15 Reasons Why The U.S. Economic Crisis Is Really An Economic Consolidation By The Elite Banking Powers
March 13, 2012
The American Dream
By The American Dream
Is the United States experiencing an “economic crisis” or an “economic consolidation”? Did the financial problems of the last several years “happen on their own”, or are they part of a broader plan to consolidate financial power in the United States? Before you dismiss that possibility, just remember what happened back during the Great Depression. During that era, the big financial powers cut off the flow of credit, hoarded cash and reduced the money supply. Suddenly nobody had any money and the economy tanked. The big financial powers were then able to swoop back in and buy up valuable assets and real estate for pennies on the dollar. So are there signs that such a financial consolidation is happening again?
Well, yes, there are.
The U.S. government is making sure that the big banks are getting all the cash they need to make sure that they don’t fail during these rocky economic times, but the U.S. government is letting small banks fail in droves. In fact, in many instances the U.S. government is actually directing these small banks to sell themselves to the big sharks.
So is this part of a planned consolidation of the U.S. banking industry? Just consider the following 15 points….
#1) The FDIC is planning to open a massive satellite office near Chicago that will house up to 500 temporary staffers and contractors to manage receiverships and liquidate assets from what they are expecting will be a gigantic wave of failed Midwest banks.
#2) But if the economic crisis is over, then why would the FDIC need such a huge additional office just to handle bank failures? Well, because the economic crisis is not over. The FDIC recently announced that the number of banks on its “problem list” climbed to 702 at the end of 2009. That is a sobering figure considering that only 552 banks were on the problem list at the end of September and only 252 banks that were on the problem list at the end of 2008.
#3) Waves of small and mid-size banks are going to continue to fail because the U.S. housing market continues to come apart at the seams. The U.S. government just announced that in January sales of new homes plunged to the lowest level on record. The reality is that the U.S. housing market simply is not recovering.
#4) In fact, a lot more houses may be on the U.S. housing market very shortly. The number of mortgages in the United States more than 90 days overdue has climbed to 5.1 percent. As the housing market continues to get increasingly worse, it will put even more pressure on small to mid-size banks.
#5) More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009. Large numbers of American homeowners are deciding to walk away from these homes rather than to keep making payments on loans that are for far more than the homes themselves are worth.
#6) If all that wasn’t bad enough, now a huge “second wave” of adjustable rate mortgages is scheduled to reset beginning in 2010. We all saw what kind of damage the “first wave” of adjustable rate mortgages did. How many banks are going to be able to survive the devastation of the second wave?
February 22nd, 2012
By: James Hall
The prospects for conducting commerce are never an easy task. The hurdles to start a business much less stay competitive demands the greatest skill and fortitude. Innovation and inspiration often is the best course for those bold enough to become an employer. The idea that a level playing field exists for all comers is preposterous. The entire macrocosm for business rests upon separating your enterprise from that of your rivalries. Such is a basic lesson for those brave or foolish enough to enter the arena.
Courtney Rubin cites the following in Inc. Magazine,
“Businesses with 20 employees or fewer pay 36 percent more than their larger counterparts (defined as those with 500 or more employees), says the report – called “The Impact of Regulatory Costs on Small Firms” — from the SBA’s Office of Advocacy. This is because a lot of costs are fixed — the same whether you have two employees or 2,000. Total annual cost of following the rules for a small business: $10,585 per employee, or about $2,830 more than big business. Businesses with 20 to 499 employees paid about $7,454 per employee, or about $300 less than the largest companies.
The report estimates that 89 percent of all firms in the U.S. employ fewer than 20 workers. By comparison, large firms account for only 0.3 percent of all U.S. firms.
Says the report: “If federal regulations place a differentially large cost on small business, this potentially causes inefficiencies in the structure of American enterprises, and the relocation of production facilities to less regulated countries, and adversely affects the international competitiveness of domestically produced American products and services.”
The screams for jobs, jobs and jobs would give the hint that federal, state and local business policy would favor the productive engine of employment. However, in the real world of political influence and favoritism only the well connected get the advantages.
Government regulations are meant to stifle competition. The legislative process graces those who are well connected, financially heeled and schooled in the art of writing the regulations. Few small businesses have a legal department or experienced lobbyists.
