Gold & Silver DEMAND to OVERWHELM MANIPULATION – Andy Hoffman
Sunday, August 18, 2013
What Is Going To Happen If Interest Rates Continue To Rise Rapidly?
If
you want to track how close we are to the next financial collapse,
there is one number that you need to be watching above all others. The
number that I am talking about is the yield on 10 year U.S. Treasuries,
because it affects thousands of other interest rates in our financial
system. When the yield on 10 year U.S. Treasuries goes up, that is bad
for the U.S. economy because it pushes long-term interest rates up.
When interest rates rise, it constricts the flow of credit, and a
healthy flow of credit is absolutely essential to the debt-based system
that we live in. Just imagine someone squeezing a tube that has water
flowing through it. The higher interest rates go, the more economic
activity will be squeezed. If interest rates continue to rise rapidly,
it will be more expensive for the U.S. government to borrow money, it
will be more expensive for state and local governments to borrow money,
the housing market may crash again, consumer debt will become more
expensive, junk bond investors will be in for a world of hurt, the stock
market will experience a tremendous amount of pain and there is a good
chance that we could see the 441 trillion dollar interest rate derivatives bubbleimplode. And that is just for starters.
So yes, we all need to be carefully watching the yield on 10 year
U.S. Treasuries. On Friday, it opened at 2.76% and hit a high of 2.86%
before closing at 2.83%. The yield on 10 year U.S. Treasuries is up
nearly 120 basis points since the beginning of May, and almost everyone
on Wall Street seems convinced that it is going to go much higher.
We are truly moving into unprecedented territory, because we have been in a bull market for U.S. Treasuries for the last 30 years. Many investors don't even know that it is possible to lose money on U.S. Treasuries. They have been described as "risk-free" investments, but that is far from the truth.
In fact, we could see bond investors of all types end up losing trillions of dollars before it is all said and done.
And those in the stock market will lose lots of money too. Low interest rates are good for economic activity which is good for the stock market. The chart posted below was created by Chartist Friend from Pittsburgh, and it shows that stock prices have generally risen as the yield on 10 year U.S. Treasuries has steadily declined over the past 30 years...
When interest rates rise, that is bad for economic activity and bad for stocks. That is why so many stock analysts are alarmed that interest rates are going up so rapidly right now.
And as I wrote about the other day, we have just witnessed the largest cluster of Hindenburg Omens that we have seen since before the last financial crisis. The stock market already seems ripe for a huge "adjustment", and rising interest rates could give it a huge extra push in a negative direction.
By the time it is all said and done, stock market investors could end up losing trillions of dollars in the next stock market crash.
In addition, rising interest rates could easily precipitate another housing crash. As the Wall Street Journal discussed on Friday, as the yield on 10 year U.S. Treasuries goes up it will also cause mortgage rates to rise...
Yes, of course it will be much harder. In fact, there is a good chance that you will have to reduce your selling price significantly so that prospective buyers can afford the payments.
Let us hope that the yield on 10 year U.S. Treasuries levels off for a while. If it says at this current level, the damage will probably not be too bad.
But if it crosses the 3 percent mark and keeps soaring, things could get messy pretty quickly. In fact, according to a Bank of America Merrill Lynch investor survey, the 3.5 percent mark is when the collapse of the bond market is likely to become "disorderly"...
Well, there are a number of factors of course, but one very disturbing sign is that foreigners are selling off U.S. Treasuries at a pace that we have not seen since 2007...
Well, it looks like it may be starting to happen.
Unfortunately, there is no way that the party that the U.S. government has been throwing can continue without foreigners buying our debt. We have added more than 11 trillion dollars to the national debt since the year 2000, and according to Boston University economist Laurence Kotlikoff we are facing unfunded liabilities in future years that are in excess of 200 trillion dollars.
Even with foreigners continuing to loan us gigantic mountains of super cheap money, it would still take a doubling of our taxes to put us on a fiscally sustainable course...
Very few Americans could.
But that is how serious the financial problems of the federal government are.
And all of the above assumes that interest payments on U.S. government debt will remain at current levels. If the average rate of interest on U.S. government debt rises to just 6 percent, the U.S. government will be paying out a trillion dollars a year just in interest on the national debt.
Also, all of the above assumes that we will have a healthy financial system that does not need to be bailed out again.
But if rapidly rising interest rates cause the 441 trillion dollar interest rate derivatives bubble to implode, the bailout that the "too big to fail" banks will need will likely be far, far larger than last time.
In fact, once that bubble bursts there probably will not be enough money in the entire world to fix it.
If the picture that I have painted above sounds bleak, that is because it is bleak.
Sometimes I get frustrated with myself because I don't feel I am communicating the tremendous danger that we are facing accurately enough.
We are heading for the worst financial crisis in modern human history, and the debt-fueled prosperity that we are enjoying today is going to go away and it is never going to come back.
You can dismiss that as "doom and gloom" and stick your head in the sand if you want, but that isn't going to help anything. Instead of ignoring reality you should be working hard to prepare your family for what is coming and warning others that they should be getting prepared too.
When a hurricane is approaching landfall, you don't take your family out for a picnic at the beach. That would be foolish. Unfortunately, way too many Americans are acting as if nothing like the financial crisis of 2008 could ever possibly happen again.
If you deceive yourself into thinking that all of this is going to have a happy ending somehow, you are going to get blindsided by the coming storm.
But if you make preparations now, you might just be okay.
There is hope in understanding what is happening and there is hope in getting prepared.
We are truly moving into unprecedented territory, because we have been in a bull market for U.S. Treasuries for the last 30 years. Many investors don't even know that it is possible to lose money on U.S. Treasuries. They have been described as "risk-free" investments, but that is far from the truth.
In fact, we could see bond investors of all types end up losing trillions of dollars before it is all said and done.
And those in the stock market will lose lots of money too. Low interest rates are good for economic activity which is good for the stock market. The chart posted below was created by Chartist Friend from Pittsburgh, and it shows that stock prices have generally risen as the yield on 10 year U.S. Treasuries has steadily declined over the past 30 years...
When interest rates rise, that is bad for economic activity and bad for stocks. That is why so many stock analysts are alarmed that interest rates are going up so rapidly right now.
And as I wrote about the other day, we have just witnessed the largest cluster of Hindenburg Omens that we have seen since before the last financial crisis. The stock market already seems ripe for a huge "adjustment", and rising interest rates could give it a huge extra push in a negative direction.
By the time it is all said and done, stock market investors could end up losing trillions of dollars in the next stock market crash.
