Saturday, March 22, 2014

Ellis Martin Report with David Morgan–How Speculative Stocks are Selected

In this edition of The Ellis Martin Report, analyst David Morgan discusses his strategy for selecting speculative mining stocks in a challenging market. He also teases us with news about a company that is using some promising technology in the business.
This segment is sponsored by El Tigre Silver Corp (TSX-V:ELS)(OTCQX:EGRTF)
This video was originally posted on Mar 11, 2014 and re-posted with permission from from Ellis Martin.SUBSCRIBE (It’s FREE!) to “Finance and Liberty” for more interviews and financial insight ? 
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Title and video graphics by Josiah Johnson Studios
DISCLAIMER: The financial and political opinions expressed in this interview are those of the guest and not necessarily of “Finance and Liberty” or its staff.

The Emperor’s New Clothes on Steroids

Some years ago, it was reported that Donald Ivestor, CEO of the Coca-Cola Corporation, had considered equipping the company’s vending machines with built-in thermometers, so that, on the hottest days of summer, the price of a Coke could automatically be raised. One of those supply-and-demand moves we’ve all heard about.
Apparently, Donald Ivestor was even quoted as saying that such a practice was a “fair” response to the dynamics of the marketplace. It was only after word of this gouging enterprise leaked out, and consumers hit the ceiling, that Ivestor pretended the company had never considered it.
In 1995, I had a conversation with the plant manager of a Fortune 100 company (I’ll call him “Fred”) regarding executive compensation. This was but one of many discussions Fred and I had had over the years, with me taking the view that we must have lost our ever-lovin’ minds, because CEO compensation had reached absurd proportions, and Fred taking the view that the only way to attract “quality people” was to offer a salary commensurate to their talents.
This particular conversation was focused specifically on the CEO of United Way. A recent newspaper story had reported that United Way’s CEO was not only being paid something on the order of $400,000 per year, but was being squired around in a chauffeured limousine, as if he were a Saudi Arabian oil sheik rather than some guy who was running a charitable organization.
Fred adamantly insisted that, given the “realities of the market place,” you wouldn’t find anyone who was sufficiently qualified to run United Way unless you were willing to pay them $500,000. I jokingly said, “You mean you couldn’t find some swinging dick out there who could do the job for, say, a measly $300,000?” Not realizing I was mocking him, he emphatically stated that No, you would not. Good god, the man was serious. He honestly believed $500,000 was the bare minimum.
One of the games we union guys used to play was speculating on how long a person—a clever, motivated but entirely “unqualified” person—could get away with pretending to be the plant manager before he was exposed as an imposter. Put him behind the plant manager’s desk, dress him in plant manager’s duds, give him a $90 haircut, and see how long he could fake it.
We’d all seen Fred in action. While he was a bright, honorable man, his management style wasn’t complicated. He asked a lot of questions, he praised people, he did a lot of delegating, and he used a lot of “management speak.” In our opinion, once a person mastered that corporate lingo, he would be home free. In our opinion, he’d be able to fake the job for a minimum of weeks, if not months.
Of course, pretending to be somebody you’re not applies only to managerial positions, because you could never hope to get away with it on a job that demanded demonstrable skills. For instance, you couldn’t pretend to be a bricklayer or shipping checker or seamstress. People would realize you were a fraud within 30 seconds. The same goes for a musician, pottery maker, and electrician.
Alas, it seems that the only jobs where you can trick people into believing that you are who you say you—despite any discernible evidence to prove it—happen to be big-time managerial jobs, jobs that come with generous salaries. How ironic is that?
David Macaray, an LA playwright and author (“It’s Never Been Easy:  Essays on Modern Labor,” 2nd edition), is a former union rep.  He can be reached at

Illinois to Follow California's Lead With 'Millionaire Tax' Referendum

Michael Madigan, the all-powerful Speaker of the Illinois House of Representatives, announced Thursday that he would direct the Democrat-controlled state legislature to place a referendum on the November ballot that would raise taxes on millionaires by three percent. The measure is similar to a referendum that California Gov. Jerry Brown convinced voters to pass in November 2012, and which helped the state achieve a budget surplus.

