Should Bernanke Park the Helicopter?

by Frank Shostak

According to Ben Bernanke, pulling back on aggressive policy measures too soon would pose a real risk of damaging a still-fragile recovery.
The Fed chief is of the view that, for the purposes of financial stability, a continuation of the central bank’s aggressive stimulus, conducted through purchases of Treasury and mortgage securities, remains the optimal approach.
In response to the financial crisis and the deep recession of 2007–09, the Fed not only lowered official rates effectively to zero, but also bought more than $2.5 trillion in assets in an effort to keep long-term rates low.

The Deeper Meanings of Cyprus

by oftwominds.com

The deposit-confiscation "bailout" of Cyprus reveals much about the Eurozone's fundamental neocolonial, neofeudal structure.

At long last, Europe's flimsy facades of State sovereignty, democracy and free-market capitalism have collapsed, and we see the real machinery laid bare: the Eurozone's political-financial Aristocracy will stripmine every nation's citizenry to preserve their power and protect the banks and bondholders from absorbing losses.

The deposit-confiscation "bailout" of Cyprus confirms the Eurozone's fundamental neocolonial, neofeudal structure and the region's political surrender to financialization.

The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)

Let's list what Cyprus reveals about the true state of financial-political power in Europe:

1. The Core-Periphery terminology masks the real structure: the E.U. operates on a neocolonial model. In the old Colonialism 1.0 model, the colonizing power conquered or co-opted the Power Elites of the periphery regions, and proceeded to exploit the new colonies' resources and labor to enrich the Imperial core.

For Everyone Shocked By What Just Happened... And Why This Is Just The Beginning

Today, lots of people woke up in shock and horror to what happened in Cyprus: a forced capital reallocation mandated by political elites under the guise of an "equity investment" in insolvent banks, which is really code for a "coercive, mandatory wealth tax." If less concerned about political correctness, one could say that what just happened was daylight robbery from savers to banks and the status quo. These same people may be even more shocked to learn that today's Cypriot "resolution" is merely the first of many such coercive interventions into personal wealth, first in Europe, and then everywhere else.

Germany And IMF's Initial Deposit Haircut Demand: 40% Of Total

by Tyler Durden

 












As the President of Cyprus proclaims  to his people that "we' should all take responsibility as his historic decision will "lead to the permanent rescue of the economy," it appears that the settled-upon 9.9% haircut is a 'good deal' compared to the stunning 40% of total deposits that Germany's FinMin Schaeuble and the IMF demanded. This action, his statement notes, enables the rescue of 8,000 banking sector jobs and ensuring the liquidity of the banks, "allowing the economy to proceed decisively to a new beginning." Ekathimerini reports," this is the first time in the eurozone that a levy has been imposed not on the interest of bank accounts but on the capital itself," and was the only way to bridge most of the the gap between the EUR17bn Nicosia needed and the EUR10bn the ESM was offering, though tax on interest in Cypriot banks will also rise to 20-25%. It is the 40% haircut requirement that concerns us the most as clearly going forward that means other nations, starting Monday (or Tuesday given national holidays) see deposit outflows surge, as the willingness to take such steps is now painfully clear.

German Commerzbank Suggests Wealth Tax In Italy Next

by Tyler Durden

While some argue that Cyprus was "one of the biggest money-washing machines for Russian criminals," and others that Cyprus ex-Pat community and energy resources brough deposits (not to say their high deposit interest rates), it seems the European Union (IMF et al.) have decided that the route to crisis stabilization, just as we outlined here over a year ago and updated here, is through a wealth tax.
However, as Handelsblatt reports, the gross distortions of wealth distribution among both core and peripheral nations (evident in the chasm between 'mean' and 'median' net assets - or wealth) makes some nations more 'capable' of 'giving' and as Commerzbank's chief economist notes, median wealth in Italy is EUR164,000 (as opposed to Austria's median of around EUR76,000 and mean of around EUR265,000) meaning that in theory Italy has no debt crisis (with net assets at 173% of GDP) - significantly more than the Germans at 124% - "so it would make sense, in Italy a one-time property tax levy," he suggested.
"A tax rate of 15% on financial assets would probably be enough to push the Italian government debt to below the critical level of 100% of gross domestic product." So there you have it, the 'new deal' in Europe, as we warned, is 'wealth taxes' and testing the "capacity of Cypriots" appears to be the strawman on what the public will take before social unrest becomes intolerable.

