This Is What a Currency Collapse Looks Like: Shopping Frenzy: ‘We Have A Lot Of Rubles Losing Value Every Second’

Jon

Russians have seen the writing on the wall and they know that they’re economy and currency are in serious trouble. Though the Russian central bank has pledged to protect and stabilize the Ruble, which has collapsed by nearly 50% versus the dollar in the last several months, people aren’t taking any chances.
It’s a scenario we’ve seen repeated throughout history when a nation’s currency was threatened with destruction and it’s one we may soon witness in America should confidence in the dollar as the world’s reserve currency ever be lost.
This is what a currency collapse looks like:
‘It is a real panic,’ said Kirill Rogov, an independent political and economic analyst who is often critical of the Putin administration. ‘The ruble is being devalued by 5 or 6 percent every day, and nobody knows how to stop it.’
The ruble has lost 50 percent of its value since the beginning of the year. Russian consumers afraid of losing their savings, as happened in a financial crisis in 1998, flooded stores, rushing to dump rubles that seemed to shrink in worth by the minute.
Source: New York Times
–
‘I don’t need this car,’ he said with a shrug. He already owns two Porsches and a Land Rover. But, he figured the prices will soon go up and the ruble will probably go down. ‘We are headed for a crisis,’ he said.
…
Electronics stores were packed late into the evening as shoppers scooped up iPhones and iPads at prices over $100 lower than what they cost in the United States. Apple’s Russian website halted online sales ‘due to extreme fluctuations in the value of the ruble… while we review pricing.’

This post was published at shtfplan on December 17th, 2014.

The December “Dots”… Drop

Jon

Presenting the quarterly change of the Fed’s “dot plot”, showing where the Fed thinks the Fed Funds rate will be at the end of 2016. The Fed is so hawkish about the upcoming rate hikes, that since September, when the median dot was at at 2.875%, the dots, “surprisingly”, have declined across the board and now have a median of 2.50%.

This post was published at Zero Hedge on 12/17/2014.

“A Couple Means Two” – Why This Is Important

Jon

Moments ago, after Yellen earlier explained that the Fed may hike rates at any moment, and certainly not only during press-briefing days, she also explicitly, and very unexpectedly, said that the Fed will likely not hike for a “couple” of meetings. And when she was subsequently asked to explain what “a couple” means, she further explained that it means “two.” As a reminder, this comes from a Fed chairwoman who had a trial by fire when, fresh after replacing Bernanke, she locked herself in the “6 month” calendar interval. In other words, she knows not to give the market a timing bogey. And still she did so. Which, quite explicitly, means that anything starting with the 3rd meeting, currently scheduled for April 28-29, 2015, and onward is very fair game and the market will be foolish to expect the Fed not to follow through with this warning, a Fed which is already dangerously close to losing all credibility it has.

This post was published at Zero Hedge on 12/17/2014.

Ted Butler Quote of the Day 12-17-14

Jon

Another physical silver related issue that remains overlooked is the deposit/withdrawal pattern of metal in the big silver ETF, SLV, the world’s single largest holding of metal. Despite the two best price weeks recently and on higher than normal volume, over that same time a significant amount of silver has been redeemed from the trust; more than 9 million oz. There’s no way of me knowing if the metal was physically shipped out of the London warehouses, or stayed in place as a result of a conversion of shares to physical metal ownership, a simple process for those who may be involved. In either event, the reduction in reported metal holdings in SLV is serious food for thought.

For one thing, the redemptions in SLV are completely counterintuitive to what normally occurs when prices rise and trading is heavy. Usually, net investment demand increases on strong buying and higher prices, necessitating the deposit of metal to correspond with the increase in new shares created by the investment demand. The best current example is in GLD, the big gold ETF.

While the redemption pattern in GLD has been pronounced over the past two years as investors sold on declining gold prices, there have been three straight days of metal deposits into GLD on the recent price strength and higher trading volume. In other words, the deposit pattern in GLD this week was completely normal; whereas the redemptions in SLV on the same or greater price strength and trading volume was as cockeyed as it gets.

