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  • THE 3 PROBLEMS OF THE WORLD

    * Note the difference between the True Arab-Like Uprisings and the Fake Arab-Like Uprisings.

    1-Central Banks:

    They have embarked in plans called Quantitative Easing and Lending Schemes, aiming to provide low-interest rates money to large financial institutions, without checking if these institutions are using the cash to invest on the real economy.

    Loans to private sector in Spain are plummeting:

    2-Large financial institutions:

    -They are utilizing the financial media since 2008, mainly CNBC and Bloomberg TV, to create market turmoil so that they can purchase attractive assets trading at fire-sale prices from imprudent investors (the poor indebted guy), utilizing the low-interest rates borrowing provided by the Central Banks. It's quick profit rather than lending to the boring SMEs.

    -They are also manipulating the price of assets trading on the financial markets, by creating fake enormous volume bid/ask at the same time. This way they drive the price up or down when they want in depressed assets.

    3-Corrupt politicians:

    -In many countries there are governments that intentionally are driving down their economies and creating social unrest (a sense of anxiety in a depressed economy on indebted citizens), by increasing taxes and fares all across the board or approving the construction of a Mall on the only park of the city center.

    -With market turmoil and social unrest, their crony large financial institutions can purchase cheaper the assets mentioned above.

    -The corrupt politicians are receiving bribes from the financial institutions for this work.

    -But they don't want their privileges and dominance to be threatened (control of the population with the creation of multiple layers of indebted Administrations, multiple subsidies everywhere and setting up thousands of public enterprises), and they maintain them through increasing the sovereign debt.

    -Crony capitalism: After the privatization of public services (i.e. the enterprises that grant the opening licence to a new business), that private enterprise charged of doing the public service should be deemed a public enterprise, because its revenues depend 100% on taxpayer money. This is another example of politicians securing the returns on investments to private investors (crony capitalism). This is also a backdoor hiring of the politicians' family and friends, because the employees in these private enterprises doing public services, don't need to have a hiring process with equal opportunities, like the civil servants.

    The politicians are obsessed with privatizing every public service, arguing that they will be more efficient, but that's false, it's a shadow crony capitalism (A private enterprise is more efficient competing with the other players, but not operating a public service with no competition. I caught you). In an economic crisis, now the multiple layers of Administrations don't have tax-revenues to pay for the returns on the investments to these private enterprises doing public services, increasing the Deficit, and thus, the Public Debt.

    -Fake Arab-Like Uprising: If the corrupt politicians see their dominance threatened, they instruct a group of people to march on the streets to protect their subsidies, public enterprises and multiple indebted administrations full of politicians on every tiny town or city. The demonstrators are part of the regime. We saw a fake arab-like uprising recently when the greek government announced to shut down its money-losing-machine State-broadcaster. Soon appeared people from the regime rallying, accompanied by the subsidized trade-unionists trained in urban guerrilla, threatening to provoke social unrest on the entire population.

    SOLUTIONS

    1-Central Banks:

    -They must return to the traditional expansive policies: through interest rates and intervention on the stock markets and currency markets.

    -Halt the QE and lending schemes. There is enough liquidity out there.

    2-Large financial institutions:

    -The JPM, PIMCO, Blackrock and Blackstones of the world are so large that are a menace to our society and ought to be broken up into a dozen pieces.

    -Shut down CNBC and Bloomberg TV: they are utilized by the large financial institutions to manipulate prices, along with WSJ, etc…A lot of corruption on the financial media.

    -A 6% transaction tax on every publicly traded security including ETFs, currencies and derivatives instruments, to be reimbursed in full if the security is held for more than 3 years after the purchase. EXCEPTION: Mutual Funds, so that all the speculators trade at the closing price.

    -They are not lending to SMEs. It ought to be implemented a fixed percentage of the total assets invested on SMEs, and prohibit them to purchase sovereign debt, playing the politicians' game (maintaining their privileges and dominance on the population).

    3-Corrupt politicians:

    -The IMF should give to those involved in the True Arab-Like Uprisings around the world, what they demand: better governance of the State, lower taxes, lower fares, and more freedom and free-trade (less subsidies, less administrations, less politicians, less red-tape and less public enterprises that affect the competition). This will boost the economic activity and thus, employment.

