09.

They promptly used this good news to raise $5bn from stock offerings, so they can return the TARP money and get back to paying big bonuses to their executives.

Link 1
Link 2
Link 3
Link 4

61 comments:

Anonymous said...

Hi FOFOA,

Here's Martin's latest.

http://economicedge.blogspot.com/2009/04/martin-armstrong-financial-panics.html

Martijn said...

http://www.goldmansachs666.com/

A website trying to lift the curtains on goldman.

Martijn said...

And why is it that China is suddenly buying huge amounts of copper?

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5160120/A-Copper-Standard-for-the-worlds-currency-system.html

Martijn said...

And for looking at Goldman's earnings

http://populus-vox.blogspot.com/2009/04/closer-look-at-goldman-sachs-earnings.html

alek_a said...

Interesting phenomenon, this Mr. Armstrong.

Imagine it: a man sitting in prison with the scum of the earth as company, writing on a typewriter, hand-made low-tech illustrations, so opposite of the sense-overload of the internet! Challenging the accepted norms and elites from outside the system! There is a lot of, uhmmm, potential there when one looks from a historian's point of view.

But, we still need to see whether he is indeed a philanthropist or just seeking fortune, fame and a way out of jail. I am not swayed either way in a definite manner (still have to read his harmonic analysis of markets), but there is a lot of easy truths to consider. For instance, the fact that what he writes, albeit in a less personal tone, is already stated worldwide by economists and senior staffs at central banks (except @ The Wall Street of course).

Godlman Sux or Not, it is not the content as much as the precedent that I find appealing in "The Curious Case of Mr. Martin Armstrong".

Martijn said...

http://www.mydigitalfc.com/news/india-and-china-want-imf-sell-its-100b-gold-897

China and India are pressuring the IMF to sell of its gold.

Rather interesting combined with China's recent copper purchases, isn't it?

FOFOA said...

Martijn,

Here is a thought Ivo posted on another blog regarding copper...

Ivo Cerckel has left a new comment on the post "Only USD or EUR - oil relationship?":

From a friend - Re: Ambrose’s copper standard article

Copper-prices are strongly rising. The dollar-financial industry continues to organise speculation on everything they can "liquidify".

The money-masters play ...

Ambrose gives it a nice explanation (justification). All speculation must be accompanied with a smokescreen of gentle talk as a cover for the financial brutalities.

For Ambrose (the dollar-financial industry), a nice opportunity to bash gold in one single go.

Many people are slowly but certainly getting fed up with this raw (absurd) dollar-monetarism... (read : constant leverage)
ME: You might not want to run out and trade your gold in for copper just yet.

FOFOA

Martijn said...

@FOFOA

To me my gold (and silver) are pretty well founded as a save haven. I will most likely hold on to them for the coming year. All other bets, such as copper, are far more speculative. I might place some speculative money in them, but will not sell gold for that.

I do however plan to keep my eyes open anyways, since these to me (as a youngster I must say) seem pretty dynamic times.

Martijn said...

Btw, as was said before (I don't remember where) the current "rally" seems to not be driven by any fundamentals, but more so by the people not really trusting they cash they've parked at the sidelines.

About the copper: would you say that China is the dollar industry also?
(as they've been buying a lot)

FOFOA said...

Martijn,

No, China is not part of the dollar faction. China is the opposition. China actually needs copper, and lots of it. And it doesn't need it for monetary or wealth preservation purposes. It needs it for industrial use and construction. China probably senses the worldwide hyperinflation that could take place at any time and is gathering materials it will need, like copper and oil, at what will ultimately be bargain prices.

As for gold, you posted an article saying that China and India are encouraging the IMF to sell ALL of its gold "to fight poverty". I find this a little funny.

China, the anti-dollar, is telling the IMF, the king-dollar, to sell all of its real money! To sell all of its only protection from the worldwide dollar hyperinflation that is about to take place, possibly spurred on by China itself!

We already know that China and India are buyers of gold. So they are in essence telling the IMF (the dollar), "Hey, we've got the dollars you need to cure poverty. Just give us all of your gold and we'll give you all these dollars we've been collecting!"

FOFOA

Martijn said...

It's a powerplay indeed.

China is getting out of the dollar since in it's current form and with the current mission of the fed (aimed at America's national interests) the dollar does not have the right cards to retain it's world currency position.

And as the IMF is de facto an extension of the US (paul Volckner once said that) China is not a proponent of too strong a position for that institute. Hence the urge to sell it's gold. At this moment both parties might even benefit as IMF gold sales might suppress the gold prise and keep the dollar standing a bit longer, and China can buy that gold and strengthen it's position.

Perhaps we can even see the copper buying as China showing it's strength. The are putting there money where there mouth is now.

The next G negotiation round will be interesting.

FOFOA said...

I just added this article to the bottom of the post...
_________________________________

Related:

Conspiracy? Is Goldman Sachs Running the Plunge Protection Team?

FOFOA said...

Alf Field has surfaced with a new article. Here are a couple excerpts I found interesting...

Gresham’s LawSir Thomas Gresham was an English financier who lived nearly 500 years ago. His Law states that “bad money drives out good money” What he meant was that people will hoard “good” money while spending the “bad” money.

Gresham lived in an era of metallic money and the “bad” money he referred to related to coins that had been clipped or had been debased by having some of the precious metal content supplanted by base metals. The “good” coins were hoarded and disappeared from circulation. People got rid of the “bad” money while they could still find someone to accept it.

There is a corollary to Gresham’s law that applies to the modern situation when a country rapidly increases the fiat currency in circulation. Initially people exchange the local “bad” currency for foreign “good” currency (or gold) and hoard the good money. Gradually the locals introduce the use of foreign currency into every day trade and eventually the local fiat currency is spurned. At some point Gresham’s Law is reversed. The “good” money drives the “bad” out of circulation.

This is exactly what happened in Zimbabwe recently. Initially South African Rand and US Dollars were hoarded by Zimbabweans. Subsequently these currencies emerged in every day trade until the Government had to accept the de facto situation that they could no longer spend Zimbabwe dollars in Zimbabwe. The people would not accept them. The Government eventually announced that trade in Zimbabwe could be conducted in any foreign currency. “Good” money had replaced the “bad”.
[..]

I recently visited Vietnam for the first time. It was basically a tourist visit, but I was interested in monetary developments in that country. The local currency, the Dong, is not an internationally exchangeable currency and has showed signs of moving in the direction of the Zimbabwe dollar.

The first thing that made an impression was a question on the Vietnamese arrival form. Immediately following the normal question: “Are you carrying more than $10,000 in cash or convertible currencies?” was another question: “Are you carrying more than 300 grams of gold? If so, list the gold that you are carrying.”

This is an interesting development. Be prepared for this question to soon be inserted on arrival forms near you.