A small excerpt from Ted Butler’s subscription letter on 12-13-14.

More precious metals news & information available at
Ed Steer’s Gold & Silver Daily.		  

What we can learn from the Sony hacking scandal [digital privacy resources]

Jon

As he speculated on the ethics of society, Aristotle found himself naturally led to the study of politics.
Putting together his observations, he wrote a treatise on political philosophy (cleverly entitled Politics), in which he describes how a tyrant abuses power for personal benefit at the expense of his subjects.
And they can get away with this either with a reign of terror or by disguising their actions as virtuous.
In order to instill terror in the populace, Aristotle elaborates:
‘A tyrant should also endeavor to know what each of his subjects says or does, and should employ spies . . . and . . . eavesdroppers . . . [T]he fear of informers prevents people from speaking their minds, and if they do, they are more easily found out.’
Yes, even 2,400 years later, Aristotle’s treatise seems to be the official playbook for those in power today, because this is precisely what’s taking place.
But it’s not only government spying that poses a threat to your privacy.
As we learned from the ongoing Sony hacking scandal, most of our digital communications are completely unsecure.
And it’s especially striking that a company as large as Sony would take digital security so lightly.

This post was published at Sovereign Man on December 17, 2014.

New Poll Shows US Citizens in Every Demographic Support Torture (Republicans, Democrats, White, Black, Young, Old)

Jon

The disgusting poll of the week by the Washington Post shows From moderate Democrats to White Evangelicals, Nearly Every Demographic Group Believes Torture Can Be Justified.
The Post says “nearly” but they are being generous. Close scrutiny shows “every” group supports torture.
Here’s the question at hand: “Looking ahead, do you feel that torture of suspected terrorists can often be justified, sometimes justified, rarely justified, or never justified.”
Disgusting Results Part One

This post was published at Global Economic Analysis on December 17, 2014.

New York Governor Cuomo Does Saudi Bidding, Bans Fracking In NY State

Jon

Having missed the entire shale boom, and with heavily-indebted shale companies now scrambling to boost liquidity or else face bankruptcy if crude prices remain at current levels, moments ago New York Governor Andrew Cuomo said Wednesday his administration would prohibit hydraulic fracturing statewide, citing health concerns and calling the economic benefits to drilling there limited. ‘I cannot support high-volume hydraulic fracturing in the great state of New York,’ acting health commissioner Howard Zucker said, adding that he wouldn’t allow his own children to live near a fracking site. He said the ‘cumulative concerns’ about fracking ‘give me reason to pause.’
It only took him 6 years to get to the bottom of said “concerns”? Or perhaps a phone call and an envelope from one or more Saudi princes helped accelerate the decision.

This post was published at Zero Hedge on 12/17/2014.

IF YOU DON’T HAVE YOUR ASSETS OUTSIDE OF THE US YET, WHAT ARE YOU WAITING FOR?

Jon

The trajectory is clear. Painfully clear.
The US government is so beyond bankrupt it isn’t even worth belaboring the point. We’ve spent the last five years here doing so.
What is more important, if you are an American who still has most of your assets inside the US, is that the walls are closing down around you at an unprecedented rate. Nearly daily the proof continues to mount.
After the US financial system collapsed in 2008 it is now only being held up like Bernie of Weekend at Bernie’s with money printing and holding interest rates at nearly 0%. In fact, today, December 16th, is the sixth anniversary of the Zero Interest Rate Policy (ZIRP) of the Federal Reserve.
Many people began to see the writing on the wall after 2008. One of them was Edward Saverin, a co-founder of Facebook, who renounced his US citizenship in 2012 and moved to Singapore. In response, the US Senate tried to pass the “Ex-Patriot” act which even considered not allowing those who dare leave the US ever to return.
Since then a record amount of Americans have renounced their citizenship to the point where the US government just recently raised the “fee” to renounce by 400%, to $2,350… and it will likely go higher and more laws will be put in place making it more difficult for people to legally disassociate from the bankrupt US government. That, of course, is in addition to the “exit tax”.
Put into effect in June 2008, US citizens who renounce their citizenship are subject under certain circumstances to an expatriation tax, which is meant to extract from the expatriate taxes that would have been paid had they remained a citizen: all property of a covered expatriate is deemed sold for its fair market value on the day before the expatriation date, which usually results in a capital gain, which is taxable income. In other words, if you have substantial assets and wish to escape the US tax system you will still end up paying a large amount of tax just to leave (there are ways around that however – read below).
And that’s if you can even get out at all. We are starting to hear word from numerous sources that Americans who have applied to get their US passport or to renew it, in order to expatriate outside of the US, are experiencing very long delays and in at least one case a person was told to “just ask for a refund because we aren’t going to issue it”.

