Consumer spending unexpectedly rose in March, temporarily boosted by
demand for utilities due to colder weather, according to data on Monday
that did little to alter a picture of a cooling in the economy.
The Commerce Department said consumer spending advanced 0.2 percent last month after a 0.7 percent rise in February.
The increase, which beat economists’ expectations for a flat reading,
was driven by higher spending on services as outlays on utilities posted
a second straight month of hefty gains. Spending on goods, a key
measure of underlying demand, fell.
Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.
"Utilities made up a pretty decent chunk of spending," said Ryan Sweet, a
senior economist at Moody's Analytics in West Chester, Pennsylvania.
"When you extract from that, spending was less than impressive in March.
The economy is slowing."
The economy's weakness was underscored by a sharp cooling in inflation,
with a price index for consumer spending falling for the first time
since November. A core reading that strips out food and energy costs was
flat.
The combination of soft demand and benign inflation should allow the
Federal Reserve to continue on its ultra-easy monetary path when it
meets on Tuesday and Wednesday. The U.S. central bank is widely expected
to keep purchasing bonds at a pace of $85 billion a month.
"The case for tapering the size of the Fed's monthly asset purchases is
further reduced," said Michelle Girard, chief economist at RBS in
Stamford, Connecticut. "However, we think the hurdle for the Fed
boosting the monthly purchase pace is high."
Accounting for the drop in prices, inflation-adjusted spending grew 0.3
percent in March, matching February's increase. Spending on utilities on
an inflation-adjusted basis recorded the largest increase since October
2001.
"Much of the upside in March was in a second straight enormous gain in
utilities consumption, which appears likely to see a substantial
reversal in coming months," said Ted Wieseman, an economist at Morgan
Stanley in New York.
HOUSING REMAINS ECONOMIC BRIGHT SPOT
A private-sector report on Monday showed signed contracts to buy
previously owned homes rose 1.5 percent last month to the highest level
since April 2010, showing underlying strength in the housing recovery
even though the pace of sales growth has cooled in recent months.
Prices for longer-dated U.S. government bonds rose on the inflation
reading, while the dollar fell against a basket of currencies. Stocks on
Wall Street rose as investors also focused on the upbeat housing data.
The U.S. economy grew at a 2.5 percent rate in the first quarter,
accelerating from a 0.4 percent rate in the last three months of 2012.
But a range of data from retail sales to factory activity weakened in
March, and growth estimates for the second quarter are currently in a
range of 1.0 percent to 1.5 percent.
Some economists, however, said the better-than-expected reading on
consumer spending in March, and the cooling in inflation, could mean
those forecasts are understated.
"This makes it much more likely than we thought for real consumer
spending to post a solid gain in the second quarter and increases the
chances that real GDP growth in the second quarter will come in above 2
percent," said John Ryding, chief economist at RDQ Economics in New
York.
FALLING PRICES LEND A HAND
The data on spending showed that consumer prices rose just 1.0 percent
over the last 12 months, the smallest gain in nearly 3-1/2 years and
down from a 1.3 percent rise in February.
The deceleration extended to core prices, which were up 1.1 percent from
a year ago after advancing 1.3 percent the prior month. The March
increase was the smallest in two years and well below the Federal
Reserve's 2 percent target.
The lack of inflation is helping to support the purchasing power of U.S.
households. Income at the disposal of households after inflation and
taxes increased 0.3 percent last month after a 0.7 percent gain in the
prior month.
With income growth matching spending, the saving rate — the percentage
of disposable income households are socking away — was unchanged at 2.7
percent.
Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.
© 2013 Thomson/Reuters. All rights reserved.
Wednesday, May 1, 2013
Insight: Why did Cypriot banks keep buying Greek bonds?
REUTERS
A man walks past a branch of Bank of Cyprus in Nicosia March 31, 2013.
REUTERS
NICOSIA: One day last
October, a memory stick containing special software for deleting data
was placed into a desktop computer at Bank of Cyprus.
Within minutes, 28,000 files were erased, according to investigators who had wanted to copy the data for an official report into the collapse of the Cypriot banking system.
The deleted files included emails sent and received in a crucial period in late 2009 and early 2010 when Bank of Cyprus, the biggest lender on the island, spent billions of euros buying Greek bonds - at a time when international banks were cutting exposure to the heavily indebted Athens government.
Those Greek bonds lost most of their value in last year's EU-sanctioned bailout, playing a key role in plunging Cyprus into an economic maelstrom. When banks turned to Cyprus's own cash-strapped government for help in plugging holes in their balance sheets, Nicosia too needed an international rescue.
Now people in the small euro zone republic, who have lost money and face years of grim austerity, want to know who decided to plough their savings into the doomed public accounts of their bigger neighbor, and why. But answers are proving elusive, not helped by the mysterious wiping of data at Bank of Cyprus.
There has been public speculation about backroom diplomatic deals or misplaced solidarity with Cypriots' fellow Greek-speakers.
But executives at the failed banks argue that Greek bonds seemed a good investment at the time - though that view is at odds with that of many bankers elsewhere in Europe, who were doing all they could to limit their own exposures to Greece.
The confidential report, prepared for the Cypriot central bank by global consultants Alvarez and Marsal, found that Bank of Cyprus had been willing, from 2009 onwards, to invest in risky, high-yielding Greek debt in a bid to offset an erosion of its balance sheet from rising non-performing loans.
The report, which Reuters has seen, alleges that bank executives may not have revealed details of bond purchases to board directors, avoided showing losses on the bonds, and may later have delayed external investigation of the bond purchases.
In December 2009, managers told media and their own board that most of the bank's Greek bondholdings had been sold - but the bank did not then disclose that it had almost immediately bought more.
Bank of Cyprus has declined to comment on the report. Petros Clerides, the Cypriot attorney-general to whom a copy of the report was delivered, declined any comment on the matter.
Much attention in the crisis has hitherto focused on allegations of poor management at Cyprus's other big lender, Laiki Bank, formerly Marfin Popular. But the Alvarez and Marsal report, whose broad findings emerged earlier this month, raises questions, too, about the former management of Bank of Cyprus.
The report noted "a culture whereby senior management decisions were not challenged".
Michael Olympios, who heads an investors' association, Pasexa, that has complained of mismanagement, said: "There was clear corporate governance failure here, and a lack of disclosure to shareholders."
More broadly, he added: "If one wants to summaries the mess in our banking system, Lord Acton sums it up; power tends to corrupt, and absolute power corrupts absolutely."
Under last month's bailout deal for the Cypriot state, Laiki is being closed and Bank of Cyprus is being recapitalized. Large depositors at Bank of Cyprus have seen virtually all of their deposits over an insured 100,000-euro ($131,000) threshold frozen and stand to see up to 60 percent of those converted into equity.
