Bill Holter

Why Don't You Listen To Them? ...Revisited

December 11, 2014

A few weeks back I wrote a piece titled "why don't you listen to them?".  The subjects were Paul Craig Roberts and David Stockman because both were previously employed at top level positions in Washington and are both are trying to warn a sleeping American population as to what is really coming.  At the time, I thought it was important to highlight their on target logic exactly BECAUSE they were from inside of Washington.  I'd like to do the same type of analysis again but instead choose another individual with a very long term track record from the private sector.  

This past week, Bill Gross reiterated the dire warning he's given in the recent past.  Bill Gross has been dubbed "the Bond King" has had more assets under management than anyone over the last 25+ years, to say he has a little experience under his belt is putting it lightly.  He has also lived and invested entirely inside the box his entire career, he may be seeing a problem with the box itself.

I had planned to include Richard Russell in this missive as I have noticed his "tone" change this year, and particularly the second half.  As he has in the past, he has again flip flopped this week and believes we may still have a year or more of equity reflation.  Until two years ago I thought he tiptoed a little bit too much and really tried to stay out of the manipulation debate.  Little by little as moves in gold and silver could only be explained by jamming volume during off hours and other tricks, Russell finally came around and called BS on all markets as manipulated.  Not just markets but financial and economic reports, "bravo old man!".  It's just been in this year's second half where he his gloomy outlook has included the talk of "systemic collapse" and also included talk about the world going back to gold standard (again, bravo!).  Now, his systemic collapse is postponed in his mind but still at the center of the table.

While Richard Russell over the years has been able to speak his mind as an independent, this wasn't as true for Bill Gross.  He primarily managed bond portfolios and more or less had to "talk his book," this has really changed recently as he moved from PIMCO to Janus funds.  Gross wrote in his Dec. newsletter some very interesting and I might add very painful truths of the financial world.  If you notice, the following paragraph was underlined by him as important:

How could they? How could policymakers have allowed so much debt to be created in the first place, and then failed to regulate their own system accordingly? How could they have thought that money printing and debt creation could create wealth instead of just more and more debt? How could fiscal authorities have stood by and attempted to balance budgets as opposed to borrowing cheaply and investing the proceeds in infrastructure and innovation? It has been a nursery rhyme experience for sure, but more than likely without a fairytale ending.

The basic premise to this newsletter is that a debt problem cannot be cured with more debt, (does this sound familiar to you?).  He seems to be back pedaling from what he wrote a few years back where he believed this scheme could actually be pulled off with three caveats:

But each of these central bankers is trying to achieve the same basic objective: Solve a debt crisis by creating more debt. Can it be done? A few years ago, I wrote that this uncommonsensical feat could be accomplished, but with a number of caveats: 1) Initial conditions must not be onerous; 2) Both monetary and fiscal policies must be coordinated and lead to acceptable structural growth rates; and 3) Private investors must continue to participate in the capital market charade that such policies produced.

For me, the cherry picked gem from this letter was without a doubt when Mr. Gross wrote... "Keeping private investors playing the "game" in our financial markets even though they smack of a pyramid scheme might seem like a no-brainer".  And there you have it, "our markets smack of a pyramid scheme!"  Again, where have you read or heard this before?   He makes mention how investors will leave the negative interest rates of Germany in favor of 12% rates in Brazil, I would ask if Brazil is any less of a Ponzi scheme than anywhere else in the world?  Without a doubt, I am sure Bill Gross knows this but he does work for a mutual fund company which has a basic need for capital to stay "within the box".  By the time the words gold or silver come out of his mouth, you will know game over has arrived.

I wanted to mention Bill Gross to you for several reasons.  First, he is at the absolute pinnacles of the finance profession and the core of the system ...debt.   No one has managed more money nor been closer to the debt market internals than he has.  I believe he sees the game coming to a head and wants to be "on the record" before it ends.  Please understand what this man is saying about "HIS" industry, he used the word "pyramid scheme" within his thought process ...the only worse word he could have used (which coincidentally starts with a P) is the word "Ponzi!"  How anyone could read his thoughts and still stay "inside this financial box" is beyond me?

Switching gears entirely, I want to briefly ask a few questions as usual.  The Treasury Department yesterday put out a bid request for "survival fanny packs" for their bank examiner employees.  What in the world do they need these for... in case they get stuck in an elevator somewhere?  Of course we already knew of the firearms purchased for the various government agencies along with ammo.  At first it was just 1 billion rounds but that was moved up to nearly 2 billion ...in case the first billion wasn't enough or didn't work?   

We also found out yesterday that Russia, who had previously scheduled testing of their own "SWIFT" system for May, next year ...will now test the system Dec. 15th!   Why did they move this up 5 months?  Did they also see 100 NATO (U.S.) tanks rolling across Latvia as we did yesterday?  Do they see something "we the sheeple" don't?  Or do they see something only the tin foil hat society could possibly dream up?    

