(Bullion Bulls Canada) — It has become increasingly difficult to engage in credible economic analysis, especially with respect to the U.S. economy. The problem: ever more limited sources of uncorrupted data, while the farcical “official statistics” have long since been totally divorced from the real world. Fortunately we have been presented with some raw, uncorrupted data that demonstrates in conclusive terms that the U.S. economy is literally shriveling before our eyes: a 21st century economy with plummeting energy consumption, and even a declining use of electricity.
A grim report just issued by the Finance Ministry that is circulating in the Kremlin today says the United States Clearing House Interbank Payments System (CHIPS) has ground to a virtual halt signaling that a major global economic collapse is currently underway and could very well likely enter into the dreaded “freefall zone.”
Virtually unknown to all but the global financial elite, CHIPS is the main privately held clearing house for large-value transactions in the United States, settling well over $1 trillion a day in around 250,000 interbank payments that together with the Fedwire Funds Service, which is operated by the Federal Reserve Banks, forms the primary US network for large-value domestic and international US dollar payments where it has a market share of around 96%.
The cause underlying the collapse of CHIPS, this report says, is due to the “unprecedented” demand for immediate liquidity relief being sought by the largest banks in the US and EU that are being crushed under of the combined debt of both the United States and Europe said to total near $39 trillion.
Important to note is that what is currently happening is a virtual repeat of the 2008 Financial Crisis that the United States Senate’s Levin–Coburn Report found “was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”
Grimly echoing this Ministry report is the latest data [see chart 2nd photo left, or click on link] from The Baltic Dry Index (BDI) that is a number issued daily by the London-based Baltic Exchange and shows it in freefall dropping 65% in the past 30 days alone, a terrifying amount of loss not seen since the dark days of late 2008.
Billionaire investor George Soros has warned the global economic system could collapse and riots on the streets of America are on the way.
The 81-year-old said he’d rather survive than stay rich as the world faces an ‘evil’ period and Europe fights a ‘descent into chaos and conflict’.
He has backed the euro, bought $2billion in European bonds and insisted the economic climate is similar to the 1930s Great Depression.
‘The euro must survive because the alternative – a breakup – would cause a meltdown that Europe, the world, can’t afford,’ he told Newsweek.
‘The situation is about as serious and difficult as I’ve experienced in my career. We are facing now a general retrenchment in the developed world.’
His warnings came as U.S. stocks dipped on Tuesday, with talks to resolve Greece’s debt crisis faltering and threatening a five-day winning streak.
by Tyler Durden, ZeroHedge
With year end fund flows making absolutely no sense for the most part, thank you global central planning, as the euro plunges and the market refuses to follow, with risk assets rising on speculation the ECB (and/or Fed) are about to restart printing yet gold collapsing (on one or two hedge funds liquidating, yet econ PhDs already rewriting their theses on why the “gold bubble has popped”), and finally with Treasurys soaring to near all time highs (10 Year under 1.9% yesterday even as stocks surged on data from the National Advertisers of Realtors, aka NAR, of all fraudulent and corrupt entities), here is the latest observation to make the confusion complete. As the Fed’s critical H.4.1 weekly update shows (which is leaps and bounds more accurate than the Treasury’s TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of US bonds in history, or $23 billion, bringing total UST custodial holdings to $2.67 trillion, a level first crossed to the upside back in April. This number peaked at $2.75 trillion in mid-August, and as the chart below shows the foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-a-vis investor demand. And going back further, the last week is merely the latest in a series of Custodial account outflows. In fact, in the last month (trailing 4 weeks), foreigners have sold a record $69 billion in US paper, a monthly outflow that was approached only once – in the aftermath of the US downgrade (when erroneously it is said that a surge in demand for US paper pushed rates lower – obviously as the chart shows nothing could be further from the truth).
