“Last weekend at Davos, Nouriel Roubini told BI’s Joe Weisenthal that it seemed   markets had sailing into a perfect storm, resulting in lots of volatility.

“…Between Chinese PMI of 50, Argentina letting its currency go, noises coming politically from Ukraine, Turkey, and Thailand … [the] contagion is not just within emerging markets but also affects advanced economies’ equity markets.

This evening Société Générale says, that, indeed it sure looks like we have.

In a note to clients titled “Perfect Storm Brewing As Policy Turns,” they write:

Following a week of extreme volatility in emerging markets, many wonder if we are now heading for a perfect storm, with China increasingly sucked in and Europe’s already low inflation falling further towards deflation. The current developments also mark a shift in markets’ focus on where the need for policy change is the greatest…”

Full article

“While the government reported Thursday that economic growth totaled 3.2 percent annualized in the fourth quarter, there are signs of weakness under the surface.

The housing market is starting to show some cracks. New home sales dropped 7 percent to a 414,000 annualized rate in December amid rising interest rates and extremely cold weather in much of the country.

The National Association of Realtors reported Thursday that its pending home sales index, based on contracts signed, fell 8.7 percent last month, the biggest plummet since May 2010.

“Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers,” NAR chief economist Lawrence Yun said in a statement, Reuters reports.

Mark Zandi, chief economist at Moody’s Analytics, says the housing sector may pose the biggest threat to his forecast of 3 percent GDP growth this year.

“We need to see more home sales, more housing construction,” he told Yahoo. “Housing is very interest-rate sensitive. If rates rise too far too fast, it short-circuits the housing recovery. Then we won’t get the economic growth I am anticipating.”

Recent employment data have been shaky, too. The economy added only 74,000 jobs in December. The labor force participation rate, which measures the proportion of people who are employed or looking for work, dipped to 62.8 percent last month, matching October’s 35-year low.

“The medium- to long-term concern is labor-force participation,” Vincent Reinhart, chief U.S. economist at Morgan Stanley, told Bloomberg. “Our population growth has slowed, fewer people want to work and productivity growth seems to have slowed.”

The Labor Department reported Thursday that initial jobless claims rose 19,000 to a seasonally adjusted 348,000, the highest level in more than a month. And claims for the previous week were revised up by 3,000.

Much of the economy’s strength in the third and fourth quarters last year (GDP grew 4.1 percent in the third quarter) stemmed from increasing inventories….}

Full article 

“Maximilian Forte’s book on the Libyan war, Slouching Towards Sirte: NATO’s War on Libya and Africa ( Baraka Books, 2012), is another powerful (and hence marginalized) study of the imperial powers in violent action, and with painful results, but supported by the UN, media, NGOs and a significant body of liberals and leftists who had persuaded themselves that this was a humanitarian enterprise. Forte shows compellingly that it wasn’t the least little bit humanitarian, either in the intent of its principals (the United States, France, and Great Britain) or in its results. As in the earlier cases of “humanitarian intervention” the Libyan program rested intellectually and ideologically on a set of supposedly justifying events and threats that were fabricated, selective, and/or otherwise misleading, but which were quickly institutionalized within the Western propaganda system. (For the deceptive model applied in the war on Yugoslavia, see Herman and Peterson, “The Dismantling of Yugoslavia,” Monthly Review, October 2007; for the propaganda model applied to Rwanda, see Herman, “Rwanda and the New Scramble for Africa,” Z Magazine, January 2014)

The key elements in the war-on-Libya model were the alleged acute threat that Gaddafi was about to massacre large numbers of civilians (in early 2011), his supposed use of mercenaries imported from the south (black Africans!) to do his dirty work, and his dictatorial rule. The first provided the core and urgent rationale for Security Council Resolution 1973 [R-1973], passed on March 17, 2011, which authorized member states “to take all necessary measures…to protect civilians and civilian populated areas under threat of attack in the Libyan Arab Jamahirija, including Benghazi, while excluding a foreign occupation force in any form…” Its fraudulently benign and limited character was shown by this exclusion of an occupation force, as presumably any actions under this resolution would be limited to aircraft and missile operations “protecting civilians.” Its deep bias is shown by its attributing the threat to civilians solely to Libyan government forces, not to the rebels as well, who turned out to greatly surpass the government forces as civilian killers, and with a racist twist.

As Forte spells out in detail, the imperial powers violated R-1973 from day one and clearly never intended to abide by its words. That resolution called for the “immediate establishment of a cease-fire and a complete end to violence,” and “the need to intensify efforts to find a solution to the crisis” and to facilitate “a dialogue to lead to the political reforms necessary to find a peaceful and sustainable solution.” Both Gaddafi and the African Union called for a cease fire and dialogue, but the rebels and imperial powers were not interested, and the bombing to “protect civilians” began within two days of the war-sanctioning resolution, without the slightest move toward obtaining a cease fire or starting negotiations.

Forte also shows that it was clear from the start that the imperial-power-warriors were using civilian protection as a “figleaf” cover for their real objective—regime change and the removal of Gaddafi (with substantial evidence that his death was part of the program and carried out with U.S. participation). The war that followed was one in which the imperial powers worked in close collaboration with the rebel forces, serving as their air arm, but also providing them with arms, training and propaganda support. The imperial powers, and Dubai, also had hundreds of operatives on the ground in Libya, training the rebels and giving them intelligence and other support, hence violating R-1973’s prohibition of an occupation force “in any form.”