The Petro Business Cycle

By James J Puplava CFP

 

 

 

 

 

Oil is the lifeblood of modern society, powering over 90% of our transportation fleet on land, sea, and air. Oil is also responsible for 95% of the production of all goods we buy and ultimately drives the natural rhythms of recession and recovery. We define this as the "Petro Business Cycle".

The post-crash world we have inhabited since the credit crisis of 2008 has been defined as "The New Normal"—a phrase used to describe an economic and market environment much different than the three decades that preceded it. In contrast to the past, the "New Normal" will mean a lower living standard for most Americans. It will be a world of lower economic growth, higher unemployment, stagnant corporate profits, and the heavy hand of government intervention in all aspects in the economy. For investors it will be an environment marked by volatility, zero interest rates, and disappointing equity returns.
The age of leverage is coming to an end as consumers, businesses, and governments are forced to rein in their balance sheets. For consumers it will mean less discretionary spending as higher taxes and inflation erode the purchasing power of wages. Businesses will have fewer profit opportunities and find it more difficult to replicate the growth rates of the booming '80s and '90s. Governments will struggle with the illusion that their fiscal and monetary stimulus will produce long lasting effects on the economy. Eventually profligate government spending will give way to an age of austerity now beginning to spread across Europe. It will either be done voluntarily or involuntarily by the heavy hand of the market.

Italian Election: Awakening Consciousness?

By John Perkins

Who would have predicted that a comedian-turned-political activist, Beppe Grillo, and the anti-austerity Five Star Movement would win the Italian election? What caused this massive rejection of Prime Minister Mario Monti's austerity policies?

U.S President Obama, German chancellor Merkel, and other European leaders who backed Mario Monti must be puzzling over these questions. The recent Italian elections support a trend I have been describing for several years: a global awakening in consciousness. Voters in Italy resoundingly rejected the two parties that had dominated, both of which advocated austerity and other measures that favor the 1% at the expense of the 99%. The electorate propelled to power the practically unheard of the Five Star Party.

Fed Injects Record $100 Billion Cash Into Foreign Banks Operating In The US In Past Week

Source: H.8

Those who have been following our exclusive series of the Fed's direct bailout of European banks (here, here, here and here), and, indirectly of Europe, will not be surprised at all to learn that in the week ended February 27, or the week in which Europe went into a however brief tailspin following the shocking defeat of Bersani in the Italian elections, and an even more shocking victory by Berlusconi and Grillo, leading to a political vacuum and a hung parliament, the Fed injected a record $99 billion of excess reserves into foreign banks. As the most recent H.8 statement makes very clear, soared from $836 billion to a near-record $936 billion, or a $99.3 billion reserve "reallocation" in the form of cash - very, very fungible cash - into foreign (read European) banks in one week.

Gold manipulation, Part 2: How they do it (and a suggestion to hedge it)

by Martin sibileau

This is the second of three articles I am posting on the suppression of gold. In the first article I showed that, under mainstream economic theory, the suppression of the gold market is not a conspiracy theory, but a logical necessity, a logical outcome. This second article will show how that suppression takes place. Those familiar with the gold market will likely find nothing new. The third article will examine the implications of this suppression and support the claim of the gold bugs, namely that physical gold will trade at a premium over fiat gold or gold paper is also not a conspiracy theory, but the logical outcome of the current paradigm.

How they do it: The concept

The popular notion, which central bankers would love to destroy, is that gold is a good hedge against inflation. In its simplest form, gold cannot be printed and, as its supply remains anchored, its price should spike if the supply of fiat money increases. The implicit math behind can be represented as follows:

Given a constant demand for money…

Did These Hidden Forces 'Elect' the President?

by Bill Bonner

 
Today, on the Ides of February, we hold our hat in our hand... we bow our head... and let our mouth fall open in amazement. Our Lenten program of fasting, prayer and meditation is producing results. We are lightheaded from near-starvation and alcohol deprivation. But our thoughts are clear. Or else, we are hallucinating.
In the last two days, we've taken a look at what promises to be the biggest bust-up of all time.
It began in stealth when a small group of big bankers boarded an unlisted train in the middle of the night. They all knew each other. All were from powerful New York banking families. But they didn't even use their own names when talking to one another... so afraid were they that word of their meeting would leak out.
Then the strange little group traveled in complete secrecy to a small island compound off the coast of Georgia. There they could talk freely. But the conversation wasn't about hunting or sports... or politics... or religion.