In Big Business and Big Government, Timothy P. Carney writes,“As the federal government has progressively become larger over the decades, every significant introduction of government regulation, taxation, and spending has been to the benefit of some big business.”
Mr. Carney presents compelling evidence on the history of this axiom, in his article. The net result from this covert partnership of interest and rewards is the never ending campaign contribution cycle that finances every election. The small businessman seldom has the resources or crony relationships to wage off the grand strategies of the giant corporate model.
Their advantage stems not from mastering sound and creative business practices. On the contrary, the major corporations use their brute force to buy or stamp out any contender that dares compete for market share.
Access to capital or the lack thereof, dooms most small businesses. The burden of regulations only compounds the severity of the survival rate and burns up reserved funds which often cannot be replenished. How can small business compete? – offers this insight.
“Small business can’t control mass-market designs or brands, but we are well-placed to do what big business can’t: Get inside the hearts and minds of our customers.”
As true as that advice resonates, the regulation landmines prevent small businesses from operating on a scale that can challenge all the advantages of the state sponsored conglomerates. The hard truth is that free enterprise is dead and in its place is an administered economy designed to suppress individually owned and managed businesses.
The prospects of reestablishing a political atmosphere that favors small business as the primary mechanism of job creation is remote as long as the transnational global and corporatist culture exists. Bigger is not better in most cases. Bigger usually means there are fewer companies in the same industry, accompanied with shrinkage in good paying jobs.
Theodore F. di Stefano suggests four steps that small businesses need to focus upon,
1. Creating a Niche
A niche is a special quality or group of qualities that sets the small business apart from its larger competitors. It has also been described as a small, specialized business market.
2. Employee Training
If a small business is going to act as though the customer is truly special, its employees must be trained accordingly. Also, they must work for managers whom they respect and who respect them. They must not be put on the “floor” to meet customers until they are thoroughly familiar with their product, be it food, auto services or any other product.
3. Management Philosophy
The owners of a small business must know the goals (mission) of their business and how they intend to achieve these goals. They should be clear about what segment of the market is their target and how they intend to appeal to that segment.
4. Good In-House Financial Management
You must be particularly aware of your current and projected cash position. And, you should certainly create a realistic annual budget for your company that serves as a financial road map for the future.
Now these common sense suggestions may assist in certain instances, but in a service economy, living wage jobs are rare at best. The regulations that drive business offshore also destroy a viable income scale. Reinstituting an American industrial and manufacturing base is a necessary step to climb out of this deep hole.
The regulatory climate must reflect policies that will benefit American workers. Open borders, that encourage illegal immigration, are a conscious regulatory policy that displaces domestic employees.
The regulations that slant and foster corporatist preference is the new feudalism. Is it not time to put Americans back to work? Without a political will to champion free enterprise and replace the corporate-state, only more suffering will thrive. It is up to the public to make this challenge the centerpiece for the 2012 elections.
February 3, 2012
By Dr. Ron Paul
The Federal Reserve’s interest rate price-setting board, the FOMC, met last week. They will continue to set the federal funds rate at well below 1%, and plan to keep it low until the end of 2014. That’s a year and half longer than they planned when they met just last month. Chairman Bernanke says they are keeping interest rates so low for so long because the economic outlook warrants it.
The fallacies in their reasoning would be amusing if they weren’t so dangerous. The Fed wants to keep the price of money at essentially zero – in other words “free” – to boost the economy. But the boost they are attempting won’t get here for another three years. That’s not a recovery. And we’ve already tried this tactic. That’s how we got into this mess in the first place: with interest rates artificially low for a very long time.
Free money doesn’t stimulate growth, as Japan’s two lost decades clearly show. Artificially low interest rates only serve to punish saving, distort market signals, and cause further malinvestment. They also do nothing to address the only real solution to our economic woes: liquidation of the bad debt that hangs around the neck of the world’s economy, preventing recovery. Artificially low interest rates merely ensure that we remain a debt-financed consumer economy guaranteed to end up with a weaker economy and higher prices.
What baffles me even more is that two decades after the collapse of Soviet planning and decades more since the U.S. and economists purportedly rejected the idea of price setting, we find nothing wrong with the Fed setting the price of money. We all agree it is a bad idea to have a board saying the price of wheat should be $250 a ton today, or carpenters wages should be $25 an hour until the end of 2014. But we are perfectly comfortable with having a board set the price of one half of every transaction in our economy. And our markets are supposedly free.