Forte shows that the factual base for Gaddafi’s alleged threat to civilians, his treatment of protesters in mid-February 2011, was more than dubious. The claimed striking at protesters by aerial attacks, and the Viagra-based rape surge, were straightforward disinformation, and the number killed was small—24 protesters in the three days, February 15-17, according to Human Rights Watch—fewer than the number of alleged “black mercenaries” executed by the rebels in Derna in mid-February (50), and fewer than the early protester deaths in Tunis or Egypt that elicited no Security Council effort to “protect civilians.” There were claims of several thousand killed in February 2011, but Forte shows that this also was disinformation supplied by the rebels and their allies, but swallowed by many Western officials, media and other gullibles. That the actual evidence would induce the urgent and massive response by the NATO powers is implausible, and the rush to arms demands a different rationale than protecting civilians in a small North African state. Forte provides it, compellingly—Obama and company were seizing the “window of opportunity” for regime change.

Forte demonstrates throughout his book that from the beginning of the regime-change-war the bombing powers were not confining themselves to protecting civilians, but were very often targeting civilians. He shows that, as in Pakistan, they used “double-tapping,” with lagged bombings that were sure civilian killers. They were also bombing military vehicles, troops and living quarters that were not attacking or threatening civilians. They also bombed ferociously anywhere their intelligence sources indicated that Gaddafi might be present. Forte also shows that the rebels were merciless in brutalizing and slaughtering people viewed as Gaddafi supporters, and in the substantial parts of the country where Gaddafi was supported, the rebels’ air-force (i.e., NATO) was regularly called upon to bomb, and it did so, ruthlessly.

Forte’s book title, Slouching Towards Sirte, and his front cover which shows devastated civilian apartment buildings in that city, focus attention on the essence of the NATO-rebel war. Sirte was Gaddafi’s headquarters, and its populace and army remnants resisted the rebel advance for months, so it was eventually bombed into submission with a large number of civilians killed and injured. Forte notes that when NATO finally caught up with Gaddafi and bombed and decimated the small entourage that was with him on the outskirts of Sirte, this was justified by NATO because this group could still “threaten civilians”! This was a town that had to be destroyed to save it—for the rebels, who Forte shows (citing Human Rights Watch, Amnesty International and UN and other observers) executed substantial numbers of captured Gaddafi supporters. This was a major war crimes scene. The civilians in Sirte needed protection, from NATO and the rebels.

R-1973 explicitly mentions Benghazi as a massacre-threatened town, but Forte points out that no document or witness was ever turned up during or after the war that indicated any Gaddafi plan to attack Benghazi, let alone engage in a civilian slaughter. Furthermore, Forte notes that “the only massacre to have occurred anywhere near [Benghazi] was the massacre of innocent black African migrant workers and black Libyans falsely accused of being ‘mercenaries’….” The rebels and their air force smashed a stream of towns in Eastern Libya, killing and turning into refugees many thousands of civilians. The destruction of Sirte, similar to what R-1973 and the “international community” claimed to fear for Benghazi, and the lynching of Gaddafi, elicited no “grave concern” over “systematic violations of human rights,” or call for any Chapter 7 response from the Western establishment. So in this Kafkaesque world the rebels and NATO behaved just as the “international community” claimed Gaddafi would behave, and the civilian casualties that resulted from the rebel-NATO combination vastly exceeded anything done by Gaddafi’s forces, or any probable civilian deaths that would have resulted if NATO had stayed away.

This conclusion is strengthened by the fact that the rebels, from the beginning, pursued a race war. Forte stresses the importance in rebel actions of the hatred flowing from the rebels to Gaddafi forces and those deemed his supporters, which the rebels took to include anybody with a black skin. Many thousands of blacks were picked up by rebel forces, accused without the slightest proof of being mercenaries, and often executed. Among the many cases that Forte describes, in one a hospital was destroyed and dozens of its black patients were massacred. The largely black population of the sizable town of Tawargha was entirely expelled by the rebels. This racism pre-dates the 2011-2012 war, and resulted in part from Gaddafi’s policies reaching out to other African states, his relatively liberal treatment of black immigrants, and his inadequate counter-racist educational and economic-social policies that would alleviate distress at home. But Gaddafi was not a racist, whereas large numbers of the rebel forces (the “democratic opposition” in Western propaganda) were, and their successes, with NATO’s help, allowed them to perform as a lynch mob in many places (as Forte documents).

The racist character of the war was reflected in the frequent focus on “black mercenaries” allegedly imported and used by Gaddafi. This was reiterated time and again by the rebels and their supporters and propagandists. Forte shows that this claim was not merely inflated, it was a lie. There were no black mercenaries brought in by Gaddafi. But the claim of the threat posed by his alleged resort to “mercenaries” (read: black mercenaries) was repeated by officials (e.g., Susan Rice and Hillary Clinton) and the mainstream media, and found its way even into R-1973 (“Deploring the continuing use of mercenaries by the Libyan authorities”). The charge was reiterated often by the rebels in justifying their systematic abuse of blacks during the war.

Note that for a Western target there are “mercenaries” whereas for big time killers there are “contractors.” We may note also that while the word “genocide” was often used to describe Gaddafi’s threat to the rebels and their supporters, in fact, the only facet of this conflict in which a special ethnic group was targeted for mistreatment and removal, and on a large scale, was the rebel focus on, and treatment of, black people. This point has, of course, escaped Western commentators on human rights.