This post was published at Dollar Vigilante on 2014/12/16.

No More “Considerable Time” – Meet The New, “Patient” Fed

Jon

With expectations that the FOMC would drop “considerable time,” ignore foreign market instability, and shrug off HY credit’s demise (as they had previously said it was a bubble), the members did not let anyone down…
*FOMC SAYS IT CAN BE ‘PATIENT’ IN APPROACH TO RAISING RATES *FOMC DECLINES TO MENTION RECENT GLOBAL MARKET INSTABILITY *FOMC SAYS PATIENT APPROACH ‘CONSISTENT WITH OCT. STATEMENT’ *FISHER, PLOSSER, KOCHERLAKOTA DISSENT IN FOMC DECISION For the 3rd FOMC meeting in a row, equity markets have surged (and decoupled from bonds); we will soon see if history repeats a third time.
Pre-FOMC: S&P Futs: 1988.00, 10Y 2010%, Gold $1195, WTI $57.50
What happened the last 2 times…

This post was published at Zero Hedge on 12/17/2014.

Greek Prime Minister Fails To Get Enough Votes To Elect President, Has Less Support Than Expected

Jon

As previewed earlier today, in a vote whose outcome was widely anticipated, Greece’s Samaras failed to get enough votes (200) to push through his choice for president, Stavros Dimas.
GREECE’S SAMARAS FAILS TO GET VOTES TO ELECT PRESIDENT: TALLY GREECE’S SAMARAS LOSES FIRST OF THREE DEC. VOTES ON PRESIDENT As a reminder, this is the first of three votes, in which the candidate needs 200 votes. ND and PASOK have together 155 seats in the Parliament, and they expected to win some votes from independent MPs and possibly also some votes from Independent Greeks and Democratic Left MPs. According to Greek media, the government expects to win a total of 162-165 votes for Dimas in the first round.
The final vote: 160 For, 135 Against, and 5 Abstain. This is a problem because the whisper number was around 170 for the 3rd round vote to be even remotely close.
Up next is the second round vote when the threshold once again is 200, which will take place on December 23, with the vote limit dropping to only 180 votes in the third and last round of voting on December 29.
In other words, Samaras is a crucial 20 votes short of getting his candidate pushed through in 2 weeks, after which follows a messy election that according to recent polls may easily be won by left-wing Syriza and its anti-bailout leader, Samaras.

This post was published at Zero Hedge on 12/17/2014.