Many in Cyprus, including hundreds of Russians who placed their faith in its once booming offshore banking products, feel they have been unfairly treated; bank depositors in Greece suffered no losses when that country was bailed out.
"They should have bought from different governments rather than just Greece," said Demetris Syllouris, who heads the Cyprus parliament's ethics committee which is looking into the affair.
"This caused 80 percent of the problem we are in."
Aside from the wisdom of its investment strategy, it is the communication of this strategy to investors that is in question.
On December 10, 2009, Yiannis Kypri, a general manager at Bank of Cyprus, told a Cypriot website, Stockwatch, that the bank had "minimal exposure to Greek sovereign debt" after reducing its holdings from 1.8 billion euros to 0.1 billion.
The same day, according to the investigators' report, Andreas Eliades, then Bank of Cyprus's group chief executive officer, instructed his treasury department to begin new purchases of such bonds. With these new instructions, that day the bank bought debt worth 150 million euros, and a total of 400 million by the end of 2009, according to the consultants.
There is, the report says, "no evidence" the public comment about "minimal exposure" to Greece was ever "retracted or subsequently corrected by any of the bank's executives".
Kypri told Reuters he could say little while an official inquiry continues, but he was quoted by the investigators saying he had been unaware of the plan to return to buying Greek bonds.
Andreas Eliades, who was chief executive until July 2012, told Reuters Kypri's statement to Stockwatch referred only to a temporary sell-off in response to short-term market fluctuation.
Another member of senior management at the time, Nicolas Karydas, gave investigators and Reuters the same explanation.
On December 11, the day after the bank resumed purchases of Greek bonds, Karydas told the bank's board that most of its Greek bonds had been sold. But, the Alvarez and Marsal investigators, add: "The board was not informed that the repurchase of Greek government bonds had commenced the prior day, after the divesture."
Karydas, group general manager of risk management and markets, who left the bank at the end of August last year, rejected any suggestion the board was unaware of the investment strategy or that he misled the board. He said in an email response to Reuters "all the executives" agreed to a policy that included possible Greek bond purchases at a meeting in November 2009.
"The ... suggestions ... were also approved by the board of directors in their December 11 meeting," Karydas said. "It seemed to be a consensus view that Greece would overcome the crisis."
By April 2010, the bank had expanded its holding of Greek government bonds to 2.4 billion euros, a third more than the amount Kypri had told Stockwatch had been sold four months before. The investigators said this went beyond the bank's own approved 2-billion-euro limit but was approved retrospectively in May 2010.
Eliades, the former group CEO, said that Greek bonds were still well rated at the time and in demand internationally: "We cannot judge, with today's circumstances, actions which took place at a different time when Greek bonds had very high demand," he said. "Everyone was buying into Greek bonds."
By comparison, however, data from "stress tests" carried out by EU authorities concerned about the health of their banks, showed that at the end of 2010, most of the 10 biggest banks on the continent, many times larger than the Cypriot lenders, held nothing like as much Greek debt as did Bank of Cyprus and Laiki.
They had 2.2 billion and 3.3 billion euros respectively, outstripped among top 10 banks only by French giants BNP Paribas and Societe Generale. The same EU data showed that Britain's Barclays had only 192 million euros and Lloyds none at all.
As investors' fears over the solvency of Greece grew, the value of the Greek bonds fell. The Bank of Cyprus made changes to the way it accounted for the bond holdings, according to the Alvarez and Marsal report, with the result that the growing potential losses were not spelled out to investors.
In April 2010, it moved about 1.6 billion euros of Greek bonds from its trading account to its "held to maturity" book. This meant the bank did not have to mark down the value of the bonds.
The accounting move was made on the grounds that Greece would redeem the bonds. The report authors said: "The justification provided does not appear to be strong."
Eliades told Reuters: "Nobody could possibly expect that a European country, in the euro, could possibly default."
Last year, however, the EU and IMF bailout terms relieved Greece of the need to repay up to 80 percent on its bonds, leaving the Bank of Cyprus with losses of 1.8 billion euros.
The bank declined to respond to an allegation made in the report that data that could have been relevant to understanding why it bought so much Greek debt may have been deleted.
That data, the authors say, was wiped from the computer of Christakis Patsalides, an executive involved in buying bonds, using special software on October 18 last year. When investigators examined it, there was a 15-month gap in emails in 2009-2010.
There is no suggestion Patsalides himself deleted them. He told investigators that he was unaware of any missing data, according to the report. Patsalides declined comment to Reuters but told investigators for the report that had thought the bank's ceiling for its Greek bond holdings had been set at "too high a limit".
Within minutes, 28,000 files were erased, according to investigators who had wanted to copy the data for an official report into the collapse of the Cypriot banking system.
The deleted files included emails sent and received in a crucial period in late 2009 and early 2010 when Bank of Cyprus, the biggest lender on the island, spent billions of euros buying Greek bonds - at a time when international banks were cutting exposure to the heavily indebted Athens government.
Those Greek bonds lost most of their value in last year's EU-sanctioned bailout, playing a key role in plunging Cyprus into an economic maelstrom. When banks turned to Cyprus's own cash-strapped government for help in plugging holes in their balance sheets, Nicosia too needed an international rescue.
Now people in the small euro zone republic, who have lost money and face years of grim austerity, want to know who decided to plough their savings into the doomed public accounts of their bigger neighbor, and why. But answers are proving elusive, not helped by the mysterious wiping of data at Bank of Cyprus.
There has been public speculation about backroom diplomatic deals or misplaced solidarity with Cypriots' fellow Greek-speakers.
But executives at the failed banks argue that Greek bonds seemed a good investment at the time - though that view is at odds with that of many bankers elsewhere in Europe, who were doing all they could to limit their own exposures to Greece.
The confidential report, prepared for the Cypriot central bank by global consultants Alvarez and Marsal, found that Bank of Cyprus had been willing, from 2009 onwards, to invest in risky, high-yielding Greek debt in a bid to offset an erosion of its balance sheet from rising non-performing loans.
The report, which Reuters has seen, alleges that bank executives may not have revealed details of bond purchases to board directors, avoided showing losses on the bonds, and may later have delayed external investigation of the bond purchases.
In December 2009, managers told media and their own board that most of the bank's Greek bondholdings had been sold - but the bank did not then disclose that it had almost immediately bought more.
Bank of Cyprus has declined to comment on the report. Petros Clerides, the Cypriot attorney-general to whom a copy of the report was delivered, declined any comment on the matter.