In addition, rising interest rates could easily precipitate another housing crash. As the Wall Street Journal discussed on Friday, as the yield on 10 year U.S. Treasuries goes up it will also cause mortgage rates to rise...
Higher yields will push up long-term borrowing cost for U.S. consumers and businesses. Mortgage rates will rise, and investors are keeping a close eye on whether this may derail the recovery of the housing market, which has shown signs of turning a corner this year.In one of my previous articles, I included an example that shows just how powerful rising mortgage rates can be...
A year ago, the 30 year rate was sitting at 3.66 percent. The monthly payment on a 30 year, $300,000 mortgage at that rate would be $1374.07.If you own a $300,000 house today, do you think it will be easier to sell it or harder to sell it if mortgage rates skyrocket?
If the 30 year rate rises to 8 percent, the monthly payment on a 30 year, $300,000 mortgage at that rate would be $2201.29.
Does 8 percent sound crazy to you?
It shouldn't. 8 percent was considered to be normal back in the year 2000.
Yes, of course it will be much harder. In fact, there is a good chance that you will have to reduce your selling price significantly so that prospective buyers can afford the payments.
Let us hope that the yield on 10 year U.S. Treasuries levels off for a while. If it says at this current level, the damage will probably not be too bad.
But if it crosses the 3 percent mark and keeps soaring, things could get messy pretty quickly. In fact, according to a Bank of America Merrill Lynch investor survey, the 3.5 percent mark is when the collapse of the bond market is likely to become "disorderly"...
Our latest Credit Investor Survey, conducted July 8-11, showed that 3.5% on the 10-year is most commonly thought of as the trigger of a disorderly rotation – i.e. higher interest rates leading to outflows and wider credit spreads – among high grade investors.So what is causing this?
Put differently, 3.0% on the 10-year will not lead to overall wider credit spreads if there is enough buying interest from institutional investors (though note that the 10s/30s spread curve would flatten further, as mutual fund/ETF holdings are concentrated in the belly of the curve, whereas institutional demand is disproportional in the long end of the curve). However, if the probability of a further move higher in interest rates to 3.5% is high – which will be the perception if interest rate volatility is high – certain institutional investors will choose to remain on the sidelines.
Thus there may not be enough institutional buying interest to mitigate retail fund outflows and contain overall high grade spread levels.
Well, there are a number of factors of course, but one very disturbing sign is that foreigners are selling off U.S. Treasuries at a pace that we have not seen since 2007...
One of the biggest fears in the financial markets is that foreign investors will stop buying U.S. Treasury securities, causing borrowing rates to surge.Do you remember all of the warnings that we have received over the years about what would take place when foreign countries started dumping U.S. debt?
Not that this is the beginning of a frightening trend, but new data from the Treasury Department shows that foreigners were net sellers in June. In fact, this is the largest net sale of U.S. securities since August 2007.
Well, it looks like it may be starting to happen.
Unfortunately, there is no way that the party that the U.S. government has been throwing can continue without foreigners buying our debt. We have added more than 11 trillion dollars to the national debt since the year 2000, and according to Boston University economist Laurence Kotlikoff we are facing unfunded liabilities in future years that are in excess of 200 trillion dollars.
Even with foreigners continuing to loan us gigantic mountains of super cheap money, it would still take a doubling of our taxes to put us on a fiscally sustainable course...
Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble - far worse than the Washington-based lender of last resort has previously acknowledged. "The U.S. fiscal gap is huge," the IMF asserted in a June report. "Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP."Can you afford to pay twice as much in taxes to the federal government?
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF's fiscal fix, a doubling of federal taxes in perpetuity, would be appalling - and possibly worse than appalling.
Prof. Kotlikoff says: "The IMF is saying that, to close this fiscal gap [by taxation] would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.
"America's fiscal gap is enormous - so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems - as well as military and other discretionary spending cuts."
Very few Americans could.
But that is how serious the financial problems of the federal government are.
And all of the above assumes that interest payments on U.S. government debt will remain at current levels. If the average rate of interest on U.S. government debt rises to just 6 percent, the U.S. government will be paying out a trillion dollars a year just in interest on the national debt.
Also, all of the above assumes that we will have a healthy financial system that does not need to be bailed out again.
But if rapidly rising interest rates cause the 441 trillion dollar interest rate derivatives bubble to implode, the bailout that the "too big to fail" banks will need will likely be far, far larger than last time.
In fact, once that bubble bursts there probably will not be enough money in the entire world to fix it.
If the picture that I have painted above sounds bleak, that is because it is bleak.
Sometimes I get frustrated with myself because I don't feel I am communicating the tremendous danger that we are facing accurately enough.
We are heading for the worst financial crisis in modern human history, and the debt-fueled prosperity that we are enjoying today is going to go away and it is never going to come back.
You can dismiss that as "doom and gloom" and stick your head in the sand if you want, but that isn't going to help anything. Instead of ignoring reality you should be working hard to prepare your family for what is coming and warning others that they should be getting prepared too.
When a hurricane is approaching landfall, you don't take your family out for a picnic at the beach. That would be foolish. Unfortunately, way too many Americans are acting as if nothing like the financial crisis of 2008 could ever possibly happen again.
If you deceive yourself into thinking that all of this is going to have a happy ending somehow, you are going to get blindsided by the coming storm.
But if you make preparations now, you might just be okay.
There is hope in understanding what is happening and there is hope in getting prepared.
So watch the yield on 10 year U.S. Treasuries. The higher it goes, the later in the game we are.
Gold Or Tungsten? Here's How To Know
We hope the Bundesbank, and certainly the German people, will be using one of these in the near-term (up to and including 2020 ) future.
From Olympus:
This test is set up by coupling the transducer to a known good bar
and identifying the echo from the bottom surface. A flaw gate may be
used to monitor the interval ahead of this back wall. Any echoes
appearing within the region marked by the gate indicate that the sound
beam is reflecting off a discontinuity, and the bar should be further
inspected by other means. Typical screen displays are seen below.
Conventional flaw detector images from solid metal (left) and metal with discontinuity (right).
Note: Echo appearing in region marked by red gate.
Phased array images from solid metal (left) and metal with discontinuity (right). The discontinuity appears as an indication in what should be a white region of the image.
This test is set up by coupling the transducer to a known good bar and identifying the backwall echo. That backwall echo may be marked by a flaw gate. If the position of that echo changes with no accompanying change in bar thickness, then the sound velocity in the metal has changed and the bar should be further inspected by other means. The most common adulterants increase sound velocity and thus move the echo to the left, as seen above.
Note: With small modifications these test can be applied to other precious metals such as silver and platinum as well. Contact Olympus NDT for further information.