There is another important race element involved in the Libyan war and regime change. Gaddafi was a devoted supporter of the idea of African independence, unity and escape from Western domination. He was a central figure in the organization of the African Union, served as its chairman, and called repeatedly for a United States of Africa, and for African lending and judicial authorities that could free Africa from subservience to the IMF, World Bank and international justice. He also invested substantial sums in African institutions, including schools, hospitals, mosques and hotels. Forte shows that this Africanist thrust troubled U.S. and other Western authorities, often frustrated at Gaddafi’s frequent unwillingness to help Western investors as well as threatening Western plans to advance their military-political-economic position in Africa. Thus, regime change and Gaddafi removal dealt a major blow to African unity and breathed new life into AFRICOM and the West’s power in the scramble for control and access in this resource rich but fragmented and militarily weak area….”

Full article

A most interesting turn of events leading to the removal of Qaddafi 

“Why isn’t GE being held accountable?

We all know that the radiation from the stricken Fukushima plant has spread around the globe and is poisoning people worldwide. We all know that the West Coast of the United States is being polluted with radioactive debris and that the oceans, the beaches that border them, and even the air is becoming more polluted by radioactivity as time goes on.

You have to ask yourself why the government won’t admit this. It’s not like a disaster half a world away is their fault, is it?

Or is it? Could the United States government have done something to prevent the situation getting to this point?

Nothing in this article is a state secret, everything is in the public domain, but the information is so disseminated that it appears disconnected.

• the US government knows only too well that the West Coast is polluted with radiation and that the situation is getting worse by the day.
• the US government and General Electric knew that Fukushima was a disaster waiting to happen, and they did nothing to prevent it.
• they also know that the many nuclear reactors in the United States are also prone to catastrophic meltdown, and they are doing nothing about it.
• research by doctors and scientists is being suppressed, and research by private citizens is being written off purely because they have no scientific background.

 All the warnings were ignored

The narrative that leads us to the state we are in today starts in 1972.

Stephen Hanauer, an official at the atomic Energy Commission recommended that General Electric’s Mark 1 design be discontinued as it presented unacceptable safety risks.

The New York Times reported:

In 1972, Stephen H. Hanauer, then a safety official with the Atomic Energy Commission, recommended that the Mark 1 system be discontinued because it presented unacceptable safety risks. Among the concerns cited was the smaller containment design, which was more susceptible to explosion and rupture from a buildup in hydrogen — a situation that may have unfolded at the Fukushima Daiichi plant. Later that same year, Joseph Hendrie, who would later become chairman of the Nuclear Regulatory Commission, a successor agency to the atomic commission, said the idea of a ban on such systems was attractive. But the technology had been so widely accepted by the industry and regulatory officials, he said, that “reversal of this hallowed policy, particularly at this time, could well be the end of nuclear power.” (source)

Then, three years later in 1975, Dale Bridenbaugh and two colleagues were asked to review the GE Mark 1 Boiling Water Reactor (BWR). They were convinced that the reactor was inherently unsafe and so flawed in its design that it could catastrophically fail under certain circumstances. There were two main issues. First was the possible failure of the Mark 1 to deal with the huge pressures created if the unit lost cooling power. Secondly, the spent fuel ponds were situated 100 feet in the air near the top of the reactor.

They voiced their opinions, which were promptly pushed aside, and after realizing that they were not going to be allowed to make their opinions public all three resigned.

Over the years numerous other experts voiced concerns over the GE Mark 1 BWR. All have gone unheeded.

Five of the six reactors at Fukushima were GE Mark 1 BWR. The first reactor, unit one, was commissioned in 1971, prior to the first concerns about the design being raised. The other reactors came on line in 1973, 1974, 1977, 1978 and 1979 respectively. Although all six reactors were the GE Mark 1 design only three were built and supplied by GE. Units 1, 2 and 6 were supplied by GE, 3 and 5 by Toshiba and unit 4 by Hitachi. (Now Hitachi-GE)

Why isn’t GE being held accountable?

Why wouldn’t GE be held accountable? Here’s one possibility: Jeffery Immelt is the head of GE. He is also the head of the United States Economic Advisory Board. He was invited to join the board personally by President Obama in 2009 and took over as head in 2011 when Paul Volcker stepped down in February 2011, just a month before the earthquake and tsunami that devastated Fukushima.

Paul Volcker was often seen as being at odds with the administration, and many of his ideas were not embraced by the government. The appointment of Immelt, a self-described Republican, was seen as a move to give Obama a leg up when dealing with the Republican majority in the House.

There have been calls from many organizations for GE to be held accountable for the design faults in the reactors that powered the Fukushima plant. The fact that they had been known for so long does seem to indicate that the company ignored and over-ruled advice from nuclear experts.

GE ran Fukushima alongside TEPCO, but it isn’t liable for the clean-up costs.

A year after the disaster, Tepco was taken over by the Japanese government because it couldn’t afford the costs to get the damaged reactors under control. By June of 2012, Tepco had received nearly 50 billion dollars from the government.

The six reactors were designed by the U.S. company General Electric (GE). GE supplied the actual reactors for units one, two and six, while two Japanese companies Toshiba provided units three and five, and Hitachi unit four. These companies as well as other suppliers are exempted from liability or costs under Japanese law.