Much attention in the crisis has hitherto focused on allegations of poor management at Cyprus's other big lender, Laiki Bank, formerly Marfin Popular. But the Alvarez and Marsal report, whose broad findings emerged earlier this month, raises questions, too, about the former management of Bank of Cyprus.
The report noted "a culture whereby senior management decisions were not challenged".
Michael Olympios, who heads an investors' association, Pasexa, that has complained of mismanagement, said: "There was clear corporate governance failure here, and a lack of disclosure to shareholders."
More broadly, he added: "If one wants to summaries the mess in our banking system, Lord Acton sums it up; power tends to corrupt, and absolute power corrupts absolutely."
Under last month's bailout deal for the Cypriot state, Laiki is being closed and Bank of Cyprus is being recapitalized. Large depositors at Bank of Cyprus have seen virtually all of their deposits over an insured 100,000-euro ($131,000) threshold frozen and stand to see up to 60 percent of those converted into equity.
Many in Cyprus, including hundreds of Russians who placed their faith in its once booming offshore banking products, feel they have been unfairly treated; bank depositors in Greece suffered no losses when that country was bailed out.
"They should have bought from different governments rather than just Greece," said Demetris Syllouris, who heads the Cyprus parliament's ethics committee which is looking into the affair.
"This caused 80 percent of the problem we are in."
Aside from the wisdom of its investment strategy, it is the communication of this strategy to investors that is in question.
On December 10, 2009, Yiannis Kypri, a general manager at Bank of Cyprus, told a Cypriot website, Stockwatch, that the bank had "minimal exposure to Greek sovereign debt" after reducing its holdings from 1.8 billion euros to 0.1 billion.
The same day, according to the investigators' report, Andreas Eliades, then Bank of Cyprus's group chief executive officer, instructed his treasury department to begin new purchases of such bonds. With these new instructions, that day the bank bought debt worth 150 million euros, and a total of 400 million by the end of 2009, according to the consultants.
There is, the report says, "no evidence" the public comment about "minimal exposure" to Greece was ever "retracted or subsequently corrected by any of the bank's executives".
Kypri told Reuters he could say little while an official inquiry continues, but he was quoted by the investigators saying he had been unaware of the plan to return to buying Greek bonds.
Andreas Eliades, who was chief executive until July 2012, told Reuters Kypri's statement to Stockwatch referred only to a temporary sell-off in response to short-term market fluctuation.
Another member of senior management at the time, Nicolas Karydas, gave investigators and Reuters the same explanation.
On December 11, the day after the bank resumed purchases of Greek bonds, Karydas told the bank's board that most of its Greek bonds had been sold. But, the Alvarez and Marsal investigators, add: "The board was not informed that the repurchase of Greek government bonds had commenced the prior day, after the divesture."
Karydas, group general manager of risk management and markets, who left the bank at the end of August last year, rejected any suggestion the board was unaware of the investment strategy or that he misled the board. He said in an email response to Reuters "all the executives" agreed to a policy that included possible Greek bond purchases at a meeting in November 2009.
"The ... suggestions ... were also approved by the board of directors in their December 11 meeting," Karydas said. "It seemed to be a consensus view that Greece would overcome the crisis."
By April 2010, the bank had expanded its holding of Greek government bonds to 2.4 billion euros, a third more than the amount Kypri had told Stockwatch had been sold four months before. The investigators said this went beyond the bank's own approved 2-billion-euro limit but was approved retrospectively in May 2010.
Eliades, the former group CEO, said that Greek bonds were still well rated at the time and in demand internationally: "We cannot judge, with today's circumstances, actions which took place at a different time when Greek bonds had very high demand," he said. "Everyone was buying into Greek bonds."
By comparison, however, data from "stress tests" carried out by EU authorities concerned about the health of their banks, showed that at the end of 2010, most of the 10 biggest banks on the continent, many times larger than the Cypriot lenders, held nothing like as much Greek debt as did Bank of Cyprus and Laiki.
They had 2.2 billion and 3.3 billion euros respectively, outstripped among top 10 banks only by French giants BNP Paribas and Societe Generale. The same EU data showed that Britain's Barclays had only 192 million euros and Lloyds none at all.
As investors' fears over the solvency of Greece grew, the value of the Greek bonds fell. The Bank of Cyprus made changes to the way it accounted for the bond holdings, according to the Alvarez and Marsal report, with the result that the growing potential losses were not spelled out to investors.
In April 2010, it moved about 1.6 billion euros of Greek bonds from its trading account to its "held to maturity" book. This meant the bank did not have to mark down the value of the bonds.
The accounting move was made on the grounds that Greece would redeem the bonds. The report authors said: "The justification provided does not appear to be strong."
Eliades told Reuters: "Nobody could possibly expect that a European country, in the euro, could possibly default."
Last year, however, the EU and IMF bailout terms relieved Greece of the need to repay up to 80 percent on its bonds, leaving the Bank of Cyprus with losses of 1.8 billion euros.
The bank declined to respond to an allegation made in the report that data that could have been relevant to understanding why it bought so much Greek debt may have been deleted.
That data, the authors say, was wiped from the computer of Christakis Patsalides, an executive involved in buying bonds, using special software on October 18 last year. When investigators examined it, there was a 15-month gap in emails in 2009-2010.
There is no suggestion Patsalides himself deleted them. He told investigators that he was unaware of any missing data, according to the report. Patsalides declined comment to Reuters but told investigators for the report that had thought the bank's ceiling for its Greek bond holdings had been set at "too high a limit".
Cyprus MPs to debate bailout deal
Cyprus President Nicos Anastasiades is planning sweeping reforms in a bid to modernise the economy.
Source: AAP
THE Cypriot parliament is to begin a debate on a 10 billion euro
($A12.76 billion) EU-IMF bailout which Finance Minister Haris Georgiades
describes as a tough but necessary measure that has to be ratified
without delay.
Speaking on the eve of Tuesday's parliament meeting, Georgiades
warned that without a positive vote on the bailout deal, the eastern
Mediterranean island would be driven to full economic collapse and could
be forced to exit the eurozone.Such an outcome would be "dramatic", said Georgiades.
He urged MPs to take "a very difficult but necessary decision" and ratify the agreement struck last month with a troika of international lenders - the European Union, European Central Bank and International Monetary Fund.
It's not known whether a vote on the controversial package will be held on Tuesday or if it will be pushed to another day due to prolonged debate.
A government source told AFP the vote "hangs in the balance and could go either way", with the ruling Disy party and coalition partner Diko "in favour" and the opposition Akel party set "to vote against" it and the social democratic Edek party still undecided.