* * *
Of course, judging by the following photo showing a Bundesbank officer using precisely such an Olympus device to verify the authenticity of its gold, one can be confident that Herr Weidmann is well-aware that not everything that glitters within the global central bank cartel is gold.
h/t Ro
From Olympus:
Ultrasonic Testing of Gold Bars
Application:
Nondestructive verification of the physical integrity of gold bars.Background:
Gold bullion bars have been fraudulently adulterated through the insertion of slugs of inexpensive base metal of similar density. These insertions are difficult or impossible to detect through weighing, radiography, or X-ray fluorescence, so some precious metals processors have resorted to drilling or cutting bars to verify integrity. However a simple ultrasonic test can quickly and reliably locate inserts with no need to drill, cut, or otherwise alter the bar.Equipment:
Any Olympus NDT flaw detector or phased array instrument can be used for this test. These include the EPOCH XT, EPOCH 600, EPOCH 1000, OmniScan SX, and OmniScan MX2. The recommended transducer frequency will typically be 2.25 MHz.Procedure:
Adulteration of a gold bar by means of inserts will cause predictable changes in the way ultrasonic waves pass through the metal. Inserts of material other than gold in a bar will change the pattern of wave reflections, a response that can also be caused by internal voids. Large inserts that fill most of the volume of the bar can also be detected through changes in sound velocity.1. Pulse/echo reflection method
Ultrasonic waves traveling through any medium will continue propagating in the same direction until they strike a boundary with a different material, which will cause them to reflect back to their source. Ultrasonic flaw detectors and phased array instruments generate pulses of high frequency sound waves with small, hand-held transducers. The sound energy is coupled into the test piece and the instrument monitors and displays the pattern of reflected echoes. Reflections coming from inside a gold bar, rather than the opposite surface, change the pattern and indicate either an insert of another metal or a internal void.Conventional flaw detector images from solid metal (left) and metal with discontinuity (right).
Note: Echo appearing in region marked by red gate.
 |
 |
Phased array images from solid metal (left) and metal with discontinuity (right). The discontinuity appears as an indication in what should be a white region of the image.
 |
 |
2. Velocity method
The sound velocity in pure gold is 3,240 m/S or .1275 in/uS. The harder gold alloys used in jewelry will typically be somewhat faster, but will similarly have a specific velocity associated with a given alloy. If the sound velocity in a bar deviates from the expected value, then the metal content has been altered.This test is set up by coupling the transducer to a known good bar and identifying the backwall echo. That backwall echo may be marked by a flaw gate. If the position of that echo changes with no accompanying change in bar thickness, then the sound velocity in the metal has changed and the bar should be further inspected by other means. The most common adulterants increase sound velocity and thus move the echo to the left, as seen above.
Note: With small modifications these test can be applied to other precious metals such as silver and platinum as well. Contact Olympus NDT for further information.
* * *
Of course, judging by the following photo showing a Bundesbank officer using precisely such an Olympus device to verify the authenticity of its gold, one can be confident that Herr Weidmann is well-aware that not everything that glitters within the global central bank cartel is gold.
h/t Ro
Gold And Silver – Fundamentals Never Say “When.” Charts Do, And It Pays To “Listen.”
by Michael Noonan
Finally, a classic example on the importance of reading developing market information,
as shown in a chart!
For the past several months, everyone interested in Precious Metals, PMs, has been
deluged with never-ending fundamental information about the unprecedented demand
for physical gold and silver. Much of the information was compelling, yet, if anyone
tried to buy into [paper] futures, it was a financial disaster, despite such strong demand
for the underlying physical. It was the lying manipulators of the COMEX and LMBA
exchanges that made the differences.
Our constant advice was to buy, accumulate, and personally hold physical gold and silver
at any price, all throughout the decline from 2011 highs. The fundamentals dictated that
strategy for so many reasons, well beyond the demand situation, but just not in the
futures market.
Fundamentals give the reasons for taking a particular action, but they do not provide the
critical element of timing. That has changed, at least temporarily, and reading developing
market activity, our constant theme, has finally entered the limelight. We use price,
volume, and time as the components for reading and timing the markets.
Just as a reminder, technical aspects like moving averages, RSI, MACD, Bollinger Bands,
etc, are not a consideration in reading market activity. They are artificial measures using
past tense data imposed upon present tense price as a means to “predict” the future tense.
We do not have any use for them. The market, itself, provides the best factual information
available in order to read its intent.
The most important piece of market information always starts with the trend. Gold is now
beginning to show signs of a potential bottom. It is too soon to know for certain, at least
on the monthly, [not shown], and weekly charts. Absent a surprise “V-Bottom,” when
price rallies like a sling-shot from the lows, it takes time for a bottom to develop, so one is
not being declared, as such. Instead, the weekly chart is used for context, while the daily
and intra day charts are more for timing.
The 1500 area is important resistance, as noted. The circled small Trading Range, TR, led
to a wide-range decline bar, and the high of that bar, along with the highs of the bars in the
TR, forms a near-term potential resistance which is close to being tested. How price reacts
to that area will provide important market information. For example, if ranges narrow on
a decline in volume, that information alerts us to likely resistance. If the ranges are wide
and volume strong, the resistance should give way. Now, a daily chart with greater detail.
This is the first time since price entered the 18 month TR, after the 2011 highs, that we can
say the daily trend is up. It may be short-lived, it may continue higher, we do not know
how the next several days/weeks will develop, but we can say for certain, at least for now,
there are reasons to trade from the long side.
After the mid-July absorption, discussed in other articles, there was a strong breakout that
stalled at obvious resistance. The market gave some important information in how price
reacted. It was a labored decline in a market where prior declines were faster. The 11th
day bottom was small with a close on the high and above the previous day close. That was
the market telling us buyers had stopped sellers during what has been a very negative price
environment.
Note how price rallied with ease over the next 3 TDs, then a two-day “correction,” and it
led to last Thursday’s breakout rally, slicing right through the resistance area. We use a 90
minute chart to show how the market left numerous clues for taking action.
The steps are outlined, 1 – 5. 1 was a small TR that came from a very strong rally bar on
equally strong volume. The fact that price consolidated, as opposed to correcting much
lower, spoke to underlying strength coming off the lows.
At 2, there is another strong, wide-range rally bar. Volume does not show because it was
during overnight hours, but the rally continued right up to resistance. Price backed away
and retraced to the highs at 1, and formed a failed probe, at 3. [We took a small loss there,
stopped out on that failed probe, unfortunately, which happens.]
Price rallied back to resistance. It is not good practice to buy just below resistance, where
price stopped there again, on the 14th. What happened at 4 developed very quickly, and
one had to be prepared to recognize events as they were occurring and react to them just
as quickly.
