Jew Hand Signals to the Market? -- Carl Icahn

[CrackSmokeRepublican]

Looks like the money J-Teams are trying to SCAM UP something over the Strauss-Kahn Scandal. Maybe something "broke" lately?  Anyways, instead of "kicking the can down the road..." it may be time to "kick the Talmudic  Jews  down the road"... in the US and Europe... --CSR

Jews babbling about Derivatives, Collapse, and Gold (the interviewer looks like a young Sarkozy):
http://www.businessinsider.com/intervie ... ach-2011-5
http://www.businessinsider.com/interview-with-jeffrey-gundlach-2011-5

Carl Icahn Confesses That The "System Is Not Working Properly", Warns Of Another "Major Problem" Coming
Submitted by Tyler Durden on 05/29/2011 13:54 -0400



Confirming our ongoing observations that the pursuit of leveraged beta is the only game in town ("Levered Beta Uber Alles: NYSE Borse Margin Debt Jumps To Three Year Highs, Investor Net Worth Remains At Record Lows") is this surprising confession by hedge fund titan Carl Icahn, who not only warns that the levels of leverage achieved in the current centrally planned regime is as bad as it ever was, and that some form of Glass-Steagall should return, but that, stated simply, the entire "system is not working properly." His warning, stated in a very politically correct fashion, is that "there could be another major problem" either next week, or next year. Which is not surprising: after all not only has anything changed, but the very same drivers of risk that nearly crashed capitalism in Q3 2008, are back and arguably stronger than ever. That the Fed is the last recourse mechanism preventing an all out systemic wipe out probably should not be a source of comfort to anyone. In the end, the Fed, as any other authoritarian institution promoting central planning, will always lose.

Mobius:

Mark Mobius Echoes Carl Icahn: "There Is Definitely Going To Be Another Financial Crisis"
Submitted by Tyler Durden on 05/30/2011 09:58 -0400

In an almost verbatim repeat of Carl Icahn's words of caution which we noted yesterday, Templeton's legendary chairman Mark Mobius said that "another financial crisis is inevitable because the causes of the previous one haven't been resolved" during a luncheon (menu included herb crusted chicken breast with cheese and tomato sauce, mashed potato and green vegetables, seasonal salad) at the Foreign Correspondents' Club of Japan in Tokyo. Bloomberg reports: "There is definitely going to be another financial crisis around the corner because we haven't solved any of the things that caused the previous crisis," Mobius said at the Foreign Correspondents' Club of Japan in Tokyo today in response to a question about price swings. "Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes." Unlike Icahn, Mobius stopped short of calling for a return to Glass-Stegall and a repeal of the abominable Gramm-Leach-Bliley which unleashed the era of zero margin derivatives and financial system neutron bombs. On the other hand, it is nice of Messrs Icahn and Mobius to speak up now, two years after the ongoing systemic instability transferred $3.5 trillion in capital from current and future taxpayer generations to the present financial elite. We do, however, forgive them because in their better late than never contrition, they join the likes of Zero Hedge who since January of 2009 have warned, over and over, that nothing in the structure of capital markets has changed, and that the market could any day open not only bidless, but broken beyond even Brian Sack-ian band aid repair.

CIA Warns Of A Greek Military Coup, Rebellion, If Austerity Intensifies
Submitted by Tyler Durden on 05/30/2011 10:30 -0400


Turkish daily Hurriyet, which paraphrases German Bild, which in turn references a CIA report, warns that Greece could face a military coup if the "tough austerity measures and the dire situation" escalate any further. On the other hand, one can avoid this belabored hypertextual chain and simply look at what happens practically every day on Syntagma square where yet again we are witnessing record numbers of people protest against what everyone now realizes is a dead end regime (luckily, in a peaceful manner, for now). More Captain Obviousness (thank you Grant Williams) from Hurriyet: "According to the CIA report, ongoing street protests in crisis-hit Greece could turn into escalated violence and a rebellion and the Greek government could lose control, said Bild. The newspaper said the CIA report talks of a possible military coup if the situation becomes more serious and uncontrolled." Luckily, following last year's Athens mob-inspired flash crash, and 2011's MENA revolutions, the market is rather desensitized to this sort of thing, and nothing short of fat-finger driven invasion of Greece by Turkey, in its humanitarian bid to reestablish the Ottoman Empire 2.0, could dent the /ES or EURUSD by more than 0.01%.

http://www.zerohedge.com/

[CrackSmokeRepublican]

The Ticking Time Bomb

Bob Moriarty
Archives
May 30, 2011

When I was young and in college we used to ask ourselves rhetorical questions just to show we could think. A favorite was, "What happens when an irresistible force meets an immovable object?" And the answer was, "Immeasurable energy."

We are about to learn if that thesis is true or not. The irresistible force is the $600 trillion in derivatives. The immovable object is the $60 trillion world economy. Basically a $60 trillion economy cannot support a $600 trillion bucket of used lottery tickets that everyone wants to pretend still have some value. They don't.

The only real question is just how much actual money is left and I suspect the answer is "near zero." That's the ticking time bomb.

I've always believed that the growth in derivatives from a low of about $60 trillion in 1997 to its high point of about $800 trillion in 2008 was the foundation stone for credit running totally out of control worldwide.