The cabinet approved the deal last Wednesday, with government spokesman Christos Stylianides saying "ratification of the loan agreement is expected after April 26".
The governing centre-right coalition holds a slim majority in the 56-member House of Representatives, but only if all of its MPs toe the party line.
Opposition MPs from the communist Akel party and socialist Edek have voiced their hostility to the high cost of the deal, which has surged from a total of 17.5 billion euros to 23 billion euros, putting the teetering economy under more pressure.
To secure the rescue package, Cyprus has had to radically downsize its bloated banking sector, raise taxes and cut public spending.
If all goes according to plan, Cyprus expects its first tranche of much-needed bailout cash in May.
On Monday, President Nicos Anastasiades said he was planning sweeping reforms in a bid to modernise the battered island, including lifting immunity from prosecution for the president and other politicians.
MPs on Tuesday are also expected to thrash out new and unprecedented reforms Anastasiades said were needed for a "bold new start" in Cyprus, which has come under increasing pressure from the public and the EU to eradicate perceived political corruption.
Georgiades also called for "structural reforms ... to kick-start the economy, saying: "We must also acknowledge the mistakes of the past and not to look for insufficient and unviable alternatives."
Welcome Back Recession: Chicago PMI Implodes To 49, First Sub-50 Print Since September 2009 !!!HUGE MISS: CHICAGO PMI SINKS TO 49.0 (Est. 52.5)!!! Report Has Some Seriously Bad News On Jobs!!!
HUGE MISS: CHICAGO PMI SINKS TO 49.0 (Est. 52.5)
The April Chicago PMI report is out.
The headline index fell to 49.0, defying economists’ expectations for a tick up to 52.5 from March’s 52.4 reading.
Any number below 50 on the index indicates contraction, so today’s data suggests that manufacturing activity in the Midwest unexpectedly contracted in April.
The production sub-component fell to 49.9 from last month’s 51.8 reading. The employment sub-component fell to 48.7 from 55.1.
http://www.businessinsider.com/chicago-pmi-april-2013-4#ixzz2RxIMiL3X
Chicago PMI slumps to 3.5-year low in April
WASHINGTON (MarketWatch) — Chicago PMI slumped to a three-and-a-half year low of 49.0 in April, down from 52.4 in March and at a reading indicating contraction. Economists polled by MarketWatch had expected a 52.5 reading. Order backlogs were particularly weak, falling to 40.6 from 45.0. The Chicago PMI is the last of the regional manufacturing indexes to be released before the national Institute for Supply Management manufacturing index for April.
http://www.marketwatch.com/story/chicago-pmi-slumps-to-35-year-low-in-april-2013-04-30
Welcome Back Recession: Chicago PMI Implodes To 49, First Sub-50 Print Since Septmber 2009
Total collapse. That is the only way to explain what just happened with the Chicago PMI which imploded from 52.4, and printed at a contractionary 49: the first sub-50 headline print since September 2009. But that’s not all: Deliveries, Prices Paid and Production all hit their lowest since 2009; Backlogs posted their tenth month of contraction in the past 12 months. And what’s worst for theDepartment of Making Shit Up, Employment plunged from 551. to 48.7, its third month over month decline. Actually another way to phrase it: complete disaster. Obviously this number explains why S&P should have no problems crossing 1,600 today. Because for that other Department: of Propaganda and Creating money out of thin air, this means only one thing: the Fed is preparing to printONE KROOGOL MORE!
It appears nobody told the respondents that the economy is back in stall speed.
http://www.zerohedge.com/news/2013-04-30/welcome-back-recession-chicago-pmi-implodes-49-first-sub-50-print-septmber-2009
zerohedge@zerohedge1 min
LOL: Consumer Confidence soars to 68.1, 61 expected
zerohedge@zerohedge4 min
A recession with central banks printing $160 billion per month? Just add moar toaner.
Business Insider@businessinsider2 min
HUGE BEAT: CONSUMER CONFIDENCE SURGES TO 68.1 (Est. 61.0)
Chicago PMI Report Has Some Seriously Bad News On Jobs
Here Comes Obama’s Press Conference…
http://www.businessinsider.com/obama-press-conference-april-30-boston-obamacare-syria-jason-collins-2013-4
The April Chicago PMI report is out.
The headline index fell to 49.0, defying economists’ expectations for a tick up to 52.5 from March’s 52.4 reading.
Any number below 50 on the index indicates contraction, so today’s data suggests that manufacturing activity in the Midwest unexpectedly contracted in April.
The production sub-component fell to 49.9 from last month’s 51.8 reading. The employment sub-component fell to 48.7 from 55.1.
http://www.businessinsider.com/chicago-pmi-april-2013-4#ixzz2RxIMiL3X
Chicago PMI slumps to 3.5-year low in April
WASHINGTON (MarketWatch) — Chicago PMI slumped to a three-and-a-half year low of 49.0 in April, down from 52.4 in March and at a reading indicating contraction. Economists polled by MarketWatch had expected a 52.5 reading. Order backlogs were particularly weak, falling to 40.6 from 45.0. The Chicago PMI is the last of the regional manufacturing indexes to be released before the national Institute for Supply Management manufacturing index for April.
http://www.marketwatch.com/story/chicago-pmi-slumps-to-35-year-low-in-april-2013-04-30
Welcome Back Recession: Chicago PMI Implodes To 49, First Sub-50 Print Since Septmber 2009
Total collapse. That is the only way to explain what just happened with the Chicago PMI which imploded from 52.4, and printed at a contractionary 49: the first sub-50 headline print since September 2009. But that’s not all: Deliveries, Prices Paid and Production all hit their lowest since 2009; Backlogs posted their tenth month of contraction in the past 12 months. And what’s worst for theDepartment of Making Shit Up, Employment plunged from 551. to 48.7, its third month over month decline. Actually another way to phrase it: complete disaster. Obviously this number explains why S&P should have no problems crossing 1,600 today. Because for that other Department: of Propaganda and Creating money out of thin air, this means only one thing: the Fed is preparing to printONE KROOGOL MORE!
It appears nobody told the respondents that the economy is back in stall speed.
http://www.zerohedge.com/news/2013-04-30/welcome-back-recession-chicago-pmi-implodes-49-first-sub-50-print-septmber-2009
zerohedge@zerohedge1 min
LOL: Consumer Confidence soars to 68.1, 61 expected
zerohedge@zerohedge4 min
A recession with central banks printing $160 billion per month? Just add moar toaner.
Business Insider@businessinsider2 min
HUGE BEAT: CONSUMER CONFIDENCE SURGES TO 68.1 (Est. 61.0)
Chicago PMI Report Has Some Seriously Bad News On Jobs
Earlier we reported on the weak Chicago PMI report, which fell into contraction at a 49 level, vs. the 52 level that analysts had expected.