Many of them, including GE, Toshiba and Hitachi, are actually making money on the disaster by being involved in the decontamination and decommissioning, according to a report by Greenpeace International.

“The nuclear industry and governments have designed a nuclear liability system that protects the industry, and forces people to pick up the bill for its mistakes and disasters,” says the report, “Fukushima Fallout.”

“If nuclear power is as safe as the industry always claims, then why do they insist on liability limits and exemptions?” asked Shawn-Patrick Stensil, a nuclear analyst with Greenpeace Canada.

Nuclear plant owner/operators in many countries have liability caps on how much they would be forced to pay in case of an accident. In Canada, this liability cap is only 75 million dollars. In the United Kingdom, it is 220 million dollars. In the U.S., each reactor owner puts around 100 million dollars into a no-fault insurance pool. This pool is worth about 10 billion dollars.

“Suppliers are indemnified even if they are negligent,” Stensil told IPS. (source)

GE will not have put anything into this ‘pot’ to cover Fukushima, as it is not in the United States. They have walked away, even though they knew their reactors have design faults.

Wait! There’s more!

It’s not that simple, though; and here’s where keeping quiet and denying what’s happening comes into its own.

So far I have not explained why Obama is keeping quiet about the radiation contamination. Well, that’s the easy part.

There are 23 nuclear plants in the United States that use the GE Mark 1 BWR.23.

There are 23 nuclear plants in the United States where the used fuel rods are suspended, in a pond, 100 feet above the ground. (source)

Any admission that radiation has spread across the Pacific Ocean and contaminated American soil is an admission that the technology was flawed, and that same flawed technology is being used in the United States. ….”

Full article

“Financial markets and their cheering section are trumpeting the U.S. economic recovery, but it may be a false dawn in America, according to Stephen Roach, a Yale University economist and former Morgan Stanley Asia chairman.

Roach said the good news is that GDP appeared to grow in the back half of 2013, the official jobless rate is down and the Federal Reserve feels confident enough to taper back on its mountain of monetary stimulus.

“But my advice is to keep the champagne on ice,” he said in an opinion piece for Project Syndicate. “Two quarters of strengthening GDP hardly indicates a breakout from anemic recovery. The same thing has happened twice since the end of the Great Recession in mid-2009. . . . In both cases, the uptick proved to be short-lived.”

Roach suspects most of the “growth” the nation has experienced is derived from inventory re-stocking by companies rather than actual sales. In reality, he said, the nation is caught in the vice of a continuing “balance-sheet recession” among consumer households.

“In the past, when discretionary spending on items such as motor vehicles, furniture, appliances and travel was deferred, a surge of ‘pent-up demand’ quickly followed.

“Not this time. The record plunge in consumer demand during the Great Recession has been followed by persistently subpar consumption growth.”

Roach compared the American consumer to Japan’s corporate “zombies” — companies that have been rendered essentially lifeless by balance-sheet problems for years on end, but which are still in business….”

Full article

“(Reuters) – Robust household spending and rising exports likely kept the U.S. economy on solid ground in the fourth quarter, but stagnant wages could chip away some of the momentum in early 2014.

Gross domestic product probably grew at a 3.2 percent annual rate, according to a Reuters poll of economists.

While that would be a slowdown from the third-quarter’s brisk 4.1 percent pace, it would be a far stronger performance than earlier anticipated, and welcome news in light of the drag from October’s partial government shutdown and a likely much smaller contribution to growth from a restocking by businesses.

“It looks like the economy was firing on a lot of cylinders in the fourth quarter,” said John Ryding, chief economist at RDQ Economics in New York….”

Full article

“Turmoil in emerging markets and a month of disappointing job growth at home are unlikely to deter the Federal Reserve from trimming its bond-buying stimulus on Wednesday, as Ben Bernanke wraps up his last policy meeting at the helm of the U.S. central bank.

Overall signs of improvement in the U.S. economy suggest Fed officials will stay on track to cut monthly purchases of Treasurys and mortgage-backed securities by $5 billion each, bringing the total of their monthly asset purchases to $65 billion.

The meeting is Bernanke’s last before Vice Chair Janet Yellen moves into the top spot.

Bernanke took the Fed far into uncharted territory during his eight years on the job, building a $4 trillion balance sheet and keeping interest rates near zero for more than five years to pull the economy from its worst downturn in decades.

With those efforts beginning to pay off — and concerns growing over possible harm from so much money printing — the Fed announced plans last month to phase out the bond buying by late this year unless the economy takes a decided turn for the worse.

It started by trimming its monthly purchases to $75 billion from $85 billion, and on Wednesday, the U.S. central bank is expected to shave another $10 billion.

“It’s clear the Fed wants to taper,” said Eric Stein, portfolio manager at Eaton Vance in Boston.

Even so, the Fed is nowhere near to making a decision to raise rates. Policymakers are expected to stick to their promise to keep rates near zero until well after the U.S. unemployment rate, now at 6.7 percent, falls to 6.5 percent. The Fed is set to announce its decision at 2 p.m. EST (1900 GMT).

A dismal employment report for December showing businesses added far fewer jobs than expected raised some doubts about the Fed’s commitment to keep tapering its stimulus.

But largely upbeat data in recent weeks, from consumer spending and confidence to industrial production, bolstered the view of an improving economy, which forecasters estimate grew at an above-trend annual rate of 3.2 percent in the fourth quarter after notching a 4.1 percent advance in the previous quarter.