December 20, 2011
By Misra, Lagi and Bar-Yam
The Trader has covered many of the market microstructure questions over the past months, that should concern many more. Majority of investors, managers, traders and others have not adapted to the “new” market, nor have they realized what is actually going on. With HFT dominating every market move, people still feel an increasing frustration, but have not adapted accordingly. This is due to lack of insight. Our biggest “fear”, is that an increasing amount of investors, end up avoiding the markets, purely due to the fact that the markets have become a “monster”, that is overseen by nobody. The competence gap between the regulators (worldwide, not only the SEC) and the market has become huge.
We have still not read any intelligent analysis from regulators what actually happened during the flash crash last year. We have not read too many reports of what happened after the uptick rule was abolished etc. We are pro technical “algo” development, but are not pro broken markets. One of our biggest fears, is the fact this market is showing signs of fatigue, and where some external events might trigger a total failure of the market microstructure. Market micro structure must be overseen by the regulators, but in order to do so successfully, they need to gain competence and understanding of what is going on in “live” trading. HFT is one aspect, but there are many more. Below interesting observations on the bear raid in Citi at the beginning of the 207 crisis (still ongoing). Could this bear raid have caused the crisis to become much deeper? By Misra, Lagi and Bar-Yam;
Supreme Court Rules That Thousands Of Home Foreclosures Are Invalid Because Banks Do Not Have Promissory Notes
October 26, 2011
By Ethan A. Huff
More than five million US homeowners and counting have had their homes foreclosed upon by banks since the “economic crisis” first began several years ago. But the Massachusetts Supreme Court recently ruled that the vast majority of the foreclosures that took place in the Commonwealth (and likely in most other states) within the past five years are illegitimate because the banks did not, and do not, actually hold the promissory notes for the properties.
This means that all mortgage payments made to banks for illegitimately foreclosed upon properties are fraudulent since such banks do not technically own the properties in question. It also means that anyone who purchased a foreclosed property, or who is threatened currently with potential foreclosure, does not necessarily have a legal obligation to continue paying their mortgage.
Even homeowners who do not face foreclosure are not necessarily required to continue paying their mortgages — if their lenders are unable to produce valid promissory notes showing true ownership of the property. Then those who follow through with mortgage payments to such lenders are technically participating in fraud because there is no way to verify whether or not mortgage payments are going to the true note holders, or even who the true note holders are in the first place.
“In essence, the ruling [upholds] that those who had purchased a foreclosure property that had been illegally foreclosed upon (which is virtually all foreclosure sales in the last five years), did not in fact have title to the property,” writes The Daily Bail. “Given the fact that more than two-thirds of all real estate transactions in the last five years have also been foreclosed properties, this creates a small problem.”
Recognizing that the federal government’s bailout plan was beneficial only to banks and not homeowners, Rep. Marcy Kaptur of Ohio told those facing foreclosure back in 2009 to “be squatters in [their] own home” (http://articles.sfgate.com/2009-02-…). Now that these foreclosures have been exposed as largely fraudulent, it turns out that her advice was sound.
“Radical though it may seem, we believe the only way to stop the chaos of fraud and the breakdown of the rule of law in our courts, and most importantly to ensure that we ourselves are not participants in the fraud, is for homeowners who can afford their mortgage to stop paying it,” says The Daily Bail.
October 24, 2011
By Kurt Nimmo
The Vatican has called for a “global public authority” and a world central bank to rule over financial affairs in the wake of the engineered economic collapse.
A document released by the Vatican’s Justice and Peace department “should be music to the ears of the ‘Occupy Wall Street’ demonstrators and similar movements around the world who have protested against the economic downturn,” according to CNBC.
Condemning the “idolatry of the market,” the document states that the “economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence.”
The planned implosion of the global economy “has revealed behaviors like selfishness, collective greed and hoarding of goods on a great scale.”
The 18-page document, entitled “Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority,” declares global economics needs an “ethic of solidarity” among rich and poor nations.