Virtually all trade in Vietnam can be conducted in either Dong or in US Dollars. Every Vietnamese can instantly quote the price in either currency. The locals spend Dong while US Dollars are hoarded. Gresham’s Law is alive and well in Vietnam. The Vietnamese are also well versed in the benefits of holding gold as “good” money. This article suggests that the Vietnamese people hold a total of 700 tonnes of gold, a huge amount for such a small country:

It will be interesting to follow developments in Vietnam.


FOFOA

FOFOA said...

How Goldman Sachs reported a profit this first quarter...

They cooked the books.

2008 fiscal year for GS ended Nov. 30, 2008.

In 2009 they switched to a calendar year, making Dec. '08 an "orphan month".

They took a bunch of writedowns in December, which will not show up on either year.

Then with the help of the new FASB rules they had an INcredible profit of $1.8bn in the first quarter of '09.

They promptly used this good news to raise $5bn from stock offerings, so they can return the TARP money and get back to paying big bonuses to their executives.

Link 1Link 2Link 3Link 4

Martijn said...

I was reading that too. Seems like a clever trick.

Martijn said...

FOFOA

Remember that video on the mayan calendar?
I'm not into arguing on believing it or not, but it got me thinking.

Remember that the guy said money will disappear, that there would only be respect (or something like that)?

There is a possibility for that. Internet allows us to use all sorts of digital meeting places (like social network sites) and from all those places we might be able to discover fairly easily whether someone is respectable or not.

If it is about respect everything done in that "system" could be monitored, and everyone can control each other. We hence all print our own, digital credits limitlessly, and others will either respect or not respect us for doing so. We are hence able to inflate or disinflate our trustwurthyness.

Ebay and others have already shown us the light in the product side, we have come to trust total strangers. All we need to do is to invent the other side, the "monetary" one that distributes our efforts.

Anyone can start a site offering this, the only difficulty would off course be obtaining the required critical mass for it to work.

However, the pressure for that mass to join seems to be rising...




Might be a bit far of

Martijn said...

But it's a cool idea!

Martijn said...

Only it might ommit gold...

Which would not be a problem for respectable people...

Can anyone tell me more on this idea?

FOFOA said...

Martijn,

I remember that part in the video. And with all due respect, it is a bit far-fetched.

Your idea sounds a little more like Anarcho-Capitalism. I believe A/C is an unworkable and impractical system. Although it has some slight similarities to Freegold.

The reality is that real existing wealth will lead us into a new system. Not political power, not fancy philisophical ideas, but wealth. It is the flow of real capital that will be followed by the masses. That is because real hard wealth is credible, unlike irredeemable promises.

As I said once or twice before, "the relevant question is not "what SHOULD be used?" But it is "what WILL be used?" The former is asked by those "philosophers" with no real wealth to protect."

This is why Another recommends following "in the footsteps of Giants".

FOFOA

Martijn said...

@FOFOA

In this idea currently owned real wealth would not matter indeed. For the record: I do have wealth to protect, and it might even be more than you think, hence my interest.
That would however not mean that I could no philosophize about what the real system COULD be.
As I believe in the power of people (being a liberal) I would argue that the market (the people) shall select the best real idea from all philosophical options.

And yes, I agree it sounds far fetched. Even with an objective view. You might however wonder wether your objectivity is not compromised by the focus on your wealth.

As I indicated before, freegold will initially not be fair (for as hard a definition that is) to the people now owning some wealth that have not managed to buy gold in time. As there are quite some bank deposits around that will make quite some people. Their objections might be overcome by the power of the freegold concept, but it might also not be all to easy.

Well anyway, not here to prove anything, but I do remain interested in all options and discussions.

FOFOA said...

Martijn,

That comment about broke philosophers was no more directed at you than your "goldbugs are myopic" comments were directed at me. :)

There are tons of monetary theories floating out there. Money based on time, on labor, on rice, on lumber, on all kinds of things.

But the fact of the matter is that every single day of every single year, money follows the flow of capital. It happens in the stock markets, in the bond markets, and on Main Street.

Can you really imagine a democratic vote of the people as to whether the new money should be based on a) copper, b) hours of labor, c) locally issued commodity-based bills, or d) admiration?

You keep coming back to this idea of fairness. Could you please define your view of fairness for me?

This is not going to be a democratic process that takes us where we are going. It is going to be a survival instinct basic to human nature. Fairness does not even fit into the equation. However, I am here to tell you that the end result will be a million times more fair to the common man, while what we have now is a million times more fair to the banker.

If you really question my objectivity and think that I am myopically focused on gold, all I can say is that you are wrong. In the past two years I have owned stocks, bonds, real estate, and many other things as well. I read a wide range of subscriber newsletters that cover a lot more than just gold.

But I will say this. There is nothing out there that will protect you like gold right now. And there is nothing that will perform like gold over the next couple years. You can mark my words on that. And when those predictions come to pass, the whole world will suddenly view gold as the wealth reserve par excellence. Not as money, but as wealth. And it is this view that will lead, not some conscious "selection" of the best wealth reserve. Money follows other money, and it follows real hard wealth. That is how it survives. Some times it follows good ideas during boom times, but not during bust time. During busts, it seeks out safety in age-old, historically proven foundations.

Sincerely,
FOFOA

The Mad Scientist said...

Hi Martijn,
As you can tell from my previous posts and comments I believe Gold is about as overrated as it gets. That said, we are in a climate of complete imbeciles as central bankers and you have to give the previous metals some credit ( no pun intended).
The key move in my opinion would be to move into hard assets which will not only go up in hyperinflation (as they obviously should) but also outperform in all other scenarios. Food and energy fit these criteria.Think about almost 7 billion people. What are they least likely to cut back on?
Also at current rates we will need 11 million barrels of additional oil per day just to power China;s fleet in 10 years. That is 12% of the entire worlds total consumption today.
Food can be invested in through Futures, Fertilizer producing stocks or agricultural land.
Check out
http://www.farmlandinvestmentpartnership.com/
Energy of course is a lot easier.
In a situation barring a complete collapse of society everywhere Food and Energy will outperform in my opinion.

That is not to say that a gold backed currency would not have merits. can you imagine being able to just save money knowing it will be worth just as much as when you made it. I sure could use that peace of mind now. There will also be much less misallocation of capital.

Martijn said...

I already agreed that fairness is a broad concept that is difficult to difine. In a defintion I would not come much further than: truely fair would be something all people agree on happing, truely unfair would be something none approves on. That's how it could be measured in theory as far as I'm concerned.

And yes, there are multiple theories, and I'm not claiming to have found the solution at all, but I do enjoy playing with the concept.

Perhaps for now it will be gold indeed.

However, using "my system" would provide all users a bonus of 100%, since at first you had the pay the tax authority a sum equalling what'd you're allowed to keep (VAT etc. included). Since this system is not official money, it cannot be taxed, and hence users benefit from ducking the tax system.

Apart from reaching the critical mass of users (by far the most difficult part), there is quite some upside to the idea.

Anyways, I'll be watching as the plot thickens further.

FOFOA said...

Martijn,

Based on your definition of fairness, "truly fair would be something all people agree on happening, truly unfair would be something none approves on", any emergent system is going to be infinitely more "fair" than any prescribed system.