The show of strength provides a welcome backdrop for Bernanke, who steps down on Friday after an unusually tumultuous and highly experimental stint atop the world’s most influential central bank.

EMERGING DISTRACTIONS

Steep losses in emerging market assets over the past week led some to question whether the Fed might put plans to trim its bond buying on hold. Analysts said the prospect of less Fed stimulus had added to other worries, from signs of slower growth in China to political turmoil in countries from Turkey to Thailand, and helped spark investors’ flight….”

Full article

Capital controls are beginning to weigh heavy on investor sentiment.

Despite currency devaluation and central bank tinkering with over night rates in Turkey and as of this morning South Africa; the trust trying to be instilled is not working as a spike in futures last night have been promptly given the homo hammer.

Perhaps, investors would rather wait to see what America’s central bank will do with tapering, before embarking on the ship of speculation aka ship of fools.

Barclays estimates the Euro Zone will have the most to loose if emerging market volatility continues. Read up here

As far as capital controls getting worse, well the writing is on the wall with actions from prominent banks along with negative commentary from the IMF, Bundesbank, and the Fed.

Read up on capital controls here

Overnight trading update

“Citizens of the U.S. and the world are heading into a future that few have prepared for.  It will also turn out to be much worse than most realize as it will be unlike anything we have witnessed in the past.

Part of the reason we are in such a bad fix has to do with the compartmentalization and specialization of our modern educational and economic system.  There are many intelligent people in the market doing smart things; however, they often have no clue on what the hell is going on in other industries or professions.

And then we have individuals who specialize in “Technical Analysis.”  Many who have read my posts and articles realize that I believe that technical analysis is worthless in a rigged market.  I also believe the big price moves in the gold and silver are more fundamental in nature than technical.

I explained this in detail in several recent articles by comparing the price movement of oil to that of gold and silver.  I have republished two charts below that show how the price of gold and silver moved in parallel with the price of oil in the 1971-1980 time period:

Here we can see that silver and gold moved in tandem with the price of oil.  Many investors still regurgitate the notion that the Hunt Brothers were solely responsible for pushing the price of silver to record highs in 1979.

If that was true, then who was pushing up the price of gold?  Or, how about oil… who was responsible for increasing the price of oil by a factor of 10, from $3.29 in 1973 to $36.83 in 1980?  If I were to ask these questions of someone who blurted out that the Hunt Brothers cornered the silver market… they would get a blank stare back from me, because they have no clue.

My articles get around the Internet.  Someone on another blog made the comment, “comparing the price of silver to oil was silly”.  They said it makes just as much sense to compare the price of silver to the price of potatoes.

Everyone is free to have their own opinion, but the fact is that energy is the key that drives the global economy.  Energy allows silver to be mined, refined, transported, minted, traded and consumed.  I happen to believe the price of energy controls the price of silver, and other commodities as well, for that matter.

Let me see if I can provide another example that may win over the worst skeptics.  If we look at the price movement of copper from 1971-1980, we see an interesting correlation to the price of oil:

Well… look at that.  It is perhaps just another coincidence, the price of copper had a similar trend to the price of oil.  As the price of oil shot up in 1979… so did the price of copper.  Hell, the 1979 and 1980 copper-oil price lines are almost identical.

Copper didn’t enjoy the same percentage gains as gold or silver as it isn’t a sought after monetary metal.  However, who was trying to corner the copper market in 1979-80 to push it up to new record highs?  Do you ever hear anyone asking that question?

I bring up this subject so investors realize that the big price moves of gold and silver parallel the price movement of oil and are not due to technical analysis.

The long-term technical analysis chart of silver below is suggesting that cycles and waves may predict the future price of silver.  I say throw-away the damn chart and follow the price of oil… it’s a much better indicator.

Why?  Because, if you were to overlay the price of oil on this chart, you would find a similar trend-line.  That being said, the price of oil is only a basic guideline to gauge the market price of gold and silver.

Due to the Financialization of the market by manufacturing hundreds of trillions of dollars worth of derivatives, fiat currency has been siphoned away from the physical market and into worthless paper garbage.  We have no idea what the prices and costs of goods, services and commodities would be if the majority of fiat currency was invested directly into the physical markets rather than the $trillions in leveraged paper claims.

I would like to touch on one more subject as it pertains to technical analysis before I get into the wonderful subject of economic collapse.

In a recent article, “Silver – The Power of Thought Will Ultimately Prevail” the author Michael Noonan stated the following:

We keep moving away from discussing fundamentals because the fundamentals have not been reliable indicators in the supply/demand equation that normally determines price. Yet, almost every single article focuses on the record sales of numbers of coins offered to the public, charts showing overwhelmingly favorable statistics that favor higher silver prices, cost factors for mine production, decreasing supply relative to increasing demand.

How many times, and in how many ways can the same information be presented over the past year, and yet the price of silver languishes near recent lows?People have an appetite for this kind of information. It serves as a crutch to bolster flagging belief that silver and gold will rally any time soon.

Fundamentals are real. We are not being dismissive of their importance. Instead, we see the perception of their impact as being misplaced, for now. Ultimately, they will prevail, but the greater area of focus of a failed fiat financial system deserves center stage.