Madigan, a Democratic Party boss whom most regard as the true ruler of the state--surpassing Democrat Gov. Pat Quinn--would need to convince three-fifths of both houses to pass the tax hike as a constitutional amendment before it could be put to the voters.
However, as Ray Long, Monique Garcia and Maura Zurich of the Chicago Tribune note, "Madigan holds enough Democratic votes that he could muscle the measure through."
Democrats hold supermajorities in both the House and Senate in Illinois, thanks partly to the fact that Madigan redrew the districts after the 2010 Census--and did so without fear of opposition from the governor after Quinn defeated his Republican challenger.
The state has continued on a downward fiscal spiral, and Illinois has the most underfunded pension system of any state in the Union, as well as the third-highest unemployment rate.
Madigan is unfazed by research that proves that taxes on millionaires encourage them to leave the state, as has been the case in New Jersey.
"Well, if they’re in Illinois today, they’re probably so much in love with Illinois that they’re not going to leave," he said, according to the Tribune--a backhanded acknowledgement of how poorly the state is already doing.
Madigan may also be encouraged by California's example, where millionaires have largely stayed put, even though Gov. Brown's tax increase on those earning more than $250,000 has helped the state achieve the second-highest tax rate in the nation. However, Illinois does not enjoy California's comfortable climate.
The real goal of the proposed referendum may not be fiscal, but political. The winner of the Republican primary this week was billionaire Bruce Rauner, a political newcomer who enjoys close ties to Democrats such as Chicago mayor Rahm Emanuel, yet has vowed to take on the public sector unions and the Madigan machine.
The referendum is just one way in which Democrats will remind voters of Rauner's immense wealth, in a repeat of President Barack Obama's re-election strategy against Mitt Romney.
Rauner is hoping to put his own referendums on the ballot, including one for term limits, which would destroy the basis of Madigan's power.

The Metamorphosis: No-Job Job Fair

Like Gregor Samsa, I’ve turned into a giant beetle. In The Metamorphosis, Franz Kafka tells the story of Samsa, who awakens one morning to find himself as a big cockroach. His voice has changed. His family no longer understands him and is repelled.
Samsa tries to adapt. His room is cleared so he can more easily scuttle up and down the walls. But everyone he comes in contact with is driven away. Unable to work, his family’s finances are crippled and they try to bring in boarders. The tenants get a glimpse of Gregor and run.
He comes to the conclusion it would be best for everyone if he died. So Gregor withers away. The giant dead beetle is discovered and disposed of.
That’s what the job market, the current economy, does to you. Once unemployed, you’re repulsive, more and more so the longer it lasts. If you’re over fifty, you are in a shunned class.
Few want to have anything to do with you. You lose friends, perhaps make one or two new ones — others who, like you, have found they’ve morphed into untouchables.
I decided to share this with you. It’s not an unobvious thing, particularly after the latest job fair experience at the Convention Center in downtown Los Angeles.
This was a STEM job fair, you know — STEM — that universal magic word meant to mean “science jobs,” uttered by people who are either lying or who don’t know from excrement.
There were about twenty “businesses” at the STEM job fair. Four rows, five kiosk/displays per row, with one on the end for on-the-spot interviews. There were no on-the-spot interviews during the time I was there.
I suspect there were none during the fair’s four hour duration.
And that’s because there weren’t any firms that were obviously looking to make hires in science. What they were mostly interested in was public relations, a kind of social networking where the human resources people sent to staff the booths hand out glossy paper and refer you to the company’s website to upload a resume.
The Environmental Protection Agency was there and was honest about it. The reps said up front they weren’t making any hires, that all of it was processed through usajobs dot gov, the omnibus website for federal hiring.
They were taking e-mail addresses so that you would received blasts when something opened up.
A firm that handled logistical and civilian staffing services for the US Air Force was looking for interns, presumably free. Which, in the current economic climate, isn’t really a job at all, but a way for a private sector company to offer outsourced contract work at a lower rate than the military would have to pay if it actually had to hire and train its own people.
Boeing was the big cheese corporation everyone was in a line to talk to. Boeing doesn’t do science. It does jets and arms manufacturing, engineering applications.
As far as I could tell, the Boeing desk wasn’t actually spreading any love to all the people hoping for some.
There was also a company, another private sector firm doing work for the US military. They were, according to their display, looking for people who could help develop underwater minefields and, reciprocally, sensors for the detection of the same.
This should make you laugh. Yes, everyone gets science and math schooling so they can get in on the exploding American industry of naval mine warfare.
It’s an inspiring vision of the future.
Picture a remake of The Graduate, a young man by the swimming pool in southern California for an evening formal party. A wealthy corporate executive puts his arm around Ben:
“I have one word to say to you, just one word … are you listening? Minefields. ‘Nuff said! That’s a deal.”
At least four of the slots at the STEMS job fair made no bones about not being there to look for workers at all. Three were from local colleges looking to enroll people in graduate work. So, like, you could spend another year and a half or longer in school, perhaps going deeper into debt before emerging into the modern labor market.
Another was the Employment Development Department of California, the state agency present to inform job-seekers without jobs of what they might be able to take advantage of in terms of their unemployment benefit and further re-training programs.
It’s really no secret that job fairs in the US are more aptly described as places where many frustrated people go, dressed in business attire, to totally waste their time.
You can hand out resumes but, for the most part, it’s desperation participation in more American corporate scamming.
One suspects there is a corporate federal income tax deduction that can be invoked once a year (or perhaps even a subsidy to apply for) if one can document some trivial outreach to the American labor pool.
It is a hard thing to make people understand. Once you’ve been transformed into the American economy’s equivalent of insect vermin, you cannot make anyone understand what is happening. You even have a hard time explaining it to yourself.
Will you be ready for the metamorphosis?