The Stateless Equilibrium

by Predrag Rajsic

The stateless market society—a peaceful social arrangement based on voluntary relations among individuals in which the state is not present—is not a popular idea. Many people believe that this society would lack the capacity to define and enforce property rights, and that this would result in chaos, tyranny of the rich or in a reversal to a state. This belief has led to a widespread dismissal of the stateless society paradigm.
Murray Rothbard is by many considered the champion of the stateless society doctrine. However, even Rothbard conceded that “there can be no absolute guarantee that a purely market society would not fall prey to organized criminality.” 
While it is true that absolute guarantees for any social outcome are generally inappropriate, I argue that there are good reasons to believe that outcomes like chaos, tyranny of the rich, or even “organized criminality” in the absence of a state are unlikely.

China Preparing To Impose Bretton Woods II Gold Standard

by King world News

The flow of power and gold is going from West to East.  China may have accumulated a staggering 1,500 tons of gold last year alone.  China’s growth is now picking up steam as well.  What is really stunning is how much the yuan has increased in terms of international transactions.”

“The usage of the yuan in international transactions has been increasing at an unbelievable 170% per year.  That’s how fast the yuan has been increasing in terms of international transactions.  So goes the gold, so goes the power, and you can see it in the prominence the yuan is gaining.

The Chinese definitely have a plan here and that is to get control of gold....

“We are headed for another Bretton Woods.  It is unsustainable for currencies to continue to lose their purchasing power while median incomes, especially in the US, continue to go down in the West.

Reversal of Fortune: Why the Power Elite Will Lose Power

by Gary North

Remnant Review

The best description of the reversal of fortune is Mary's Magnificat, recorded in the Gospel of Luke, chapter 1, verses 46-55. "He hath put down the mighty from their seats, and exalted them of low degree" (v. 52).
This was a fundamental theme in the Old Testament. We are told that those who hold their position by means of political power and corruption always lose their position. They are always overthrown. They look unbeatable. They are always defeated. The prophets of Israel came before kings and commoners with this message. Isaiah 1 is a good example. Isaiah even identified a major technique of the power elite: inflation. "Thy silver has become dross, thy wine mixed with water" (Isa 1:22).
The more things change, the more they stay the same.

THE POWER ELITE

What do I mean by the power elite? The phrase was coined by Leftist sociologist C. Wright Mills in 1956. His book remains a classic. Its main chapter is here. Liberal columnist Richard Rovere in 1956 called it the American Establishment. Conservatives refer to it as the Insiders or the Conspiracy. David Rothkopf, writing from inside, calls them the superclass. Sometimes they are called the PTB: the Powers that Be. I think conservative journalist and historian Otto Scott said it best: the behind-the-scenes fellows who are too clever by half.

Bubble trouble: Is there an end to endless quantitative easing?

By Detlev Schlichter

The publication, earlier this week, of the Federal Reserve’s Federal Open Market Committee minutes of January 29-30 seemed to have a similar effect on equity markets as a call from room service to a Las Vegas hotel suite, informing the partying high-rollers that the hotel might be running out of Cristal Champagne.  Around the world, stocks sold off, and so did gold.

Here is the sentence that caused such consternation:

“However, many participants also expressed some concerns about potential costs and risks arising from further asset purchases (the Fed’s open-ended, $85 billion-a-month debt monetization program called ‘quantitative easing’, DS). Several participants discussed the possible complications that additional purchases could cause for the eventual withdrawal of policy accommodation, a few mentioned the prospect of inflationary risks, and some noted that further asset purchases could foster market behaviour that could undermine financial stability.”