The spike down to the low at 4 was followed by an immediate rally back up on increased
volume. That alerted us to a potential shakeout, where price drops to “shakeout” weak
longs and stops, just before resuming higher. That this development was happening so
near a resistance area was a message that gold was ready to move higher, according to
information provided by the market itself. It was time to buy and buy now, if the read
were accurate. The volume that day was important confirmation that demand had just
overwhelmed supply. From lock-and-load at 1 – 4, it was time to “fire” at 5.
The knowledge of market manipulation and huge demand for physical gold provided
background that this market was due for a rally, but almost all thought the rally should
have happened weeks or months ago. Finally, the charts, in reading the market activity,
gave the when to act, with a low-risk entry. The timing for that window of opportunity
was about 10 minutes.
This is why we love charts and tout them as the best and most reliable source for market
information and the most important element, timing. The timing factor began a few
weeks ago when the prospects of absorption were covered. We stated back on 27 July:
“We choose now for buying and holding physical gold and silver. We are on the long side
in gold futures, but that can change on any given day.”
See Newton’s Third Law Is About Ready To [Over]React. Be Prepared. The last sentence
of the article, click on http://bit.ly/1bXsEJE .
That last bar on the weekly chart speaks volumes, a gap higher from apparent weakness.
The odds of silver retesting 26 have increased dramatically.
We often mention putting developing market activity into a context as it is the vital step in
preparation for when a market moves. The support-turned-into-resistance line is drawn
as the market activity dictates, which most often in not simply a straight line, used for
convenience and not necessarily accuracy.
The lower support/resistance line meant very little as price sailed right through 21. It
shows the importance of how price reacts to an anticipated resistance. Obviously, when
it goes right through, the market is telling us to expect higher levels. Silver is already
testing the higher resistance line, just above 23.
The “D/S” designates Demand overcoming Supply, evidenced by the wide range up bar
and on sharply higher volume. It could not be any clearer that demand, [buyers], took
charge. 23+ may act as resistance, but that volume and rally getting there suggests it
could be short-lived.
You can see the day of the gap that was shown on the weekly chart. That was one of the
market’s stronger messages, emphasized even more by the next two days, a consolidation
in the form of a rally and not just sideways, as normally occurs.
The first time we recommended the long side in silver is indicated, based on a short-term
read of developing market activity, back then. It is included as background to inform that
the buy signal from last Thursday was not the first, but it was a much better one.
Timing for buying silver that day, just as with gold, was very short, and one had to respond
on instinct and not sit back to assess the developing information. That “instinct” actually
comes from the necessary preparation work and not simply “shooting from the hip.” As
the steps were shown in gold, they existed for silver, but silver had been stronger from the
“signs” indicated.
As a rule, a trading unit is a minimum of two contracts to enable “half-position” action.
Silver reached a potential resistance area on Friday, and taking partial profits on a half-
position was warranted. If price moves higher, the other half still gains. If price corrects
lower, the “locked-in” half-position takes advantage of a higher prior to a potential
correction. This is a form of money management, on our part.
It is not always this clear, but when the market “talks,” we listen, for a reason.
Finally, a classic example on the importance of reading developing market information,
as shown in a chart!
For the past several months, everyone interested in Precious Metals, PMs, has been
deluged with never-ending fundamental information about the unprecedented demand
for physical gold and silver. Much of the information was compelling, yet, if anyone
tried to buy into [paper] futures, it was a financial disaster, despite such strong demand
for the underlying physical. It was the lying manipulators of the COMEX and LMBA
exchanges that made the differences.
Our constant advice was to buy, accumulate, and personally hold physical gold and silver
at any price, all throughout the decline from 2011 highs. The fundamentals dictated that
strategy for so many reasons, well beyond the demand situation, but just not in the
futures market.
Fundamentals give the reasons for taking a particular action, but they do not provide the
critical element of timing. That has changed, at least temporarily, and reading developing
market activity, our constant theme, has finally entered the limelight. We use price,
volume, and time as the components for reading and timing the markets.
Just as a reminder, technical aspects like moving averages, RSI, MACD, Bollinger Bands,
etc, are not a consideration in reading market activity. They are artificial measures using
past tense data imposed upon present tense price as a means to “predict” the future tense.
We do not have any use for them. The market, itself, provides the best factual information
available in order to read its intent.
The most important piece of market information always starts with the trend. Gold is now
beginning to show signs of a potential bottom. It is too soon to know for certain, at least
on the monthly, [not shown], and weekly charts. Absent a surprise “V-Bottom,” when
price rallies like a sling-shot from the lows, it takes time for a bottom to develop, so one is
not being declared, as such. Instead, the weekly chart is used for context, while the daily
and intra day charts are more for timing.
The 1500 area is important resistance, as noted. The circled small Trading Range, TR, led
to a wide-range decline bar, and the high of that bar, along with the highs of the bars in the
TR, forms a near-term potential resistance which is close to being tested. How price reacts
to that area will provide important market information. For example, if ranges narrow on
a decline in volume, that information alerts us to likely resistance. If the ranges are wide
and volume strong, the resistance should give way. Now, a daily chart with greater detail.
This is the first time since price entered the 18 month TR, after the 2011 highs, that we can
say the daily trend is up. It may be short-lived, it may continue higher, we do not know
how the next several days/weeks will develop, but we can say for certain, at least for now,
there are reasons to trade from the long side.
After the mid-July absorption, discussed in other articles, there was a strong breakout that
stalled at obvious resistance. The market gave some important information in how price
reacted. It was a labored decline in a market where prior declines were faster. The 11th
day bottom was small with a close on the high and above the previous day close. That was
the market telling us buyers had stopped sellers during what has been a very negative price
environment.
Note how price rallied with ease over the next 3 TDs, then a two-day “correction,” and it
led to last Thursday’s breakout rally, slicing right through the resistance area. We use a 90
minute chart to show how the market left numerous clues for taking action.
The steps are outlined, 1 – 5. 1 was a small TR that came from a very strong rally bar on
equally strong volume. The fact that price consolidated, as opposed to correcting much
lower, spoke to underlying strength coming off the lows.
At 2, there is another strong, wide-range rally bar. Volume does not show because it was
during overnight hours, but the rally continued right up to resistance. Price backed away
and retraced to the highs at 1, and formed a failed probe, at 3. [We took a small loss there,
stopped out on that failed probe, unfortunately, which happens.]
Price rallied back to resistance. It is not good practice to buy just below resistance, where
price stopped there again, on the 14th. What happened at 4 developed very quickly, and
one had to be prepared to recognize events as they were occurring and react to them just
as quickly.