“If no solutions are found to the various forms of injustice, the negative effects that will follow on the social, political and economic level will be destined to create a climate of growing hostility and even violence, and ultimately undermine the very foundations of democratic institutions, even the ones considered most solid,” it said.
In response, the Vatican is calling for “a supranational authority” with worldwide scope and “universal jurisdiction” to guide economic policies and decisions. The authority will be run by the United Nations, according to the document.
It will take time to replace economic policies and in the process destroy national sovereignty, according to the Vatican.
“Of course, this transformation will be made at the cost of a gradual, balanced transfer of a part of each nation’s powers to a world authority and to regional authorities, but this is necessary at a time when the dynamism of human society and the economy and the progress of technology are transcending borders, which are in fact already very eroded in a globalizes world.”
October 20, 2011
The Economic Collapse Blog
Most people have no idea that Wall Street has become a gigantic financial casino. The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end. The word “derivatives” sounds complicated and technical, but understanding them is really not that hard. A derivative is essentially a fancy way of saying that a bet has been made. Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before. Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion. Keep in mind that the GDP of the entire world is only somewhere in the neighborhood of $65 trillion. The danger to the global financial system posed by derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”. For now, the financial powers that be are trying to keep the casino rolling, but it is inevitable that at some point this entire mess is going to come crashing down. When it does, we are going to be facing a derivatives crisis that really could destroy the entire global financial system.
Most people don’t talk much about derivatives because they simply do not understand them.
Perhaps a couple of definitions would be helpful.
The following is how a recent Bloomberg article defined derivatives….
Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates.
The key word there is “speculation”. Today the folks down on Wall Street are speculating on just about anything that you can imagine.
The following is how Investopedia defines derivatives….
A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
A derivative has no underlying value of its own. A derivative is essentially a side bet. Usually these side bets are highly leveraged.
At this point, making side bets has totally gotten out of control in the financial world. Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it. This system is almost entirely unregulated and it is totally dominated by the big international banks.
Over the past couple of decades, the derivatives market has multiplied in size. Everything is going to be fine as long as the system stays in balance. But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix.
The amount of money that we are talking about is absolutely staggering. Graham Summers of Phoenix Capital Research estimates that the notional value of the global derivatives market is $1.4 quadrillion, and in an article for Seeking Alpha he tried to put that number into perspective….
If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.
The notional value of the derivative market is roughly $1.4 QUADRILLION.
I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.
$1.4 Quadrillion is roughly:
-40 TIMES THE WORLD’S STOCK MARKET.
-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.
-23 TIMES WORLD GDP.
It is hard to fathom how much money a quadrillion is.
If you started counting right now at one dollar per second, it would take 32 million years to count to one quadrillion dollars.
Yes, the boys and girls down on Wall Street have gotten completely and totally out of control.
In an excellent article that he did on derivatives, Webster Tarpley described the pivotal role that derivatives now play in the global financial system….
Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.
Most people do not realize this, but derivatives were at the center of the financial crisis of 2008.
They will almost certainly be at the center of the next financial crisis as well.
For many, alarm bells went off the other day when it was revealed that Bank of America has moved a big chunk of derivatives from its failing Merrill Lynch investment banking unit to its depository arm.
So what does that mean?
An article posted on The Daily Bail the other day explained that it means that U.S. taxpayers could end up holding the bag….
This means that the investment bank’s European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn’t get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to “give relief” to the bank holding company, which is under heavy pressure.
This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input.
So did you hear about this on the news?
Today, the notional value of all the derivatives held by Bank of America comes to approximately $75 trillion.
JPMorgan Chase is holding derivatives with a notional value of about $79 trillion.
It is hard to even conceive of such figures.
Right now, the banks with the most exposure to derivatives are JPMorgan Chase, Bank of America, Goldman Sachs, Citigroup, Wells Fargo and HSBC Bank USA.
Morgan Stanley also has tremendous exposure to derivatives.
You may have noticed that these are some of the “too big to fail” banks.
The biggest U.S. banks continue to grow and they continue to get even more power.
Back in 2002, the top 10 U.S. banks controlled 55 percent of all U.S. banking assets. Today, the top 10 U.S. banks control 77 percent of all U.S. banking assets.
These banks have gotten so big and so powerful that if they collapsed our entire financial system would implode.
