Time is tight, all around you are signs. If you have eyes to see.

Prepare.

I really mean it. I gave you a heads up 3 months ago. Many of you perhaps thought I was being metaphorical. I was not. The proverbial fecal matter is about to strike the rotating blades.

When it all starts to fall apart.. then be ready.

The situation in Europe is about to collapse. There will be a great ‘unwinding” of contracts.And the unwinding will carry across the globe.

And the world as we know it will unravel right before our eyes.

There will be a great surge of popular unrest. Imagine for a moment what would happen if the ATM’s have a daily limit of $50… it is already happening in Eastern Europe. Soon enough it will spread. And the cash-points will empty within minutes.

In the end, those who heeded the warning will be ‘safe’. Well for now, anyways. The future is a funny thing.

And then the real ‘FUN’ can begin; as the US of A (and NATO; even lowly Canada) embarks on a new war over Syria. And into Iran? Or perhaps Iran will fire a few missiles to demonstrate they are the ‘real’ power in the Middle East

Peace and Love my friends… as far as I see it, time is short

But, I might have to rescind that decision for now.

Yesterday’s posting no doubt got some people worried, so here’s an explanation of the Prepare posting for you all. I can’t be bothered finding the source articles; but if you google the themes no doubt they are easy to see.

The current ‘crisis’ is the start of the next leg downwards around the world. Do not believe any lies about China, or any of the BRICs “rescuing” the EU. Nor the latest of Japan pumping tons of cash into the EFSF (European Financial Stability Facility). These are all lies being told to help market traders suspend belief and go along for the ride.

The Chinese economy is contracting, the Asian, EU and US PMI numbers all suggest manufacturing is contracting, which suggests demand is contracting. US unemployment remains higher than it has been since the Great Depression. The WTO is just now saying  that trade growth is declining. Commodities are going insane as traders wake up to the facts. The VIX is at 41.35, and climbing, with the European counterpart iTraxx Crossover index rising to 857 on Thursday. These are not normal times, and signs like this will smack everyone not watching in the head. The Greater Depression is about to start.

The Fed’s “Operation Twist” (as the media likes to call it) is nothing more than extending the re-payment terms of the bailouts 6-30 years into the future; and in the meantime attempt to lower long term interest rates (and in turn drop the lending rates for US mortgages). But of course when US mortgage rates were lower in 2009, the number of mortgage applications remained pretty much unchanged. People aren’t buying new houses when they are worried about their jobs. And those without jobs for so long are now finally getting foreclosed.And who will pay for this in the future? Why you, and your kids, and their kids. Forever.

And the banks of course were not eager to offer re-finance deals; as the whole US mortgage industry is now based on the prior ability to bundle these loans up and sell them as AAA rated investments. We all know how well that worked out for them. So if banks are no longer able to get the mortgages off their balance sheets (and in turn offer more loans and generate more profits) there won’t be a massive rush coming either. Instead we’ll finally start to see major problems with the banks over the next few weeks. Banks may finally have be allowed to go bankrupt; and their ‘assets’ assumed by other, more prudent private institutions. The world will not end; but the world as we know it will.

This is of course not restricted to the US. It will impact everywhere. In the UK Lloyds looks set for collapse. In France it seems Société Générale will be the first; although they seem to be fighting with BNP Paribas for the honour of failing. In France they will likely be nationalised. The same cannot be said of Bank of America in the US. Recent news they whispered that they ‘will help Perry out’ has likely ticked off the formerly golden chosen one Obama, and perhaps he’ll be reluctant to offer any support. And the chances of a new bailout fund being passed through Congress rates up there with the likelihood that the moon is actually made of cheese.

So what happens if BAC is actually allowed to fail? After a few days of mild panic and closed ATM networks, the US people may finally wake up to what the US government and the private US Federal Reserve banks have been doing with their countries greatest asset for all these years. The debasement of the dollar will renew. And the ripples will be felt worldwide.

The EU has suggested they are re-capitalising 16 European banks; but not one of those banks is in France. These are the 16 banks that failed or were very close to failing the last EU Banking Stress Test. Which of course did not factor in the severity of the upcoming Greek default – now rumoured at a 50% haircut for bondholders. And who are the bonholders? The European Banks, mainly in France, Germany and elsewhere.

Portugal also returned to the news, with the Island of Madeira’s local government books disclosed as failing to report EUR1.2 billion in commercial liabilities. And so Portugal will be next on the market’s RADAR over the next few weeeks with the latest downgrade by Moodys.

So I am warning you, over the next few weeks anything can happen. The events in the major stock markets yesterday will be repeated today; and into the next few weeks.

The G20 meeting in Washington this weekend will fail to decide to do anything useful.

The IMF is waiting in the wings; but the amount of monies required to support the world’s financial system simply do not exist at this time.

