The Economic Alamo

By Jeff Thomas

The world's tax havens are the economic Alamo—the last holdout against world economic domination.... 

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Capital Controls and a Bank Holiday in Greece… Here’s How You Can Profit

By Nick Giambruno

For the unprepared, it happens like a mugging…
When you hear a central banker or politician deny that something is going to happen to bank depositors, you can almost be certain that it will happen. And probably soon.

Coming from a government official, the real meaning of “No, of course not” is “Could be tomorrow.”
There’s a reason for the dishonesty. The government needs to take the public by surprise. Otherwise they won’t get the results they want from capital controls or a bank holiday.

The term bank holiday is a politician’s euphemism. When one happens, you won’t be celebrating. You won’t be able to access your bank account, and you’ll be worried.
How will you get by, and how long will the lockout last? And when it ends, will all your money still be there? Will any of it remain?

Calling the experience a bank holiday is like calling a street mugging a surprise party.
Once the banks are closed - or on “holiday,” as the government puts it - the politicians are free to help themselves to as much of the customer deposits (including yours) as they want. It’s like an all-you-can-steal buffet.

A bank holiday usually dovetails with capital controls, which are restrictions on the free flow of money out of the country. Capital controls make it hard for the country’s remaining wealth to dodge a future mugging.

Bank holidays and capital controls are all about the government maximizing the amount of money available for them to confiscate during a crisis. Pen up the sheep, and they’re easier to shear.
It’s a common pattern… 1) country in financial trouble, 2) government denials, 3) surprise bank holiday, 4) wealth confiscation, and 5) capital controls.

It’s a pattern we’ve seen repeated in many countries in economic crisis.
We saw it in Cyprus during their banking crisis of 2013. The trap slammed shut without warning on an otherwise ordinary Saturday morning. The government declared a surprise bank holiday. Capital controls and a bank deposit confiscation followed. It occurred despite repeated promises from the highest Cypriot politicians that bank deposits would be safe.

And now we are seeing the same pattern in Greece.
For the past month, Greece’s government has been denying that it intends to impose capital controls. Yesterday, Sunday morning, the Greek Finance Ministry repeated the denial yet again. Then on the same day - a few hours later - the Greek government declared a weeklong bank holiday. And they would impose capital controls after all.

But don’t worry. The Greek Prime Minister promised that bank deposits would be "completely safe.”
Rather than being “completely safe,” they are far more likely to be harvested by the Greek government, which is free to do as so many troubled governments have done… take the money and run.

Given Greece’s years of chronic financial weakness, none of this should come as a surprise.
There was ample time for any Greek citizen to protect himself from what the government is now doing. But now, with the bank holiday in place, it’s too late.

Moving money into something that Greek politicians can’t steal with a couple taps on a keyboard - like a Greek bank account - would have bought a large measure of protection.
A bank account in another EU country like Austria, a piece of real estate in South America, some physical gold in Singapore or a brokerage account in Hong Kong would have been just what the doctor ordered.

Most people understand that it’s foolish to keep all their eggs in one basket. Yet they fail to go far enough in applying the principle. Diversification isn’t just about investing in multiple stocks or in multiple asset classes. Real diversification - the kind that keeps you safe - means holding assets in multiple countries, so that you’re not overexposed to the economic and political risks that are present in every country.
The problem is, despite having options available to them, many Greeks had a “this can’t happen here” mentality. So they did nothing to prepare. The reality is, what happened in Greece can happen in any country, as it has happened throughout history.

But could it really happen in the US? According to Judge Andrew Napolitano, the troubling answer is YES. The judge is a legal expert. He knows all about bank holidays, capital controls, and other shenanigans politicians pull. The judge has said, “People who have more than $100,000 in the bank are targets for any government that’s looking for money to shore up its own inability to manage its finances.”

The whole ordeal in Greece is yet another example of why international diversification is so important. It’s a prudent strategy because it frees you from absolute dependence on any one country. Achieve that independence, and events or policies where you live can never dominate your life.
Wealthy families have been doing it for centuries. Today, with modern communications, international diversification is within everyone’s reach.

International Man’s mission is to help you protect your personal freedom and make the most of financial opportunity around the world. Global diversification is at the heart of it. Discovering the best investment opportunities around the world is another. And, ironically, the best opportunities often show up after a government has done its worst to a country. For example, in places like… Greece.