You would have thought that we would have learned our lesson back in 2008 and would have done something about this, but instead we have allowed the “too big to bail” banks to become bigger than ever.
And they pretty much do whatever they want.
A while back, the New York Times published an article entitled “A Secretive Banking Elite Rules Trading in Derivatives”. That article exposed the steel-fisted control that the “too big to fail” banks exert over the trading of derivatives. Just consider the following excerpt from the article….
On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.
The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.
So what institutions are represented at these meetings?
Well, according to the New York Times, the following banks are involved: JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup.
Why do those same five names seem to keep popping up time after time?
Sadly, these five banks keep pouring money into the campaigns of politicians that supported the bailouts in 2008 and that they know will bail them out again when the next financial crisis strikes.
Those that defend the wild derivatives trading that is going on today claim that Wall Street has accounted for all of the risks and they assume that the issuing banks will always be able to cover all of the derivative contracts that they write.
But that is a faulty assumption. Just look at AIG back in 2008. When the housing market collapsed AIG was on the wrong end of a massive number of derivative contracts and it would have gone “bust” without gigantic bailouts from the federal government. If the bailouts of AIG had not happened, Goldman Sachs and a whole lot of other people would have been left standing there with a whole bunch of worthless paper.
It is inevitable that the same thing is going to happen again. Except next time it may be on a much grander scale.
When “the house” goes “bust”, everybody loses. The governments of the world could step in and try to bail everyone out, but the reality is that when the derivatives market comes totally crashing down there won’t be any government on earth with enough money to put it back together again.
A horrible derivatives crisis is coming.
It is only a matter of time.
Stay alert for any mention of the word “derivatives” or the term “derivatives crisis” in the news. When the derivatives crisis arrives, things will start falling apart very rapidly.
October 19, 2011
By Christopher Doering and Jonathan Leff
The United States pushed through its toughest measures yet to curtail speculation in commodity markets in a tight vote on Tuesday, likely shifting the focus of a fierce four-year debate from the regulators to the courts.
In a measure decried by Wall Street and trading companies as a misguided political attempt to cap soaring oil and grain prices, the Commodity Futures Trading Commission voted 3-2 to approve “position limits” that will cap the number of futures and swaps contracts that any single trader can hold.
The rule, which was being modified until the last minute even after months of intense review, offers some relief for the industry, relenting on several contentious provisions, as expected.
But that will do little to temper frustration over a plan that could force banks like Morgan Stanley and traders including grains giant Cargill to scale back business, and could stanch the flow of financial capital into commodities.
The divisiveness was stark from the opening, making a legal challenge potentially more likely. That would be another hurdle for CFTC Chairman Gary Gensler, who is struggling against emboldened Republicans and a hostile Wall Street to put in place the rules required by recent financial reforms.
Swing vote Michael Dunn, a Democrat whose term has already expired, said he would follow the Dodd-Frank financial reform law but blasted the limits as a dangerous distraction from bigger issues. Dunn can remain through the end of 2012 until a replacement is confirmed by the Senate.
“Position limits are a sideshow that has unnecessarily diverted human and fiscal resources away from actions to prevent another financial crisis,” Dunn said. “At worst the limits may harm the very markets they are intended to protect” by making prices more volatile and hedging more difficult.
The decision also failed to appease those who had called for tougher limits, such as British charity Oxfam and Senator Bernie Sanders, long a vocal proponent of tougher limits.
“The CFTC has moved a step forward, but much more has to be done and I intend to play an active role in that process,” Sanders said in a statement.
As expected, the commission’s two Democrats, Dunn and Bart Chilton, voted with Gensler, while Republicans Jill Sommers and Scott O’Malia opposed the measure. O’Malia said the agency had overreached its mandate and echoed the industry’s argument that there was no “empirical evidence” to substantiate the rule.
“We went beyond the statute” by doing things like narrowing the bona fide hedge exemption, Sommers told Reuters. “Those are the things that people can use for a legal challenge.”
The CFTC has never faced a lawsuit over one of its rules, according to an agency spokesman.
A lack of proof that excessive speculation leads to high prices is at the heart of the issue. Without evidence of any damage wrought by failing to limit traders, it may be difficult to demonstrate the net benefit of the measure.