The spike down to the low at 4 was followed by an immediate rally back up on increased
volume. That alerted us to a potential shakeout, where price drops to “shakeout” weak
longs and stops, just before resuming higher. That this development was happening so
near a resistance area was a message that gold was ready to move higher, according to
information provided by the market itself. It was time to buy and buy now, if the read
were accurate. The volume that day was important confirmation that demand had just
overwhelmed supply. From lock-and-load at 1 – 4, it was time to “fire” at 5.
The knowledge of market manipulation and huge demand for physical gold provided
background that this market was due for a rally, but almost all thought the rally should
have happened weeks or months ago. Finally, the charts, in reading the market activity,
gave the when to act, with a low-risk entry. The timing for that window of opportunity
was about 10 minutes.
This is why we love charts and tout them as the best and most reliable source for market
information and the most important element, timing. The timing factor began a few
weeks ago when the prospects of absorption were covered. We stated back on 27 July:
“We choose now for buying and holding physical gold and silver. We are on the long side
in gold futures, but that can change on any given day.”
See Newton’s Third Law Is About Ready To [Over]React. Be Prepared. The last sentence
of the article, click on http://bit.ly/1bXsEJE .
That last bar on the weekly chart speaks volumes, a gap higher from apparent weakness.
The odds of silver retesting 26 have increased dramatically.
We often mention putting developing market activity into a context as it is the vital step in
preparation for when a market moves. The support-turned-into-resistance line is drawn
as the market activity dictates, which most often in not simply a straight line, used for
convenience and not necessarily accuracy.
The lower support/resistance line meant very little as price sailed right through 21. It
shows the importance of how price reacts to an anticipated resistance. Obviously, when
it goes right through, the market is telling us to expect higher levels. Silver is already
testing the higher resistance line, just above 23.
The “D/S” designates Demand overcoming Supply, evidenced by the wide range up bar
and on sharply higher volume. It could not be any clearer that demand, [buyers], took
charge. 23+ may act as resistance, but that volume and rally getting there suggests it
could be short-lived.
You can see the day of the gap that was shown on the weekly chart. That was one of the
market’s stronger messages, emphasized even more by the next two days, a consolidation
in the form of a rally and not just sideways, as normally occurs.
The first time we recommended the long side in silver is indicated, based on a short-term
read of developing market activity, back then. It is included as background to inform that
the buy signal from last Thursday was not the first, but it was a much better one.
Timing for buying silver that day, just as with gold, was very short, and one had to respond
on instinct and not sit back to assess the developing information. That “instinct” actually
comes from the necessary preparation work and not simply “shooting from the hip.” As
the steps were shown in gold, they existed for silver, but silver had been stronger from the
“signs” indicated.
As a rule, a trading unit is a minimum of two contracts to enable “half-position” action.
Silver reached a potential resistance area on Friday, and taking partial profits on a half-
position was warranted. If price moves higher, the other half still gains. If price corrects
lower, the “locked-in” half-position takes advantage of a higher prior to a potential
correction. This is a form of money management, on our part.
It is not always this clear, but when the market “talks,” we listen, for a reason.
WARNING: The Countdown To The Economic Collapse Has Begun, Everything Is Being Put Into Place For The Fierce Storm That Is Approaching
The central bankers/US government have taken control over Egypt. They control the military by giving them aid, they control Saudi Arabia that supports the Egyptian armed forces. This was a take over to declare martial law and a dictatorship in Egypt to protect the US dollar as the reserve currency. The economic collapse is approaching quickly this fall. Everything is being put into place for the fierce storm that is approaching.
Is Slowing Money Supply Signalling Another Stock Market Crash?
According to Austrian Business Cycle Theory, when a central bank slows its money printing that has fueled a manipulated stock market boom, the stock market is very vulnerable to a crash. Murray Rothbard in his book America’s Great Depression explained how it occurred before the October 1929 crash:
It is generally acknowledged that the great boom of the 1920s began around July, 1921, after a year or more of sharp recession, and ended about July, 1929.
Production and business activity began to decline in July, 1929, although the famous stock market crash came in October of that year.
http://www.lewrockwell.com/2013/08/robert-wenzel/stock-market-crash-just-ahead/
The Market’s Gains Are Being Driven By Fewer And Fewer Stocks
Meanwhile, the 200-DMA of all of those stocks is trending up.
For what it’s worth…
UBSNew Mortgage applications are tanking…Due to rising rates?
CLICK ON CHART TO ENLARGE
New mortgage applications are falling like a rock of late!. Is this due to the steep rise in rates? Seen the inset rate chart above and look what has happened to applications during the window of rising rates.
http://blog.kimblechartingsolutions.com/2013/08/new-mortgage-applications-are-tanking-due-to-rising-rates/
Bill Gross Tweets: “Without Central Bank Check Writing, We Only Have Ourselves To Sell To” Sends Yields Soaring
http://www.zerohedge.com/news/2013-08-16/bill-gross-tweets-without-central-bank-check-writing-we-only-have-ourselves-sell-sen
The charts that point to an imminent Fed taper
http://www.marketwatch.com/story/the-charts-that-point-to-an-imminent-fed-taper-2013-08-16
Dow Suffers Worst Week Of 2013
NEW YORK — Stocks ended a tough week on a down note Friday, hurt by
retailers and companies that are sensitive to rising interest rates. The
Dow Jones industrial average had its worst week of the year.
The Dow edged down 30 points, or 0.2 percent, to close at 15,081. The Standard & Poor’s 500 index fell five points, or 0.3 percent, to 1,655. The Nasdaq eased three points, or 0.09 percent, to 3,602.
The possibility of a cutback in the Federal Reserve’s massive bond-buying program in September has roiled the bond market. The 10-year Treasury note rose to 2.83 percent, its highest level since July 2011. A week ago, the yield was 2.58 percent. . .
The Dow edged down 30 points, or 0.2 percent, to close at 15,081. The Standard & Poor’s 500 index fell five points, or 0.3 percent, to 1,655. The Nasdaq eased three points, or 0.09 percent, to 3,602.
The possibility of a cutback in the Federal Reserve’s massive bond-buying program in September has roiled the bond market. The 10-year Treasury note rose to 2.83 percent, its highest level since July 2011. A week ago, the yield was 2.58 percent. . .
Bankrupt World Now Headed Into Frightening Chaos
With stocks plunging this week as gold and silver rallied
substantially, today Egon von Greyerz warned King World News that a
bankrupt world is now headed into a period of frightening chaos. Greyerz
also warned that banks and governments will not survive what is coming.