Oh, and did I mention the failure to get the debt ceiling raised? Ah that was passed this morning just after midnight. Whew, at least that’s not a worry any more… Except of course, the Republicans messed around with the text of the Bill and there is now a good chance the Senate won’t pass the amended Bill. And with Congress off on a break there’s a good chance the end of the month will be reached without an updated debt limit. Let’s see what the Treasury does to get around that one this time round…

And news just in, Moodys has downgraded 8 Grrek banks, two of which are majority owned by French banks. Let the games commence!

As before, Expect the unexpectedly.

Peace and Love
Mike

Prepare.

Peace & Love.

So the news was splashed across traders screens this morning:

WEN SAYS CHINA WILL CONTINUE TO INCREASE INVESTMENT IN EUROPE
WEN SAYS CHINA IS WILLING TO EXTEND HELP TO EUROPE

When in reality what Chinese Premier Wen Jiaboa said was more like:

WEN SAYS YOU CRAFTY DEVILS. WE WILL SPARE YOU NO CONSIDERATION UNTIL YOU PUT YOUR OWN HOUSE IN ORDER
WEN SAYS IF WE WERE TO HELP EUROPE IT WOULD BE THROUGH GOOD BOND PURCHASES ONLY
WEN SAYS RUB OUR BACKS AND WE’LL RUB YOURS

The actual ticker comments that followed the first two were more to the point:

WEN SAYS EU SHOULD RECOGNIZE CHINA’S MARKET ECONOMY STATUS
WEN SAYS HOPES FOR BREAKTHROUGH AT CHINA-EU SUMMIT NEXT MONTH

As Zerohedge points out, this is in reference to the current exclusion of China from much of the WTO protections. So China says “Sure, we’ll help you out ole buddy; but it’s time you started scratching our backs in return. You’re all cosy with Russia for Oil and Gas supplies, how about you open up more of Europe to Chinese exports”?

AEP in the Telegraph tells a similar story, with the head line “China states price for Italian rescue” and lays out more of what the good Premier really talked about. So don’t expect any bailout of Greek or Italian debt… but perhaps French or German? On a side note, how many were aware the World Economic Forum is holding it’s “Summer Davos” over in China? I wonder what other nuggets will appear over the coming days?

Meanwhile, Moodys has indeed cut the ratings on 2 French Banks debt a notch. As Robert Peston points out on his blog that SocGen and Crédit Agricole were downgraded while BNP Paribas was kept “on review”. Robert’s entry includes a few juicy nuggets, the biggest being this comment about other bank’s distrust of the French bank’s official balance sheets:

“Nobody really believes their numbers. The perception is that the French banks report what the Banque de France, the French central bank, tells them to report”

Which of course is just someone’s opinion. Which may or may not be true. One wonders how many other Central Banks assist banks in creating totally meaningless balance sheets? Canada perhaps?

And of course, the European Central Bank issued $575 million dollars in “emergency swap lines” overnight. To 2 European banks. at 1.1%. Instead of the 3.6% the LIBOR suggests? Not mentioning any names, of course… But prime suspects are of course the 2 French banks so reliant on short term, dollar backed funding. SocGen and Crédit Agricole. And why no downgrade for BNP? Perhaps it was a rush news they are selling $96 Million dollars worth of assets like mad to shore up their balances? And of course perhaps Moodys is watching it’s back, after BNP asked France’s finacial regulator to investigate the Wall Street Journal’s story that BNP is now blocked from purchasing USD short term funds at anything like ‘normal’ rates.

Oh yeah, China’s got Europe covered. Tell me about those other Danish fairy tales while you’re at it? Always liked Hans Christian Andersen…

For some light-hearted reading I thought I would point out what the Canadian banks are telling us about our economy. They see a “slight reduction” in GDP over the coming years… uh huh… I thought I would point this out here, and then we can check back in 3 months and see if their forecast has come true or not.

Of course still no real mention of the contents of the OECD report (just a little mention in a sentence buried in this fluff here). But why does any of that matter? At least the Bank of Nova Scotia is closer to the truth with the line:

Canada may already be in a “technical recession,” or two consecutive quarters of negative economic growth

As usual this is brushed off with lies about ‘sideways growth’ and little or no mention of the facts behind the “technical recession” analysis. Meanwhile Canadians are piling on debt at a rate faster than just about anywhere else in the world. Waiting for the housing bubble to burst here in Canada is a little frightening…

As per everything else this year, Expect the unexpectedly. (If article is blocked by a paywall, google the title and read…)

A funny story crossed my way today. While normally I will blog about all things financial (OK, sometimes spiritual things, but I keep that to a minimum now), every once in a while a story “pops up” that deserves a mention. Ok it IS partly financial, but I think it is a pretty telling tale on the state of surveillance in the US, and all over the world.