I disagree with Mr. Noonan on his current assessment of the fundamentals.  While I don’t want to get into a TIT for TAT debate with Mr. Noonan on why I disagree, I believe it’s important to understand the difference between the two ideologies.

Mr. Noonan doesn’t focus on the fundamentals because they are, according to his analysis,  “unreliable indicators.”  Instead, he seems to suggest or imply that technical charts offer a better indicator.  Now, I may be guilty of putting words in his mouth as he did not directly say that, but if you read his articles, you will find technical charts rather than fundamental analysis.

I believe that the fundamentals are everything in a rigged market…. even when the paper price doesn’t reflect it.  It is more important to understand the energy fundamentals than it is to focus the on technical charts of silver.  As I explained above, oil has been the major indicator in driving the price of gold and silver (and yes… copper).

Also, when investors understand the fundamentals of the energy-cost structure in the precious metal industry, they will be able to see there is a floor for the price of gold and silver.  I still get investors emailing me stating that silver can go to $5.00 because it’s so cheap to mine.

In addition, technical analysis in a rigged market cannot grasp the serious problems looming in the energy industry.  I just got off the phone with energy analyst Bill Powers of PowerEnergyInvestor.com… and I have to say the information he shared about the U.S. Shale gas industry is alarming.  I will publish an article on this subject next week.

Let’s just say the price of natural gas in the United States is heading much higher.  This will not be because of technical analysis, but rather in response to important fundamental causes, forces and data.

If you are an individual who believes the garbage forecasts put out by the Large Bloated Worthless Banks and Brokerage Houses claiming 20 years of growing natural gas production at low prices of $4.00 Mcf here in the U.S., get ready for a rude awakening.

This is the reason Mr. Noonan’s opinion on the fundamentals are wrong.  While I agree with Mr. Noonan that the “Failed Fiat System” deserves focus, peak oil is the reason the Fiat Monetary System is headed for certain death.

Again… technical analysis is worthless in understanding the ramifications of peak oil and its impact on the United States and the world going forward.

The Coming Economic Collapse Will Be Much Worse Than Most Realize…”

Full article

“The trend for the stock market is going to be lower and lower so long as the Federal Reserve continues with its asset-tapering strategy, according to Charles Biderman, chairman of TrimTabs Investment Research.

Equity prices are dependent on the Fed, and not on the value of the companies that make up the market, Biderman told Yahoo.

“The bull market is solely due in my opinion to the Fed pumping money . . . more money chasing fewer shares. And the more money has come from the Fed.”

Biderman was surprised that very little new money has flowed into equities in January via mutual funds and exchange-traded funds. He said investors may have decided the economy is not growing that strongly and that ripple effects from declining emerging markets are taking effect.

But he suggested the fact the Fed has commenced cutting back its monthly asset purchases is definitely playing an outsized role. “If the Fed keeps tapering, the market will keep going down. If they stop the tapering and start printing again, then we’ll see a huge rally.” …”

Full article

“Backdrops conductive to crises can drag on for so long – sometimes seemingly forever – as if they’re moving in ultra-slow motion. Invariably, they lull most to sleep. Better yet, such environments even work to embolden the optimists. This is especially the case when policy measures are aggressively employed along the way, repeatedly holding the forces of crisis at bay. In the face of mounting risk, heightened risk-taking and leveraging often work only to exacerbate underlying fragilities. But eventually a critical juncture arrives where newfound momentum has things unwinding at a more frenetic pace. It is the nature of such things that most everyone gets caught totally unprepared.

…

Virtually the entire EM “complex” has been enveloped in protracted destabilizing financial and economic Bubbles. In particular, for five years now unprecedented “developed” world central bank-induced liquidity has spurred unsound economic and financial booms. The massive investment and “hot money” flows are illustrated by the multi-trillion growth of EM central bank international reserve holdings. There have of course been disparate resulting impacts on EM financial and economic systems. But I believe in all cases this tsunami of liquidity and speculation has had deleterious consequences, certainly including fomenting systemic dependencies to foreign-sourced flows. In seemingly all cases, protracted Bubbles have inflated societal expectations.

…

For a while, central bank willingness to use reserves to support individual currencies bolsters market confidence in a country’s currency, bonds and financial system more generally. But at some point a central bank begins losing the battle to accelerating outflows. A tough decision is made to back away from market intervention to safeguard increasingly precious reserve holdings. Immediately, the marketplace must then contend with a faltering currency, surging yields, unstable financial markets and rapidly waning liquidity generally. Things unravel quickly.

…

The issue of EM sovereign and corporate borrowings in dollar (and euro and yen) denominated debt has speedily become a critical “macro” issue. More than five years of unprecedented global dollar liquidity excess spurred a historic boom in dollar-denominated borrowings. The marketplace assumed ongoing dollar devaluation/EM currency appreciation. There became essentially insatiable market demand for higher-yielding EM debt, replete with all the distortions in risk perceptions, market mispricing and associated maladjustment one should expect from years of unlimited cheap finance. As was the case with U.S. subprime, it’s always the riskiest borrowers that most intensively feast at the trough of easy “money.”

So, too many high-risk borrowers – from vulnerable economies and Credit systems – accumulated debt denominated in U.S. and other foreign currencies – for too long. Now, currencies are faltering, “hot money” is exiting, Credit conditions are tightening and economic conditions are rapidly deteriorating. It’s a problematic confluence that will find scores of borrowers challenged to service untenable debt loads, especially for borrowings denominated in appreciating non-domestic currencies. This tightening of finance then becomes a pressing economic issue, further pressuring EM currencies and financial systems – the brutal downside of a protracted globalized Credit and speculative cycle.