Investor sentiment in Greece is nearing the point of maximum pessimism… the point at which almost nobody wants to buy. Prices of Greek stocks have already crashed headfirst into the pavement, so we may be getting close to the best time to buy. As Baron Rothschild advised: Buy when the blood is in the streets.
That’s what crisis investing is all about, and it’s enormously profitable.
Seeking out home runs in crisis markets is exactly what Doug Casey and I do in each monthly issue of Crisis Speculator.

Back in 2013 there was another crisis in a Mediterranean country… Cyprus.
Doug and I put our boots to the ground in Cyprus to search the rubble for investment bargains that would be too good to resist. And we found them.

Despite all the ugly headlines, sound, productive, and well-run Cypriot businesses continued to produce earnings and pay dividends. Anyone with a little money and a cool head could have bought their stocks on the ultra-cheap.

One of the Cyprus companies we recommended has more than tripled as of this writing. Another has more than doubled. Two others have come close to a double. Our readers have loved the experience.
We expect that even bigger bargains are emerging nearby, in Greece.

The financial crisis in Greece is not going to destroy the solid companies operating there. But it is going to make their stocks extremely cheap. And that could mean huge profits for you.

For full coverage of this rich profit opportunity, be sure to check out Crisis Speculator by clicking here.

The article was originally published at internationalman.com.

In GOLD We TRUST

The gold price has stabilized in 2014, after its collapse in April and June of 2013. Investors' interest in the yellow metal is los. Hence, market sentiment vis-à-vis gold is standing at a multi-year low, maybe even a multi-decade low. History learns that extreme underperformance usually lasts for one year. If history is any guide, than there should be a recovery in the gold price in the foreseeable future. Even with the severe underperformance since 2013, gold is up approximately 9% per year since it started to trade freely in 1971. As seen on the next chart, depending on the currency in which it trades, the average yearly performance is excellent for investors with a long term horizon. In other words, gold does what is always has done throughout history: preserve value and purchasing power.

Preservation of wealth is the primary reason why one should hold gold nowadays. Monetary policies of central banks are extremely unusual. The U.S. Fed could be talking about “normalization,” but with 7 years at zero percent interest rates we are nowhere near “normal” conditions. The most extreme monetary conditions, today, are being seen in Japan. It is really no coincidence that the gold price in Yen is near its all time highs. The gold price in Yen is simply reacting on the extreme expansion of the monetary base by the Japanese central bank. As the next chart shows, the balance sheet of the Bank Of Japan (BOJ) is approximately 65% of the country's GDP. In other words, the assets that the BOJ is holding nears 2/3 of the total economic output of the country. When compared to other regions, it is clear that is a monstrous amount. It seems that Japan is near its endgame.

A correction in the stock market is certainly in the cards. Why? Because traditionally the gold/silver ratio is mostly negatively correlated with the S&P 500. In other words, as the gold/silver ratio goes down which means there is a disinflationary environment, stocks come down as well. Over the last 25 years, that correlation has held very well, but started to diverge strongly 3 years ago.

- Source

John Williams- Panic Decline and Selling of the US Dollar Will Take it to Historic Lows and More!

What does renowned economist John Williams make of the strength of the dollar in the last year? He thinks the markets were anticipating the Fed raising interest rates because of the so-called “recovery.” Of course, the economy is not improving, and Williams thinks when the Fed tries to pump the economy back up, the dollar will dive.

Williams explains, “I was looking for a hyperinflation in 2014. What I did not expect and what I have missed is the big rally in the dollar. . . . The economy was never improving. Now, it’s not only not improving, but it is begging to turn down again. That’s the importance of quarter to quarter contraction. When you get that, you get official recognition that the economy is falling, and it is not recovering. So, as the expectations wane on the Fed tightening, you will start to see dollar selling. I think you are going to see a panic decline in the dollar at some point, massive selling of the dollar, not only that, it will take it down to levels of a year ago, but to historic lows. As that happens, you will see a tremendous spike in oil prices which will start moving the consumer price index pick up. . . . You have an overhang in excesses of $12 trillion outside the United States.

A goodly portion of that will be repatriated to the United States into the US markets. People will be dumping the dollar to get out of the dollar and the Fed is going to have to be monetizing all sorts of things. . . . What’s out of whack right now against reality is the strength of the dollar. We don’t have a booming economy. We don’t have a Fed that is going to happily raise rates, although they would like to. As the realization sinks in, the exchange rate of the dollar will start falling. Then, you will actually have a panic, and once that has happened, you will see a sharp upturn in headline inflation, and that will evolve eventually into hyperinflation. . . . A dollar panic is reflective of the problems here.”