So what’s the story all about? An artist by the name of Alex Schaefer, in California, has been painting for years. He’s started on a recent series about the state of capitalism as exhibited in the past decade in the USA. His latest paintings focus on banks in flames. Some who have the smallest amount of brains about them would recognise this as an artistic represntation of the frustration many people have towards the bank’s exaggerated sense of importance in the current system. However, there are others (in the ‘police’) who feel this is exhibiting a potential terrorist bent. Like WTF? HELLO!

So one wonders what is next…

While painting a scene in front of a Chase branch in Van Nyes, CA., Mr. Schaefer was approached by local police after receiveing a “tip off” of his activities. After recording his details (perhaps a silly thing to do; but I guess he’s bought into the whole idea that if he’s doing nothing wrong then there is no harm in giving details to the police. At least he was smart enough not to give out his SSN) the police thanked him for his cooperation and left him.

However, 2 weeks later police turned up at his house asking him if he was a terrorist.

More can be found here at his own blog. It is a chilling reminder that anyone can be branded a terrorist for the slightest infraction of the ‘law’. I hope he doesn’t plan on flying anywhere now; no doubt he’s on a no-fly list someplace Of course, Alex has also posted a number of blog entries on what “money” really is; and how it comes into existance.

BTW, the painting of the Chase bank in flames he was painting just sold on eBay for roughly $25K. Not bad money for an afternoon’s work…

After an extended absence making things livable up on the land, I have returned to my sanity. And boy, how little have things changed!

This morning’s event’s in Europe are sure to spark a renewed collapse in bank stocks; especially in France. In the Wall Street Journal, Nicholas Lecaussian writes the following about BNP Paribas (which has been one of the ‘better’ banks over the last few weeks):

We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore. Since we don’t have access to dollars anymore, we’re creating a market in euros. This is a first. . . . We hope it will work, otherwise the downward spiral will be hell. We will no longer be trusted at all and no one will lend to us anymore.

I recall that was one of the triggers behind the collapse of Northern Rock, and many other UK & US banking institutions over 3 years ago. Now watch as France nationalises the big banks they hold so dear. What could possibly cause all this? How about Moodys’ expected downgrade of France itself (in addition to the big 3 banks in France)?

BTW, if you are unable to read that article as it’s paid content, there’s a simple way around that. Google the title and you’ll find that you can bypass the paywall to get to the full article…

Meanwhile Merkel and Sarkozy have switched from a monthly ‘emergency meeting’ to something more like a weekly “emergency meeting”. Although the rumour of a meeting today was promptly squashed, there are some funny things in Sarkozy’s diary for today:

 SEINE-ET-MARNE - President Nicolas Sarkozy visits a new
prison.

 PARIS - President Sarkozy meets European Council President
Herman Van Rompuy (1500 GMT).

Will they never learn? Of course all they have is propaganda, as there are no real tools in the EU’s tool box. Van Rompuy & Sarkozy’s meeting will no doubt bring us nothing but wind, meanwhile Merkel’s been bashing rumours of an “uncontrolled default“.

So we are to have an orderly and controlled default instead?

Yet bloomberg is shouting a “98% chance of default“…

Perhaps the Fed will step in and rescue Europe? I would not be surprised if the “emergency Swap Lines” are expanded; nor even a series of “emergency loans” to European banks are being set up.

Over in Canada the financial press is being incredibly quiet on the current state of affairs as it impacts Canadians. For my Canadian readers, a word of warning. Things are about to start “contracting” again. Regardless of what Obama manages to get past Congress to Èstimulate job creation”, it will have minimal impact on Canadian fortunes. I present the following from the OECD report on Composite Leading Indicators released yesterday – Canada is officially ‘contracting’ already, with a reading of 99.7 (anything less than 100 is contraction in output). Why isn’t this splashed all over the business pages here?

I am heartened to see that Italy is doing slightly worse off, with a reading of 99.6, but when compared to all other ‘major’ economies (I am not including Brazil and India in there, but if you look at those numbers you’ll soon realise the growth in the BRICs is not going to rescue us this time round). But the news that France, Germany and the UK are also pointing at a serious contraction should have everyone prepared for the worse. And soon.

P.S. The news that China Investment Corporation will be buying ‘tons’ of Italian bonds is rubbish… LOL the CIC was set up to generate profits, not take losses! Here’s the ‘official’ rebuttal of the rumour in the FT yesterday (that sent the Dow Jones flying… expect that to be a short lived spike).

I was spammed big time by some russian “hackers” on the forum LOL

I have shut down the forum for now; I have anti-spam on the ‘normal’ comments; looks like I’ll need to investigate how to do the same on the forums

But there you go; I have gotten above the level of nutjob to an attack target? LOL

To combat anything further, I have shut off new registrations for a bit while I investigate, and I have deleted ‘most’ users created in the last day that look a little suspicious. So if you can’t login to comment it is likely I deleted you by accident soz… please re-register when I switch it back on

***Update*** 08:20 pm EST
It seems the anti-spam I use can also be activated for the forums So I have activated it, and returned the forums to active state. Let’s see if it’s any good?