Paul Krugman Buys into the Big Lie About the 2008 Financial Collapse

Jon

Wall Street On Parade holds great respect for Paul Krugman as an economist. We link regularly to his columns under our ‘Publisher’s Must Reads’. But every time Krugman posits on Dodd-Frank financial reform or the crash of 2008 he blunders into the quagmire created by financial reporter Andrew Ross Sorkin’s misinformation campaign in the pages of the New York Times.
Take this past Monday for example. Krugman devoted his column to the spending bill just passed by Congress that guts a key derivatives provision of the Dodd-Frank financial reform legislation, writing that ‘One of the goals of financial reform was to stop banks from taking big risks with depositors’ money. Why? Well, bank deposits are insured against loss, and this creates a well-known problem of ‘moral hazard’: If banks are free to gamble, they can play a game of heads we win, tails the taxpayers lose.’
So far so good. Krugman then continues: ‘Dodd-Frank tried to limit this kind of moral hazard in various ways, including a rule barring insured institutions from dealing in exotic securities, the kind that played such a big role in the financial crisis. And that’s the rule that has just been rolled back.’
Again, spot on. But then Krugman steps into Andrew Ross Sorkin’s illusion of what actually happened in 2008, writing: ‘Now, this isn’t the death of financial reform. In fact, I’d argue that regulating insured banks is something of a sideshow, since the 2008 crisis was brought on mainly by uninsured institutions like Lehman Brothers and A. I. G.’
Regulating insured banks is a sideshow? Nobel laureates can’t go around saying things like that for very long before their academic colleagues start to roll their eyes and the Nobel folks start to wonder if there’s some way to rescind the prize.
Serious financial reform isn’t about regulating any ole insured banks. It’s about regulating some of the largest banks that have ever existed in history, such as JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup. There are 6,546 FDIC insured banks in the U. S. but as of the second quarter of this year, just these four banks held almost $4.5 trillion in deposits, representing 45 percent of all bank deposits, according to data from the Office of the Comptroller of the Currency (OCC).

This post was published at Wall Street On Parade By Pam Marte.

The Ruble Dies, Bankers Fret, Russia Sells Crown Jewels to Stem the Chaos

Jon

On Wednesday, the frazzled Russian Ministry of Finance tried to get a grip on the currency crisis that is annihilating the ruble by announcing through the Russian news agency Interfax that it began selling its crown jewels, the already dwindling foreign currency reserves, in order to buy rubles. It had an impact, at least for the day.
This came after the utterly desperate Central Bank of Russia announced after midnight Tuesday Moscow time that it increased its benchmark rate by 6.5 percentage points to 17%, after having already jacked up rates last week to 10.5%. It was supposed to put a floor under the plunging ruble.
After the shock-and-awe rate increase, the ruble perked up just one tiny bit. For a few moments there might have been hopes that the unstoppable dive could be stopped, that in fact the central bank had this under control. But then the ruble crashed, hitting 80 rubles to the dollar, down 20% from the peak of the prior trading day, and down 56% since August.
Panicked markets had demolished the central bank’s scheme. After Economy Minister Alexei Ulyukayev denied rampant rumors that the government would impose strict capital controls to stop Russians from dumping their rubles in exchange for dollars or euros, the ruble ‘recovered,’ and it ended Tuesday at 68 rubles to the dollar, down 11% for the day.

This post was published at Wolf Street on December 17, 2014.

Greek Prime Minister Fails To Get Enough Votes To Elect President

Jon

As previewed earlier today, in a vote whose outcome was widely anticipated, Greece’s Samaras failed to get enough votes (200) to push through his choice for president, Stavros Dimas.
GREECE’S SAMARAS FAILS TO GET VOTES TO ELECT PRESIDENT: TALLY GREECE’S SAMARAS LOSES FIRST OF THREE DEC. VOTES ON PRESIDENT As a reminder, this is the first of three votes, in which the candidate needs 200 votes. ND and PASOK have together 155 seats in the Parliament, and they expected to win some votes from independent MPs and possibly also some votes from Independent Greeks and Democratic Left MPs. According to Greek media, the government expects to win a total of 162-165 votes for Dimas in the first round.
The final vote: 160 For, 135 Against, and 5 Abstain.
Up next is the second round vote when the threshold once again is 200 will take place on December 23, with the vote limit dropping to only 180 votes in the third and last round of voting on December 29.
In other words, Samaras is a crucial 20 votes short of getting his candidate pushed through in 2 weeks, after which follow a messy election that according to recent polls may well be won by left-wing Syriza and its anti-bailout leader, Samaras.

This post was published at Zero Hedge on 12/17/2014.