The only way a prescribed system could be more "fair" under your definition would be for everyone to agree.

But in reality, if there are more than two choices, it is extremely rare to get even a simple majority of over 50% to agree. In fact, in today's world, anything over 60% is considered a landslide win. But that still leaves 40% feeling they have been treated unfairly.

But for a system to "emerge" requires participation on a much greater scale than even a landslide victory. It requires the "invisible hand" of truly free market forces which are the result of 6 billion inputs, and the emergent system becomes the output. This is Freegold. All signs show we are headed there (Ambrose Evans-Pritchard notwithstanding).

I think what you see as being unfair is what will be a kind of envy of those who had the foresight to get in ahead of time. But that kind of envy exists everywhere right now. It is the basis of Marx's popularity.

FOFOA

Martijn said...

I agree on most of that.

I also believe the only way for a new system be installed is for it to emerge. And perhaps even a basis property of that system will be competition. In "my system" various communities could compete (just as ebay and alibaba) within the same idea, but freegold would be a fair challenger.

Maybe gold is best suited for long horizon storage, but other, community-based money systems will emerge for mor "liquid" payments.

That is, if the government allows for them off course...

Martijn said...

And maybe it will be freegold.

Logically speaking (although this is a bit philosophic again) we can in todays world never be sure that all signs true point to one thing, as were are simply not capable of viewing them all.
We could only state that the signs wee did see point in a certain direction, but in doing so we must not forget that we partly are creators of our own world (we choose what blogs to read, what movies to watch etc.).

Anyway, since there is no real way of putting money in any "community-based open source" system (apart from developing one) I'll stick with gold at the moment for attaching my wealth.

Although I've heard some distant stories of someone having spotted a black swan sometime...

FOFOA said...

Martijn,

You say, "Maybe gold is best suited for long horizon storage, but other, community-based money systems will emerge for more "liquid" payments."

This is true about Freegold. Currencies will still be used for labor payment and for commerce. These could be more community-based if the whole system collapses, or they could be something like the Euro if most of the system collapses but one survives, or they could be the existing currencies if the system muddles through.

You also say, "We could only state that the signs wee did see point in a certain direction..."

This is why I take the Chaos Theory view. I am fully aware that I cannot know all the small twists and turns that will happen along the way. It is like looking too closely at a river. You might be only seeing an eddy of swirling water. And based on that view, you might believe that the water is flowing upstream. In order to see the overall flow of the river, you must climb to a mountain top and widen your view.

For this reason I pay closer attention to things that were written along time ago, than to things that were written recently. You notice that I follow the 10 year old writings of Another, as well as other people that take a decidedly historic view of the current crisis, like Martin Armstrong. This is to achieve a wide view.

By the way, I just added a video that I found on maxkeiser.com to the bottom of the post.

FOFOA

The Mad Scientist said...

FOFOA,
I think Gold is an undervalued asset and will go higher. That said you should always evaluate Gold in terms of price and value rather than saying in absolute terms that Gold is a good store of value. Not it is not in my opinion. What about the people who bought Gold around $600 an ounce in 1979? Do those people feel that they have anything of value today? All investments classes including money markets would beat Gold over the last 30 years. Surely people who invested then have given it enough time. Gold was simply overvalued compared to everything else. It took less than 50 ounces of gold to buy a house. People who bought a house also did much better than Gold. Would Gold be a great store of value if it cost $1000 an ounce but the Dow was at 500? What if gold was at 10,000 an a ounce and a average home in a great neighborhood went for $100,000?
Everything is relative

FOFOA said...

Hello Mad,

With all due respect, I have considered all the arguments you make and I stand by my statements.

Admittedly my views were spawned by the writings of Another and FOA, but I have pondered this subject at great length, and I can say with conviction that gold is the only investment that makes any sense right now.

I don't expect this statement to make me popular. On the contrary.

I will say just a few words about the arguments you make. As for the one about the person who bought in 1979, that argument works only if you view the next 30 years to be similar to the last 30 years. You say, "Do those people feel that they have anything of value today?" I say, I hope so, because very soon their patience will be paid in full and then some! It will prove to have been a better investment than all the other things you mention.

You say, "What if gold was at 10,000 an a ounce and a average home in a great neighborhood went for $100,000?" I say, then I would still prefer gold, because it still had more upside. Once the upside was gone, it would make no difference if you invested in gold or a house. The prices would be fair and real at that time. Neither one suppressed.

You say, "Everything is relative". I say I couldn't agree more. This may very well be the title of my next post.

Sincerely,
FOFOA

The Mad Scientist said...

What yardstick are you using when you say Gold is so undervalued today?
Other than all paper is short position on Gold...which if true then there is no upside cap to Gold.

FOFOA said...

Mad,

I suppose my yardstick is 6 billion people, US$300 trillion worth of wealth, and only 5 billion ounces of gold, combined with the collapsing of a 100-year-monetary-system.

I understand that you are a TA guy, Mad, and you will probably reject this outright for that reason. And I also understand that you found my blog because of a few posts I wrote about hyperinflation. But please understand, this subject is the very reason this blog exists at all.

Please read all of Another and FOA if this interests you, or if you want to understand how an intelligent person could believe this.

Here is a post I made on GIM on 8/30/08 regarding the gold/house ratio. Under 10 say I? I was actually going a little easy because it was a public forum. Try 4 or 5.

Here is my post on FreeGold from 9/21/08. And please note that in it I am talking about a value in terms of today's dollar purchasing power, not hyperinflation-adjusted future dollars.

These Thoughts are no longer discussed openly, they are taboo, which is why I started this blog.

Take this for what you will. I am not trying to convince anyone or make friends, only to spread the word that these Thoughts and ideas exist and are very real. And since Another and FOA are quite long to read, you can get an idea by reading my various posts with (QUOTES) and (THOUGHTS) from them. Here are a few...

http://fofoa.blogspot.com/2008/08/i-love-this-intro.html
http://fofoa.blogspot.com/2008/09/another-quotes.html
http://fofoa.blogspot.com/2008/10/another-quotes-ii.html
http://fofoa.blogspot.com/2008/12/foa-quotes-from-trail.html
http://fofoa.blogspot.com/2008/12/foa-that-default-on-comex.html
http://fofoa.blogspot.com/2009/03/time-is-right-for-change-of-events.html
http://fofoa.blogspot.com/2009/03/some-thoughts-from-foa.html

In 1997 Another warned us that "all paper will burn". That this outcome was already baked into the cake, so to speak. Today it is actually happening.

Sincerely,
FOFOA

FOFOA said...

Jim Sinclair...

To Protect and Serve

Alf Field's Prediction On Gold

Martijn said...

The chaos theory view is interesting indeed.

Now for something else: the new Leap2020 is here:

In this issue of the GEAB (N°34), our researchers focus on how to explain the « mystery of gold price ». Indeed, our seekers (of information, not gold) identified a number of interesting leads to understand why (14) the price of gold has been fluctuating around the same level for months when the number of gold buyers is constantly increasing and demand for coins and bars far exceeds available supply in many countries.Might make it worth buying a subscription....