    -The politicians are now embarked on a campaign to tackle the tax-evasion theme. They want to divert the attention and appear to be working on the matter. But that's not the main reason of the low tax-revenues, but a lower economic activity due to the three problems of the world. Focus.

    -Crony capitalism. If a public service is privatized, the customers (taxpayers) should be allowed to choose among several private players offering the public service. In the case of no competition, no privatization.

    -There are multiple countries carrying out a silent True Arab-Like Uprising, that shouldn't be left apart.

    -The protest rallies of those of the regime that want to maintain the dominance of the politicians, should take place in a place that doesn't disturb the normal life of the citizens.

    -Setting up an independent Corrupt Politicians Court on every country.

    ********** THIS POST WILL MAKE HISTORY ***********

    Please, send this post to everyone and you will make history as well.

    Tags: JPM, BLK, BOND, C, BAC, WFC, FNMA
    Jun 19 7:00 AM | Link | 25 Comments
  • People Sell Gold In Crisis

    Peripheral Europe is troubled with Italy and Spain deep in the hole.

    The only truth in this world is that people sell gold in crisis. What are they going to do to wind down their position on gold without disrupting the market?

    Largest gold holdings by country:

    United States: 8,133 tonnes

    Germany: 3,391 tonnes

    Italy: 2,452 tonnes

    France: 2,435 tonnes

    China: 1,054 tonnes

    Switzerland: 1,040 tonnes

    Obscure Russia: 978 tonnes

    It's worth noting that many Wall Street participants have been gobbling up gold like mad since more than a year ago. For example, investor John Paulson holds $10 billion worth of gold (personal wealth but also trading on behalf of whale-investors).

    Watching the graph of gold, it seems there are many investors with long positions on gold built up during the last years, that would be willing to sell now. That's why it's announced that representative Ron Paul will appear today on Bloomberg TV saying that we need to return to the gold standard as monetary system, playing the big banks' game, because they are scared of the multiple Golden Whales out there.

    Vicious cycle: until now, the battered european governments have been financed by the comercial banks by purchasing their debt, thanks to cash from the Central Banks' liquidity schemes (both the ECB and the BOE). But now the IMF has a tough stance against this practice and will surveillance that the comercial banks are truly using the Central Banks' funds to lend to individuals and corporations and not battered governments. So, let's hope the IMF has cut off this vicious cycle drastically.

    Also the Federal Reserve has in place a Quantitative Easying (QE) policy.

    QE means to monetize debt. The objective is to increase the value of the financial assets in the books of the financial institutions (increase the mark to market valuation or "paper profits") due to rate declines and spread tightening, but also, to inject cash to the private sector purchasing debt instruments in their hands (more liquidity to the system like the european central banks are doing).

    MISCONCEPTIONS ABOUT GOLD

    1-QE doesn't mean higher gold prices: More liquidity to the system doesn't mean that the banks will necessarily decide to use that liquidity to buy gold among all the universe of assets and also, I've just mentioned that now the banks will be forced to lend more to individuals and corporations.

    2-Gold is not a hedge against inflation: primarily because products manufactured with gold don't appear in the index of inflation. If you want to hedge your portfolio against inflation, you need to buy hard assets.

    3-Gold is not a hard asset: Hard assets are related to infrastructures of oil and electricity, with a production that has impact on the overall economy's prices and, subsequently, is reflected in the inflation data.

    4-Gold is not a governments' reserve different than the oil reserves: Governments hold reserves of gold and also strategic reserves of oil and gasoline. Therefore, gold shouldn't trade at a premium for being held as reserve by some governments.

    5-There is no shortage of gold: Every 20 or 30 years, new technology is used capable of finding more gold and oil.

    In simple words, gold is just a hedge against fear on the stability of the financial markets.

    But without prospects in the coming years of a ECB bankruptcy due to a bond-buying program of the battered peripheral europe's debt or a war against a remote small region full of fake-jihadists (Putin would love it) that posted a video claiming responsibilty about two different terrorist attacks on U.S. soil, there is no fear factor.

    (By the way, I'm still waiting to see Bloomberg TV's interview yesterday to representative McCain with a tough stance against Chechenia that wasn't broadcasted in full).

    Now say with me:

    People sell gold in crisis.

    People sell gold in crisis.

    ….

    Tags: GLD, GOLD
    Apr 23 8:13 AM | Link | 24 Comments
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