Ron Paul: Ultimately The Dollar Will Be Rejected

Detroit may raise fines for parking violations

Detroit pays $32 to process a $30 parking violation and hasn't adjusted rates since 2001. (Clarence Tabb Jr. / The Detroit News)
Detroit — For the first time in more than a decade, the city may increase its parking fines and come down harder on repeat offenders who don’t pay up.
The recommendations, which would bump the current parking fines of $20, $30 and $100 per ticket to a two-tiered structure of $45 and $150, are among the revenue-generating strategies recommended by Detroit’s restructuring consultants.
The proposed reforms come as Emergency Manager Kevyn Orr awaits an analysis of the city’s parking assets and contemplates spinning off Municipal Parking, a department that generally breaks even or fails to bring in enough revenue to cover its expenses.
The city is paying $32 to issue and process a $30 parking violation, and it hasn’t adjusted rates since 2001. On top of that, about half of Detroit’s 3,404 parking meters are not operating properly at any given time, says Orr’s spokesman, Bill Nowling.
“It’s another example of the old, antiquated system and processes the city has that creates impediments for anyone trying to do their job,” Nowling said.
Detroit Chief Operating Officer Gary Brown is advocating for the changes, which he says would bring in an additional $6 million per year and $60 million over the 10-year plan of adjustment Orr is proposing for the bankrupt city.
“That’s real money,” Brown said. “If the asset is truly an asset and making money, no one is going to want to do anything with it.”
Brown said the ticket increases would not unduly burden Detroit residents, since 70 percent of the fines are written to nonresident offenders. The city also expects to offer a one-time amnesty program that’s commensurate with any increase.
Brown said it’s unclear how much is currently owed to the city in unpaid parking fines. Some fines are more than 10 years old, he said, surpassing the statute of limitations and “should be written off.”

License renewals prevented

Besides the ticket hike, the proposal seeks to prevent motorists with three or more unpaid fines from renewing their driver’s licenses.
Brown said the actions can be implemented without additional expenditures, staffing or amendments to state or local laws, but they will need City Council approval.
At-large City Council member Saunteel Jenkins supports an increase, “especially since it’s costing the city more to write and process tickets than the actual parking fines themselves.”
The city and 36th District Court, however, should work with those who cannot afford to pay the tickets outright, she said.
“The fine structure here is one that continues to build,” Jenkins said. “For people already financially distressed, how much more of a burden will this place on them?”
Councilwoman Raquel Castaneda-Lopez noted the city’s current rates are below other comparable cities and an increase would not unfairly burden Detroiters.
“The proposed increases are just one piece of a comprehensive strategy to increase revenue within the Municipal Parking Department,” Castaneda-Lopez, who represents District 6, wrote in an email to The News.
Last year, the most expensive fine in the country for expired parking meters was $72 in downtown San Francisco; Detroit was among the lowest at $20, according to a survey by
Chicago had the highest hourly on-street meter rate of $6.50. Detroit’s was on the lower end and among about a dozen cities that charged $1 per hour, the study found.
Detroit has considered outsourcing its parking system for years; a 2011 report showed the city could make $22 million to $65 million annually through the lease or sale of parking assets. Years prior, elected officials argued it could be worth even more.