I am investigating the use of a captcha control on registrations; it would eliminate this type of attack

Peace and Love

As predicted, the protests in Cairo got a little out of hand yesterday; with more protests planned for today. The Egyptian government has banned all protests today; so we will have to wait and see if more blood is shed. All it will take to get more people on the street is one or two high profile ‘attacks’ by police against the protestors. Some reports suggest as many as 200,000 people protested yesterday across Egypt; but as usual these are ‘official’ figures. Judging on some of the pictures of the protest in Cairo I’d guesstimate that number is closer to 10x the ‘official’ numbers. Currently the Egyptian government’s ban seems to be holding; for how long?

Yesterday’s running blog on the Guardian paints an interesting picture of Egyptian police and state tactics to supress the protests. The most distressing is the treatment of journalists, who tweeted through the police’s repression of the crowds and the use of tear gas:

@mfatta7 Tear gas
@mfatta7 I’m suffocating
@mfatta7 We r trapped inside a building
@mfatta7 Armored vehicles outside
@mfatta7 Help we r suffocating
@mfatta7 I will be arrested
@mfatta7 Help !!!
@mfatta7 Arrested
@mfatta7 Ikve been beaten alot

Egypt has cut off access to Twitter, and is also blocking facebook by playing around with their DNS servers. However, technologically savy protesters have learnt (from the Wikileaks cablegate saga) that all they need is the real IP addresses of these systems… but according to current tweets, now the government is asking the local phone companies to disconnect the mobile phones of ‘activists’.

Also of note, the President’s son is reported to have fled to London yesterday. Long suspected as the most likely to be placed into power by his father, perhaps Gamal Mubarak is going to verify that his father’s residence is cleaned up before his father soon arrives? The Egyptian consulate in Britain is reported on the current Guardian blog as saying that this rumour is unfounded…

We deny it. I assume he is in Cairo, but he’s not in London. That’s the truth of the matter.

Of course whenever someone in the Egyptian embassy uses the words “that’s the truth”, one must wonder if that is simply the truth they are aware of?

I wonder how many of his staff came along; carrying gold bars in their pillows?

Meanwhile, in the UK, Mervyn King has stepped out of the shadows to discuss the recent decline of UK GDP and the current levels of ‘inflation’, and states the following,

“In 2011, real wages are likely to be no higher than they were in 2005.”
“One has to go back to the 1920s to find a time when real wages fell over a period of six years.”
“The squeeze on living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies.”

So what does he mean when he say’s one has to go back to the 1920′s? According to King, the ‘real’ purchasing power of the UK populace has declined 12% during the economic crisis, and will continue to decline as inflation approaches 5%. How far will the decline be? The real decline is likely even more, and would be close to 20% or 25%. For those unfamilar with percentages and how that equates to ‘real life’, thats a full cut of one quarter of your wages. And yet the Bank of England and the government is still predicting an increase of GDP over 2011?

For instance, compared to a resource rich country like Canada, the UK has suffered an even larger decline in ‘real’ wealth. Do people in the UK not realise that the Pound has declined almost 35% against the Canadian Dollar in the last 4 years?

Inflation is a hidden tax, cutting the wealth of the people without them even realising it. And it is not an even tax; it impacts poor and middle class much more than the wealthy. Why do you think the UK government now uses ‘core CPI’ in determining state benefit increases? Because ‘core CPI’ ignores all those “inconsequential” rises in prices of fuel and food. Do you think they will increase the weekly benefits of the unemployed (or unemployable) in line with the real cost of living? Of course not, so the poor will get poorer. Meanwhile those with money can use it to speculate on the rising cost of oil, and offset any decline in purchasing power.

And why is it an “inevitable price to pay” for the failure of government to regulate banks’ recklessnes? I think he’s stepping close to the edge on this; and perhaps he is so blinded by his role in all this that he considers a 1/8th cut in ‘real’ wages an acceptable result of the Bank of England’s failures in the past. And where is this inflation really coming from? From QE, in the UK, but more so in the US. The declining value of Sterling and the US dollar as compared to ‘real’ commodities is a direct result of devaluing those currencies through the creation of fictional money.

While the decline in ‘real’ wages in the US is nowhere near as bad as the UK, most likely around 8-10%; they too are suffering from the “silent tax”. And yet the Federal Reserve continues to pacify Wall Street with talk of yet more QE over the coming months. If more people understood how this impacts them, perhaps the Egyptian riots will “suddenly” appear in the US? It is time for changes, and I pray they are peaceful and work out better than current signs indicate.

Peace