Brooksley Born famously attempted to regulate the Wild West environment of derivatives in 1997 only to be slapped down in a classic Washington DC turf war led by Alan Greenspan, Larry Summers and Robert Rubin. We are going to rue the day she lost that battle.

In pieces I've written since I first began warning 321gold readers about the dangers of derivatives in early 2002, I've made the comment a number of times I don't think there are ten people in the world who really understand derivatives. I'm not kidding. I think next to nobody actually understands this most dangerous of markets.

What is going on in Greece, Spain, Iceland and Ireland is all part of the same ticking time bomb. Some of the events almost defy imagination.

Three relatively small banks in Iceland issued over 50 billion euros in debt that blew up in early October of 2008. The governments of the UK and Holland made local savers in those countries whole and then demanded the citizens of Iceland repay the losses. After two nationwide votes, the citizens of Iceland basically told the UK and Netherlands governments to pound sand. Why should the citizens of Iceland have to repay the losses of the banks? It's a good question.

What is actually going on is all governments are trying to pretend the debts can be paid and all citizens are demanding the benefits continue. Irresistible force and immovable object. The citizens and all governments believe the good times will continue. They can't. We can't afford it.

Spain and Greece both used non-transparent derivatives to improve their financial books so they could enter the EU. The cooked books are now pretty obvious and Germans are objecting to having to work to the age of 67 so Greeks can retire at 50. Tick. Tick. Tick.

I was watching some of the violence taking place in Spain today and it caused me to realize I needed to write this piece. Greece is the proverbial canary in the coalmine. I think they are going to effectively default next week. When they do, the party stops at once as a series of cascading defaults consume the financial system far faster than governments can print money to dump on the problem.

I was working for EDS in New York when then President Nixon made his famous speech on August 15th, 1971 taking the US off the gold standard. You have to be pretty old to still remember it but his speech wasn't actually about gold or the dollar, the speech was about putting the US on Wage and Price Controls. The speech pissed me off because I knew Ross Perot would use it as an excuse to stop pay raises already promised. He did. Cheap bastard.

In any case, after the dust settled, I began to think of the implications of the US being totally off the gold standard. For most of the last 40 years, I have firmly believed the US dollar would die as a result of hyperinflation. I was an early adopter in the hyperinflation theory and now it's commonly accepted as how the dollar will end.

I may have been wrong, totally wrong. We know the $600 trillion in derivatives has to disappear. The chances of $600 trillion in derivatives being around for much longer are about the same as the future of a snowball in Hell. It's actually pretty surprising that the system has lasted as long as it has.

Greece, Spain, Ireland, Iceland, they are just part of the burning fuse. We hear very little rational discussion about the issues. The issues are simple. The world has far more debt than it can support. Unions and workers have extracted promises from government that can never be paid. We simply cannot afford the lever of government we have but no one wants to address the issue. They keep kicking the can down the road. One day very soon the music will stop and everyone will try to find a chair to sit in only to find in this epic game of musical chairs, there are no chairs.

It's heresy for me to suggest it but the very best investment for the next six months might well be cash. The kind of dirty filthy cash that you can shove under your mattress and use when the system comes to a grinding halt. Gold may well be the currency of choice to rebuild the system but to get through the chaos that is coming, I think you want the kind of cash you can hold and spend.

The revolution may have started in Egypt and Libya and Spain and Greece but I'll bet money, cash money, that revolution heads our way soon.

###

Bob Moriarty
President: 321gold

[CrackSmokeRepublican]

Another "Poor Jews" blabbing from a Shabbos Goy "Apologist-Cabalist..." trader John Maudlin.

-------

A Random Walk Through the Minefield
Saturday, May 28th, 2011 | Filed under Thoughts from the Front Line,Weekly Recap | Posted by John Mauldin



"All polit­i­cal think­ing for years past has been viti­ated in the same way. Peo­ple can fore­see the future only when it coin­cides with their own wishes, and the most grossly obvi­ous facts can be ignored when they are unwelcome."

– George Orwell

" Hind­sight is not only clearer than perception-in-the-moment but also unfair to those who actu­ally lived through the moment."

– Edwin S. Shnei­d­man, Autopsy Of A Sui­ci­dal Mind

Brinkman­ship is defined as the prac­tice of push­ing dan­ger­ous events to the verge of dis­as­ter in order to achieve the most advan­ta­geous out­come. It occurs in inter­na­tional pol­i­tics, for­eign pol­icy, labor rela­tions, and (in con­tem­po­rary set­tings) mil­i­tary strat­egy involv­ing the threat­ened use of nuclear weapons.

This maneu­ver of push­ing a sit­u­a­tion with the oppo­nent to the brink suc­ceeds by forc­ing the oppo­nent to back down and make con­ces­sions. This might be achieved through diplo­matic maneu­vers by cre­at­ing the impres­sion that one is will­ing to use extreme meth­ods rather than con­cede. Dur­ing the Cold War, the threat of nuclear force was often used as such an esca­lat­ing mea­sure. Adolf Hitler also uti­lized brinkman­ship con­spic­u­ously dur­ing his rise to power. (More on ignor­ing events and Hitler later on.)

In the last 48 hours, so much news has come out of Europe that has me frankly shak­ing my head. It is a strange game of brinks­man­ship they are play­ing, and it is one we should be pay­ing atten­tion to (as if the brinkman­ship played by US politi­cians over the debt ceil­ing is not enough). This week we look at what seems to be Euro­pean lead­ers tak­ing ran­dom walks through the mine­field at the very heart of the Euro­pean Exper­i­ment. As Paul Simon wrote, "A man sees what he wants to see and dis­re­gards the rest." But first...