Towing fee nearly tripled

The city has tried other methods to boost its parking coffers.
In May, the City Council amended an ordinance that nearly tripled Detroit’s towing fee from $215 from $75. The rate does not cover storage.
In his debt-cutting plan filed in U.S. Bankruptcy Court last month, Orr noted that the department’s ability to raise revenue has been crippled by budget cuts, headcount reductions and unfavorable work rules. The challenges have led to reduced patrols and a drop in the issuance of tickets from 535,000 in the 2002 fiscal year to 323,000 in 2012.
The department has 90 full-time employees between its two divisions — the Auto Parking System and Parking Violations Bureau.
The parking system is responsible for the operation and maintenance of seven parking garages and certain on-street parking spaces. The projected revenue in the 2013 fiscal year for the parking fund, an enterprise fund that services the city’s parking bonds, was about $12.9 million. It’s expenses were expected to be about the same, according to a bankruptcy court disclosure statement.
The violations bureau enforces on-street parking ordinances and issues, processes and collects parking tickets. Its projected revenue for the current fiscal year is $11.4 million. After expenses, it will result in a $3.6 million surplus for the city’s general fund.
In fiscal year 2013, the city received payments of $11.1 million into the Automobile Parking Fund and it made payments totaling $11.2 million.
Consultants from Chicago-based Desman Associates have been evaluating the city’s parking assets for more than a month, as part of an up to $175,000, three-phase study, Nowling said.
The parking and transportation firm is expected to produce a 30-year financial model that lays out the department’s worth and cost of upkeep. Desman will also document the existing assets, gather industry trends and identify revenue enhancement options. Findings are anticipated by mid-April.

Data driving Orr's decision

In the final stage, Nowling said, Desman will provide the city with options for selling or leasing parking assets and, if needed, could prepare and facilitate the bidding process.
“(Orr) is agnostic as to what the organizational structure is; only, it has to prove a net benefit to the city,” he said. “He’s going to let the data drive it.”
Orr first raised the possibility of leasing or selling off the parking department last summer.
The move is fairly new in the country, but could be a viable option for Detroit, said Leonard Gilroy, director of government reform at the California-based libertarian Reason Foundation.
“In a situation like this, where Detroit is with bankruptcy, you have to have your assets on the table,” said Gilroy, a privatization expert who has researched municipal leasing.
Other cities, including Chicago, have profited from spinning off parking.
Chicago received $1.2 billion upfront after entering into a 75-year lease of 36,000 parking meters in 2008. But the deal led to five years of rate hikes and reports the private company that took over the system will make 10 times the amount it paid the city.
Indianapolis entered into a 50-year lease deal for its meters.
Because parking is an enterprise and not a core government function, Gilroy said, off-loading it helps transfer a major risk.
“You are shedding risk, you are shedding costs and lots of responsibilities,” he said.
But Eric Foster, a governmental affairs consultant, has advocated against a lease or sale of Detroit’s parking assets, arguing the department’s debt load is minimal and it’s in a position to operate profitably.
“If structured in a good way, it will continue to be a revenue generator, pay for itself and contribute to the general fund,” said Foster, of West Bloomfield-based LB3 Management, LLC.
No matter the direction, Brown said the city is looking for funds that it will invest in replacing Detroit’s broken meters.
“We are not going to just let half the meters be down,” he said.

Expired meter fines

Fines in San Francisco’s downtown are the highest in the country, while Detroit, at $20, is near the bottom. Chicago has the highest hourly meter rates. Detroit is on the lower end and among about a dozen others that charge $1 for a top hourly meter rate.
San Francisco (downtown): $72
Chicago: $65
Seattle: $44
Philadelphia: $36
Detroit: $20
Nashville: $11
St. Louis: $10
Hourly meter rates
Chicago: $6.50
New York: $5
Seattle: $4
Dallas: $2
Phoenix: $1.50
Detroit: $1
St. Louis: $0.75

F-35 News. Spending frozen on the troubled jet.

via Gazetta El Sud
Rome, March 20 - Italy has frozen spending on its F-35 jet fighters program, pending a parliamentary review of military spending, says Defence Minister Roberta Pinotti. Her comments during a television interview with La7 Wednesday night, came several days after Premier Matteo Renzi said that defence spending - including the budget for the F-35 program - was under review. This could include three billion euros in potential savings for defence budgets. The government could decide to trim its Lockheed Martin F-35 fighter jets' budget, which is currently about 11.8 billion euros over 45 years beginning in 2015. "Today we suspended payment of installments," on the F-35, Pinotti told the program The Barbarian Invasion. "We are having a moratorium, pending the results of an inquiry by Parliament," she added.
A certain blogger I know told me I was full of shit when I posted news that the F-35 would be cut to 45 jets by the Italians.

He went through a long song and dance about how this was just a minor thing and that they would be back in the fold buying 90 odd jets shortly.

That blogger failed to take into account current economic conditions worldwide.

Globalization is breaking down.  Economies around the world are on the verge of bankruptcy.  In short.  Everyone is is in a hurtlocker and defense spending is the first sacrificial lamb of the masses.