Dozens of academic, government and bank studies on the subject have differed on whether speculators — in particular the institutional investors who have poured some $300 billion into commodity markets over the past decade — influence prices or whether prices simply respond to market conditions.
October 18, 2011
Beacon Equity Research
By Dominique de Kevelioc de Bailleul
Outpacing former U.S. Comptroller General (1998-2008), David Walker, the indefatigable Peter Schiff has markedly stepped up his appearances, interviews and overall visibility of the past year with his dire message to investors: prepare for an “abrupt” dollar collapse.
Though a thorn in the side of Wall Street’s behemoth banking cartel, broker-dealers and the financial media that serves them, Euro Pacific Capital’s CEO Schiff strips away the tired rhetoric, massaged sentiment building, shameless hype, obfuscation and outright rumor spreading of CNBC’s broadcast, all characteristic of an old guard desperately clinging to power though its control of a highly sophisticated media-driven propaganda campaign deployed to hide the foreshadowing symptoms of a coming economic collapse.(1)
Speaking with SeekingAlpha’s contributing writer, Garrett Baldwin, Schiff deploys his own version of the truth, which he sees as an endgame for dollar hegemony manifesting in future sharp declines in U.S. Treasuries.
“I do believe that it [the decline in U.S. Treasuries] will be very abrupt,” said Schiff. “I think when the dollar collapses, it will happen very rapidly. When the bond bubble bursts, the air is going to come gushing out. It’s not going to give a lot of people time to reverse their position.”
And like the Nasdaq and housing bubbles, both pricked into collapse, the U.S. sovereign debt bubble, too, has “a lot of pins” out there grasped by powerful invisible hands; and “it’s [Treasury market] going to find one eventually.”
Peter, the son of famed tax protestor Irwin A. Schiff, has demonstrated that his message to investors can be trusted as pure, no less than uber-American patriot U.S. Congressman Ron Paul’s plea to revamp the global monetary system and phase out the Federal Reserve during his presidential 2012 bid.
While unabashedly speaking truth to power about the dollar’s ultimate worthlessness void of its artificial props, Schiff offers real solutions to what former U.S. Comptroller Walker has metaphorically stated is a “burning platform”—not in the sense of how best to put out the fire (though Schiff tried in his bid for U.S. Senator for his home state of Connecticut), but how investors can profit from an inevitable Roman Empire-like decline.
Schiff’s decade-long message to investors who seek protection from the coming colossal collapse, which he originally saw coming as far back as 2000, is to own gold. His advice back then rewarded investors with a 700%+ return in nominal terms and much more in real terms when compared with the contrasted performance of more widely-held assets, such as real estate and the S&P500. The S&P still trades below its 2000 level while home prices continue to fall.
When the subject of gold’s breathtaking drop in late 2008 and early 2009 was broached, Schiff defended his record, talking about the performance of the gold price within a larger context of the overall bull market in the metal since its $255 price tag low of 1999.
“In 2008, gold prices went down, but they’re double what they were now – then,” Schiff explained. “So people still made money on precious metals. And of course if they bought precious metals, years earlier, had they bought them in 2002, 2003, 2004, even though 2008 was a down year – or at least the second half was. They’ve more than recouped that.”
Schiff continued, “So, people have been able to profit, certainly from the advice to get out of the dollar. The dollar is quite a bit lower than it was when I first started telling people to get rid of it based on these forecasts. Even though it’s higher than it was a month ago, it’s much lower than it was years ago. And the dollar will continue to fall.”
To expound on Schiff’s strategy for survival of the mother of all currency crises he sees on the horizon, investors may want to refer to the lifelong work of Princeton Economics’ founder Martin Armstrong, a man whose study of market cycles may shed more light on the coming years’ volatility in the gold market.
Though Armstrong’s personal life is controversial, his brilliant work with market cycles led him to advise the Reagan White House on how best to handle the aftermath of the 1987 stock market crash—which developed into the infamous Working Group of Financial Markets, more popularly referred to today as the PPT (Plunge Protection Team). Twenty-three years later, the eccentric Armstrong strongly suggests that the volatility we now see in all markets across the globe will increase dramatically into the year 2016.
Speaking with King World News this past week, Armstrong said the volatility will be, frankly, frighteningly breathtaking.
“We’re going to increase volatility by 50% over the next two years, and then, going into the latter part of 2016 it will double again,” he told KWN’s Eric King. “It’s the way markets move.”