Would You Like to Read Over My Shoulder?

As you know, I read scores (if not hun­dreds) of reports and analy­ses each week to put together my let­ters. Wouldn't you like it if I could fil­ter for you what is impor­tant? The few things that you should read? What would it be worth to you to have some­one with my years of expe­ri­ence and breadth of resources avail­able to you as your own per­sonal reader/filter?

I can be just that. I've now launched a new ser­vice called Over My Shoul­der to bring you the very best 5–10 pieces I read each week.

I'll call your atten­tion to some of the most fas­ci­nat­ing ana­lysts out there, peo­ple with non-intuitive per­spec­tives on some of the most press­ing issues fac­ing us as indi­vid­ual investors. Con­cerned about inflation/deflation? Won­der­ing about the future for US mar­kets and sov­er­eign debt? Europe? It's all here.

If you need cogent analy­sis and clear rea­son­ing, this is the ser­vice for you. And if you want to see the data, charts, and graph­ics that back it all up, you'll get them. Would that be worth just $39 every three months? What is just one piece worth to you that helps you make that crit­i­cal decision?

My job is to find you the best of the best, mak­ing sure your radar is pointed at the crit­i­cal issues and weed­ing out all the noise. If your time mat­ters as much as your invest­ments, click here to learn more: http://www.johnmauldin.com/overmyshoulder/recent/

And let me has­ten to note, this weekly let­ter will not change. It will still be free, com­ing to you each week­end. And now on to this week's letter.

Dys­func­tional, Thy Name Is Europe

This week one mem­ber of the Euro­pean Cen­tral Bank after another repeated the warn­ing that if Greece defaults or restruc­tures its debt, then Greek debt would not be eli­gi­ble for use as col­lat­eral at the ECB, nor would Greek bank debt. They are con­tin­u­ally warn­ing of "con­ta­gion risks" and the end of the euro as we know it, and all in sten­to­rian tones that would make any dooms­day prophet of Armaged­don jealous.  

But this ignores real­ity. Greece sim­ply can­not bear the bur­den of the debt. Some sort of restruc­tur­ing or "repro­fil­ing" is clearly going to be needed, if not out­right default. There are those in the EU who are rec­og­niz­ing this.

Even a Greek EU com­mis­sioner (of fish­ing) noted the prob­lem openly:

"ATHENS, Greece – A Greek EU Com­mis­sioner warned that the country's par­tic­i­pa­tion in the euro was under threat, though the prime min­is­ter insisted Wednes­day his gov­ern­ment would see through new aus­ter­ity mea­sures and keep Greece in the joint cur­rency. The EU's Fish­eries Com­mis­sioner, Greece's Maria Damanaki, warned that:

" 'The sce­nario of remov­ing Greece from the euro is now on the table. I am obliged to speak openly. We have a his­tor­i­cal respon­si­bil­ity to see the dilemma clearly: either we agree with our bor­row­ers on a pro­gram of tough sac­ri­fices with results ... or we return to the drachma,' she said in a state­ment on her per­sonal web­site. Damanaki does not rep­re­sent the Greek gov­ern­ment, but she is part of the rul­ing Social­ist party." (Yahoo)

Of course, there were quick denials by the gov­ern­ment and the prime min­is­ter that there were even any dis­cus­sions of leav­ing the euro­zone, which I find rather odd. I mean, if you are not hav­ing dis­cus­sions about all the options (behind closed doors) then you are being derelict in your duties. We shall learn soon enough that there have in fact been such dis­cus­sions. The Greels may in fact reject the idea of leav­ing the euro, but to think they did not have such a dis­cus­sion rather strains credulity.

Here's the real­ity in Europe. Greece and Por­tu­gal are effec­tively shut out of the debt mar­ket with­out EU and ECB loans. Ire­land will not be able to (nor should it!) han­dle the debt it has taken from the ECB to bail out its banks. If they acknowl­edge that debt, lenders will rec­og­nize they can­not ser­vice any new debt, and they will be shut out of the debt mar­kets with­out ECB and EU guarantees.

The IMF warned this week it may not con­tinue fund­ing Greek debt in the very near term. Greece might be denied the next tranche of finan­cial aid if an audit of its bud­get account­ing shows that the coun­try can­not guar­an­tee financ­ing for the next 12 months, Eurogroup Pres­i­dent Jean-Claude Juncker said Thurs­day. "I'm not the spokesman of the Inter­na­tional Mon­e­tary Fund, but the rules say they can only dis­burse if there is a financ­ing guar­an­tee for the 12-month period," Juncker told reporters at a con­fer­ence in Lux­em­bourg. Juncker is very dis­creet and savvy. Clearly he had dis­cus­sions with IMF lead­ers before mak­ing such a statement.

"If that hap­pens, he said, the IMF's rules could stop the fund from con­tribut­ing its share of the next slug of bailout money, due to be paid out to Greece on June 29. The review, from the so-called troika of offi­cials from the Euro­pean Com­mis­sion, Euro­pean Cen­tral Bank and IMF, is due to be pre­sented next week. 'I don't think that the troika will come to the con­clu­sion that this'—12 months of fund­ing com­mit­ments for Greece—'is cer­tain,' said Mr. Juncker, speak­ing at a con­fer­ence in Luxembourg.