Below is what Greyerz, who is founder of Matterhorn Asset Management
out of Switzerland, had to say in this powerful interview.
Greyerz: “Eric, I’ve been thinking about the end game. The conclusion I have come to is that this will go on for a long period of time because there won’t be a conventional end to the coming chaos. These are absolutely historic and unprecedented times. We have never, ever had a situation in history where most major nations are bankrupt.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/8/16_Bankrupt_World_Now_Headed_Into_Frightening_Chaos.html
Greyerz: “Eric, I’ve been thinking about the end game. The conclusion I have come to is that this will go on for a long period of time because there won’t be a conventional end to the coming chaos. These are absolutely historic and unprecedented times. We have never, ever had a situation in history where most major nations are bankrupt.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/8/16_Bankrupt_World_Now_Headed_Into_Frightening_Chaos.html
Saturday, August 17, 2013
The New Poor
• America’s
middle class sinking under the poverty line
By Victor Thorn
Amid White House claims that
the economy is rebounding, Americans are actually being placated by a
vast illusion. During the Great Depression, soup lines stretched
around city blocks.
In 2013, these same soup lines
exist, except in a different form. Facilitated by yearly trillion
dollar deficits, one-sixth of all citizens now collect food stamps.
This rapidly expanding welfare state also includes skyrocketing
disability claims and other government programs that have provided
the necessary optics for what many are calling an invisible
depression.
But calculated PR campaigns
can only conceal these calamities for so long, especially a
disturbing slide toward poverty for middle class workers, many of
them white. In a monumental July 28 article, the AP’s Hope Yen
revealed
that 79% of U.S. adults will, at least once in their lifetime, face
prolonged stretches of unemployment, reliance on government aid, or
income levels below the poverty line.
While corporate media
propagandists fixated for months on George Zimmerman’s alleged
profiling of Trayvon Martin, the real story facing our country lies
in classism, not racism. Harvard Prof. William Julius Wilson
emphasized,
“It’s time that America comes to understand that many of the
nation’s biggest disparities . . . are increasingly due to economic
class position.”
Yen took it a step further.
“Hardship is particularly growing among whites.” Although poverty
rates for blacks and Hispanics triple that of whites, by sheer
numbers those living in a monetary danger zone—characterized as an
income level of $23,012 for a family of four—are now 41.5% white.
Despite white families still
possessing, on average, six-times the overall wealth of blacks and
Hispanics, on July 31 Fox Business Network analyst Charles Payne
offered
this perspective. “While the nation has been sidetracked with a
variety of news headlines promoting racial animosity and a recent
speech by Pres. Obama suggesting treatment of black people is moving
backwards, there is a major crisis in white America that’s going
unnoticed or ignored.”
The reasons are plenty. After
the housing bubble burst, many homeowners abruptly realized that they
owed more on their residences than they were worth, a condition known
as being underwater. Also, even though working class whites still
comprise the largest demographic employment bloc, fears regarding
Obamacare are compelling companies to primarily only hire part-time
or temporary help. In fact, of all jobs created this year, 77% were
part-time.
Other factors must be
considered. For instance, if Obama’s amnesty bill passes, upwards
of 20 million more foreigners will be competing for lower-end jobs.
In Appalachia, an ongoing war against coal has decimated many
mountain communities, whereas Midwest factory towns still suffer from
the effects of outsourcing.
Moreover, insidious programs
such as Agenda 21 are gutting rural white America, especially in the
heartland, in an attempt to urbanize our population. With recent
college graduates struggling to find entry-level jobs, a rise in
white single-mother households, increased payroll taxes, and a
largely unreported rise in poverty among whites near retirement age,
it appears as if the new normal for once thriving white Americans
seems to be one of economic dystopia.
The Obama administration’s
attempt to “level the playing field” seems to be working
according to plan.
________________________________________________________
Too ‘Rich’ for Welfare
• Single white woman
recounts her struggle to pay the monthly bills
Despite the rosy scenarios put
forth by Washington elites, an increasing number of single white
females are facing the harsh reality that just because you have a job
doesn’t mean you’re not considered poor.
For this week’s edition,
this writer to spoke to a single white female in her late 40s who
lives in rural Pennsylvania. Out of concern that her candid
statements about the perils of today’s working poor could impact
the various jobs she works or embarrass her in the local community,
AMERICAN FREE PRESS decided
not to reveal her identity. Instead, she asked to be referred to as
“Nikki.”
AFP asked Nikki to describe
her schedule.
“I work 36 hours a week as a
secretary, and then afterward I put in two or three hours each
evening at a local retail store for minimum wage,” she said. “So,
I get up at six in the morning and usually don’t get home until
seven or eight at night. It’s a good thing both my kids are grown
and on their own, because if they were little, I’d never see them.”
Nikki’s jobs don’t end
there. “On the weekends, I do some gardening for a couple of
elderly people to earn a few extra bucks,” she added.
Even with a seven-day
workweek, Nikki’s financial situation isn’t pleasant. “Between
rent, a car payment, car insurance, gas money and paying my
utilities, I usually only have $10-15 left over by week’s end,”
she said.
At the risk of getting too
personal, this writer inquired about Nikki’s circumstances. “I
got divorced a few years ago,” she began, “and I’m still gun
shy about starting a new relationship. For better or worse, I’m on
my own. It’s all up to me.”
When prompted to expand upon
some of her hardships, Nikki reluctantly stated, “This is
embarrassing, but a few weeks ago I needed some new outfits for work.
Being low on cash, I had to buy used clothes at a second-hand shop.”
She continued: “Last June my
friend asked if she could borrow $200 to pay for an overdue doctor’s
visit. I didn’t have that kind of money lying around. Do you know
how hard it was turning down a gal I’d known since high school? I
felt sick for days.”
As to whether she tried
getting government assistance, Nikki provided another interesting
element to her story. “At the beginning of this year I swallowed my
pride and made an appointment at the welfare office,” she said.
“After poring over my records, they said I made $53 a month too
much to qualify for food stamps and their subsidized fuel program.
So, even though I’m always broke, I’m too rich for welfare.”
Pausing a moment, Nikki joked:
“They say money can’t buy happiness, but it sure would help put a
down payment on it.”
Posed with what would happen
if a catastrophic expense suddenly arose, Nikki replied, “If the
engine in my car blew up, I’d be ruined. I can’t even afford to
make a down payment on another one. Plus, since I don’t have health
insurance, I’d never recover from a major hospital bill. I’d be
bankrupt.”
