Groan… mmmmphhh

meant to post something in the past few days… but can’t bring myself to… going over the same ground over and over again occasionally has that effect on me… a combination of despondency, resignation… despair??…

The European “deal”?… More of the same… different package but same workings and same result…

Debt ceiling? idem…

Counties and municipalities finding it hard to re-finance and going bankrupt? Seen it coming a few years ago…



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8 Responses to “Groan… mmmmphhh”

  1. Pat Donnelly Says:

    All paper returns to initial value: paper.

    That is the nature of what has happened since 9/11. There are at least two distinct plots. Probably many more, that will be co-opted by the winners of the main one. Poor people and those who used to be middle class are merely pawns and will have to fight for their rights. They will be harnessed by the winners. The real losers end up with ransoms given to the winners or losss of liberty. Think Conrad and Rupert. Very humbling.

    The gold and silver plays either make a lot of sense or none…… I mean physical gold, not paper. Since I am in Oz I am already long commodities!

    This could end in a world wide war on terror, or a UN dominated world, the NWO option. Either way, America suffers big time as they turn into Central and South America. All the “jobs” going elsewhere. The sooner America gets rid of the arms and banking monkeys, the better their citizens will be. Don’t see that happening. Do you?

  2. Andy V Says:

    Really like Pat Donnelly quote on the comments the other day
    “All they have is time and they trade money for it. Unless your readers are on the inside, they should sell off now?!”

    As a reader of your blog i feel i have learnt a great deal of this debt based fiat currency, factional reserve world we live in. But what good is this knowledge without a plan of action, or some ablity to protect ones self interest.

    I mean the entire system is broken, the US goverment is unable to sell its debt, its as simple as that, what are we todo?

  3. Andy V Says:

    Using what you know of the system,

    Could you please describe what you think we will start to see in the comming months?

    Do you belileve that Greece will default, if so how will this effect other EU nations?
    Is there any significance of US debt ceiling and Greece problems pretty much falling at the very same time?
    Is the system going to carry on kicking the can down the road as long as possible, with each month the figures getting worse and worse, are we “safe” as a result for a couple of years or is it going to fall to peieces before that?

    What do you see ahead for:
    commodity prices? (continue upwards trend with the possiblity to rise sharpy due to market shocks?)

    interest rates (holding low as long as possible, until market forces make it impossible to be so artifacally low?, then rising to 5%?)

    How would you advise friends/family to weather this comming storm?

    • guidoamm Says:

      Apologies Andy. I had typed chapter and verse as an answer and then I must have pressed something and lost the entire thing. I’ll have to get back to you because I have to run now.

    • guidoamm Says:

      Let’s try this again.

      What we will start to see is more of the same. Smaller banks will continue to fail and be absorbed into larger banks (not all banks are created equal). Cities, Counties, Municipalities, Regions, States will continue to fail. Public services will continue to be curtailed; things like road maintenance, refuse collection, public transport, postal services. Scandals in politics and economics will continue to crop up at ever greater degrees with little to no prosecution of the people involved.

      There is no significance to the need to raise the US debt ceiling now that Greece is failing. The US debt ceiling has had to be raised several times in the past decade alone and it only attests to the decreasing marginal utility of debt.

      Yes, Western governments will try to postpone the inevitable. But, as Pat says, all paper returns to its original value of… paper. Hence the reason you always need more debt in order to obtain the same result, let alone improve on previous results. It was so for the Chinese 5000 years ago, it was so for the French in the 1700s (Assignats and Mandats), it was so for the Americans in the 1800s (the Continental and other currencies) and it will be so for us too.

      When will it fall to pieces? In many respects it already has. “Falling to pieces” is not an absolute measurement. If you have lost your job three years ago and are due to retire in the next three years, I’d say things have already fallen to pieces for you. If you are middle aged, have no savings, have excessive debt and are about to lose your job, I’d say things have already fallen to pieces for you too. If you had a successful career and have contributed religiously to your pension, have savings invested in main stream stocks and mutual funds and are about to retire within the next three years, I’d say things are about to fall to pieces for you. Difficult to say what falling to pieces looks like to different people. If you look at the charts on the first page of my chart book, I’d say that in terms of purchasing power parity and quality of life, things have already fallen to pieces for most people including those that still have their jobs. On the other hand, if you are a JP Morgan, Goldman Sachs or Bank of America banker, things are looking pretty good for you.

      Commodity prices? Dunno. Is gold a commodity? Food is generally defined as a commodity…. but that’s in normal times… in times of scarcity due to, for example, war, or a total break-down of society, can food become a currency? I dunno. However, I do know that cigarettes can be a currency in prison for example. So, given the right circumstances, anything can be a currency.

      Interest rates? For an economy to work properly, interest rates must reach a level whereby the productive sector can produce in excess of current needs in order to front future needs without fearing loss of purchasing power. Where that level is cannot be known in advance but it certainly is much higher than where we are now. As a by the by, the price of oil too is much too low.

      As for advise on how to survive the system, I’ll have to continue later.

    • guidoamm Says:

      As to advise. The storm is not coming. It is here. It is uncanny. I spent two days in the desert down south with some friends and on the monotonous drive back yesterday afternoon, I got to thinking just that. If I know how the system works, I should be able to continue profiting from it.

      But nothing in life is straight forward.

      Currently I am at a loss to suggest anything else I have not been suggesting for the past ten years. I still believe people should hedge their savings and their purchases with purchases of gold and silver. This is a strategy that has worked well for the past ten years and that I think should work well for the next five if not ten years. But beware. What is true mathematically may not serve you well if you take into account the nature of government. If government abides to mathematics, then we would not be in this situation in the first place. But government especially the government of the hegemon cannot and does not abide by rules of logic or mathematics. This is borne out by the increasingly aberrant, absolutist and fascist nature of new legislation being proposed and enacted in the West and enforced by an increasingly militarized apparatus that is gradually taking over traditionally civic institutions.

      The latest most glaringly case in point is the amendments required to the sundry European treaties and legislation required for the EU and the ECB to carry on kicking the can down the road yet again. This is happening against the will of the people and against the better judgment of those entities and politicians that know better but that, due to the aberration of the Raison d’Etat and with the cooperation of the main stream press, are relegated to voices in the wilderness.

      A Greek default is a lock. The bond market has priced a default at some time within the next two years. A Greek default will inevitably bring about a repricing of all sovereign debt thus impacting in one feel swoop the heaps of sovereign debt stuffed on the books of not only major banks but the ECB too who carry this crap at face value when, accountingly speaking, it is worth significantly less.

      The end is nigh. The inflection point was marked by LTCM in the late 90s. Since then, the diminishing marginal utility of debt sees to it that “bailout” figures increase geometrically.

      A case in point:

      And that is only one case in point. We have no idea what machinations take place behind closed doors other than after the fact. But we do know they take place because other than monetary parameters flashing big fat “EMERGENCY” warnings as is the case for the money multiplier, by inadvertent idiocy on the part of our politicians we are told that we must be lied to when things get serious as dopey Jean Claude Junker admitted last month.

  4. Pat Donnelly Says:

    Agreed. Federal Europe, here we come.

    I wonder what dirty tricks were employed in the name of regional security?

    • guidoamm Says:

      The machinations of Western governments will dazzle us in coming weeks… the denouement is nigh…

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