"In that case, the IMF would expect other euro-zone gov­ern­ments to step in and cover the funds. Drum­ming up that financ­ing would be hard in coun­tries such as Ger­many and Fin­land, he said. IMF spokes­woman Car­o­line Atkin­son said Thurs­day in Wash­ing­ton that the fund gen­er­ally doesn't lend if there are gaps in financ­ing, and that it was seek­ing reas­sur­ance from the euro-zone coun­tries who are also lend­ing to Greece. The IMF is pro­vid­ing €30 bil­lion of the €110 bil­lion facil­ity, with the bal­ance pro­vided by euro-zone coun­tries." (Wall Street Jour­nal)

This is all brinks­man­ship. The ECB says Greece will get noth­ing if they default. The EU says that to get money the Greeks must make even deeper cuts, while a soon-to-be-completed audit will show they are in worse shape rather than improv­ing. The Greeks have an obscure min­is­ter who is not part of the gov­ern­ment say they might leave the euro. The IMF says they may not fund with­out fur­ther com­mit­ments from the euro mem­bers, which are going to be tough to get from Ger­many and Fin­land, at the least.

The Ger­man gov­ern­ment has been propos­ing to fill Greece's finance gap with­out pro­vid­ing more loans, by ask­ing hold­ers of Greek bonds matur­ing in the next cou­ple of years to agree to post­pone their repay­ments. Yeah, like that's going to hap­pen. Let's depend on the kind­ness of strangers.

Again, from the Jour­nal:

"Ana­lysts and offi­cials say a polit­i­cal fudge will likely be worked out that won't leave the euro zone hang­ing on a precipice on June 29. Since the IMF is pro­vid­ing only around a quar­ter of the fund­ing, the euro zone's exist­ing com­mit­ments alone would tide Greece over for a few months as Euro­pean lead­ers debate addi­tional financing.

"How­ever, short-term fixes won't resolve the fun­da­men­tal ten­sions around Greece's debt that are putting the ECB, IMF and cred­i­tor gov­ern­ments at odds, ana­lysts say. Many believe if some­thing gives, it will be the ECB. 'One of the sides will have to give way. I believe that the ECB's threat of leav­ing Greek bonds out ... is not some­thing it will actu­ally carry through. I don't think it's a cred­i­ble threat because it's a nuclear option,' Mr. Kapoor said."

Brinkman­ship indeed. Let's look at a few graphs from a scathingly crit­i­cal post in Der Spiegel about the cen­tral banks of the var­i­ous coun­tries in Europe and the ECB itself, which show us why the ECB is so wor­ried about a default. As it turns out, the ECB would be in worse shape than Lehman was in Sep­tem­ber 2008! You can read the arti­cle at http://www.spiegel.de/international/bus ... 99,00.html. It is not pleas­ant read­ing if you pay taxes in Europe. Espe­cially if you are German.

"While Europe is pre­oc­cu­pied with a pos­si­ble restruc­tur­ing of Greece's debt, huge risks lurk else­where – in the bal­ance sheet of the Euro­pean Cen­tral Bank. The guardian of the sin­gle cur­rency has taken on bil­lions of euros worth of risky secu­ri­ties as col­lat­eral for loans to shore up the banks of strug­gling nations.

"... Since the begin­ning of the finan­cial cri­sis, banks in coun­tries like Ire­land, Por­tu­gal, Spain and Greece have unloaded risks amount­ing to sev­eral hun­dred bil­lion euros with cen­tral banks. The cen­tral banks have dis­trib­uted large sums to their coun­tries' finan­cial insti­tu­tions to pre­vent them from col­laps­ing. They have accepted secu­ri­ties as col­lat­eral, many of which are – to put it mildly – not par­tic­u­larly valuable.

"Risks Trans­ferred to ECB

"These risks are now on the ECB's books because the cen­tral banks of the euro coun­tries are not autonomous but, rather, part of the ECB sys­tem. When banks in Ire­land go bank­rupt and their secu­ri­ties aren't worth enough, the euro coun­tries must col­lec­tively account for the loss. Germany's cen­tral bank, the Bun­des­bank, pro­vides 27 per­cent of the ECB's cap­i­tal, which means that it would have to pay for more than a quar­ter of all losses.

"For 2010 and the two ensu­ing years, the Bun­des­bank has already decided to estab­lish reserves for a total of €4.9 bil­lion ($7 bil­lion) to cover pos­si­ble risks. The fail­ure of a coun­try like Greece, which would almost inevitably lead to the bank­ruptcy of a few Greek banks, would increase the bill dra­mat­i­cally, because the ECB is believed to have pur­chased Greek gov­ern­ment bonds for €47 bil­lion. Besides, by the end of April, the ECB had spent about €90 bil­lion on refi­nanc­ing Greek banks." (Der Spiegel)

Two graphs from the arti­cle say a lot:

What Hap­pens if the Greeks Default?

Andrew Lil­ico, writ­ing in the Lon­don Tele­graph, gives us the answer to that ques­tion with a series of short bul­let points. I might not agree with all of them, but he is look­ing in the right direc­tion. (quot­ing from http://blogs.telegraph.co.uk/finance/an ... -defaults/)

"It is when, not if. Finan­cial mar­kets merely aren't sure whether it'll be tomor­row, a month's time, a year's time, or two years' time (it won't be longer than that). Given that the ECB has played the "final card" it employed to force a bailout upon the Irish – threat­en­ing to bank­rupt the country's bank­ing sec­tor – pre­sum­ably we will now see either another Greek bailout or default within days.