Despite her financial woes,
Nikki wanted to clarify something. “I don’t want your readers to
think I’m complaining. Even though things are rough, I work hard,
still have my faith, and except for a few credit card bills, I’m
mostly out of debt. Better yet, although everyone in my family is
struggling, we all pull together and help each other whenever we
can.”
Providing a final thought,
Nikki wondered: “The only thing I can’t figure out is, shouldn’t
working three jobs and being exhausted all the time get me at least a
little piece of the American Dream? For some reason, I can’t seem
to catch that brass ring.”
Money and the Corporate Media Are Gagging Democracy
"This the truth of [election] 2012:
money beat money," John Nichols and Robert McChesney conclude in their
new book "Dollarocracy: How the Money and the Media Election Complex Is
Destroying America."
Can a system in which democracy has been placed by a betting parlor of financial backers be returned to an informed citizenry of voters? It's a particularly daunting challenge considering that the mainstream corporate media, which the vast majority of Americans rely on for their political and public policy "information," benefits quite profitably from "dollarocracy."
Lisa Graves, executive director of the Center for Media and Democracy writes of the book, "The billionaires are buying our media and our elections. They're spinning our democracy into a dollarocracy. John Nichols and Bob McChesney expose the culprits who steered America into the quagmire of big money and provide us with the tools to free ourselves and our republic from the corporate kleptocrats."
Please help sustain progressive media. Obtain "Dollarocracy: How the Media and Media Election Complex Is Destroying America" with a minimum contribution to Truthout. Click here now.
Excerpt from Introduction: "Privilege Resurgent"
At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth. That is nothing new.
THEODORE ROOSEVELT, 1910
It is, of course, nothing new.
America has from its founding struggled along a narrow arc of history toward an end never quite reached: that of sincere and meaningful democracy. We have made massive progress, evolving from a nation of privileged elites that espoused lofty ideals about all men being created equal and then enslaved men, women, and children into a nation where the descendants of those slaves have taken their places as governors, senators, and Supreme Court justices. Yet as the great champion of American advancement, the Reverend Martin Luther King Jr., reminded us in a time of historic change, “Human progress is neither automatic nor inevitable.”
What was gained in the Progressive Era when Teddy Roosevelt championed radical reform and across the years of unsteady but genuine democratic progress that followed was written into the Constitution and the statutes of the land. Witness amendments eliminating poll taxes and extending the franchise to women and eighteen- to twenty-year-olds, the Civil Rights and Voting Rights acts, and, finally, the National Voter Registration Act of 1993.
But this progress never quite assured that the great mass of people would gain and hold the right of self-government as against the special interests. The U.S. Constitution contains no guarantee of a right to vote, and this lack of definition is constantly exploited by political hucksters who would make America a democracy for the few, and a plutocracy in essence. The malefactors of great wealth continue to twist the methods of free government into the machinery for defeating the popular will. And scarcely one hundred years after Roosevelt identified his central condition of progress, they have reversed it, with court rulings and practices that are contributing to the destruction of the American electoral system as a tool for realizing the democratic dreams that have animated American progress across two centuries. U.S. elections have never been perfect—far from it—but the United States is now rapidly approaching a point where the electoral process itself ceases to function as a means for citizens to effectively control leaders and guide government policies. It pains us, as political writers and citizens who have spent a combined eighty years working on and/or covering electoral campaigns, to write these words. But there can no longer be any question that free and fair elections—what we were raised to believe was an American democratic birthright—are effectively being taken away from the people.
In this book we examine the forces—billionaires, corporations, the politicians who do their bidding, and the media conglomerates that facilitate the abuse—that have sapped elections of their meaning and of their democratic potential. “The Money Power,” as Roosevelt and his contemporaries termed the collaboration that imposed the will of wealth on our politics, achieves its ends by flooding the electoral system with an unprecedented tidal wave of unaccountable money. The money makes a mockery of political equality in the voting booth, and the determination of media companies to cash in on that mockery—when they should instead be exposing and opposing it—completes a vicious circle.
This is not an entirely new phenomenon, as we note in the historical chapters of this book. But it is an accelerating phenomenon. The U.S. Supreme Court’s 2010 Citizens United allowing unlimited corporate campaign spending confirmed the court-ordered diminution of democratic processes that over four decades has renewed the political privileges of the elites. “The day before Citizens United decided,” Lawrence Lessig wrote, “our democracy was already broken. Citizens United have shot the body, but the body was already cold.”
Economic elites are now exercising those privileges with an abandon not seen since the era of the robber barons that Roosevelt decried. To enhance the influence of their money, billionaires, corporations, and their political pawns began in the run-up to the 2012 election to aggressively advance policies designed to limit the voting rights of those Americans who are most disinclined to sanction these elites’ continued dominance of the political process. They are grasping for total power, and if they did not succeed in choking off the avenues of dissent in 2012, they will surely return—with increased determination and more insidious tactics—in 2014 and 2016 and beyond.
“There’s been almost a shameless quality to it,” says former U.S. senator Russ Feingold of the pressure on politicians to raise and spend exponentially more money since the Citizens United . “It has grossly altered our system of government. We don’t have the kind of elections that most of us grew up seeing.”
The moneyed interests are confident, even in the face of temporary setbacks, that they will be able to continue their initiative because they are well served by the rapid decline of the news media as a checking and balancing force on our politics. Our dominant media institutions do an absolutely dreadful job of drawing citizens into public life, especially elections. The owners of media corporations have made their pact with the new order. For the most part, they do not challenge it, as the crusading editors and publishers of another age did.
Rather, advertising departments position media outlets to reap windfall profits through the broadcasting of invariably inane and crudely negative political campaign advertising, which is the lingua franca of American electioneering in the twenty-first century. The corporate media are the immediate financial beneficiaries of our increasingly absurd election system—and the primary barriers to its reform. To talk about the crisis of money in politics without addressing the mess that the media have made of things is the equivalent of talking about the deliberate fire without discussing the arsonist.
We term the combine that has emerged the “money-and-media election complex.” It has become so vast and so powerful that it can best be understood as an entity unto itself. This complex is built on a set of commercial and institutional relationships involving wealthy donors, giant corporations, lobbyists, consultants, politicians, spinmeisters, corporate media, coin-operated “think tanks,” inside-the-beltway pundits, and now super-PACs. These relationships are eviscerating democratic elections and benefit by that evisceration.
The complex has tremendous gravitational power, which increases the degree of difficulty for those wishing to participate in elections outside its paradigm. The complex embraces and encourages a politics defined by wealthy funders, corporate media, and the preservation of a new status quo; it is the modernday reflection of the arrangements that served the robber barons of the late nineteenth and early twentieth centuries.