Anonymous said...

It's a bit expensive at 200 euros. I'd be willing to pay $40 or so. If enough people are willing to chip in maybe we could make it affordable. Anybody?

Martijn said...

I wouldn't mind chipping in. It's interesting stuff indeed, but I also wouldn't want to pay 200 euro's.

To bad we can't order single issues, or can we?

alek_a said...

Hi all,

It is a bit egoistic to state problems only and not offer a solution. This is why FOFOA's reluctance to consider or attach to a particular proposed post-$ system/structure may irritate some posters. Probably this is what Cerckel thought when he states that this blog is "too American". And this is also why Martijn has indulged in a little Utopian fantasying above (we all do that M!), because his manners could not restrain him to only opine but not attempt to solve.

Sometimes, we can have an opinion but we should refrain from stating it or doing anything about it. "Golden Silence" and all that. It is a part of what irritates me with the young students that I work with, as I have already stated. Sometimes you just simply need to listen/follow and ask questions later when you can see the landscape.

As long as the following 2 things are not addressed, the realism of FOFOA is justified on moral grounds:

1. Alignment between trade imbalances and excesses at Wall Street in NY and The City in London.

2. Discussion about the role of Keynesianism and its evolved offspring, the virtual financial world, happens in relevant circles on the world stage.

Number 1. should de-concentrate the capital from The Finance Behemoth and free it up for the next productive stage of history. Here Mad is probably correct in his vision.

Number 2. should return the Rule of Law and ethics in our society.

I see nothing from US leadership yet that they are looking at the two issues above with the necessary seriousness. The same is valid for the EU, rising to historic high levels of passivity, although I hope that LEAP2020 is read by decision makers whose actions do matter.

The longer these issues are not addressed, the more probable is the violent transition of FOFOA. And thus his reluctance to relax in a, what is more probable by the day, arm-chair academic demagogy.

The morals of sending such a warning message and to prepare people about the inevitability of what will happen heavily outweighs the perceived egoism of FOFOA's standpoint.

If LEAP2020 was free to act in a way as to ignore the subjective perception that their readers will have about them, a perception guided by the widely accepted quasi-moral of being modest and non-egoisitic, so prevalent in "modern" Europe, they would be on exactly the same wavelength with FOFOA.

Sinclair has also recently joined the club of doomsayers with such a ferocity that it brought him the consequence of 40% losses of the value of his company.

The longer the above issues are not addressed, the lower the threshold for joining the realsim of FOFOA will be.

The Mad Scientist said...

Good Morning all,
See you up early FOFOA...
"I am not trying to convince anyone or make friends,"

Well you already have made a friend...But we can disagree cant we :)?
I will read the blogs you mentioned.
Till then I respectfully withdraw..

The Mad Scientist said...

Heard the comments from ECB
They support a strong dollar policy...meaning we are screwed together guys

alek_a said...

Mad,

From Trichet sees need for balanceTrichet also said he appreciated U.S. policymakers saying a strong dollar is in U.S. interests, adding it did not fit with reality to say the euro is weak now as the single European currency is stronger than at its launch a decade ago.The euro fell to its lowest in a month after his comments to $1.3065 on trading platform EBS.

"Though Trichet's comments today provided few surprises, he also seemed to suggest that he does not want to cut rates further after May," said Takahide Nagasaki, chief FX strategist at Daiwa Securities SMBC.

"Such a stance may not work in the euro's favour as it casts doubts on the euro zone's economic recovery prospects."
- emphasys mine.

So, we should buy dollars then since they are recovering?! Gimme a break.

More of the same twist-and-spin coverage from international media that LEAP2020 warned about today.

The Mad Scientist said...

Currencies don't float...they just sink at different rates
The wisest quote I ever read

FOFOA said...

Hello All,

Mad, I did not mean to express emotion toward you, if that is what you felt. I was simply stating the purpose of my blog, which hasn't changed since the first post. It's right under the title. A tribute. A paying forward of what I have already received. All I really want is for more people to read and to try to understand Another. I believe he was someone of great credibility who could only speak THROUGH the curtain. It is like reading a book to read those archives. I think it is about 400 pages worth of paper if you print it out (which I did). I am on my third reading and I still find new Thoughts and concepts I did not catch on the first two passes.

Alek, Thank you for defending my egotism. Or is it egoism? They are different, but I think they both are the wrong diagnosis. However, I cannot argue with your perceptions of me. We are on other sides of the planet and speaking through text alone, from different cultures, ideals and mores. I understand this and try to keep the message simple for this reason.

Another was perhaps more "egotistical" than me, when he said things like...

A lot of my "Thoughts" are of record, just not public record. My thoughts are made free for all to read now because, as of the beginning of 97 the "cat is out of the bag". You may have read that on the Gold Eagle Site. Much of what was written about the "Big Traders" will play out in time. Though those writings were extremely hard to relay it is written that "time will prove all things"! I will allow time to prove my Thoughts...

ALL: I do not offer to prove my thoughts. If what is written was easy for all to find, the information would be of no use to you. Many will take no motions to change their ways and protect worth. Such is life.

Each will chose his way and as always the future will teach the truth.


Another offered his Thoughts free to all, but he did not offer to prove his thoughts. He left that job to time. Well time has passed, and I believe time is preparing to prove his thoughts soon.

For this reason, I try to go a step further and to write about things which would seem to support this view. I do not simply say "listen to me, for I have the answer". Instead, I try to logically argue my views.

I remain anonymous for very different reasons than Another. I wish to be anonymous so that my Thoughts can be judged on content alone. I believe this is the real power of the Internet. Naysayers will usually attack the credibility of the messenger before the message if given the chance. By taking that away, you leave only the message.

So am I egotistical? I don't think so. Am I confident? Yes. Do I have doubts? Who doesn't? Even Mother Theresa had doubts about her faith. He who doesn't have doubts is a fool.

Anyway, I must go read LEAP2020 now. Thank you all.

Sincerely,
FOFOA

Martijn said...

FOFOA

Are you subribed to LEAP2020? If so, would you recommend?

Martijn said...

@Mad

Wise quote indeed.

FOFOA said...

Martijn,

I am not. There is just too much to read out there for free. I cannot justify parting with gold for words.

But if you want to subscribe, I will gladly give you my email address. :)

FOFOA

FOFOA said...

I learned a new word from LEAP2020 today...

They called the European leaders "pusillanimous".

This short video explains:
http://www.youtube.com/watch?v=9qyHS4met7c

FOFOA

FOFOA said...

Good hyperinflation article:

On the Cusp of Hyperinflation
by James Turk

Anonymous said...

GEAB N°34 is available! Summer 2009: The international monetary system’s breakdown is underway

http://www.leap2020.eu/GEAB-N-34-is-available!-Summer-2009-The-international-monetary-system-s-breakdown-is-underway_a3129.html

FOFOA said...