U.S. Gold Exports Jump 70% In September

Jon

According to the USGS most recent data, total U. S. gold exports increased significantly in September. Not only did U. S. gold exports surge in September, they were 70% higher than the previous month. This was probably due to increased demand as the price of gold declined $80 during the month.
U. S. exports started off very strong in January, reaching 80 mt (metric tons) with the majority heading to Hong Kong. However, gold exports fell to 47 metric in February and dropped even further in March at 30 mt. If we look at the chart below, U. S. gold exports continue to remain weak from April to August until the spike up in September:

This post was published at SRSrocco Report on December 17, 2014.

Silver Prices to Outperform Gold in 2015

Jon

I know it’s a bold prediction: silver prices are going to surprise investors and provide them with better returns than gold bullion. I say this because both the fundamental and the technical pictures for silver continue to improve.
Demand and Supply
The supply of silver produced continues to dwindle, while demand for the metal is robust. This is the perfect recipe for higher prices.
In Canada, a major gold-producing country, in the first nine months of 2014, mines produced 373,828 kilograms of silver. In the first nine months of 2013, Canadian miners produced 510,390 kilograms of silver – representing a 26% decline in silver mine production. (Source: Natural Resources Canada web site, last accessed December 9, 2014.)
Mine production in other silver-producing countries is also on the decline. As silver prices remain low, silver producers have less incentive to produce. And those whose production costs were too high have shut down their operations.

This post was published at SilverSeek on December 17th 2014.

Meet Your Newest Legislator: Citigroup

Jon

Citigroup is the Wall Street mega bank that forced the repeal of the Glass-Steagall Act in 1999; blew itself up as a result of the repeal in 2008; was propped back up with the largest taxpayer bailout in the history of the world even though it was insolvent and didn’t qualify for a bailout; has now written its own legislation to de-regulate itself; got the President of the United States to lobby for its passage; and received an up vote from both houses of Congress in less than a week.
And there is one more thing you should know at the outset about Citigroup: it didn’t just have a hand in bringing the country to its knees in 2008; it was a key participant in the 1929 collapse under the moniker National City Bank. Both the U. S. Senate’s investigation of the collapse of the financial system in 1929 and the Financial Crisis Inquiry Commission (FCIC) that investigated the 2008 collapse cited this bank as a key culprit.
The FCIC wrote:
‘…we do not accept the view that regulators lacked the power to protect the financial system. They had ample power in many arenas and they chose not to use it. To give just three examples: the Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not. The Federal Reserve Bank of New York and other regulators could have clamped down on Citigroup’s excesses in the run-up to the crisis. They did not. Policy makers and regulators could have stopped the runaway mortgage securitization train. They did not… Too often, they lacked the political will – in a political and ideological environment that constrained it – as well as the fortitude to critically challenge the institutions and the entire system they were entrusted to oversee.’
The words above from the FCIC also perfectly describe what just happened in Congress and the Oval Office. Citigroup snuck its deregulation legislation into the $1.1 trillion Cromnibus spending bill that will keep the government running through next September. (It’s called Cromnibus because it’s part Continuing Resolution or CR and part omnibus spending bill.) Just as the FCIC wrote about the reasons for the financial collapse, Citigroup was able to pass this outrageous deregulation legislation because the majority of Congress and the President ‘lacked the political will’ and the ‘fortitude to critically challenge the institutions and the entire system they were entrusted to oversee.’

This post was published at Wall Street On Parade By Pam Marte.

Stocks Bounce But Credit & Crude Continue Slide

Jon

Hope abounds once again this morning. Stocks are up (albeit off their overnight highs) thanks to AUDJPY and the Ruble is ‘stabilizing’. However, the two crucial factors for recent volatility – crude prices and credit spreads – continue to slump. WTI crude is back below $55 (trading as low as $54.60 this morning) and HY credit spreads have pushed back to their wides around 406bps (disagreeing with stocks modest bounce).
Crude continues to slide…

This post was published at Zero Hedge on 12/17/2014.