Please help sustain progressive media. Obtain "Dollarocracy: How the Media and Media Election Complex Is Destroying America" with a minimum contribution to Truthout. Click here now.
Copyright 2013 by John Nichols and Robert W. McChesney. Not to be reproduced without the permission of the authors.
Copyright, Truthout. May not be reprinted without permission of the author.
Can a system in which democracy has been placed by a betting parlor of financial backers be returned to an informed citizenry of voters? It's a particularly daunting challenge considering that the mainstream corporate media, which the vast majority of Americans rely on for their political and public policy "information," benefits quite profitably from "dollarocracy."
Lisa Graves, executive director of the Center for Media and Democracy writes of the book, "The billionaires are buying our media and our elections. They're spinning our democracy into a dollarocracy. John Nichols and Bob McChesney expose the culprits who steered America into the quagmire of big money and provide us with the tools to free ourselves and our republic from the corporate kleptocrats."
Please help sustain progressive media. Obtain "Dollarocracy: How the Media and Media Election Complex Is Destroying America" with a minimum contribution to Truthout. Click here now.
Excerpt from Introduction: "Privilege Resurgent"
At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth. That is nothing new.
THEODORE ROOSEVELT, 1910
It is, of course, nothing new.
America has from its founding struggled along a narrow arc of history toward an end never quite reached: that of sincere and meaningful democracy. We have made massive progress, evolving from a nation of privileged elites that espoused lofty ideals about all men being created equal and then enslaved men, women, and children into a nation where the descendants of those slaves have taken their places as governors, senators, and Supreme Court justices. Yet as the great champion of American advancement, the Reverend Martin Luther King Jr., reminded us in a time of historic change, “Human progress is neither automatic nor inevitable.”
What was gained in the Progressive Era when Teddy Roosevelt championed radical reform and across the years of unsteady but genuine democratic progress that followed was written into the Constitution and the statutes of the land. Witness amendments eliminating poll taxes and extending the franchise to women and eighteen- to twenty-year-olds, the Civil Rights and Voting Rights acts, and, finally, the National Voter Registration Act of 1993.
But this progress never quite assured that the great mass of people would gain and hold the right of self-government as against the special interests. The U.S. Constitution contains no guarantee of a right to vote, and this lack of definition is constantly exploited by political hucksters who would make America a democracy for the few, and a plutocracy in essence. The malefactors of great wealth continue to twist the methods of free government into the machinery for defeating the popular will. And scarcely one hundred years after Roosevelt identified his central condition of progress, they have reversed it, with court rulings and practices that are contributing to the destruction of the American electoral system as a tool for realizing the democratic dreams that have animated American progress across two centuries. U.S. elections have never been perfect—far from it—but the United States is now rapidly approaching a point where the electoral process itself ceases to function as a means for citizens to effectively control leaders and guide government policies. It pains us, as political writers and citizens who have spent a combined eighty years working on and/or covering electoral campaigns, to write these words. But there can no longer be any question that free and fair elections—what we were raised to believe was an American democratic birthright—are effectively being taken away from the people.
In this book we examine the forces—billionaires, corporations, the politicians who do their bidding, and the media conglomerates that facilitate the abuse—that have sapped elections of their meaning and of their democratic potential. “The Money Power,” as Roosevelt and his contemporaries termed the collaboration that imposed the will of wealth on our politics, achieves its ends by flooding the electoral system with an unprecedented tidal wave of unaccountable money. The money makes a mockery of political equality in the voting booth, and the determination of media companies to cash in on that mockery—when they should instead be exposing and opposing it—completes a vicious circle.
This is not an entirely new phenomenon, as we note in the historical chapters of this book. But it is an accelerating phenomenon. The U.S. Supreme Court’s 2010 Citizens United allowing unlimited corporate campaign spending confirmed the court-ordered diminution of democratic processes that over four decades has renewed the political privileges of the elites. “The day before Citizens United decided,” Lawrence Lessig wrote, “our democracy was already broken. Citizens United have shot the body, but the body was already cold.”
Economic elites are now exercising those privileges with an abandon not seen since the era of the robber barons that Roosevelt decried. To enhance the influence of their money, billionaires, corporations, and their political pawns began in the run-up to the 2012 election to aggressively advance policies designed to limit the voting rights of those Americans who are most disinclined to sanction these elites’ continued dominance of the political process. They are grasping for total power, and if they did not succeed in choking off the avenues of dissent in 2012, they will surely return—with increased determination and more insidious tactics—in 2014 and 2016 and beyond.
“There’s been almost a shameless quality to it,” says former U.S. senator Russ Feingold of the pressure on politicians to raise and spend exponentially more money since the Citizens United . “It has grossly altered our system of government. We don’t have the kind of elections that most of us grew up seeing.”
The moneyed interests are confident, even in the face of temporary setbacks, that they will be able to continue their initiative because they are well served by the rapid decline of the news media as a checking and balancing force on our politics. Our dominant media institutions do an absolutely dreadful job of drawing citizens into public life, especially elections. The owners of media corporations have made their pact with the new order. For the most part, they do not challenge it, as the crusading editors and publishers of another age did.
Rather, advertising departments position media outlets to reap windfall profits through the broadcasting of invariably inane and crudely negative political campaign advertising, which is the lingua franca of American electioneering in the twenty-first century. The corporate media are the immediate financial beneficiaries of our increasingly absurd election system—and the primary barriers to its reform. To talk about the crisis of money in politics without addressing the mess that the media have made of things is the equivalent of talking about the deliberate fire without discussing the arsonist.
We term the combine that has emerged the “money-and-media election complex.” It has become so vast and so powerful that it can best be understood as an entity unto itself. This complex is built on a set of commercial and institutional relationships involving wealthy donors, giant corporations, lobbyists, consultants, politicians, spinmeisters, corporate media, coin-operated “think tanks,” inside-the-beltway pundits, and now super-PACs. These relationships are eviscerating democratic elections and benefit by that evisceration.
The complex has tremendous gravitational power, which increases the degree of difficulty for those wishing to participate in elections outside its paradigm. The complex embraces and encourages a politics defined by wealthy funders, corporate media, and the preservation of a new status quo; it is the modernday reflection of the arrangements that served the robber barons of the late nineteenth and early twentieth centuries.
Please help sustain progressive media. Obtain "Dollarocracy: How the Media and Media Election Complex Is Destroying America" with a minimum contribution to Truthout. Click here now.
Copyright 2013 by John Nichols and Robert W. McChesney. Not to be reproduced without the permission of the authors.
Copyright, Truthout. May not be reprinted without permission of the author.
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