The Netherlands was first, Italy is second, and I predict that the frugal Canadians will be third.  But they won't be the last.  Even the USAF will be hit with the reality bat and the F-35 order will be cut.

I say again.

The death spiral is here.

Peter Schiff: Government's War on Living Standards (1947 to now)

How Phony Inflation Numbers Mask GDP Weakness

Earlier this week, we wrote about how inflation is hidden both by the Feds and by corporations.
Why hide inflation? Well for one thing, understating inflation allows you to overstate GDP growth.
One of the biggest games played by the bean counters in Washington. in the US is the overstatement of GDP growth by understating inflation.
Consider this simple example. Let’s say that the US GDP grew by 10% last year. Now let’s say that inflation also grew by 10%.
In this scenario, real inflation adjusted GDP growth was ZERO. However, announcing ZERO GDP growth is a major problem politically.
So what do the Feds do? They claim that inflation was just 8%, and BOOM you’ve got 2% GDP growth announced for a year in which real GDP growth was actually zero.
This game is played all the time via a metric called the GDP “deflator.” Technically what this is meant to do is remove the effects of inflation from the GDP growth numbers to show what real growth was.
However, what it actually ends up being is an accounting gimmick that allows the numbers to overstate GDP growth.
By now, we all know that the CPI numbers understate inflation significantly. But the Federal Government uses a GDP deflator that is even lower the CPI.
This is like measuring your height in “inches” that are actually centimeters. In reality you’re still the same height, but nominally you look a lot taller.
Inflation is a very real problem for the economy and for the US financial system. We’ve been told to believe that it is a necessary evil, but the reality is that it concentrates wealth, weakens the US dollar and raises the cost of living.
None of those are beneficial to the US as a whole.
Since 2007, the world’s Central Banks have collectively put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.
This kind of money printing is literally unheard of in modern history. And it has set the stage for a roaring wave of inflation to hit the financial system. Indeed, the first signs are already showing up… not in the “official” Government data (which is bogus) but in how those who run businesses around the globe are acting.
For a FREE Special Report on how to protect your portfolio from inflation, swing by
Best Regards
Phoenix Capital Research

Nearly one million Obamacare 'enrollees' have never paid any premiums

(NaturalNews) It won't be long before the March 31 Obamacare enrollment deadline arrives, and the latest data still show that very few people have signed up for the scheme. In fact, according to recent figures put out by the Obama administration, there have only been about 4.2 million total enrollments logged in healthcare exchanges across the country, and of these only 3.3 million enrollees have actually paid their premiums.

As of March 1, less than half of the sitting government's projected 7 million Obamacare enrollments have actually materialized, and fewer still have followed through with actually paying for their Obama insurance. Based on data collected from the Obamacare marketplaces in California, Connecticut, Maryland, Nevada, Rhode Island, Vermont and Washington, less than 80 percent of Obamacare enrollees have thus far paid their insurance premiums, with no system in place to actually track these payments.

According to the UK's Daily Mail, fewer than 1 million Americans signed up for Obamacare during the month of February, despite aggressive marketing campaigns that aired via television, radio and social media. Even a recent publicity stunt on the internet mini-show Funny or Die, where Obama hounded the public to sign up for Obamacare, failed to push enrollment numbers toward the administration's goal.

More than 80 percent of Obamacare enrollees previously had health insurance

Because of this, the administration has had to readjust its projected enrollment outcomes and even twist the numbers to make it look like more people are complying with the healthcare takeover than actually are. Obama and co. have also glossed over the fact that most of the people signing up for Obamacare are people who previously had insurance and were forced to adopt the new plan

"[O]nly 27 per cent [sic] of new enrollees -- or 1.14 million of the total announced Tuesday -- were uninsured before they signed up," writes political editor David Martosko for the Daily Mail. "Millions of insured Americans received cancellation letters from their insurers in October, November and December, spurred by the companies' recognition that their existing offerings didn't satisfy the Affordable Care Act's stringent minimum standards."

90 percent of eligible Americans refusing to sign up for Obamacare

Another zinger is the overall percentage of eligible enrollees who have actually signed up for Obamacare. According to an analysis conducted by the consultancy group McKinsey & Co., only about 10 percent of eligible Americans have opted to participate in the program thus far, a dismal figure that demonstrates the true extent of Obamacare's unpopularity.

"Of the 3.3 million people that the White House has touted as Obamacare exchange 'sign-ups,' less than 500,000 are actual uninsured people who have actually gained health coverage," writes Avik Roy for, noting that the most significant reason why people are deciding not to enroll under Obamacare is that they simply cannot afford the premiums.