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Dr. Lacy Hunt on the Six Characteristics of Over-Indebted Economies

Cris Sheridan welcomes Lacy Hunt PhD, an internationally known economist, and Executive Vice President of Hoisington Investment Management. Wondering why economic growth can’t seem to take off...

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Silver Is Historically Undervalued

Richard Duncan - The Real Risk Of A Coming Multi-Decade Global Depression

Richard Duncan, author of The Dollar Crisis and The New Depression: The Breakdown Of The Paper Money Economy, isn't mincing words about the risks he sees ahead for the world economy.

Essentially, he sees the past 50 years of economic prosperity fueled by globalization and easy credit in serious danger of being unwound, as the doomed monetary policies currently being pursued by the word's central banks result in a massive multi-decade depression that spans the globe.

GATA'S Bill Murphy - The Man Banned From CNBC For Exposing The Truth About Gold And Silver

Bill 'Midas' Murphy monitors Precious Metals markets and has been bringing daily analysis and commentary to our subscribers here at LeMetropole Cafe for over 15 years.

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Odds High Hyperinflation Begins In 2015

John Williams, of ShadowStats.com, says the Fed has given a false sense of security but did not fix the problems that led to the last meltdown. Williams warns, “People say everything is fine again—nonsense. You had a panic in 2008. . . . The system was on the brink of collapse. The Fed and the federal government did everything in their power to prevent it. They pushed things into the future, but they didn’t do anything of substance to address the underlying problems.” So, are we going to have another panic? Williams says, “Yes, and that is the type of thing that can break at any time, and you just don’t have the options you had in 2008 for buying time into the future.” Williams adds, “The odds are high you are going to see the beginnings of hyperinflation this year.”

- Source, USA Watchdog

David Stockman - The Global Economy Has Entered The Crack-Up Phase

We’re in the crack-up phase. I think there are four big characteristics of that which are going to shape the way the economy and the markets unfold as we go forward.

You’re going to see increasing desperation and extreme central bank financial repressionbecause they have gotten themselves painted so deep into the corner that they're lost and desperate. Almost week by week, we have another central bank – this week, it was Sweden – lowering their money market rates into negative territory. The Swiss Bank is already there, the Denmark Bank is there, the ECB is there on the deposit rate, the Bank of Japan’s there. All of the central banks of the world now are desperately driving interest rates into negative territory. I believe that they’re lost; they're in a race to the bottom whether they acknowledge it or not. The central bank of China can’t sit still much longer when the reminbi has appreciated something like 30% against the Japanese yet because of the massive bubble of monetary expansion that’s being created there. So that’s the first thing going on. Central banks out of control in a race to the bottom, sliding by the seat of their pants, making up really incoherent theories as they go.

The second thing is increasing market disorder and volatility. In the last three months, the stock market has behaved like a drunken sailor. But it’s really just a bunch of robots and day traders that have traded chart points until somebody can figure out what is happening directionally in the world. It has nothing to do with information or incoming data about the real world. We have today the 10-year German bond trading at 29.5 basis points. Well, the German economy’s been reasonably strong, fueling the Chinese boom. That export boom is over. The Chinese economy is faltering. Germany is going to have its own problems. But clearly, 29 basis points on a 10-year is irrational, even in the case of Germany, to say nothing of the 160 available today on the 10-year for Spain and Italy. Both of those countries are in deep, deep fiscal decline. There is no obvious way for them to dig out of the debt trap that they’re in. It’s going to get worse over time. There’s huge risk in those bonds, especially because there’s no guarantee that the EU will remain intact or the euro will survive. Why in the world would anybody in their right mind be owning Italian debt at 160 other than the fact that they’re front-running the massive purchases that Draghi has promised and the Germans have acquiesced to over the next year or two. But that only kicks the can down the road. One of these days, the central banks are going to falter and the market is going to reset violently to prices that reflect the true risk on all this sovereign debt and the pretty cloudy outlook that’s ahead for the world market.

We now have something like four trillion worth of sovereign debt spread over Japanese issues, the major European countries that are trading at negative yields. Obviously, that is one, irrational and second, completely unsustainable. And yet, it’s another characteristic of what I call these disorderly markets. Investment is now coming home to roost. It will be driving a huge deflation of commodity and industrial prices worldwide. You can see that in iron ore, now barely holding $60 from a peak of $200. Obviously, it’s seen in the whole oil patch. Look at the Baltic Dry Index. That is a measure, one, of faltering demand for shipments and, two, massive overbuilding of bulk carrier capacity as a result of this central bank driven boom that we’ve had in the last 10 to 20 years. So that is going to be ripping through the financial system, the global economy, in ways that we’ve never before experienced. And so therefore, in ways that are hard to predict what all, you know, the ramifications and cascading effects will be. But clearly, it’s something that we haven’t seen in modern times or ever before – the degree of over investment, excess capacity, and everything from iron ore mines to dry vault carriers, aluminum plants, steel mills, and on down the line.