At least part of the LEAP/E2020 was leaked on a forum. I have copied this from TreeofLiberty forum. A smaller portion was also posted on the Ron Paul forum. There may be more from the original leaker, although it seems to be broken up in short posts on another forum. Link is at the bottom...


"The monetary storm coming by the end of summer 2009 may encourage governments to exchange their foreign currency reserves, particularly U.S. dollars, for gold.


In this issue of the GEAB, our researchers anticipate the different forms a US default will take at the end of summer 2009, a US default which can no longer be concealed concealable from this April (most taxes are collected in April in the US) onward10. The perspective of a US default this summer is becoming clearer as public debt is now completely out of control with skyrocketing expenses (+41%) and collapsing tax revenues (-28%), as LEAP/E2020 anticipated more than a year ago.


"With regard to US Treasuries, China has largely stopped buying them (purchases decreased by USD 146 billion in the first quarter of 2009 compared to the same period last year, representing an increase of only USD 7.7 billion!) and only then purchasing short term (three month) Treasuries!"


"Due to the failure of the G20 Summit in London in guiding the planet towards a controlled crisis unwinding over a period of 3 to 5 years, the world is condemned to suffer a decade-long tragic crisis. This situation will have severe consequences on pensions, savings and life insurance. The paradox is that, as it will be a lasting crisis, it will become necessary to get out of long-term savings investments which were designed for such a context. They will indeed become tax traps and yield negative returns."


Life insurance, a very important savings instrument and often a first choice investment for retirement, will be incapable of returning more than 3%, thus becoming an investment trap because of time and taxation constraints. Indeed, like the other savings and investments, states will tend to increase the tax burden on them in an attempt to bail out their finances. This phenomenon will be visible in continental Europe and China in particular (where savings rates are high), but a little less in Australia, New Zealand and the rest of Asia. In the United States and United Kingdom, it will remain low because there is little left to be taken by the State due to the absence of personal savings in recent years.

In the months to come, you should get out of savings’ products which no do not provide good returns, because soon they will not bring in anything at all - or worse. Stay liquid! After this summer and the crisis of the international monetary system, new trends will emerge that will certainly allow new choices.

The current situation is certainly uncomfortable, but nobody ever said that going through a global systemic crisis and losing as little as possible would be a sinecure. "


Due to the accelerating collapse of real economy in the US and the ongoing recessions in Europe and Asia, the months to come will be even worse than the previous ones. The "glimmers of hope" seen by Barack Obama - like sister Anne perched on her tower57 - will not change anything. Despite permanent injections of public money, banks, specifically US ones, remain insolvent; and their recent manipulative activities and other positive « breaking news » without any sustainable content58 (explaining most of the March 2009 stock market rally), do not alter negative trends in the medium term. So, according to our team, you should keep your life and drop stock options! A single sector may experience real growth in the months ahead: security, due to the development of global geopolitical dislocation.


In conclusion, our team recommends that its subscribers who do not want to speculate (and therefore face the risk of losing their entire investment) must stop investing in paper gold and should limit themselves to physical transactions. It This may be difficult in some cases, but as we get closer to the breakdown of the international monetary system in the summer of 2009, we believe that there is now a major risk that owners of paper gold will end up losing all their investment when sellers recognize that they cannot honour their contracts because they are unable to supply the physical gold they contracted to.


Between the fact that it has nearly put a complete end to its purchase of US Treasuries and that it is accelerating the pace of its« global shopping » for more than USD 50 billion per month (swap agreements included), it appears that, between the end of 2008 and the end of summer 2009, China will have disposed of nearly 600 billion worth of USD-denominated assets, and it will have failed to purchase between USD 500 and USD 1,000 billion worth of US Treasuries that the Obama administration has begun to issue to finance its extravagant borrowings. LEAP/E2020 estimates that these two amounts added together give a clear idea of Beijing’s impact on the « Dollar-era » at the end of summer 2009, at the end of the US fiscal year. China’s disposals and failed purchases of US Treasuries alone will then represent a shortfall of between USD 1,100 billion and USD 1,600 billion in the United States’ financial needs. Ben Bernanke will be compelled to print Dollars in a (vain) effort to prevent his country from defaulting on its debt.


"In the knowledge that each time Bernanke declares that the Fed will purchase its own US Treasuries, they lose 10 percent in one day, i.e. USD 140 billion compared to other international currencies, Chinese leaders will certainly find it acceptable to sacrifice USD 400 or 500 billion. LEAP/E2020 believes that, at this stage, they will consider that they made the best « possible » use of their USD-denominated assets. Then, they would better be among those who push the « button » - or who do not try to prevent it. The second phase of China’s “Great Escape” out of the Dollar will then begin, depending on the behavior of the other key players. Either the Yuan takes its place as international reserve currency along with the Euro, Yen, Ruble, Real, or a process creating a new international reserve currency based on a basket of these currencies will begin. The Dollar will then be out of the race and the G20 reduced to a G18 (without the United States and the United Kingdom, but with Japan no longer able to escape the Chinese sphere of influence). Otherwise, the process of global geopolitical dislocation, described in GEAB N°32, will be underway, based on economic blocks, each of them trading in their own specific reserve currency."


All those who read our Open Letter to the G20 leaders, published in the Financial Times on March 24th, 2009 (and widely circulated on the Internet), already have an idea of our analysis of this London Summit32. But we must admit that the results are even worse than we imagined. The Western G20 participants (Americans, Europeans and Japanese) were remarkable in two respects: in making sure that no particular could be agreed on; and in ensuring that none of the announced measures could seriously start being implemented in the short or medium term. Of course they could not be everywhere: on the one hand, convincing themselves that the end of the crisis is coming soon and, on the other hand, trying to avoid a decade-long tragic worldwide crisis unwinding. LEAP/E2020 believes that, during the current global crisis33, the United States are sinking deeper everyday into a depression with no equivalent in the country’s history and which is now arriving at a political and social breaking point.


In New-York, in September 2009, the G20 leaders, as well as all the leaders taking part in the United Nations’ Annual General Assembly, will only be able to acknowledge the severity of the crisis overwhelming the United States38. Faced with social poverty (it is no god news when one US citizen in two declares himself two month’s salary away from bankruptcy)39, increasing urban violence40 and homicides41, worsening economic recession (already visible in the streets of Manhattan)42… No doubt they will focus on the failure of Obama’s stimulus plan, voluntarily taken hostage by Wall Street’s financiers43, and point at government borrowings, out of control under the combined effects of growing spending and diminishing tax revenues, as described in this issue. Indeed, this process will directly affect them mainly via the international monetary crisis induced by US default and the Dollar crisis.



Foreign Exchange Risks: Facing an unprecedented situation Corporate treasurers and financial directors should prepare for a period of high volatility in terms of risk. The second half of 2009, with the failure of the international monetary system and the beginning of the post-Dollar era, will certainly be a period of unprecedented currency volatility in decades. Both suppliers and customers will experience unpredictable changes. Three parameters will therefore be volatile: the parity of the invoicing currency, as well as the currency of the importer and the currency of the customer. All concerned companies should quickly make simulations involving atypical variations up to 1 Euro = 2 USD or 1 USD = 5 Yuan ... and draw conclusions regarding orders, suppliers and markets. The chronic instability which will prevail in the absence of a new stable system (resulting from the G20’s incapacity to discuss the key problems) also requires not making decisions with a commitment beyond six months.