"What hap­pens when Greece defaults. Here are a few things:

- Every bank in Greece will instantly go insolvent.

- The Greek gov­ern­ment will nation­al­ize every bank in Greece.

- The Greek gov­ern­ment will for­bid with­drawals from Greek banks.

- To pre­vent Greek depos­i­tors from riot­ing on the streets, Argentina-2002-style (when the Argen­tin­ian pres­i­dent had to flee by heli­copter from the roof of the pres­i­den­tial palace to

evade a mob of such depos­i­tors), the Greek gov­ern­ment will declare a cur­few, per­haps even gen­eral mar­tial law.

- Greece will rede­nom­i­nate all its debts into "New Drach­mas" or what­ever it calls the new cur­rency (this is a clas­sic ploy of coun­tries defaulting)

- The New Drachma will devalue by some 30–70 per cent (prob­a­bly around 50 per cent, though per­haps more), effec­tively default­ing 0n 50 per cent or more of all Greek euro-denominated debts.

- The Irish will, within a few days, walk away from the debts of its bank­ing system.

- The Por­tuguese gov­ern­ment will wait to see whether there is chaos in Greece before decid­ing whether to default in turn.

- A num­ber of French and Ger­man banks will make suf­fi­cient losses that they no longer meet reg­u­la­tory cap­i­tal ade­quacy requirements.

- The Euro­pean Cen­tral Bank will become insol­vent, given its very high expo­sure to Greek gov­ern­ment debt, and to Greek bank­ing sec­tor and Irish bank­ing sec­tor debt.

- The French and Ger­man gov­ern­ments will meet to decide whether (a) to recap­i­talise the ECB, or (b) to allow the ECB to print money to restore its sol­vency. (Because the ECB has rel­a­tively lit­tle for­eign currency-denominated expo­sure, it could in prin­ci­ple print its way out, but this is for­bid­den by its found­ing char­ter. On the other hand, the EU Treaty explic­itly, and in terms, for­bids the form of bailouts used for Greece, Por­tu­gal and Ire­land, but a lit­tle thing like their being bla­tantly ille­gal hasn't pre­vented that from hap­pen­ing, so it's not intrin­si­cally obvi­ous that its being ille­gal for the ECB to print its way out will prove much of a hurdle.)

- They will recap­i­talise, and recap­i­talise their own banks, but declare an end to all bailouts.

- There will be car­nage in the mar­ket for Span­ish bank­ing sec­tor bonds, as bond­hold­ers antic­i­pate imposed debt-equity swaps.

- This assump­tion will prove jus­ti­fied, as the Spaniards choose to over-ride the struc­ture of cur­rent bond con­tracts in the Span­ish bank­ing sec­tor, recap­i­tal­is­ing a num­ber of banks via

debt-equity swaps.

- Bond­hold­ers will take the Span­ish Bank­ing Sec­tor to the Euro­pean Court of Human Rights (and prob­a­bly other courts, also), claim­ing vio­la­tions of prop­erty rights. These cases won't

be heard for years. By the time they are finally heard, no one will care.

- Atten­tion will turn to the British banks. Then we shall see..."

Or the EU can kick the can down the road yet another time, as many main­stream can­di­dates expect. The ECB will blink. Some way will be found to find money yet again, and politi­cians every­where will pray that some­thing hap­pens that saves the sys­tem – like the Greeks sud­denly start to pay taxes and Greek and Irish GDP jumps up to 5%. Nouriel Roubini has out­lined a very clear plan for restruc­tur­ing. It is not with­out pain, but there are ways, if they can join what Greg Wel­don calls a twelve-step plan for Euro­pean bankers to deal with reality.

Side­bar: for the record, there are report­edly mas­sive bank runs in Greece, espe­cially on large unin­sured deposits.

It is hard to under­stand how peo­ple can ignore what I think are clear warn­ing signs, but the fol­low­ing analy­sis shows us the process. My good friend and early men­tor Dr. Gary North wrote a poignant piece in his Real­ity Check let­ter today about ignor­ing the signs of pend­ing prob­lems. I insert it here as the launch­ing point for the close of the let­ter. (I learned about Aus­trian eco­nom­ics, and a great deal of what I know about writ­ing, eco­nomic his­tory, and more dur­ing my early years [in the '80s] as Gary's busi­ness associate.)
"Trig­ger Points and Eva­sive Action

"When would a wise (Greedy Scamming away with Spoils???)    Jew    have begun mak­ing plans to leave Ger­many? 1933? 1934? 1938? 1939?  

"In ret­ro­spect, most peo­ple would say 1933, the year Hitler was appointed (not elected) Chan­cel­lor by Pres­i­dent von Hin­den­burg. On 30 Jan­u­ary, Hitler became Chan­cel­lor. He asked Hin­den­burg to dis­solve the gov­ern­ment and sched­ule new elec­tions for March 5, which Hin­den­burg did.  

"Should a Jew have begun pack­ing his bags? Maybe not. Maybe after the next elec­tion, the Nazis would have been defeated.