The various sub-indices of the report were really ugly as well, especially employment.
Check it out. The index collapsed from 55.1 in March to 48.7 in April.
Just 18 % of companies say they plan to hire more. That’s down from 27% in March.
18% of companies say they plan to hire less, up from 16%.
http://www.businessinsider.com/chicago-pmi-report-has-some-seriously-bad-news-for-jobs-2013-4#ixzz2RxIpZLVFThe various sub-indices of the report were really ugly as well, especially employment.
Check it out. The index collapsed from 55.1 in March to 48.7 in April.
Just 18 % of companies say they plan to hire more. That’s down from 27% in March.
18% of companies say they plan to hire less, up from 16%.
Here Comes Obama’s Press Conference…
http://www.businessinsider.com/obama-press-conference-april-30-boston-obamacare-syria-jason-collins-2013-4
JP Morgan’s gold and silver price manipulation
When just one firm accounts for 99.3% of the physical gold sales at the COMEX in the last three months it’s not what most of us on this side of the rainbow would consider “broad-based” selling.
Of course discovering this kind of relevant information requires an internet connection, 2nd grade math and reading skills, and the desire to do a teeny-weeny bit of reporting. Sadly they’ve wandered so far down the rabbit hole that the concept of “physical demand” (i.e. people actually wanting to take possession of the stuff) is puzzling to them because the vast majority of the world’s so-called “gold-trading” takes place in the realm of make believe (which is their natural habitat).
It’s all fun and games until somebody loses their metal and “somebody” has lost one hell of a lot of metal in the last 90 days.
This is the CME Group’s COMEX metals issues and stops year-to-date report, which can be found here everyday for free. It chronicles the physical delivery notices of various metals, including gold. Let’s have a look:
“I” is for “Idiot” That’s how I remember it, anyway. “I” actually stands for “issues,” meaning the firm parted with its metal (@ 100 troy ounces a shot), and “S” stands for “stops,” meaning the firm took delivery of gold. “C” is for customer accounts, “H” is house accounts. The first thing you should notice is that most transaction net out to zero in a given month (blue boxes), meaning the firm’s gold holdings didn’t change.
What they delivered one day they got back the next, or vice versa. The green boxes show firms who received more than they delivered and the red boxes indicate firms who coughed up gold for Bernanke bucks (aka idiots). Note that Deutsche Bank’s massive take in February more than offsets its deliveries in December and April.
Notice one more thing before we move on: Despite Goldman’s much ballyhooed “Gold Sucks!” call a few weeks ago, the squid has not parted with any yellow metal whatsoever in 2013. Hmmm.
Now for the main event:
JP Morgan has fumbled ownership of 1,966,000 Troy ounces of gold since February 1. That’s 74% more gold than the US mint delivered through the US mint’s American Eagle program in all of 2012. I mention this because there’s little doubt in my mind that the US government is one of JPM’s gold “customers.” So (if I am correct) the same US government who just let the Morgue dump its gold on the COMEX floor will once again be suspending gold sales to peasants.
Maybe Jamie Dimon figures he’ll buy back all that gold on the cheap when the rest of the world realizes how smart he is. Or maybe he’s once again displaying that his firm doesn’t have the slightest idea what “hedging” is and is teetering on the brink of collapse. That would explain the April 11th meeting between President Obama and the Pig 5 bank CEOs, wouldn’t it? And you just have to get a little misty that Lloyd Blankfein was nice enough to provide some hot-air cover for his competitor, don’t you?
One thing’s very clear: When it comes to selling physical gold, J P Morgan is acting alone. The 130 contracts NOT delivered by JPM in the last three months (of which 110 were fromABN AMRO) are but a footnote. If Jamie’s right, he’ll look like a genius in a few months, if not he should be able to recycle his quote regarding the infamous “London Whale” losses: “Just because we’re stupid, doesn’t mean everybody else was.” Time will tell.
100 years ago John Pierpont Morgan famously testified to Congress, “Money is gold, and nothing else.” (Note: That is the exact quote, the full testimony can be found here). One has to wonder what the big guy would think of his legacy’s disregard for sound money, $70 Trillion derivatives book, and “House of Cards” “Fortress” balance sheet.
One more very, very important thing. Anybody who says there’s been gold selling in the GLD is a freaking moron (Bob Pistrami, I’m looking in your direction). The GLD works much like a coat check. Unless you think checking your coat constitutes a real transaction of some kind you shouldn’t think of changes in the GLD’s gold holdings as sales. They’re not. When you check your gold into the GLD you get shares (like a claim check). Where it gets wierd is you can sell these claim checks to nimrods who seem to think they’ve bought your coat, but aren’t actually allowed to wear it.
What nobody seems to appreciate is that every share of GLD is allowed to be sold TWICE (long and short, and it’s really important to understand that). If you’re foolish enough to doubt me (and foolish enough to short gold), go short GLD shares and see if anyone knocks on your door demanding gold. Saying the GLD is 100% backed by gold is a bold face lie because they’re can be twice as many shares in play as gold backing them, which means GLD shares may be only 50% backed by gold before any rules are broken.
When GLD (or any ETF for that matter) shares sold exceed the existing shares PLUS all the shortable (double-sold) shares, legitimate shares can not be found for settlement and that must be reported to the SEC’s “Fails to Deliver” list, which is published twice a month with about a four-week delay (here).
April 15, 2013 was this biggest volume day ever for GLD (93.7mm) and I’ll guarantee you right now that record fails to deliver will be reported on or around that date, which should have required more gold to be deposited with the GLD (but that didn’t happen). So instead of the half-assed explanation Pistrami offered (here) of how he thinks the GLD works, he should have raised the question of whether or not there were enough legitimate shares of GLD to facilitate trading (I say no way in hell).
Gold continues to be pulled from the GLD (which really means people want their coats back) and still no one’s concerned about the number doubled-owned shares. Worse yet, the responsibility for sorting this unholy mess out falls to SEC chief Mary Jo White who is celebrating her 16th day in office.
I can’t wait to see what happens next….
Notes for Nerds: This piece is not intended to describe the inner workings of the COMEX or GLD in detail, so don’t bust my balls with minutiae, unless it is relevant to the discussion of JPM’s massive gold sales or the double-ownership of ETF shares. Double-owned ETF shares are huge problem with ETFs in general, but the misrepresentation (by omission) of this fact by ETFs supposedly backed by tangible assets like gold and silver seems more egregious to me.
In addition to the YTD CME Group metals report, you can track the hilarity on a day-by-day basis here.
