Handicapping the Collapse
By: Jim Willie CB
Friday, 9 March 2012
Scattered diverse and almost uniformly unfavorable and dangerous events are unfolding, as the global economy and financial structure undergoes the equivalent of endless earthquakes and bombardment of solar emissions. Reporting is difficult, since information is distorted toward the sunny side. Events are moving fast, as quickly as the danger level is rising. As conditions worsen, the hype and spin has risen almost out of control. The political machine, tied at the hip to the banking apparatus, has ramped up the growth story even as the strain on the information spin has become more visible and subject to heavy criticism. A re-election year is always fraught with risk of unmasked falsehoods making headlines. For some reason the Mayans have been lifted in prominence despite their cultural vanishing act. Like calling the dodo bird the epitome of future evolution in the aviary world of ornithology. The Jackass prefers the eagle, hawk, and falcon. Nonetheless, the list of acts on stage is replete with stories of collapse. A review is useful. Keep in mind that whatever happens to Greece will serve as vivid preview of what is to come in Italy, Spain, and perhaps France. Much more ruin comes. Witness the great unraveling. The only winners will be tangibles, like gold, silver, crude oil, and farmland.
GREEK TRAGEDY TURNS INTO CONGAME FARCE
Notice the debt solution to the debt problem handed to Greece, shoved down their throats. More specifically, observe the austerity budget requirements that assure economic deterioration. No exception has been offered, yet the same prescription is applied that results in job cuts, project termination, and greater deficits. Observe the bond swaps of new faulty bonds for old impaired ruined bonds. No solution there. Observe the strongarm methods of powerful coercion to enable the bond holders a cooperative role in the process. Observe the asset grabs and seizures tied to collateral in previous debt agreements. Observe the vacuum effect of money fleeing the Greek banking system. Observe the profound economic recession, far worse than reported. Observe the chaos in the streets, as the people are angry that decisions are made without their participation, acknowledgement, or approval. As the Greek debt default continues down the road, with delays and distortions to its view, the only assurance is the end point. The banks resist a liquidation or exit from the Euro currency, since it would spell sudden death failure for many large European banks. The nation must exit the Euro currency in order to write down its debt more effectively (rather than trade it), in order to be in a position to devalue it for a true stimulus, in order for a fresh start out from under the banker thumb. Let’s watch the details of the Credit Default Swap, whether a default event is ordered. Be sure to know that the claimed $3.2 billion in net CDS payouts is a grand lie. If $200 billion is offset by $196.8 billion between Group A versus Group B (guessed hypothetical numbers), then know clearly that Group A is deader than dead, while Group B will never by paid by the dead counter-party. The CDS sham reveals mutually dead financial entities, not offsetting calculus.
PHYSICAL GOLD DRAINAGE BACKFIRE
Amazing what can be done when 22 million paper gold ounces is dropped on the market on a single day, the Leap Year Day of all days. Witness the leap downward in paper gold price and perceived market integrity. No need for an honest market. The CFTC remains asleep at the wheel, or with eyes firmly fixed on their master clubhouse on Wall Street, the chain tugged hard. The end result, as described by the notorious London Trader on King World News, is that a magnificent amount of physical gold is leaving the COMEX and LBMA. The United States remains transfixed on the paper gold price. The real action lies in the physical London gold market, where Asians are fast draining the London gold supply. Once again, a powerful dichotomy exists. The Boyz can control the paper gold price, but they are therefore gifting the Asian buyers with a hefty discount that results in truckloads of gold bullion rolling out the ramps in delivery. As desperation rises to ambush with naked gold sales devoid of metal, enabled by USGovt and UKGovt watchful eyes, the gold inventory is fast vanishing. The divergence will continue to play out, as the paper gold price might decline but the physical gold price will rise. The COMEX will become an irrelevant arena empty of inventory, even as London rots hollow. The gold price on the real physical honest side must continue upward, since supply is fast doing a vanishing act. It is going from West to East and will not return in our generation, along with true power. The recent episode of vast paper gold sales without benefit of collateral metal cannot keep the gold price down. It is recovering. The rally to $2000 was not permitted. The event has merely marked the road with a support level. Nothing can keep gold down, nothing. It is real money in an era when paper masquerading as money is being revealed for its faulty makeup, subject to acid drips.