So here is the conundrum for today: did China continue to dump US paper in the year end, something we saw started with the October TIC data, or was it French banks continuing to sell off any non-EUR assets, and in the process repatriate proceeds, keeping the EUR higher. We don’t know, nor frankly, in this uber-centrally p(l)anned market, do we care much any longer.
CHICAGO (Reuters) – When it comes to retirement, many middle class Americans said 80 is the new 65 and plan to delay retirement because of worries over money, according to a new survey.
Wells Fargo bank asked 1,500 Americans who earned between $25,000 and $99,999 and ranged in age from 20 into their 70s questions about retirement, savings and Social Security for its seventh annual retirement survey.
Three-fourths of those surveyed said they expect to work in their retirement years. One quarter said they will “need to work until at least age 80″ to live comfortably in retirement.
Of Americans who will work in retirement, “47 percent said that they are going to continue in the same job or a similar job of similar responsibility,” Joe Ready, Well Fargo’s director of Institutional Retirement and Trust, told Reuters Insider.
Read More Here
David Shepardson/ Detroit News Washington Bureau
The Treasury Department dramatically boosted its estimate of losses from its $85 billion auto industry bailout by more than $9 billion in the face of General Motors Co.’s steep stock decline.
In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.33 billion.
The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion. It no longer includes $5 billion it set aside to guarantee payments to auto suppliers in 2009.
The big increase is a reflection of the sharp decline in the value of GM’s share price.
The current estimate of losses is based on GM’s Sept. 30 closing price of $20.18, down one-third over the previous quarterly price.
GM’s stock closed Monday at $22.99, up 2 percent. The government won’t reassess the estimate of the costs until Dec. 30.
The government has recovered $23.2 billion of its $49.5 billion GM bailout, and cut its stake in the company from 61 percent to 26.5 percent. But it has been forced to put on hold the sale of its remaining 500 million shares of stock.
The new estimate also hikes the overall cost of the $700 billion Troubled Asset Relief Program costs to taxpayers. TARP is the emergency program approved by Congress in late 2008 at the height of the financial crisis.
In total, the government used $425 billion to bailout banks, insurance companies and automakers, and provided $45 billion in housing program assistance.
The government now expects to lose $57.33 billion, including the full cost of the housing program, up from $36.7 billion. The new estimate means the government doesn’t believe it will make an overall profit on its bailouts.
While we’re convinced that our gold and silver investments will pay off, they don’t come without risk. What do you suppose is the biggest risk we face? Another 2008-style selloff? Gold stocks never breaking out of their funk? Maybe a depression that slams our standard of living?
Though those things are possible, we at Casey Research don’t see that as your greatest threat:
“Your biggest risk is not that gold or silver may fall in price. Nor is it that gold stocks could take longer to catch fire than we think. Not even the prospect of the Greater Depression. No, your biggest risk is political. As bankrupt governments get increasingly desperate for revenue, any monetary asset held domestically could be a target. It is absolutely essential that every investor diversify themselves politically. In fact, at this point, it is the one action that should be taken before anything else.” ~ Doug Casey, September 2011
I know many reading this are prudent investors. You own gold and silver as solid protection against currency debasement, inflation, and faltering economies. You set aside cash for emergencies. You have strong exposure to gold stocks, both producers and juniors, positioned ahead of what is likely the next-favored asset class. You feel protected and poised to profit.
Yet, despite all this preparation, you remain exposed to one of the biggest risks.
Why is the US involved in endless war around the world? Why, for that matter, do nations – or, rather, their governments – act the way they do? The number of answers is no doubt nearly equal to the number of questioners. It’s all about economics, say the Marxists (and the Hamiltonians): imperialism is the highest stage of capitalism. No, say the “realists,” it’s all about the objective “interests” of various nations, and the interplay of those “interests” in the international arena. The neocons have a different explanation: it’s all a matter of “will” and “national purpose,” or a lack of same: imbued with a sense of our “national greatness,” America will spread democracy all over the world – or else go into a shameful decline in which spiritual loss precedes the loss of the war-making spirit.