In many cases, this was all part of a colossal “global reflation trade.” Today, many EM economies confront the exact opposite: mounting disinflationary forces for things sold into global markets. Falling prices, especially throughout the commodities complex, have pressured domestic currencies. This became a major systemic risk after huge speculative flows arrived in anticipation of buoyant currencies, attractive securities markets, and enticing business opportunities. The commodities boom was to fuel general and sustained economic booms. EM was to finally play catchup to “developed.”

Now, Bubbles are faltering right and left – and fearful “money” is heading for the (closing?) exits. And, as the global pool of speculative finance reverses course, the scale of economic maladjustment and financial system impairment begins to come into clearer focus. It’s time for the marketplace to remove the beer goggles.

No less important is the historic – and ongoing – boom in manufacturing capacity in China and throughout Asia. This has created excess capacity and increasing pricing pressure for too many manufactured things, a situation only worsened by Japan’s aggressive currency devaluation. This dilemma, with parallels to the commodity economies, becomes especially problematic because of the enormous debt buildup over recent years. While this is a serious issue for the entire region, it has become a major pressing problem in China.

This week the markets seemed to begin taking the unfolding Chinese Credit crisis more seriously. There was talk early in the week of concerted efforts to save the troubled $496 million (“Credit Equals Gold No. 1”) trust product from a possible end-of-month default.

…

Savers, investors and speculators will indeed learn painful lessons in China Credit – and it’s difficult for me to envisage this learning process going smoothly. “Credit Equals Gold No.1” is the proverbial tip of the Iceberg for a Credit system today suffering from a historic gulf between saver perceptions of “moneyness” and the poor and deteriorating quality of much of underlying system Credit. Incredible quantities of finance have flowed freely into risky Credit vehicles with the expectation that the banks and governments (local and central) will not allow losses nor ever tolerate a crisis. This is precisely the recipe for Credit accidents and even disaster.

…

Now officials confront a dangerous situation: Acute fragility in segments of its “shadow” financing of corporate and local government debt festers concurrently with ongoing “terminal phase” excess throughout housing finance…..”

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“James Rickards, a top adviser for the Pentagon and CIA, is sounding the alarm that America is on the brink of a global “financial war.”

“Rival nations and terrorist organizations are developing capabilities in unconventional warfare,” Rickards commented in a Newsmax interview. “Things like cyber warfare, biological or chemical warfare, and now, financial weapons of mass destruction.”

And this “financial war” is a battle America isn’t prepared to win.

Rickards believes that as this conflict escalates, it will “cause oil to skyrocket above $190 a barrel, gold to surge to $3,000 an ounce, and, in its aftermath, it could completely decimate the wealth of millions.”

See Rickards’ Interview: ‘This Third War Will Be Most Destructive In History’

Rickards’ assessment is not one to be taken lightly. The first two “financial wars” he refers to in the interview led to World War II and the economic stagflation of the late 1970s.

And unfortunately, Rickards isn’t alone in his assessment.

MSN Money commented, “The end game for all this . . . is higher inflation combined with economic stagnation,” and The Financial Times reported that “Japan may have fired the first shot.”

The Voice of Russia warned, “Russia is getting ready to defend itself in the global financial war which is going to break out in the near future.”

So What Exactly Is This ‘Financial War?’ 

It’s a battle over money . . . also known as a “Currency War.”

In an ironic twist, political figures of each country are trying to depreciate their own currency. In theory, this strategy will give a short-term boost to their own economy, while handicapping foreign countries.

REPORT: Currency War Leads China to Secretly Stockpile Gold 

But there are several flaws in this line of thinking.

“The problem is that everybody can’t play the depreciation game at the same time: One country’s advantage is the others’ disadvantage,” according to US News & World Report.

Essentially, currencies around the world — dollars, yen, and pounds — are losing their purchasing power.

We all know this as inflation. In normal times, inflation runs around 3%. But if a currency war erupts, it could easily run at 10% to 50% per year.

Should You Be Worried?

Absolutely.

When a country intentionally tries to devalue its own currency, the very money in one’s bank account loses purchasing power.

Gas prices soar. Groceries get more expensive. And utility bills climb higher every month. ….”

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[youtube://http://www.youtube.com/watch?v=_z6gducXB_U#t=46 450 300]

“This time, the Federal Reserve has created a truly global problem.  A big chunk of the trillions of dollars that it pumped into the financial system over the past several years has flowed into emerging markets. But now that the Fed has decided to begin “the taper”, investors see it as a sign to pull the “hot money” out of emerging markets as rapidly as possible.  This is causing currencies to collapse and interest rates to soar all over the planet. Argentina, Turkey, South Africa, Ukraine, Chile, Indonesia, Venezuela, India, Brazil, Taiwan and Malaysia are just some of the emerging markets that have been hit hard so far.

In fact, last week, emerging market currencies experienced the biggest decline that we have seen since the financial crisis of 2008.  And all of this chaos in emerging markets is seriously spooking Wall Street as well.  The Dow has fallen nearly 500 points over the last two trading sessions alone.  If the Federal Reserve opts to taper even more in the coming days, this currency crisis could rapidly turn into a complete and total currency collapse.