EU / Rest of the world relations: An even larger majority of respondents expect a collapse of the US dollar in the next few months / An increased majority think the crisis will not be over by 2012 / A near-unanimity estimate that the decisions taken at the London G20 Summit will not significantly help solving the crisis / A very large majority consider that the measures announced at the G20 Summit will not be implemented / A very large majority estimate that China will try to dispose of its US dollar-denominated assets

Apparently, the G20 Summit has failed to convince the Europeans, despite staggering media coverage. In fact, none of the respondents (0 percent is a blatantly clear result) estimate that the decisions taken at the G20 will significantly contribute to solving the crisis (while 93 percent believe they will not). This clearly means that the Europeans estimate that the summit failed to address the key questions. These figures are appalling, but the worst is yet to come: 83 percent of respondents think that measures announced at the G20 summit will simply never be implemented.


The U.S. Conference of Mayors' top staffer says much of the public has grown "numb" to a mounting body count. At least nine mass killings this year have claimed 57 lives, including the fatal shootings last week of 13 people at an immigration center in Binghamton, N.Y.

"As a country, we seem to be more interested in the origin of tainted pistachios, peanuts and ice cream than the people who are being killed in our cities," says Tom Cochran, executive director of the mayors' group. He has scheduled a "national conversation" on the shootings when the group meets in June in Providence.


One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.

The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials—from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere—trudging to the fund when circumstances were dire and all else had failed.

Every crisis is different, of course. Ukraine faced hyperinflation in 1994; Russia desperately needed help when its short-term-debt rollover scheme exploded in the summer of 1998; the Indonesian rupiah plunged in 1997, nearly leveling the corporate economy; that same year, South Korea’s 30-year economic miracle ground to a halt when foreign banks suddenly refused to extend new credit.

But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess—exports must be increased, and imports cut—and the goal is to do this without the most horrible of recessions. Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out.


The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy “stress scenario” that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.

Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.

The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.


Many countries had policies prohibiting private possession of gold and / or setting up forced sales to the State at ridiculous prices. The United States and Germany have experienced such situations in the twentieth century. The United States also maintained a ban on private possession of gold from 1934 to 1974. That is why, for the last two years LEAP/E2020, has regularly reminded its subscribers that one must be wary of the gold market and closely monitor the attitude of public authorities in this area. If they do plan on doing this will they let the price of gold/silver rise to the levels that they should be at before they make it illegal? Although currently it is useful to diversify up to 30% of one’s assets into precious metals (gold, silver, platinum).


Avery Goodman has published two interesting articles on the subject referring to two cases invoking the possibility that the New York Stock COMEX is already out of stocks of gold for certain product categories and that the European Central Bank has intervened discreetly to avoid a problem of coverage in the same market. Sources : SeekingAlpha, 03/27/2009 ; SeekingAlpha, 04/02/2009


Link

alek_a said...

Thanks FOFOA.

In the middle of the article there are 7 paragraphs, beginning with "One thing you learn rather quickly..." and ending with "... Let us hope it is not then too late.", are from an article in "The Atlantic" that someone linked to in some of your previous posts.

FOFOA said...

Hi Alek,

Yeah, I noticed that too. Perhaps LEAP 2020 quoted the article. The next paragraph sounded like a quote from something else too.

I don't know.

But I did read that article, The Quiet Coup, about a month ago, when Jim Sinclair posted it and sent an email alert about it.

FOFOA

FOFOA said...

Alek,

You asked about a book recommendation that would take a scholarly look at the crisis. Jim Willie recommends Trace Mayer's book at the end of his latest article. His description sounds like something you might be interested in...

CREDIT CRISIS AUTOPSYHere is fine piece of analytic work from a friend named Trace Mayer. He comes to the gold community with a different slant and background. He has a law scholar with emphasis on the Constitution, especially how it applies to the gold and currency topics. In his e-book entitled "The Great Credit Contraction" one can read about the historical significance of a crisis that will surely reshape the world. The global economy is built on an illusion currency that is evaporating before our very eyes. This book is an autopsy of the current worldwide systems and begins with financial history, discusses the current great deflationary credit contraction, projects the future environment, and concludes with suggestions on how to generate and preserve wealth in this challenging time. An appendix analyzes important topics. (CLICK HERE TO ORDER)

Check out Trace's site: http://www.runtogold.com/His articles are top notch.

This article I linked recently was really good: Global Quantitative Easing(I have not read his more recent articles, but I will)

And notice that his theories and his book are based on this inverse pyramid that is very similar to the one I made for All Paper is STILL a short position on gold.
(By the way, I did not see his pyramid until after I did that post)

I think I will have to order his book as well!

Sincerely,
FOFOA

FOFOA said...

Pure poetry from Eric Janszen's latest...

"...In the vast, raging deluge of falsehoods, fantasies, fabrications, and fake-outs that passes for news in the U.S., the river of informational sewage that collects in drips and spews from ducts and runoff of coin operated media outlets, occasional shimmering snippets of verified truth from immaculately credible sources bob improbably among torrential turd-waves of propaganda, hoopla, and fluff. From a perch at the shore they enter our field of vision and drift by like an immaculate flotilla of shimmering white swans on a river of shit, their incongruous beauty commanding our shocked attention..."

alek_a said...

Thanks, I will check links out. Have noticed the poetry from Janszen as well.

But, I am getting a small case of information overload lately.

Because I have been reading ZeroHedge.

These guys are going to ruin the world. I mean the quants. The depths to which they go in order to extract patterns. Oh.. My.. God. If they would only have applied this brainpower to actually create something. Show you how dislocated everything is.

This is what I *think* they are saying:

The current eqauity rally is based on government intervention and not fundamentals. This takes place at two levels. One is in the visible spectrum: deflationaty measures of the governemnt i.e. the TARPs, FASB rules and the AIG unwind that created the base for recent bank profits. In the invisible spectrum, about which ZeroHedge has some obsure evidence, the Visible Hand of the PPT has been involved. This usually goes through program trading, executed mostly by GS as a proxy/broker and visible on the NYSE reporting books, with monies originating in a number of hedge funds that are run by the best quants out there. The latter have been known to work on government sponsored research in "financial innovation". The monies are of course $-digits made by the FED with a keyboard.

The purpose of this is to support the so-called "crap rally" with as little money as possible and trap as many market participants, which are overwhelmingly on the short side now, as possible.

It is the "Trillion Dollar Media Campaign" to send the message to the world that the US has recovered and is profitable again while raping most of the market participants. The latter are usually the quants and most of the hedge funds that use alghoritms that now seem to not be working due to the crap rally which is based neither on fundamentals nor TA.