"On 27 Feb­ru­ary, the Reich­stag build­ing burned down. One man did it, who admit­ted he had done it. Hitler imme­di­ately iden­ti­fied him as a Com­mu­nist, although even today, it is not clear that he did any­thing but act alone.

"Hitler used this as a pro­pa­ganda tool. On March 5, the Nazis got 44% of the pop­u­lar vote, up from 33%. With an allied party, they had 52% of the vote in the Reichstag.

"Was it time to pack the bags? Maybe not. The Nazis did not have a major­ity. They had only a coali­tion majority.

"On March 23, the gov­ern­ment passed the Enabling Act. It took a two-thirds vote to do this. Hitler now pos­sessed dic­ta­to­r­ial pow­ers. He had attained these by means of sup­port by rival polit­i­cal par­ties. http://en.wikipedia.org/wiki/Reichstag_fire

"Was it time to pack the bags? Maybe not. Those pow­ers might not be used.

"On April 1, a one-day boy­cott of Jew­ish busi­nesses was staged by the S.A., which were tech­ni­cally pri­vate storm troops. Was it time to pack those bags? Maybe not. This was not government-directed. It was only symbolic.

"What about 1935′s Nurem­berg Laws on Cit­i­zen­ship and Race? They made it ille­gal for Jews to be cit­i­zens. But that was only pol­i­tics. How many votes did Jews have, any­way? They were only 1% to 2% of the pop­u­la­tion. Pol­i­tics isn't everything.

"And so on, right down to Crys­tal Night in Novem­ber 1938, when riot­ers broke the plate glass win­dows of 7,500 Jewish-owned busi­nesses and burned or dam­aged 200 syn­a­gogues, mean­ing most syn­a­gogues in Germany.

"After that, over 100,000 Jews packed their bags and departed. Between 1933 and 1939, about half the Jews in Ger­many emi­grated: 250,000. But half did not.    (Maudlin here signals it. Jews are getting warned to get out of the US/EU with their SCAMMED GAINS before the Goyim Drop the Hammer on their TALMUDIC SCAMS!!! )  -- CSR

"There were a series of trig­ger points, 1933 to 1939. Most Jews sat tight until very late.    (Because they wanted to keep the Germans paying....indeed the Greed from the Banks of Babylon are stronger than their hidebound books they carry... ) --CSR

"Yet in Aus­tria, Lud­wig von Mises saw the hand­writ­ing on the wall in 1934. He looked at the map. He con­cluded that the Nazis would wind up run­ning Aus­tria. Hitler was an Aus­trian, and he would want to con­trol Aus­tria. He packed his bags and took his first salaried teach­ing posi­tion, a job in Geneva, Switzer­land. He warned Jew­ish friends to get out. Econ­o­mist Got­tfried Haber­ler did, in 1936. Econ­o­mist Fritz Machlup already had. He fled in 1933. Well, not quite. He was in the United States in 1933, and he decided not to return to Aus­tria. Both men found safe havens in the United States. So did Mises in 1940, when he left Switzer­land, barely escap­ing Ger­man troops in France as he and his wife road a bus toward Spain, and from there to Por­tu­gal and the United States.  

"One might have thought that a care­ful read­ing of 'Mein Kampf' (1926) would have been a suf­fi­cient trig­ger point in the Sum­mer of 1933. The gun was loaded. Then the ham­mer was cocked in March: the Enabling Act.

"Laws enacted by the Reich gov­ern­ment shall be issued by the Chan­cel­lor and announced in the Reich Gazette. They shall take effect on the day fol­low­ing the announce­ment, unless they pre­scribe a dif­fer­ent date. Arti­cles 68 to 77 of the Con­sti­tu­tion do not apply to laws enacted by the Reich government.

"Arti­cles 68 to 77 stip­u­lated the pro­ce­dures for enact­ing leg­is­la­tion in the Reich­stag. 'So what?' This seems to have been a mere tech­ni­cal­ity. The lan­guage was so pro­ce­dural. But there was sub­stance to it. As we read on Wiki, 'The Enabling Act allowed the cab­i­net to enact leg­is­la­tion, includ­ing laws devi­at­ing from or alter­ing the con­sti­tu­tion, with­out the con­sent of the Reichstag.'

"It was time to move out and move on ... and not just if you were Jewish.

"Some peo­ple see the signs. Oth­ers do not. Some decide to get out while the get­ting is good. Oth­ers do not. ( Yeah, and Jews see dollar signs like Ichan or Jew "Higgins Boat-God's Work" Blanfein -- they can't bail when the risks are high...they are just too Greedy...  )

"Inci­dent by inci­dent, trig­ger point by trig­ger point, peo­ple see signs. Most peo­ple ignore them. 'It can't hap­pen here.' Most times it doesn't. Some­times it does."    ( Climbing a wall of Jew "Kick-Out" Worry..here John are we??? )

A Ran­dom Walk Through the Minefield

Accord­ing to Dealogic, Euro­pean banks have to refi­nance about €1.3tn of matur­ing debt by the end of 2012. This is the sort of pres­sure point capa­ble of trig­ger­ing a liq­uid­ity panic unless Euroland pol­i­cy­mak­ers become much more proac­tive in the interim. But, as noted, it may take more mar­ket stress now to force pre­cisely this sort of pol­icy response. That implies a much greater cor­rec­tion for the euro against the US dol­lar than what has been seen thus far, and a fur­ther cor­re­lated sell-off in risk assets, includ­ing com­modi­ties (Chris Wood, writ­ing in Greed and Fear).