A lot of Americans have always assumed that the U.S. dollar would be the first currency to collapse when the next great financial crisis happens.  But actually, right now just the opposite is happening and it is causing chaos all over the planet.

For instance, just check out what is happening in Turkey according to a recent report in the New York Times…

Turkey’s currency fell to a record low against the dollar on Friday, a drop that will hit the purchasing power of everyone in the country.

On a street corner in Istanbul, Yilmaz Gok, 51, said, “I’m a retiree making ends meet on a small pension and all I care about is a possible increase in prices.”

“I will need to cut further,” he said. “Maybe I should use my natural gas heater less.”

As inflation escalates and interest rates soar in these countries, ordinary citizens are going to feel the squeeze.  Just having enough money to purchase the basics is going to become more difficult.

And this is not just limited to a few countries.  What we are watching right now is truly a global phenomenon…”

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Can governments stem the problem?

“The stock market selloff last week was fueled in part by worries that big companies are going to have a hard time keeping their profits growing as the Federal Reserve starts shutting down its massive money pumps.

That’s news to a panel of top business economists, who insist profit growth will remain on track, according to a survey released Monday by the National Association for Business Economics.

“The outlook for 2014 is strengthening,” NABE President Jack Kleinhenz, said in a statement accompanying the release. Profit gains are expected “regardless of any changes in monetary policy.”

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“While the Dow Jones Industrial Average has dropped 1.2 percent so far this year, the Russell 2000 index of small stocks has gained 1.5 percent.

That reflects the superior economic environment in the United States compared with overseas, says Richard Bernstein, CEO of Richard Bernstein Advisors, because small stocks are more tied to the domestic economy than large ones are.

“Small stocks have been up,” he tells CNBC.

“Part of what’s happening in large cap land — multinational exposure is hurting them. The market is starting to recognize the difference, that whatever is going on here in the United States is healthier than what’s going on in the emerging markets.”

Bernstein notes that it’s not surprising that Wall Street strategists are calling for gains by the stock market this year.….”

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“Government figures understate the actual unemployment rate and misery index, says David John Marotta, president of Marotta Wealth Management in Charlottesville, Va.

He and colleague Megan Russell write in a commentary to clients that the true unemployment rate stands at a whopping 37.2 percent, rather than the 6.7 percent calculated by the government for December.

And the misery index, which adds together inflation and unemployment, totals 14.7, the worst in almost 40 years, rather than the 7.5 that would be derived using government data.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

The government’s unemployment rate errs because it includes only the unemployed who are looking for a job, Marotta says.

His 37.2 percent reading “obviously includes some people who are not or never plan to seek employment,” Marotta and Russell explain. “But it does describe how many people are not able to, do not want to or cannot find a way to work.”

The government also understates inflation…”

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With many parts of the world gearing up to commemorate the one hundredth anniversary of the start of the First World War, Nouriel Roubini has solidified his hold on the title “Dr. Doom” by suggesting parallels between 2014 and 1914.

There may be no Austro-Hungarian empire or Archduke Franz Ferdinand, but Roubini tweeted this from the World Economic Forum (WEF) in Davos today: He then tweeted some of the reasoning behind this train of thought.

Nouriel Roubini

@Nouriel

#wef14 many speakers compare 2014 to 1914 when WWI broke out & no one expected it. A black swan in the form of a war between China & Japan?

Nouriel Roubini

@Nouriel

#wef14 Echoes of 1914: backlash against globalization, gilded age of inequality, rising geopolitical tensions, ignoring tail risks

While Roubini is renowned for his bubble warnings and doom scenarios, his concerns weren’t drawn out of thin air, but rather taken mainly from the lips of Japanese Prime Minister Shinzo Abe.

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“Corporate profits were strong in 2013, with S&P 500 profits jumping an estimated 11% year-over-year.

With profit margins at record highs, some fear that we are due for some mean reversion, which could mean falling profits and tumbling stock prices.

However, Goldman Sachs’ Jan Hatzius doesn’t believe 2014 will see profits pull back.

“Profits are likely to accelerate in 2014, as GDP and productivity growth recover but wage growth picks up only gradually,” wrote Hatzius in a new note to clients.  “Eventually, the pendulum will swing back in the direction of lower profits, but probably not until the labor market has recovered sufficiently to push up hourly wage growth up to 4% or more.”

Let’s unpack this.

To understand his bullish thesis, you have to look back at 2013, a year when profit growth overcame significant headwinds. Hatzius identified three: 1) relatively weak GDP and productivity growth in the U.S.; 2) very weak growth outside of the U.S.; and 3) low and declining inflation.

Despite these challenges, after-tax corporate profits grew an estimated 6.5% using the definition of the national income and product accounts (NIPA).

Goldman Sachs

 

Here’s Hatzius on the strength:

What accounts for the strength? We believe that the key reason is the continued slack in the US labor market, and the resulting weakness of nominal wage growth. Exhibit 1 shows that our wage tracker–a composite measure based on the three most widely used hourly wage measures–is still only growing at about 2%. This weakness has held down unit labor costs even in an environment of sluggish GDP and productivity growth. And in turn, the subdued growth of unit labor costs has supported profit margins even in an environment of low price inflation…

For 2014, Hatzius expects wage growth to remain modest. Furthermore, he expects the three headwinds mentioned earlier to act as tailwinds…”

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