Percentage of Americans with health insurance has dropped since Obama took office

With all this in mind, it is hardly surprising that the overall number of insured people in this country has actually dropped since Obama took office. The millions of hard-working Americans who were previously insured but who have now lost their coverage, as well as uninsured individuals everywhere who still cannot afford health insurance even under Obamacare, exceeds the number of people who are actually benefiting as a result of the scheme.

"[W]hile the percentage of uninsured Americans has dropped from 17.1 per cent at the end of 2013 to just 15.9 per cent now, that number stood at just 14.4 per cent before Obama took office," adds Martosko about the dilemma.

Sources for this article include:

EU Agrees Banking Union – Bail-Ins Cometh …

Today’s AM fix was USD 1,338.50, EUR 970.21 and GBP 810.57 per ounce.
Yesterday’s AM fix was USD 1,327.00, EUR 962.64 and GBP 802.78 per ounce.
Gold dropped $2.30 or 0.17% yesterday to $1,327.00/oz. Silver fell $0.28 or 1.36% to $20.29/oz.
Gold in U.S. Dollars, 5 Days – (Bloomberg)
Gold rose 1%, it’s first rise in five days, trimming a weekly decline of 2.8%, as the crisis over Ukraine led to a renewed safe haven bid for gold. Palladium surged 3.1% to the highest since 2011 on concern supply from Russia may be restricted.
Gold had become overbought after its surge to 6 month highs and was due profit taking and a correction. A perception of an abatement of tensions between Russia and the West has contributed to the pullback this week. Momentum could lead to further falls next week but we expect weakness will be short lived.
Gold’s TechnicalsThere is a risk that gold could fall below immediate support at $1,320/oz and the next levels of support are at $1,300, $1,240 and then back where we started the year at $1,200. A 50% retracement would not be unusual after the speed of recent gains and that would take us to the psychological level of $1,300/oz again.