There are just so many risks in Europe that it is hard to make a list long enough. I think the risk to the world mar­kets is higher than the sub­prime risk, at least from what I can see today. I know that the lead­ers of Europe think they can "con­tain" the risk. So did Bernanke in the sum­mer of 2007. You can­not con­tain this until you actu­ally admit the problem.

Our credit insti­tu­tions are so inter­twined that a repeat of the 2008 credit cri­sis is entirely pos­si­ble. Who plays the role of Lehman? Let me count the can­di­dates. Greece. Ire­land. Por­tu­gal. Spain. The ECB. Any num­ber of large Euro­pean banks with mas­sive Irish expo­sure. Greece alone could be dealt with. That is why ECB lead­ers are right to talk pas­sion­ately about con­ta­gion risks. But ignor­ing the polit­i­cal real­i­ties is not the way to deal with it.

The sim­ple fact is that at some point, whether this year or the next or the next, depend­ing on how long they can kick the can down the road and how long Ger­man vot­ers are pre­pared to bite 27% of the cost (NOT a given), Greece is going to default. Maybe the plan of the ECB is to keep financ­ing Greek debt until it is off enough bank bal­ance sheets and onto the back of the euro through the ECB bal­ance sheet, before they pull the plug.

What­ever the plan is, right now Europe looks like a very dys­func­tional fam­ily (BECAUSE OF JEW SCAMS) . The poten­tial for a messy divorce is quite real. Can you see Greece or Ire­land giv­ing up sov­er­eignty to Brus­sels? Really? Then you should buy Greek bonds at 24%. They are a steal. At a min­i­mum, Europe is in for years of expen­sive "ther­apy." And we have not even got­ten to their ver­sion of their health-care and pen­sion crisis.

The euro appears to me to be a mas­sive short. (Note: I and my fam­ily leave the euro­zone [Tus­cany] June 16–17. Just say­ing.) You should limit your expo­sure to Euro­zone sov­er­eign debt and bank debt. If you are invested in US finan­cials that write credit default swaps to Euro­pean banks or hedge funds, you are not invest­ing, you are gambling.
Gam­ing the GDP Numbers

I know I should quit, but this one quick note, as this just really annoys me. I get the method­ol­ogy and ratio­nal­iza­tion of how GDP is cal­cu­lated, but it does have the appear­ance of being "gamed." This from my friends at Con­sumer Met­rics. Link to the full report after.

"The impor­tance of the price deflater used by the BEA can­not be over­stated. In cal­cu­lat­ing the "real" GDP the BEA con­tin­ued to use an over­all 1.9% annu­al­ized infla­tion rate, which is sub­stan­tially lower than the infla­tion rates being reported by any of the BEA's sis­ter agen­cies. The math­e­mat­i­cal impli­ca­tions of the deflater are sim­ple: a lower deflater cre­ates a higher 'real' GDP read­ing. If April's CPI-U (as reported by the Bureau of Labor Sta­tis­tics) of 3.2% year-over-year infla­tion is used as the deflater, the reported 1.84% annu­al­ized growth rate shrinks to a 0.56% annu­al­ized rate, and the 'real final sales of domes­tic prod­ucts' is actu­ally con­tract­ing at a 0.63% rate. If instead of the year-over-year CPI-U we were to use the annu­al­ized CPI-U from just the first quar­ter (5.7%), the 'real' GDP would be shrink­ing at a 1.82% annu­al­ized rate, and the 'real final sales of domes­tic prod­ucts' would be con­tract­ing at a recession-like 3.01%." ( http://www.consumerindexes.com/)
Tus­cany (And I Get the Irony)

I am in Boston (Cam­bridge) at a Har­vard reunion week with friends (I went to Rice – Har­vard on the Bayou, as it was called back then – so am not a Har­vard alum) and fly to Rome and then take a train to Tus­cany on Sun­day and Mon­day. Five of my kids will already be there. After hav­ing basi­cally trash-talked Europe for nine pages, I get the irony of going there; but the lit­tle vil­lage of Tre­quanda is the first place I have ever gone back to for a vaca­tion. It is heaven, or at least it is for me. I love Italy. For that mat­ter, I love France, Spain, Greece, and the other dozen-plus Euro­pean coun­tries I have been to. Rarely have I had a bad time.

There is a dif­fer­ence between the peo­ple and land of a coun­try and its gov­ern­ment. I am truly sad for what I think will be a dif­fi­cult time for the peo­ple of the euro­zone, not that we in the US (as I have writ­ten many times) don't have our own issues on the near hori­zon. But there is no rea­son not to enjoy our­selves on the descent into eco­nomic hell.

Finally, although I rarely do this, let me highly rec­om­mend you take about 15 min­utes and watch the "rap" videos of a spar­ring match between Keynes and Hayek. The first, which hit the streets a year ago, was sen­sa­tional and fun; but the sec­ond one is the best cap­ture of the eco­nomic irony (that word again) of the accep­tance of Keynes in the press, when Hayek is being proven right, right in front of our eyes. For those with some under­stand­ing of eco­nom­ics it is great fun. It is also a seri­ous teach­ing tool.