Possible problem is the increased risk of a Black Swan when one of the big market participants, which provides liquidity etc. to make an orderly market, fails.

Diabolic and fitting of the ruling elite, dont ya think?

FOFOA said...

Alek,

Thank you. I greatly appreciate your analysis and reduction of ZeroHedge's analysis. It is helpful to my Thoughts. Let's break this down further. I can see a few areas of thought that could be helpful.

First, let's try to get inside of the head of the PPT and understand their thoughts which lead to their strategy.

Second, let's try to figure out their risk/reward balance in the substantial risks they seem willing to take.

Thirdly, let's look for signs that they have taken the ultimate risk, as you say, "The monies are of course $-digits made by the FED with a keyboard." I don't think this is a foregone conclusion. And I think this is the greatest risk they could possibly take. However, like you, I suspect they are doing exactly this. And if they are, that they are also profiting personally from it.

Inside their head: So it seems like they think if they can financially destroy those betting against recovery, then they will have eliminated the opposition to recovery. They clearly take personal pleasure in stopping out the shorts in the middle of the night, and destroying anyone playing on margin. This has become a game to them, with pleasure derived from the pain of others. They (the PPT and our Govt.) have become sadists. And they self-justify this perversion by telling themselves it is for "the greater good". That if they can create a rally, that the sheep's 401K's will rise.

Risk/reward: There are so many risks to their strategy that one wonders what the rewards are that justify the risks. Personal gain to the participants who are "helping the PPT" is clearly one of them. Delaying the inevitable is another. As long as you delay, you still have a job that pays you big money. But I think the biggest reward these sociopaths receive is the temporary confirmation that they have god-like powers over the markets. There are certainly no long term selfless rewards, like actually fixing the economy.

Money from thin air: The greatest risk "they" (Ben Bernanke) could take would be to actually create funds for this purpose without jumping through the usual hoops of exchanging credits for public debt (Treasuries). Is it possible that "they" are doing this in the name of the greater good? Is it technically possible for Ben with the blessing of TreasSec and POTUS to simply "create funds" and let the quants play with them?

If this is happening, it is a complete affront to the entire system. And if it were exposed, it could bring down Washington, the President, the Fed and the entire system. This is why I call it "the ultimate risk".

Do you think they are doing this? Does ZeroHedge think so? Is there any evidence?

Jim Willie points to the Caribbean funds which have purchased more Treasuries than a large country. If this is the Fed purchasing Treasuries surreptitiously it is almost the same thing, but not quite. It is not quite as bad, because it is funding the Federal deficit. BUT.... if true, it shows that this type of "credit creation" is technically possible. And it is not a large step to then think that he is doing the same for the stock market.

If so, this means that raw dollars, digital credits, are being secretly added to the money supply to fuck around with the stock market and kill the shorts. Where does it stop? At what point do they say, okay, we should not create another $billion? And who is in on this scam? A scam against the entire world!

This is truly amazing.

FOFOA

alek_a said...

A few selected posts from the ZH blog:

-------------------------------
BarclaysPortableAlpha
8 hours ago
I think ZH is pointing exactly that when he is focusing on the quant angle: these are math driven "asset managers" who work fundamentally on a regression to the mean model. The reason why funds such as RenTec are allegedly down 15% YTD (with others down as much as 30%) is because the statistical model has failed over the past month. The two implications are: i) quants deleveraging and leaving market in droves is allowing for a perpetuation of the statistically irrational behavior as there is no one to push to mean regression, ii) the market will continue its parabolic trend until the last marginal purchaser is gone and the snapback will be vicious as all the sellers, currently on the sidelines including M/N quants, will flip to a long term regression program and the market will likely plummet when all bids get pulled. Talking to my superior (if nothing than at least in age) he says: "what will happen will likely be much much worse than October 1987, when we were told not to pick up any phones from clients trying to sell".

The timing of this crash is unpredictable of course.

---------------------------------

RobotTrader
8 hours ago
The Quant Collapse probably won't start until 1) The majority of all near-bankrupt NYSE stocks have rallied up the 200-day, 2) U.S. Dollar breaks out to new highs, 3) Gold experiences a shocking selloff, 4)Unprecedented currency volatility requires G-20 intervention on a grand scale.

With so many computers looking at the same "fundamentals", going long or short based on what all the other computers are doing, it would not surprise me to see some type of fantastic market dislocation that makes absolutely no sense at all to occur which will bankrupt many of these quant funds using leveraged trading strategies.

I think it will also climax with a major player getting totally liquidated at the worst possible time, which is what usually happens during times like these.

The market must turn down ASAP, otherwise, the SPY is going to make a beeline to the 200-day and take a lot of beaten down junker stocks with it on some shocking runs.

-----------------------------

OhmeOhmy
22 hours ago
It's just an article from years ago confirming the PPT. I didn't read it but here is the real truth.

These days there is no single entity, rather there are 6 large hedge funds located in the Reston Virginia, and DC area who are the commercial accounts.

The commercial accounts take their direction from either the Treasury or Fed depending on which branch has the lead. These hedge funds are the ones placing large orders to GS, JPM, etc... Market moving orders. So when you hear that 'paper is buying' large quantities on the floor you cannot really tell who it is and all you can do is speculate. It looks like it's coming from GS but they are just executing an order for a client. There is no trail back to Uncle Sam.

Do you really think the government would go directly to GS or JPM to place orders? That is laughable. Anyway the end result is the same, you are all getting gamed.

And our hero Tyler is the only one who is exposing the `real` truth so stay tuned to Zero Hedge. The monkey's got mad love for TD. Mad Mad Monkey Love.
----------------------------------

Jesus(2.0)comingsoon
16 hours ago
What is everyone smoking.....? Everything, i mean everything is pointing down, way down. Peoples ability to pull "cash" out of there homes. Manufacturing....... the building block, the fucking building block of society. No manufacturing, nothing after that.... if you dont have something to start with you need nothing else. Why design a box if nothing is going inside it. I have insider info- (yes) caterpillar is sitting on (4 billion) of equipment, they have had 75 % order cancellations within the last 3 months. They are down &0 YoY, this is from the very top of the corporation. Now you add in commercial property reeling from business imploding from the consumer inability to purchase all the cheap crap flowing in from china..... When this thing first started our top investment banks imploded, because they leveraged each ninja loan 30-1 , but now we have GE,GM,Citi,REIT's,AIG, we have the most important building blocks of our great nation K.O'd. Starbucks... ? Walmart.... ? What do we have to look forward to... ? Housing has dropped 30% & we have another 20% to go, its one big cluster f*ck. Credit cards, no money down...... 3 card monty, i mean how do you hand out no interest loans with no backround check ? Then you leverage this 25-1 & sell this to some guy in germany, please..... Madoff, Enron, Pirate Bay, everyone willing to screw "the guy next door" for a $. I mean we count McDonald's as part of our manufacturing numbers ???? , & i did not even start with the S.S. ponzi... And we owe china 2 trillion also...