Gold in U.S. Dollars, 1 Year – (Bloomberg)
A political solution needs to be found as governments continue to opt for economic sanctions of various degrees, it could degenerate into a full blown trade and economic war. Were this to occur the benefits of free trade and globalization that we have seen in recent history would be at risk – creating real challenges for the global economy.
The premiums that risk assets such as stock markets command could quickly be lost as market participants reevaluate asset allocations in the light of the more risky economic and geopolitical situation.
Gold in U.S. Dollars, 43 Years – (Bloomberg)
Hopefully, calm and wise counsel will prevail and a diplomatic political solution will be found. However, in the meantime, gold continues to be an important asset to own in order to hedge these and other geopolitical and economic risks.
Yellen At Fed – Print Baby Print
It was very welcome to see a woman taking over the helm of the Federal Reserve. However, we cannot allow our goodwill in this regard to cloud judgement and impact our analysis of her and the Fed’s performance and policies.
Yellen gave mixed messages, both on the economy and on monetary policy, but market participants have chosen to focus on some of the more hawkish comments that she made. She acknowledged that the Fed may have been too optimistic about the economic outlook recently. Yet, she and the Fed largely stuck to their projections for how growth and inflation will unfold in the coming years.
It is important to remember that the Fed did not predict or foresee at all the sub prime crisis, the housing bubble, Bear Stearns, Lehman, the global financial crisis and subsequent recession.
The dollar is set to be structurally weak in the coming years given the still significant imbalances in the U.S. economy and still very poor fiscal state of the economy. No amount of jaw boning or Fed tinkering with interest rates will change that.
While interest rates may rise from nearly 0%, they are set to remain low for the foreseeable future. At least until the bond markets decide to enforce fiscal discipline on the U.S. Then interest rates will likely rise substantially leading to a severe U.S. recession.
U.S. Govt 10 Year Yield, 1971 to March 2014 – (Bloomberg)
On a long term basis, it is likely that the dollar will remain weak and gold’s bull market will continue until the end of the interest rate tightening cycle which will likely be between 2020 and 2025.
This was seen in the 1970s when interest rates surged higher that decade from a low in March 1971, to a high in September 1981. The U.S. 10 Year went from 5.38% to 15.84% during that period and gold rose from near $35/oz to over $850/oz in January 1980 (see charts).
Thus, contrary to the popular perception, rising interest rates are not bearish for gold. High interest rates and real positive interest rates in a sound economy are very bearish for gold prices and will burst the coming gold bubble. However, that is a long way off – likely between 2018 and 2025 and likely when gold prices are well above their inflation adjusted high (CPI) of $2,500/oz. Indeed, longer term prices over $4,000/oz or $5,000/oz are quite feasible.
EU Agrees Banking Union – Bail-Ins Cometh …Early this morning European Union politicians struck a deal on legislation to create a single agency to handle failing banks and bail-ins in the Eurozone after another all night negotiating marathon ahead of a summit of EU leaders starting in Brussels today.
German Finance Minister Wolfgang Schaeuble was drawn into the talks around 0530 GMT as the negotiations dragged on into the night. The politicians emerged around 0715 GMT with the deal, which now will need formal approval by the European Parliament and by national governments.
Negotiators persuaded nations that had been opposed to the proposed Single Resolution Mechanism and the legislation for bail-ins to agree.
Insolvent banks will be treated equally regardless of the country they are based in. Failed banks creditors, both bond holders and depositors, will be subject to bail-ins in the same way in all countries.
“It’s a very good agreement,” European Central Bank President Mario Draghi said before the meeting of EU leaders in the Belgian capital. The banking union was shaped in part by Draghi and he hailed the compromise plan as “great progress for a better banking union. Two pillars are now in place.”
Plans for a single banking union were put together two years ago due to fears for the euro and the EU’s 6,000 banks. Countries wanted to break the link between sovereigns and insolvent banks to ensure taxpayers were not forced to bail out insolvent banks and to prevent contagion and a systemic crisis.
It had already been agreed that shareholders and importantly now depositors will be bailed in before the single resolution fund can be tapped. About 100 banks plus transnationals and those already bailed out will come under the direct supervision of the ECB from January.
While most of the coverage is on the European Union member states and the European Parliament agreeing the final details of a single resolution mechanism (SRM) to wind up failing banks, there is little coverage of the developing bail-in regimes and the heightened risk that depositors in the Eurozone now face.
Banks in the Eurozone remain extremely vulnerable. Our research on
bail-ins and the developing bail-in regimes clearly shows how banks remain very vulnerable and it is now the case that in the event of bank failure, your deposits could be confiscated as happened in Cyprus.
It is important to realise that not just the EU but also the UK, the U.S., Canada, Australia, New Zealand and most G20 nations all have plans for bail-ins in the event that banks and other large financial institutions get into difficulty.
The coming bail-ins will pose real challenges and risks to investors and of course depositors – both household and corporate. Return of capital, rather than return on capital will assume greater importance.
Evaluating counterparty risk and only using the safest banks, investment providers and financial institutions will become essential in order to protect and grow wealth.
It is important that one owns physical coins and bars, legally in your name, outside the banking system. Paper or electronic forms of gold investment should be avoided as they along with cash deposits could be subject to bail-ins.
Educate yourself about this emerging threat to your livelihood by reading:
Bail-In Guide: 
Protecting your Savings In The Coming Bail-In Era (10 pages)
Bail-In Research: 
From Bail-Outs to Bail-Ins: Risks and Ramifications (50 pages) 

NASA-funded study: Over 32 advanced civilizations have collapsed before us, and we’re next in line.

Collapse of civilization
As any long-time reader of this column knows, we routinely draw from historical lessons to highlight that this time is not different.
Throughout the 18th century, for example, France was the greatest superpower in Europe, if not the world.
But they became complacent, believing that they had some sort of ‘divine right’ to reign supreme, and that they could be as fiscally irresponsible as they liked.
The French government spent money like drunken sailors; they had substantial welfare programs, free hospitals, and grand monuments.
They held vast territories overseas, engaged in constant warfare, and even had their own intrusive intelligence service that spied on King and subject alike.
Of course, they couldn’t pay for any of this.
French budget deficits were out of control, and they resorted to going heavily into debt and rapidly debasing their currency.
Stop me when this sounds familiar.
The French economy ultimately failed, bringing with it a 26-year period of hyperinflation, civil war, military conquest, and genocide.
History is full of examples, from ancient Mesopotamia to the Soviet Union, which show that whenever societies reach unsustainable levels of resource consumption and allocation, they collapse.
I’ve been writing about this for years, and the idea is now hitting mainstream.
A recent research paper funded by NASA highlights this same premise. According to the authors:
“Collapses of even advanced civilizations have occurred many times in the past five thousand years, and they were frequently followed by centuries of population and cultural decline and economic regression.”
The results of their experiments show that some of the very clear trends which exist today– unsustainable resource consumption, and economic stratification that favors the elite– can very easily result in collapse.
In fact, they write that “collapse is very difficult to avoid and requires major policy changes.”
This isn’t exactly good news.
But here’s the thing– between massive debts, deficits, money printing, war, resource depletion, etc., our modern society seems riddled with these risks.
And history certainly shows that dominant powers are always changing.
Empires rise and fall. The global monetary system is always changing. The prevailing social contract is always changing.
But there is one FAR greater trend across history that supercedes all of the rest… and that trend is the RISE of humanity.
Human beings are fundamentally tool creators. We take problems and turn them into opportunities. We find solutions. We adapt and overcome.
The world is not coming to an end. It’s going to reset. There’s a huge difference between the two.
Think about the system that we’re living under.
A tiny elite has total control of the money supply. They wield intrusive spy networks and weapons of mass destruction. The can confiscate the wealth of others in their sole discretion. They can indebt unborn generations.
Curiously, these are the same people who are so incompetent they can’t put a website together.
It’s not working. And just about everyone knows it.
We’re taught growing up that ‘We the People’ have the power to affect radical change in the voting booth. But this is another fairy tale.
Voting only changes the players. It doesn’t change the game.
Technology is one major game changer. The technology exists today to completely revolutionize the way we live and govern ourselves.
Today’s system is just a 19th century model applied to a 21st century society. I mean– a room full of men making decisions about how much money to print? It’s so antiquated it’s almost comical.
But given that the majority of Western governments borrow money just to pay interest on money they’ve already borrowed, it’s obvious the current game is almost finished.
When it ends, there will be a reset… potentially a tumultuous one.
This is why you want to have a plan B, and why you don’t want to have all of your eggs in one basket.
After all, why bother working so hard if everything you’ve ever achieved or provided for your children is tied up in a country with dismal fundamentals?
If you agree with me, then feel free to share this article with your friends below so they also can get a plan B in place. They’ll be glad they did.