I met Hayek in his late '80s in the moun­tains in Aus­tria, for a mag­i­cal 3-hour interview/private lec­ture. If you have not watched the first rap video, then do so as a set-up to the sec­ond, which has amaz­ing pro­duc­tion val­ues. Look for the Bernanke, double-nodding in time to Keynes rap­ping about con­sumer spend­ing. I guar­an­tee bet­ter than TV. You can see them both at http://pipesandtheories.blogspot.com/20 ... rt-ii.html

It really is time to hit the send but­ton. I had intended to make this a short let­ter, but these things hap­pen. And for the record, this is the first time in eleven years I have got­ten up at 6 AM to write this let­ter. I am usu­ally a very late-night guy. Go figure.

Have a great week. And thanks for being one of my clos­est friends. I do appre­ci­ate each and every one of you.

Your see­ing fab­u­lous Tus­can meals for two weeks in his future analyst,

John Mauldin
http://www.johnmauldin.com/overmyshoulder/recent/

[CrackSmokeRepublican]

More Jew Econo-Blab: Is it really "markets failed" or is it "Jews have Scammed" --- CSR
-----------------------------------------
May 30, 2011
Europe at the Abyss
By    Robert Samuelson  

WASHINGTON -- It has come to this. A year after rescuing Greece from default, Europe is staring into the abyss. The bailout has proved insufficient. Greece needs more money, and it can't borrow from private markets where it faces interest rates as high as 25 percent. But Europe's governments are reluctant to advance more funds unless other lenders -- banks, bondholders -- absorb some losses by writing down their debts. This, however, would constitute a default, risking a broader banking crisis that might torpedo Europe's fragile recovery in France, Germany and elsewhere. There is no easy escape.

What's called a "debt crisis" is increasingly a political and social crisis. Looming over the financial complexities is the broader question of the ability -- or willingness -- of weak debtor nations to endure growing hardship to service their massive government debts. Already, unemployment is 14.1 percent in Greece, 14.7 percent in Ireland, 11.1 percent in Portugal and 20.7 percent in Spain. What are the limits of austerity? Steep spending cuts and tax increases do curb budget deficits; but they also create deep recessions, lowering tax revenues and offsetting some of the deficit improvement.

Just how long this grinding process can continue is unclear. In Spain, the incumbent socialist party lost big in recent elections. Popular unrest persists in Greece amid signs -- reports The Washington Post's Anthony Faiola -- of a "resurgence of an anarchist movement" there and elsewhere.

Some causes of Europe's plight are well-known: the harsh recession following the 2008-2009 financial crisis; aging populations coupled with costly welfare states. But there's also another less recognized culprit: the euro, the single currency now used by 17 countries.

Launched in 1999, it aimed to foster economic and political unity. Economic growth would improve. Costly currency conversions would cease; money would flow smoothly across borders to the best profit opportunities. Using euros -- and not marks or lira -- Germans, Italians and others would increasingly consider themselves "Europeans." For a while, it seemed to succeed. In the euro's first decade, jobs in countries using the common currency increased by 16 million.

It was a mirage. The euro helped create the crisis and has made its resolution harder, as a new report from the International Monetary Fund shows. For starters, the euro fostered a credit bubble that led to booms in housing, borrowing and consumer spending. When each country had its own currency, the country's central bank (its Federal Reserve) regulated local interest rates and credit conditions. With the euro, the European Central Bank (ECB) assumed that job. But one policy didn't fit all: Interest rates suited to Germany and France were too low for "periphery" countries (Greece, Ireland, Portugal and Spain).

Financial markets" -- private investors -- compounded the problem by assuming that the euro's creation reduced risk. Weak countries would be protected by the strong. Money poured into the periphery countries. There was a huge compression of interest rates. In 1997, rates on 10-year Greek government bonds averaged 9.8 percent compared to 5.7 percent for similar German bonds. By 2003, Greek bonds fetched 4.3 percent, just above the 4.1 percent of German bonds.

"The markets failed. All this would not have occurred if banks in Germany and France had not lent so much," says economist Desmond Lachman of the American Enterprise Institute. "It was like the U.S. housing market." Both American and European banks went overboard in relaxing credit standards.

Now that the credit bubble has burst, the euro impedes recovery. One way countries revive from financial crises is by depreciating their currencies. This makes exports and local tourism cheaper, creating some job gains that cushion the ill effects of austerity elsewhere. But latched to the euro, Greece and other vulnerable debtors forfeit this safety valve.

Greece's debt is now approaching an unsustainable 160 percent of its annual economy (gross domestic product). If it defaulted, investors might dump bonds of other weak debtors for fear that they too would default. That could send interest rates soaring and saddle European banks with huge losses. At the end of 2010, Europe's banks had about $1.3 trillion of loans and investments -- both governmental and private -- in Greece, Ireland, Spain and Portugal, reports the Institute of International Finance, an industry research group. A banking crisis would imperil economic recovery.

So Europe is playing for time. It's struggling to delay any Greek default long enough for other vulnerable countries to demonstrate they can handle their debts. The very process makes the euro -- contrary to original intent -- a source of contention, as nations shift blame and costs to others. Given Europe's huge debts, even the holding action may fail. It may merely postpone a broader crisis. "They may dodge this bullet," says Lachman, "but not the next."

Copyright 2011, Washington Post Writers Group

http://www.realclearpolitics.com/articl ... 025-2.html