The Unstoppable Tsunami of Reality

December 10, 2014

A decade ago, I sat in my office watching the gold Cartel do its thing - and muttered to myself, "each day worse than the last." It's hard to believe this "manipulation mantra" has not only "held up" this long, but gone exponential; as in my view, the asset bubbles created by the world's Central banks don't hold a candle to the greatest of them all - the market manipulation bubble that enabled TPTB to "kick the can" a few more years at the expense of "99%" of the world's population.

Since then, "lesser" Central banks - i.e., those not armed with the world's reserve currency and armies of "financial engineers" - have desperately sought to mimic the "master," albeit clumsily. To wit, the Bank of Japan is so clueless and hapless, it actually admits to monetizing stocks; whilst the Swiss Bank has utterly immolated itself on a doomed currency peg. Heck, even the mighty ECB - with a Goldman Sachs stooge running it, no less - has too much bureaucracy to be effective; whilst the PBOC, as wealthy as it is, is so purely Communist, it never had a chance. So yes, the U.S. is still the world's "leader" at something - which sadly, could be better described as a Pied Piper of sorts. Consequently, the dollar's reserve status has been so badly abused, that when the "final currency war" ends in global chaos it will be America that is remembered for posterity as its cause.

The "unstoppable tsunami of reality" is clearly starting to overrun such manipulations; which, in my view, are being understood at a rate so rapid, it won't be long before they are overrun entirely. Yesterday alone, for example, TPTB's desperation to prevent realization of the "most damning proof yet of QE failure" - i.e., plunging rates amidst so-called "recovery" - could not have been more obvious. Let alone, the realization that "2008 is back, with one temporary exception" - i.e., the PPT's maniacal support of the stock market.

I mean, geez, the Chinese stock market plunged nearly 6% in its worst day since 2009 - whilst the Greek market imploded by 13%, as its sovereign 10-year bond yield exploded from 7.2% to 8.0%. Moreover, oil prices were again under pressure, European stocks were down 2%-3%, and high-yield bonds were imploding. That is until exactly 10:00 AM, when the Fed's "open market operations" are conducted and the physical PM markets close. But wait, weren't open market operations supposed to have "ended" with QE's termination on October 27^th. Apparently not, as a "dead ringer" algorithm has been utilized to support the "Dow Jones Propaganda Average" every day since! And wouldn't you know it, the "Cartel Herald" algorithm that has capped every gold rally for the past decade showed up simultaneously.

In fact, the "footprints" of such "confidence protecting" algorithms were so obvious, I pegged 118.20 on the GLD ETF as the "line in the sand" the Cartel was defending all day, and 123.73 on the TLT ETF (tracking long-term Treasury bonds). Take a guess what those levels represented? Yep, exactly a 2.0% gain for gold - i.e., the Cartel's "limit up" cap on 99.9% of all trading days; and the 2.20% yield on the 10-year Treasury bond the Fed has been ravenously defending all month. After all, the FOMC is meeting next week, and Whirlybird Janet desperately wants to remove the meaningless, ambiguous "considerable time" language from her year-end policy statement. That way, the MSM and Washington can claim "recovery" - plunging global commodity markets, bond yields, currencies and economies notwithstanding - to enable a "Santa Claus" rally to put multi-million dollar bonuses in Wall Street's pockets. And by the way, take a wild guess where the Dow's losses were capped yesterday? Yep, you guessed it at exactly 1.0% - i.e., the "PPT ultimate limit down" - before yet another miraculous "Hail Mary" rally saved the day.

Fast forward to this morning, wherein oil is down another 4%, to a new five-year low of $61.50/bbl. Greek stocks are down another 2%; the Greek ten year yield is up another 60 basis points; and not a shred of positive economic data can be found. Yet, "amazingly" the 10-year yield's overnight plunge was again stopped at exactly 2.2%, at exactly the 6:00 AM EST time we have watched it bottom at for the past month. Gold was again stopped by a Cartel Herald algorithm at 2:15 AM EST - for the 345^th time in the last 392 trading days - and again when it attempted to surge at the COMEX open. To that end, how about the WATERFALL DECLINES below at exactly 9:00 AM EST - including the ubiquitous 2% intraday decline silver endures on roughly half of all trading days? Fortunately, PMs' "yield advantage" over government debt is becoming a significant issue to TPTB's suppression efforts as more than €400 billion of European sovereign debt now has negative yields - with Japan at all but 0%, and even the "mighty U.S." headed there rapidly. Here at the Miles Franklin Blog, we have written incessantly of how "NIRP" is the ultimate depiction of fiat currency failure, such as what Bill Holter penned yesterday.

Sorry to spend so much time on manipulation, but it's eminently important to point out how desperate TPTB have become. However, each day such machinations are executed, the "chasm of destruction" between rigged markets and "the unstoppable tsunami of reality" only grows larger, as the aforementioned "manipulation bubble" rapidly heads toward its inevitable historic collapse. In fact, said "chasm" appears to be rending apart from within, as even Wall Street is having difficulty pretending anymore.