The Federal Reserve: Masters of the Universe or Trapped Incompetents?

Suppose the Fed was actually little more than a collection of incompetents trapped in a broken system that is beyond repair.
For a variety of reasons, the Federal Reserve is viewed by many as the financial Master of the Universe. Given how the media hangs on every pronouncement and the visible power of the Fed’s policies to move markets, this view is understandable.
But suppose rather than being masters of all things financial, the Fed was actually little more than a collection of incompetents trapped in a broken system that is beyond repair.
Many reasons have been proposed to explain the Fed’s policies,and most (including my own expressed here) focus on the Fed’s need to protect the banking sector and the Status Quo, lest the whole rotten contraption collapses in a heap of worthless derivatives and various Ponzi schemes.
An alternative view is that the members of the Fed have been selected for incompetence by a system that fosters incompetence by its very nature, i.e. a centralized power center.
Longtime correspondent Harun I. recently offered this explanation of the incompetence of those atop the heap:
Regarding the competence of the Deep State and Federal Reserve:When one merges the Peter Principle and Pareto Principle one realizes that, not only are they incompetent, it is inevitable. Complexity does not equal competence. And because complexity is a form of leverage it does not require a majority of systems inoperable to fail.
Modern developed civilizations rest upon several inverted pyramids. How many people out of any random sampling know how to produce their own food, make their own clothing, build their shelter, or tap into their own water source? As complexity increases and the division in labor grows increasingly in areas that have nothing to do with core survival the civilization becomes increasingly incompetent.
Since a civilization is a hierarchal system, its leaders (the vital few) will eventually be incompetent. Inverted pyramids and inept leadership are a toxic mix. As history would indicate this situation eventually disintegrates then reorganizes… to be repeated.
Another key characteristic of such centralized systems is the way they trap participants, even those at the top. Analyst Catherine Austin Fitts has discussed this attribute, for example, in this interview: Catherine Austin Fitts on Wall Street’s Corruption, the Austrian School and Who’s ‘Really’ in Charge.
One way to think about this is to ask: let’s say the voting members of the Fed knew that the best way to re-start sustainable growth was to normalize interest rates by ending the Fed’s zero-interest rate policy (ZIRP) and quantitative easing.
Even if they knew these changes would ultimately profit the banking sector and the economy as a whole, could they withstand the pressure that would be exerted by everyone benefiting from the Status Quo?
I have long maintained that the Fed’s vaunted independence is actually contingent, i.e. the Fed is a political entity and as a result it responds to political pressure like any other political entity. And like any hierarchy, it is prone to group-think and the urge to conform to norms.
This raises another question: even if the voting members of the Fed wanted to fix the nation’s broken financial system, do they have the ability to do so?
I have posited that whatever consensus/group-think dominated the various factions that comprise the Deep State has eroded, and the cracks of profound disunity are opening between powerful factions in the Deep State.
Rather than Masters of the Universe, the Fed’s governors are increasingly looking more like deer caught in the headlights of a transformation they cannot understand, much less control.