“Boil a pot of water. When it gets to the boiling point, you’ll see all of a sudden the water juts burst into bubbles,” Armstrong explained. “That’s the way the market is. And that final end is when you get that doubling effect. And when you see that, sometime it can be more than double, but when you see that, that’s the time when you are getting into the final top. So we haven’t seen anything like that yet.”
And to hammer home the point made by Messieurs Schiff and Armstrong, gold investors must focus on the endgame and not the extreme volatility in the gold market. To keep it simple, the old stead hand of financial markets, Dow Theory Letter’s Richard Russell, said about gold in a roundtable discussion with Financial Sense Newshour in 2003, “I think it’s a bull market [in gold]. The bull will always try to shake you out, go up with the least people as possible.” Russell suggested that investors should not look at the gold price anymore than they look at the market value of their houses on a day-to-day basis. Instead, the 87-year-old veteran of the markets said, “You buy and take a position in gold, and that’s it.”
(1) Today’s early-morning c update on CNBC featured a roundtable discussion session, including the establishment’s most sycophantic shill of television, Steve Liesman, a 20-year and enabling CNBC veteran Joe Kernen, another of Wall Street apologist guest, and the 34-year-old Andrew Sorkin. As Sorkin began to hit home the salient points behind the reasons for OWS’s growing uprising—now sprouting worldwide—Liesman, abruptly stepped on Sorkin and began the 3-man gang up operation on the young Gerald Loeb Award winner.
October 7th, 2011
By: Catherine New
While thousands of Americans unleash their anger at big banks in protests around the country, many more are registering their dissatisfaction at their keyboards.
In the wake of Bank of America’s announcement that it is adding a new $5 monthly fee for debit card use, online-only banks are seeing a wave of new business.
On Friday PerkStreet Financial had twice as many new customers sign up as usual. The next day even more users signed up.
“The Bank of America news woke everyone up and spurred change,”
said Perk Street’s CEO Dan O’Malley in a phone interview.
PerkStreet, which launched in late 2009, is part of a new breed of online-only bank–all aiming to capture consumers looking to escape fee increases at more established banks.
Bank of America (BAC) isn’t the only institution to come under fire after raising fees. In a recent mailing to its customers Citibank said it would double the monthly service charge on EZ Checking accounts from $7.50 to $15, in November.
Citibank said it has been encouraged by the response of its customers and is using the opportunity to help them understand the diversity of account options, including no fees on debit cards or online services, said Citibank spokesperson Catherine Pulley. On Wednesday, Bank of America’s CEO defended the bank’s new $5 fee saying the bank has a right “to make a profit.”
In contrast, a PerkStreet’s no-fee checking account is free to open with a $25 minimum and earns debit-card rewards, including free coffee, music or cash. Online-only ING Direct’s (ING) free Electric Orange Account earns .24% interest on accounts of up to $49,999. Free interest checking accounts at online Ally Bank have variable interest rates based on monthly balance, and no monthly fees.
Big banks defend the new fees and hikes as necessary to recoup revenues lost due to recently enacted consumer protection laws, but the consumer zeitgeist is quickly changing, as evidenced by the Occupy Wall Street protests. O’Malley said he thinks this moment will be remembered as a turning point for consumer banking. The American Bankers Association is pointing the finger at government regulations as being a root cause of its fee increases, even as the general perception on Main Street is that the new fees are just revenue grabs by greedy bankers.
Brick-and-mortar banks are seeing large numbers of customers shift to online banking, which has had an effect on the popularity of branch banking. For the first time since 1995, the number of branch storefronts in the United States dropped last year, according to the American Bankers Association. A recent ABA survey showed that 62% of banking customers prefer online transactions — a huge increase from the 32% who felt that way in 2009. Spokespeople at Bank of America and Citibank couldn’t be reached immediately for comment for this article.
Brick and Mortar Still Has Advantages
Online banks like PerkStreet, ING Direct and Ally Bank, all face certain common challenges, such as how to deal with actual paper checks, and how to give a human touch to customer service. Customer reviews on MyBankTracker, an open forum for customers to review financial products, showed that deposit turnaround and customer service are two of the biggest sources of complaints for online banks in general.