The February 1 to April 25 delivered gold contracts info referenced included only transactions between firms. For that reason Morgan Stanley’s 307 contracts transferred from house account to customer account was excluded from the calculations.
Total Net gold deliveries Feb 1 to April 25:
Vision Financial – 1 contract
R J O’Brien – 2
ADM Investor Services
INC – 2
Marex – 5
Citigroup Global Markets – 10
ABN AMRO – 110
JP Morgan – 19,660
SEE ALSO: The biggest price-fixing scandal ever
Source: http://www.zerohedge.com/news/2013-04-26/jpmorgan-accounts-993-comex-gold-sales-last-three-months
Of course discovering this kind of relevant information requires an internet connection, 2nd grade math and reading skills, and the desire to do a teeny-weeny bit of reporting. Sadly they’ve wandered so far down the rabbit hole that the concept of “physical demand” (i.e. people actually wanting to take possession of the stuff) is puzzling to them because the vast majority of the world’s so-called “gold-trading” takes place in the realm of make believe (which is their natural habitat).
It’s all fun and games until somebody loses their metal and “somebody” has lost one hell of a lot of metal in the last 90 days.
This is the CME Group’s COMEX metals issues and stops year-to-date report, which can be found here everyday for free. It chronicles the physical delivery notices of various metals, including gold. Let’s have a look:
“I” is for “Idiot” That’s how I remember it, anyway. “I” actually stands for “issues,” meaning the firm parted with its metal (@ 100 troy ounces a shot), and “S” stands for “stops,” meaning the firm took delivery of gold. “C” is for customer accounts, “H” is house accounts. The first thing you should notice is that most transaction net out to zero in a given month (blue boxes), meaning the firm’s gold holdings didn’t change.
What they delivered one day they got back the next, or vice versa. The green boxes show firms who received more than they delivered and the red boxes indicate firms who coughed up gold for Bernanke bucks (aka idiots). Note that Deutsche Bank’s massive take in February more than offsets its deliveries in December and April.
Notice one more thing before we move on: Despite Goldman’s much ballyhooed “Gold Sucks!” call a few weeks ago, the squid has not parted with any yellow metal whatsoever in 2013. Hmmm.
Now for the main event:
JP Morgan has fumbled ownership of 1,966,000 Troy ounces of gold since February 1. That’s 74% more gold than the US mint delivered through the US mint’s American Eagle program in all of 2012. I mention this because there’s little doubt in my mind that the US government is one of JPM’s gold “customers.” So (if I am correct) the same US government who just let the Morgue dump its gold on the COMEX floor will once again be suspending gold sales to peasants.
Maybe Jamie Dimon figures he’ll buy back all that gold on the cheap when the rest of the world realizes how smart he is. Or maybe he’s once again displaying that his firm doesn’t have the slightest idea what “hedging” is and is teetering on the brink of collapse. That would explain the April 11th meeting between President Obama and the Pig 5 bank CEOs, wouldn’t it? And you just have to get a little misty that Lloyd Blankfein was nice enough to provide some hot-air cover for his competitor, don’t you?
One thing’s very clear: When it comes to selling physical gold, J P Morgan is acting alone. The 130 contracts NOT delivered by JPM in the last three months (of which 110 were fromABN AMRO) are but a footnote. If Jamie’s right, he’ll look like a genius in a few months, if not he should be able to recycle his quote regarding the infamous “London Whale” losses: “Just because we’re stupid, doesn’t mean everybody else was.” Time will tell.
100 years ago John Pierpont Morgan famously testified to Congress, “Money is gold, and nothing else.” (Note: That is the exact quote, the full testimony can be found here). One has to wonder what the big guy would think of his legacy’s disregard for sound money, $70 Trillion derivatives book, and “House of Cards” “Fortress” balance sheet.
One more very, very important thing. Anybody who says there’s been gold selling in the GLD is a freaking moron (Bob Pistrami, I’m looking in your direction). The GLD works much like a coat check. Unless you think checking your coat constitutes a real transaction of some kind you shouldn’t think of changes in the GLD’s gold holdings as sales. They’re not. When you check your gold into the GLD you get shares (like a claim check). Where it gets wierd is you can sell these claim checks to nimrods who seem to think they’ve bought your coat, but aren’t actually allowed to wear it.
What nobody seems to appreciate is that every share of GLD is allowed to be sold TWICE (long and short, and it’s really important to understand that). If you’re foolish enough to doubt me (and foolish enough to short gold), go short GLD shares and see if anyone knocks on your door demanding gold. Saying the GLD is 100% backed by gold is a bold face lie because they’re can be twice as many shares in play as gold backing them, which means GLD shares may be only 50% backed by gold before any rules are broken.
When GLD (or any ETF for that matter) shares sold exceed the existing shares PLUS all the shortable (double-sold) shares, legitimate shares can not be found for settlement and that must be reported to the SEC’s “Fails to Deliver” list, which is published twice a month with about a four-week delay (here).
April 15, 2013 was this biggest volume day ever for GLD (93.7mm) and I’ll guarantee you right now that record fails to deliver will be reported on or around that date, which should have required more gold to be deposited with the GLD (but that didn’t happen). So instead of the half-assed explanation Pistrami offered (here) of how he thinks the GLD works, he should have raised the question of whether or not there were enough legitimate shares of GLD to facilitate trading (I say no way in hell).
Gold continues to be pulled from the GLD (which really means people want their coats back) and still no one’s concerned about the number doubled-owned shares. Worse yet, the responsibility for sorting this unholy mess out falls to SEC chief Mary Jo White who is celebrating her 16th day in office.
I can’t wait to see what happens next….
Notes for Nerds: This piece is not intended to describe the inner workings of the COMEX or GLD in detail, so don’t bust my balls with minutiae, unless it is relevant to the discussion of JPM’s massive gold sales or the double-ownership of ETF shares. Double-owned ETF shares are huge problem with ETFs in general, but the misrepresentation (by omission) of this fact by ETFs supposedly backed by tangible assets like gold and silver seems more egregious to me.
In addition to the YTD CME Group metals report, you can track the hilarity on a day-by-day basis here.
The February 1 to April 25 delivered gold contracts info referenced included only transactions between firms. For that reason Morgan Stanley’s 307 contracts transferred from house account to customer account was excluded from the calculations.