Yet none of these supposedly overarching theories provides an adequate explanation for how and why we find ourselves in our present predicament. America has bankrupted itself building a global empire with bases, protectorates, and colonies on every continent – and yet still we persist in pursuing a policy that is taking us to the brink of the financial abyss. Our social safety net is in serious disrepair, and shows
In his famously doleful, dystopian novel, Nineteen Eighty-Four, George Orwell described a world enthralled to what was functionally a “permanent war economy,” an “economy existing by and for continuous warfare.”
Today, on the heels of a debt ceiling increase calculated to forestall a federal-government default, we both are witnessing and are yoked to the many indispositions of what could be characterized as a permanent debt economy.
The Federal Reserve System, as the radix and arguably most defining component of the American economic paradigm, is fostering a scourge on productive activity that has metastasized through society to a now-catastrophic degree.
As a malignant growth eating away at the foundations of prosperity and freedom, the state, together with its parasitic courtiers, could not survive without the debt and insolvency that Congress’s latest actions have endorsed.
Behind the spurious language of compromise and pragmatism, the Washington power elite have damned Americans to what a talk by Mises Institute president Doug French styled “The Culture of Debt and Despair.” The state’s fraudulent system, grounded on the fool’s paradise of an ever-expanding monetary base, is perfectly adapted to engender an indissoluble condition of dependency in the great majority of Americans.
Though mainstream commentators scarcely ever acknowledge it, there is a critical causal relationship between the banking system that prevails in the United States and the ballooning federal debt; the two are intimately linked in both theory and practice, a fact that has been well understood by free-market economists — and particularly the Austrian School — for generations, and that manifests itself today.
As Professor Jörg Guido Hülsmann observes in The Ethics of Money Production, within a fiat-money system, public debt increases “at a much faster rhythm” than even the distended money supply. Pointing to the United States since 1971 as an example, Professor Hülsmann notes that while the money in circulation “increased by the factor 6,” the federal government’s debt grew by a factor of 20.
This imbalance is not a coincidence. The warped incentives of the cartelized banking environment encourage the precarious imbalances of the state-privileged banker class, existing completely outside of market discipline. The commercial banks collude with the central bank in a symbiotic partnership, one in which the former group gorges itself on government-debt bonds while the bonds furnish easy money at no cost and backed by no value. We cannot hope, then, to address the problem of a snowballing federal debt without first confronting the underlying infirmity bedeviling the economy, the centralized banking framework.
In 1817, the English free marketer and opponent of protectionism, William Cobbett, percipiently recognized the unique connection between government debt and central banking. In Paper Against Gold, he wrote:
[I]t was soon found, that to pay the interest of its Debt, the government needed something other than gold and silver; which, indeed, any one might have foreseen, because the Debt itself necessarily arose from the want of gold and silver within the reach of the government. It was, therefore, supreme folly to suppose, that the government, who had borrowed people’s guineas from want, would long have guineas enough to carry on wars and to pay [its creditors] too.
In a cycle through which one illusion is built on and follows from the next, the free market’s inherent protections against systemic breakdown are overturned by the state. In a true free market,
One of the top credit rating agencies, Standard & Poor’s, has downgraded the United States’ top-notch AAA rating for the first time ever.
S&P cut the long-term US rating by one notch to AA+ with a negative outlook, citing concerns about budget deficits.
The agency said the deficit reduction plan passed by the US Congress on Tuesday did not go far enough.
Washington was locked in months of acrimonious partisan bickering over a bill to raise the US debt ceiling.
A US treasury department spokesman said of the S&P analysis: “A judgment flawed by a $2 trillion [£1.2 trillion] error speaks for itself.” He did not offer any immediate explanation.
But earlier, as rumours swirled about the downgrade on Friday evening, officials in Washington were telling US media that S&P’s sums were deeply flawed.
The unnamed sources were quoted as saying that a treasury official had spotted a $2tn mistake in the agency’s analysis