The End of Honest Money

by Bill Bonner

You shall not crucify mankind upon a cross of gold.

~ William Jennings Bryan

The season of fasting is upon us. No more high living. It's time to cinch up our belts... to put on a gaunt face and a smug look. Alone among friends and associates, we will keep Lent.
So neglected is Lent that even Google has forgotten about it. When we searched for it, it proposed "lentil soup."
Lent is meant to rehearse the 40 days and nights that Jesus spent fasting in the desert before going public. We remember the lean days with prayer, meditation and self-denial. No alcohol will cross our lips from Ash Wednesday till Easter Sunday. (Except on Sundays. And saints' days. And national holidays. And days that begin the letter "T" or have a date that is a prime number.)
Yes, dear reader, we will be true to the church calendar, with a few emendations of our own.

The Errors of Keynes's Critics

 by Steven Kates

I was intrigued by the review that Philipp Bagus wrote of The Errors of Keynes (Los Errores de la Vieja Economía), a book written in Spanish by Juan Ramón Rallo, part of which deals with Say’s Law.
An important understanding is taking hold, that the road to unwind Keynesian economics travels through Say’s Law. Keynes himself could not have been clearer about the significance of Say’s Law to the entire structure of his argument. Keynes emphasized, over and over again, in The General Theory (TGT) that he was reversing the conclusions of those who believed Say’s Law to be true. Thus, there are two things that need to be done if you are going to refute Keynes. First, you have to know what Say’s Law is. Then you have to show it is valid.

The Core of American Liberty

by Bill Bonner

I've been at the beck and call of rich men all my life. But I'll be damned if I'll be at the beck and call of every son-of-a-bitch with a 3¢ stamp.
~ William Faulkner on losing his job at the Oxford, Miss., post office
One of the rarely cited advantages of having money is that you're less beholden to others who have it too. The more you have, at least in theory, the more you can ignore the other fellow with it, and go about your business. Nor need you drink the same cocktail or rush to the same mall so you can outfit yourself in the same duds.
In short, with a little capital of your own you can do what you want.

Jim Rogers On Why He Moved To Asia

by hudsonunionsociety.com

The Hudson Union Society www.hudsonunionsociety.com is where today's leaders come to discuss tomorrow's ideas. If you live not to far from New York, please join us in person. 

n 1973, Jim Rogers co-founded the The Quantum Fund. During the following 10 years, the portfolio gained 4200% while the S&P advanced about 47%. The Quantum Fund was one of the first truly international funds. From 1990 to 1992, Rogers traveled around the world world on motorcycle, over 100,000 miles across six continents, which was picked up in the Guinness Book of World Records. Between January 1, 1999 and January 5, 2002, Rogers did another Guinness World Record journey through 116 countries, covering 245,000 kilometers with his wife, Paige Parker, in a custom-made Mercedes. The trip began in Iceland, which was about to celebrate the 1000th anniversary of Leif Eriksson's first trip to America. In December 2007, Rogers sold his mansion in New York City for about 16 million USD and moved to Singapore.

The Myth of Fed Independence

by Murray N. Rothbard
 

By far the most secret and least accountable operation of the federal government is not, as one might expect, the CIA, DIA, or some other super-secret intelligence agency. The CIA and other intelligence operations are under control of the Congress. They are accountable: a Congressional committee supervises these operations, controls their budgets, and is informed of their covert activities. It is true that the committee hearings and activities are closed to the public; but at least the people’s representatives in Congress insure some accountability for these secret agencies.

The Serf Society

By Bill Bonner

Stocks, bonds, gold – all bounced around last week.

And as we mentioned on Friday, Americans continue to turn into "neo-serfs."

"Wall Street is running a new profit game," writes Shabnam Bashiri at Salon.com, "by buying foreclosed houses and renting them back to their former owners."

Yes... nice business. Even better than it looks. It's why the rich get richer... and the 1% are way ahead of the other 99%. Writes Bashiri:

Every day, it seems a new report comes out praising the ongoing housing recovery. In Georgia, home prices are up 5% over last year, a year in which we also had one of the highest foreclosure rates in the country. Seems a little odd, doesn't it? Don't foreclosures usually drive down the market?