Total Net gold deliveries Feb 1 to April 25:
Vision Financial – 1 contract
R J O’Brien – 2
ADM Investor Services
INC – 2
Marex – 5
Citigroup Global Markets – 10
ABN AMRO – 110
JP Morgan – 19,660
SEE ALSO: The biggest price-fixing scandal ever
Source: http://www.zerohedge.com/news/2013-04-26/jpmorgan-accounts-993-comex-gold-sales-last-three-months
Perth Mint Demand Highest Since Lehman Brothers – Refines Coins, Bars At Weekend
by GoldCore
Today’s AM fix was USD 1,472.75, EUR 1,126.13 and GBP 950.04 per ounce.
Yesterday’s AM fix was USD 1,472.50, EUR 1,125.51 and GBP 947.80 per ounce.
Gold climbed $13.10 or 0.9% yesterday to $1,470.40/oz and silver reached $24.47 and finished +1.8%.
Cross Currency Table – (Bloomberg)
Gold is slightly lower today after yesterday’s consolidation on last week’s gains.
Premiums continue to rise on physical product across the world to reflect a significant increase in demand and very tight supplies. Premiums on gold and silver coins and bars are increasing across the world – from London to Frankfurt to Zurich to Turkey to Dubai to Mumbai to Singapore to Hong Kong to Tokyo and across the U.S.
Physical gold stocks held at CME Group’s Comex warehouses in New York have dropped to a near-five year low in a further sign that gold’s recent weakness has unleashed a nascent mini gold rush of demand as people all over the world scramble to own bars and coins.
Premiums to secure supplies in India jumped to five times the level before the slump.
Physical bullion coins and bars for immediate delivery are not available in much of the world including in the Middle East and Singapore.
Consumers in Singapore and Hong Kong have seen premiums on bars rise sharply and Standard Merchant Bank (Asia) Ltd. said that “physical metal is still not available.”
Gold in USD, 3 Day – (Bloomberg)
Australia’s Perth Mint, the largest refinery in Australia and one of the largest in the world, said that demand has jumped to the highest level since the Lehman crisis in 2008.
Demand has been robust due to currency devaluation concerns and then the 15% price fall led to a massive surge in demand as store of wealth buyers leapt at the chance to acquire physical bullion at much cheaper prices.
This led to the Perth Mint which refines nearly all of the nation’s bullion, having to stay open over the weekend to meet orders.
There’s been strong interest, including from the U.S., with buyers confident that the metal will rebound from the decline, Ron Currie, sales and marketing director, told Bloomberg in a phone interview from Perth.
Gold in Euros, 3 Day – (Bloomberg)
“We haven’t seen levels like this since the 2008 global financial crisis,” Currie said yesterday. “Compared to March sales, April sales have doubled or tripled,” he said.
“We worked all weekend to keep the factory running to make more stock and that was only to fill orders,” Currie said from the facility founded in 1899. “We’re being inundated with people buying products.”
As the Perth Mint’s Approved Dealer in the EU, GoldCore are seeing a similar increase in demand – particularly for Perth Mint gold bars and allocated bullion accounts.
Gold in British Pounds, 3 Day – (Bloomberg)
Bullion buyers who had been planning to buy coins and bars in the coming months have brought forward their purchases due to the much cheaper prices and concerns about rising premiums and difficulty in securing supply.
“We’re seeing people are coming into the market because the price has come down, they think they can afford it now and expect that it will go up again,” Currie said. “The U.S. has got the money to purchase metal and is doing so as a hedge,” he said, referring to individual investors. “It’s extremely busy for us in the U.S.”
Coin sales by the U.S. Mint are set for the highest month since December 2009, while premiums to secure supplies in India rose to five times the level before the slump.
While prices have gained 11 percent from a two-year low on April 16, they are still heading for the biggest monthly loss since December 2011.
Increased physical purchases may help to offset declining holdings in ETPs, which are on course for a record contraction in tonnage terms this month, according to data compiled by Bloomberg. Holdings have contracted 168 tons in April as weak more speculative hands were shook out of the market on the price decline.
Billionaire John Paulson, the biggest investor in the largest exchange-traded product backed by bullion, reiterated his bullish view on prices.
The U.S. Mint said on April 23 it suspended sales of coins weighing a 10th of an ounce after demand more than doubled from a year earlier. The mint has sold 209,500 ounces of gold coins so far in April from 62,000 in March, according to data compiled by Bloomberg. The U.K. Mint said purchases tripled in April.
Gold is now testing resistance at the 50% retracement level and further price weakness is possible. However, the fundamentals remain as sound as ever and securing ownership of gold and silver bullion coins and bars at these prices and at these still relatively low premiums remains very prudent.
Today’s AM fix was USD 1,472.75, EUR 1,126.13 and GBP 950.04 per ounce.
Yesterday’s AM fix was USD 1,472.50, EUR 1,125.51 and GBP 947.80 per ounce.
Gold climbed $13.10 or 0.9% yesterday to $1,470.40/oz and silver reached $24.47 and finished +1.8%.
Cross Currency Table – (Bloomberg)
Gold is slightly lower today after yesterday’s consolidation on last week’s gains.
Premiums continue to rise on physical product across the world to reflect a significant increase in demand and very tight supplies. Premiums on gold and silver coins and bars are increasing across the world – from London to Frankfurt to Zurich to Turkey to Dubai to Mumbai to Singapore to Hong Kong to Tokyo and across the U.S.
Physical gold stocks held at CME Group’s Comex warehouses in New York have dropped to a near-five year low in a further sign that gold’s recent weakness has unleashed a nascent mini gold rush of demand as people all over the world scramble to own bars and coins.
Premiums to secure supplies in India jumped to five times the level before the slump.
Physical bullion coins and bars for immediate delivery are not available in much of the world including in the Middle East and Singapore.
Consumers in Singapore and Hong Kong have seen premiums on bars rise sharply and Standard Merchant Bank (Asia) Ltd. said that “physical metal is still not available.”
Gold in USD, 3 Day – (Bloomberg)
Australia’s Perth Mint, the largest refinery in Australia and one of the largest in the world, said that demand has jumped to the highest level since the Lehman crisis in 2008.
Demand has been robust due to currency devaluation concerns and then the 15% price fall led to a massive surge in demand as store of wealth buyers leapt at the chance to acquire physical bullion at much cheaper prices.
This led to the Perth Mint which refines nearly all of the nation’s bullion, having to stay open over the weekend to meet orders.
There’s been strong interest, including from the U.S., with buyers confident that the metal will rebound from the decline, Ron Currie, sales and marketing director, told Bloomberg in a phone interview from Perth.
Gold in Euros, 3 Day – (Bloomberg)
“We haven’t seen levels like this since the 2008 global financial crisis,” Currie said yesterday. “Compared to March sales, April sales have doubled or tripled,” he said.
“We worked all weekend to keep the factory running to make more stock and that was only to fill orders,” Currie said from the facility founded in 1899. “We’re being inundated with people buying products.”