To wit, here's what Deutschebank's HEAD OF U.S. CREDIT RESEARCH, Oleg Melentyev, said yesterday, in claiming to be "stumped" by how equity markets refuse to decline.

One of the most interesting disconnects we are currently witnessing on the valuation landscape is that broad market indexes - in equities and credit - have largely ignored a bear market that has hit energy assets.

Taking into account the fact that energy is the single-largest sector in all of High Yield, second-largest in Investment Grade, and third-largest in the entire S&P500, this strikes us as an unusual outcome.

-Zero Hedge, December 9, 2014

Apparently, Oleg doesn't understand the concepts of the PPT or QE. Then again, when right down the hall, Deutschebank's HEAD OF U.S. EQUITY RESEARCH, David Bianco, on the very same day, goes on CNBC with his "2015 predictions" - of no U.S. recession and rising stock prices - Oleg was probably a bitconfused. And even more so - again, that very same day - when Bianco himself penned an article predicting a "profits recession" based on a surging dollar and plunging crude. In other words, not only are the top analysts at one of the world's largest banks contradicting each other - but in Bianco's case, himself! To that end, if you were a client of Deutschebank, what would you think?

Back to the aforementioned "tsunami of reality," as I look at my screen, I see gold and silver surging anew and CRUDE OIL IN FREEFALL - down to $61.19/bbl. as I write, enroute to far lower levels. Frankly, I am amazed at just how many people assume oil prices must rebound, when supply and demand are dramatically out of balance; commodities worldwide are crashing; and oh yeah, Saudi Arabia has commenced a potentially bloody price war with the West. Take my word for it - as an energy analyst for a decade - that outside a major supply disruption (caused by Middle Eastern War, for example) or unfettered overt currency hyperinflation, the supply/demand situation is so ugly, it is entirely possible that the 2009 low of $40/bbl. is breached.

Of course as Bank of America's European Credit Chief, Barnaby Martin, wrote yesterday...

56% of global GDP is currently supported by zero interest rates, as well as 83% of the free-floating equities on global bourses - whilst half of all government bonds in the world yield less than 1%. In other words, roughly 1.4 billion people are experiencing negative rates in one form or another. These are astonishing figures, evidence of a 1930s-style depression.

And thus, don't be surprised if oil prices do in fact "rebound," even if only in nominal terms, as Goldman Mario, Whirlybird Janet and company are forced to engage in all-out overt "QE to Infinity."

Which brings me back to Wednesday's FOMC meeting, just one week from today; ominously, the exact same day as Greece's "snap elections," which could provide the "flash point" that finally destroys the European Union, the Euro Currency and LOL, the Swiss Franc's Euro peg. In our view, the Fed's urgencyto stabilize financial markets - including stocks, bonds, oil and gold - ahead of this meeting is as powerful as the Swiss National Bank's was to discredit gold last month.

If what we are seeing today continues into next week, there is NO WAY the Fed can remove the "considerable time" language from its statement as it has telegraphed all month. And worse yet, if the "financial snowball" continues to roll downhill, they may well have to turn dramatically more dovish; and this time around, methinks, PPT-synchronized comments from James Bullard won't be enough. No, this time around, hints from Whirlybird Janet herself - of "QE4," or something like it - will be required; and whether such desperateacts actually work will be another story entirely as the "unstoppable tsunami of reality" gains momentum.

Remember, only crisis drives the Fed to switch the nature of "QE to Infinity" from covert to overt; and if oil prices continue to plunge; the 10-year Treasury yield convincingly breaches 2.20% to the downside (2.201% as I write); or stocks decline and/or precious metals surge, the Fed will create a bunker mentality like the Cuban Missile Crisis or 9/11. Once they are forced to admit what the aforementioned Wall Street bankers are all but screaming, it will be game over for the three-year precious metals "bear market" - and game on for the terminal phase of history's largest Ponzi scheme.

Regarding the former, don't for a second forget that amidst said "bear market," physical gold and silver demand has reached record levels. Moreover, Central banks as diverse as China, Russia, Germany, Holland and Belgium are clamoring to buy and/or repatriate gold - with countless others, like France and Switzerland, for instance, "waiting in the wings." Consequently, a Fed "crisis admission event" could be the "straw that breaks the Cartel's back." And when it does, the "New York Gold Pool" will instantly become the same embarrassing footnote as the London Gold Pool of the 1960s, and all other failed attempts to suppress real money throughout history.

And by the way, keep your eyes on the "key round number" of €1,000/oz. gold - which we are just a few Euros away from; and �154,000/oz. gold - i.e., Yen-priced gold's all-time high, which we are just 5% away from. When one - or both - of these levels are breached, massive technical buying programs will likely kick in; which in and of themselves, could bury the Cartel in the aforementioned inevitable "unstoppable tsunami of reality."

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