High speed rail, green energy, on what ? production no...... more debt. so more debt to paper over our debt issues, ya' thats the ticket. The markets are up on smoke & mirrors, nothing is supporting this, nothing. Housing in cali is selling at 1998 levels, revert everything else to those levels then factor in a 5% over shoot, thats where we are heading... Picture after a nuclear bomb goes off everything sucks back toward ground zero & stabilizes before that shock wave blows everything to bit's. PIPP, TALF 1,2,3... 15.8, stress test... will not stop this blowback.

Get ready, reality hurts.... god bless america we need it !


Jesus(2.0)comingsoon
16 hours ago
* caterpillar is sitting on 4 billion worth of equipment & orders are down 70% YoY. This info is from the very top ..... & going forward , they expect it to take 5 years to get near recent production. This info- is from a person very,very, very high up the food chain. They have had 65% orders cancelled within the last 12 weeks...... This plant is 2 million sq. feet, they are only using 100,000, the lights are turned off in the rest of the plant..... this is ground zero,.... the SHTF, you think things are bad now just wait, black swan (58.2) x 6z coming soon......


Altan
16 hours ago
Awesome insights; I hope your name is ironic...


Jesus(2.0)comingsoon
15 hours ago
My info is coming from the president of a very large manufacturing plant in illinois. He is calling EVERYONE no one has anything going on. Many shops are within weeks of going bust, forget everything else. These guys are the canary in the coal mine, everything works of manufacturing. He is even talking with govt. brokers trying to get military work, everything has stopped. Some of his biggest costumers are going bust, hes taking a 2 million dollar hit..... not good.

-----------------------------

ms
5 hours ago
If the market continues to go up and the leveraged ETFs continue to set new lows, those (like me) holding them are screwed even if we are right about the ultimate outcome.

Please keep probing the quant fund managers and share any thoughts ASAP. Many of us are suffering badly on paper right now and are shocked at the markets continued rise. My gut feeling is that there will be movement downwards Mon/Tues. of next week and the market topped out last week.

By the way, Bridewater's Pure Alpha fund is also a quand fund right? From reading Fortunes article on them, they believe a D-process is underway but they might have been caught off guard by the strength of the rally.


OhmeOhmy
5 hours ago
Here's the way it's going to play out, son.

http://i40.tinypic.com/awsrqb.jpg

Cut your loses or if you can manage to reverse your positions do it. We still have a couple hundred S&P points to go till a major trend change which is going to be sideways movement for about 3 months. Going forward: trade ETF's the way they were originally setup to trade. Quick ins and outs.

And what is going to pressure the market downward on Mon/Tues. of next week? Good earnings from banks or tech? Rosie guidance from others? Or positive stress test news leaks...

As one amusing commenter said to TD last week; "Don't go chasing waterfalls".


ms
3 hours ago
You must be a very rich man with your crystal ball. I can't preclude it going to S&P 1000 if trends persist but I think that something really bad will come out in the next two weeks or so which will stop the trend in its tracks. I do understand the risk with the leveraged ETFs and how they work - we'll just have to see what happens!


OhmeOhmy
2 hours ago
Now MS,
Let's not trade insults. Schill told me I had to be more productive, so I'm extending some knowledge my friend.

The chart shows a simple fib pattern, we haven't even retraced to the 38% level from the low and that 89 day moving average is calling out to those candles like Sirens to Sailors. There is no news in the pipeline that cannot be prettied up with some Obama lipstick and a squirt of Burberry Weekend.

In short, this is the kind of pig that any investor would be proud to bring home to momma because she has so much proven potential and she is backed by the full faith and credit of the United States Government.

We have live buyers flooding the market. Money from bonds, retail, and overseas. Did you see how strongly we closed every day over the last couple weeks.

I hate to see people lose a lot of money. A little is fine because it happens to us all, but a lot is not good.

--------------------------------

BarclaysPortableAlpha
8 hours ago
I think ZH is pointing exactly that when he is focusing on the quant angle: these are math driven "asset managers" who work fundamentally on a regression to the mean model. The reason why funds such as RenTec are allegedly down 15% YTD (with others down as much as 30%) is because the statistical model has failed over the past month. The two implications are: i) quants deleveraging and leaving market in droves is allowing for a perpetuation of the statistically irrational behavior as there is no one to push to mean regression, ii) the market will continue its parabolic trend until the last marginal purchaser is gone and the snapback will be vicious as all the sellers, currently on the sidelines including M/N quants, will flip to a long term regression program and the market will likely plummet when all bids get pulled. Talking to my superior (if nothing than at least in age) he says: "what will happen will likely be much much worse than October 1987, when we were told not to pick up any phones from clients trying to sell".

The timing of this crash is unpredictable of course.


OhmeOhmy
4 hours ago
Yes, it will happen in 2039. 51.6 years from 1987. The final of the 6 waves.

8.6153846615

--------------------------------
It is also enrirely possible that the ZeroHedge blog is just manipulating itself, with sinister purposes. Things can be confusing at times.

And yes FOFOA, I think this is turning to be just simply pure evil.

I would also not try to look at motives etc. since I think that they (government positions and large influences) all sense that the game is up and their horizon is getting shorter and shorter.

FOFOA said...

Thanks Alek,

"I think that they (government positions and large influences) all sense that the game is up and their horizon is getting shorter and shorter."

I suppose this alone is enough reason to take the ultimate risk. At some point all that funny money must be converted to hard money if this is their game plan. An "endgame exit strategy"?

FOFOA

FOFOA said...

Goldman Sachs exposed - Massive Conspiracy
by "Patrick the Painter"

FOFOA said...

Paul Volcker, former chairman of the Federal Reserve... "said a review the Federal Reserve's role, something traditionally regarded as taboo, now seems inevitable given the fallout from the long-running financial crisis.

"For better or worse, we are at a point where the Federal Reserve Act is going to be reviewed," said Volcker.

The wide range of proposals, from giving the Fed much more supervisory authority to stripping it of part of its current authorities, "are just an indication of how wide open that question is going to be."

Reuters Sat. April 18, 2009

PragmaticStatistic said...

In regard to your post thanking PragmaticStatistic for posting your link to this article, I was glad to do it. The link comes from an article I commented on on Politico.com about Wife Of TARP CEO Whines About Loss Of Luxury, Social Status.

Anonymous said...

Hi, I'm Brazilian and all this talk about how money might be reminded me of this.

There is community in northeast of Brazil, in the state of Ceará (one of the poorest regions of BRazil) that founded their own bank and print their own money.

There are people from Germany there making a doc movie about their bank. There is a post on Youtube about this bank too.

The name of the bank is "banco Palmas".
http://www.bancopalmas.org/site.php


I don't know if there is anything about it in English, but Portuguese is not too hard to understand if you know some Spanish.

FOFOA said...

Thank you Anonymous,

I will look into that. I am very curious about Brazil. Its monetary problems are not discussed as often as other places like Argentina. Please feel free to share anything else you have on the subject, like past currency problems, problems with the IMF etc...

Sincerely,
FOFOA

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