As the Perth Mint’s Approved Dealer in the EU, GoldCore are seeing a similar increase in demand – particularly for Perth Mint gold bars and allocated bullion accounts.
Gold in British Pounds, 3 Day – (Bloomberg)
Bullion buyers who had been planning to buy coins and bars in the coming months have brought forward their purchases due to the much cheaper prices and concerns about rising premiums and difficulty in securing supply.
“We’re seeing people are coming into the market because the price has come down, they think they can afford it now and expect that it will go up again,” Currie said. “The U.S. has got the money to purchase metal and is doing so as a hedge,” he said, referring to individual investors. “It’s extremely busy for us in the U.S.”
Coin sales by the U.S. Mint are set for the highest month since December 2009, while premiums to secure supplies in India rose to five times the level before the slump.
While prices have gained 11 percent from a two-year low on April 16, they are still heading for the biggest monthly loss since December 2011.
Increased physical purchases may help to offset declining holdings in ETPs, which are on course for a record contraction in tonnage terms this month, according to data compiled by Bloomberg. Holdings have contracted 168 tons in April as weak more speculative hands were shook out of the market on the price decline.
Billionaire John Paulson, the biggest investor in the largest exchange-traded product backed by bullion, reiterated his bullish view on prices.
The U.S. Mint said on April 23 it suspended sales of coins weighing a 10th of an ounce after demand more than doubled from a year earlier. The mint has sold 209,500 ounces of gold coins so far in April from 62,000 in March, according to data compiled by Bloomberg. The U.K. Mint said purchases tripled in April.
Gold is now testing resistance at the 50% retracement level and further price weakness is possible. However, the fundamentals remain as sound as ever and securing ownership of gold and silver bullion coins and bars at these prices and at these still relatively low premiums remains very prudent.
The Crisis Is Imminent: “When The Real Crash Comes It Will Be Worse Than the Great Depression” – Peter Schiff
Mac Slavo
April 30th, 2013
SHTFplan.com
“The United States is like the Titanic, and I’m here with the lifeboat trying to get people to leave the ship… I see a real financial crisis coming for the United States.”
Peter Schiff
August 2006
In 2006, when he faced off with many well known Titans of investing and warned of an impending financial disaster and economic collapse, Peter Schiff was laughed at by his colleagues. He urged Americans to exit financial markets and take steps to protect themselves before the wealth held in their savings accounts, retirement investments and real estate was wiped out.
Few listened.
We know what happened next.
Now, those same financial experts who publicly vilified Schiff for his predictions six years ago are at it again. Many, including our politicians, central bankers and leading economists, have unequivocally stated that the worst is behind us, and that a global recovery is on the horizon.
Once again, Peter Schiff disagrees:
We must understand that none of the fundamental problems leading up to the 2007/2008 financial crisis have been resolved.
If anything, it’s gotten worse.
Our politicians will not change, and therefore, will change nothing in Washington. Wall Street is as corrupt as ever. Our central bank continues to devalue our currency. There is no end in sight for these people. They will continue on this unsustainable path until we as a country finally hit the proverbial brick wall.
As Peter Schiff notes, the destruction to life as we know it in America and the world is imminent. It’s going to be severe.
So much so that the government has been simulating the collapse of our financial system, the collapse of our society and the potential for widespread violence.
A collapse happened in 2008, but THE collapse is still ahead.
Watch: Peter Schiff Saw It Coming:
April 30th, 2013
SHTFplan.com
“The United States is like the Titanic, and I’m here with the lifeboat trying to get people to leave the ship… I see a real financial crisis coming for the United States.”
Peter Schiff
August 2006
In 2006, when he faced off with many well known Titans of investing and warned of an impending financial disaster and economic collapse, Peter Schiff was laughed at by his colleagues. He urged Americans to exit financial markets and take steps to protect themselves before the wealth held in their savings accounts, retirement investments and real estate was wiped out.
Few listened.
We know what happened next.
Now, those same financial experts who publicly vilified Schiff for his predictions six years ago are at it again. Many, including our politicians, central bankers and leading economists, have unequivocally stated that the worst is behind us, and that a global recovery is on the horizon.
Once again, Peter Schiff disagrees:
“I think we are heading for a worse economic crisis than we had in 2007,” Schiff said. “You’re going to have a collapse in the dollar…a huge spike in interest rates… and our whole economy, which is built on the foundation of cheap money, is going to topple when you pull the rug out from under it.”Indeed.
Schiff says that, despite “phony” signs of an economic recovery, the cancer destroying America stems from a lethal concoction of our $16 trillion federal debt and the Fed’s never ending money printing.
…
According to Schiff, these numbers are unsustainable. And the Fed has no credible “exit strategy.”
Eventually interest rates will rise… and when they do, Schiff says, stocks will tank and bonds dip to nothing. Massive new tax hikes will be imposed and programs and entitlements will be cut to the bone.
…
“The crisis is imminent,” Schiff said. ”I don’t think Obama is going to finish his second term without the bottom dropping out. And stock market investors are oblivious to the problems.”
“We’re broke, Schiff added. ”We owe trillions. Look at our budget deficit; look at the debt to GDP ratio, the unfunded liabilities. If we were in the Eurozone, they would kick us out.”
…
“The Fed knows that the U.S. economy is not recovering,” he noted. “It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode.”
A noted economist, Schiff has been a fierce critic of the Fed and its policies for years. And his warnings have proven to be prophetic.
…
His recent warnings, however, have been even more alarming. Will they also prove to be true?
In his most recent book, “The Real Crash” How to Save Yourself and Your Country“, Schiff writes that
when the “real crash” comes,” it will be worse than the Great Depression.
Unemployment will skyrocket, credit will dry up, and worse, the dollar will collapse completely, “wiping out all savings and sending consumer prices into the stratosphere.”
…
“All we can do now is prepare for the crash,” Schiff said. “If we brace ourselves properly and control the impact, we will survive it.”
We must understand that none of the fundamental problems leading up to the 2007/2008 financial crisis have been resolved.
If anything, it’s gotten worse.
Our politicians will not change, and therefore, will change nothing in Washington. Wall Street is as corrupt as ever. Our central bank continues to devalue our currency. There is no end in sight for these people. They will continue on this unsustainable path until we as a country finally hit the proverbial brick wall.
As Peter Schiff notes, the destruction to life as we know it in America and the world is imminent. It’s going to be severe.
So much so that the government has been simulating the collapse of our financial system, the collapse of our society and the potential for widespread violence.
A collapse happened in 2008, but THE collapse is still ahead.
Watch: Peter Schiff Saw It Coming:
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