And then, finally, clearly, demand has run smack up against peak debt -- I think that’s the right word for it. We had a tremendous study come out in the last week or so from McKinsey, who do a pretty good job of trying to calculate, track and total up the amount of credit outstanding, public and private, in the world. We’re now at the $200 Trillion threshold. That’s up from only about $140 Trillion at the time of the crisis. So we’ve had a $60 Trillion expansion worldwide of debt just since 2008. During that same period, though, the GDP of the world saw a little more than $15 trillion from $55 or mid-$50s, roughly, to $70 Trillion. So we’ve generated, because of central bank money printing and all of this unprecedented monetary stimulus, we’ve generated something like $60 Trillion of new debt in the world and have barely gotten $15-17 Trillion of new GDP for all of that effort. And I think that is a measure of why the fundamental era is changing. That the boom is over and the crackup is under way when you see that kind of minimal yield from the vast amount of new debt that has been generated.

Now I’d only wrap this up by calling attention to the fact that within that global total of $200 Trillion, the numbers from China are even more startling. At the time of the crisis, let’s go back to 2000, China had $2 Trillion of credit outstanding. It’s now $28 Trillion. So we’ve had just massive 14X growth in 14 years. There’s nothing like that in recorded history, nor is there any plausible reason to believe that an economy, which is basically under a command-and-control system that is run from the top down to the party cadres, could possibly create $26 Trillion in new debt in that period of time without massive inefficiencies in waste and mistakes everywhere within the systems, especially since they have no markets. They have no feedback mechanisms. It all comes cascading down from the top and everybody lies to the next party above them. And I think the system is irrationally out of control.

In any event, my point was that at the time of the 2008 crisis, China had allegedly – if you believe their numbers, which no one really should – but as reported, they had $5 Trillion worth of GDP. It’s now $10. So they’ve gained $5 Trillion of GDP. Their debt at the time of the crisis was $7 Trillion, now it’s $28. So the debt is up more than $20 Trillion while the GDP is up just $5 Trillion. These are extreme unsustainable deformations, if I can use that word, that just scream out, “Danger ahead. Mayhem has happened.” And the unwinding of this and the resolution of this is not going to be pretty.

- Source, Peak Prosperity

Lever up or down, global debt still rises

The world is more indebted than in the financial crisis. Richard Dobbs, director of the McKinsey Global Institute, talks to Ralph Atkins, capital markets editor at the Financial Times, about the risks this raises and the creative responses being tested.

- Source, FT

‘Less chocolate in a bar, price stays the same: Pure deflation?’

Afshin Rattansi goes underground on the impact of inflation in international relations. Pippa Malmgren, former U.S. Presidential policy advisor, warns that the UK and US are using inflation to default on their debts, and their principal creditors, Russia and China, are making grabs for assets in the face of that uncertainty and risk. Kevin Courtney, Deputy General Secretary of the National Union of Teachers, warns academies are failing to increase school standards and let vested interests into the system. With further talks on TTIP this week, we look further into what damage could be wreaked on the NHS if the free trade agreement goes through. And Iain Duncan Smith plans yet more cuts to benefits – as research shows that even with greater austerity, Tory welfare spending will be no lower than when they came into power.

- Source, Russia Today

Dr. Marc Faber - Employment Numbers Are BS

John Manfreda and Jason Burack of Wall St for Main St had on returning guest Editor and Publisher of the Gloom, Boom & Doom Report http://www.gloomboomdoom.com/, Dr. Marc Faber.

Jason and John ask Dr. Faber about interest rates, financial repression, ECB QE, Swiss depegging, Greece leaving the Euro, the fake employment numbers, Asia, China, Gold and Gold Mining.

- Source, Wall Street for Main Street

David Morgan - Silver Manifesto Updated

David Morgan Discusses Silver in Depth and about his new book.

The Cancer Which Started In The US Financial System Has Spread Globally

"The US Dollar payment system is essentially a system for looting. This, Globalization and Neo-liberal economics are tools of American economic imperialism. Countries are beginning to realize this. The looting of countries by American imperialism has now reached the point where it is turning on itself - Greece for example."

- Source, Gold Silver