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Archive for January 2011

Inflation, inflation everywhere, and not a drop to drink

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by CIGA Pedro
from Jim Sinclair’s jsmineset.com
Originally posted Jan 30, 2011

Jim Sinclair’s commentary: CIGA Pedro clearly outlines how the demise of the dollar is the demise of much more. Greenspan gave away more than anyone knows. Gold is your only insurance policy against things we cannot control regardless of the wild fluctuation of the price. We must be our own central bank.

AT LAST, THE DOUBTERS HAVE NOWHERE TO HIDE. The world is starkly revealed as an interconnected political economy force, and not as a disparate grouping of various nations, some authoritarian, some choosing democratically agreed upon policies, creating policy choice and thereby shaping of political outcome. Greece, Ireland, Tunisia, and now, the fulcrum of the Arab world, Egypt, stand as testimony. They are countries caught up in the machinations of a monetary policy to debase the world’s reserve currency.

All “he” wanted was some inflation, a little inflation to get America and the west out of the deflationary spiral caused by the failure of financial instruments (a.k.a. OTC Derivatives) and un-payable government debt – but he can’t get it. Everywhere it rages, but the place he wants it is home. So it erupts in global food prices and manifests itself in the attempts to bail out stone dead banks on the backs of the marginal economic player: the post-destruction of the middle class. Most of the world has no savings to get through difficult times. Most of the world cannot “hedge” inflationary outcomes. Those outcomes appear quickly and change realities violently. The inflationary reality is their reality – the difference between starvation and survival.

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The Bears explain the Bank Bailouts

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The Bears are back (hooray!) with further enlightened discourse, this time on a subject ever close to our hearts: the hows and whys of how the American people ended up paying for the failure (and looting) of the [criminal] banking system…

Geithner does not see global inflation as a concern

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by Tyler Durden
Originally posted Jan 28, 2011

Further confirming that America deserves each of its elected officials, in this case a Treasury Secretary whose intellect is increasingly put into question with every single utterance out of his mouth, was Tim Geithner’s statement from Davos earlier that inflation on a global level is “not high on the list of concerns” although probably while looking at pictures of tear gas being fired at protesters in Tunisia, Algeria, Yemen, Morocco and now Egypt he added “emerging markets across the world are certainly ‘feeling some pressure’.”

IF BY PRESSURE, HE MEANS REVOLUTIONS, THEN HE IS CERTAINLY SPOT-ON. As for Egypt’s soon to be deposed leaders, Timmy has four words of advice: please kill the dollar. “Geithner told the World Economic Forum that emerging markets could manage their inflation problems better if they loosened their currencies’ links to the dollar, a measure that economists say would lead in most cases to an appreciation against the greenback.”

And there you have it: America continues keeping the world hostage courtesy of the dollar’s reserve status, able to export inflation at will knowing that the US consumer is irreplaceable, and the only recommendation we have to the world is to continue devaluing the dollar (yes, a weaker dollar means stronger opposing non-dilutable currencies), an act for which we are sure the US middle class thanks him.


More on the inane banality emanating from the vocal orifice of the tax cheat:

As for the U.S.’s own fiscal problems, Geithner admitted that the current position is “unsustainable in the long run” and needs to lay out a credible, multi-year path to sustainability. He bemoaned the fact that the U.S. political system lacks any mechanism to enforce this.

Geithner expressed confidence that the recovery has taken root in the U.S., pointing to clear increases in private investment and job creation over the last 12 months. Without explicitly endorsing them, he referenced consensus forecasts of between 3.5% and 4% annualized growth for the U.S. for the near term, and a “tighter consensus” that the jobless rate will fall to below 8% by the end of next year, from around 9.6% at present. He noted, though that the U.S. was “consigned to a tragically moderate” recovery and an accordingly slow decline in joblessness. Speaking Thursday, HSBC Holdings PLC chief economist Stephen King had noted that although an annualized growth rate of 3.5%-4% appears healthy enough, it’s below the 5%-7% that the U.S. has seen at a comparable stages of previous recoveries.

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Elite desperation over failing Middle East Psyops

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by  Anthony Wile
From The Daily Bell
Originally posted January 29, 2011

Once again, the power elite manipulates the Middle East for its own gain. It is a dangerous game, especially in Egypt, which controls the Suez Canal. Because of the violence, gold is up and oil, too. And just as I finish writing this article, the UK Telegraph has released an extraordinary story. It claims that the United States leadership not only secretly backed the current uprisings in Egypt, it was actively aiding and abetting the protestors. Hello rewrite!

“AMERICA’S SECRET BACKING FOR REBEL LEADERS behind uprising,” the article reads. It explains that The American Embassy in Cairo helped a young dissident attend a US-sponsored summit for activists in New York. “On his return to Cairo in December 2008, the activist told US diplomats that an alliance of opposition groups had drawn up a plan to overthrow President Hosni Mubarak and install a democratic government in 2011.”

What an expose! Unfortunately the story is developed from cables recently leaked by WikiLeaks. And here at the Bell, we don’t trust WikiLeaks. Julian Assange himself may be an asset of Western intel. Of course, from the perspective of Western intel, tying Egyptian yearnings for independence to WikiLeaks may have seemed a brilliant stroke. Perhaps they believe it provides both WikiLeaks and the American ruling establishment with enormous credibility: Each can be seen as supporting freedom.

But on a deeper level, it reveals the desperation and the unraveling of this entire operation. The Anglo-American power elite has apparently decided to destablize the Middle East in order to create regulatory democracies with an Islamic tinge (an arrogant assumption in my view). The ultimate goal is to butress the war on terror and deliver enhanced authoritarianism to the West – and the Western middle classes that are always the targets of the elite.

But as usual, the Internet has apparently upset elite plans. How does one run a “black ops” of this magnitude while being exposed in real time? In fact, WikiLeaks could have released these cables at any point. They did it yesterday, apparently. It is as if the collective hand of the elite has been forced.

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Audio Slide Show: Pictures from Cairo’s Protests

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Obama’s Speech and America, Inc.

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by Nomi Prins
Originally posted January 26, 2011

Watching Obama deliver his State of the Union Speech last night, reminded me of all the rah-rah quarterly meetings that we had to attend as Managing Directors at Goldman, where senior management would remind us all of how great we were, and if there were any areas of competitive weakness relative to our adversaries at other banks, all we had to do was step up our game, innovate and globalize (or something like that.)

Obama wasn’t delivering a summary of what has, or is, going on for most Americans last night, no such negative status report. And, if you didn’t expect him to, he gave good speech – full of reminders of how it is America’s destiny and the American dream to be great and powerful, “robust democracy” that we are.

There was a massive pink elephant in the room called reality though. So, when he waxed proud when he said, “We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing.” I had a different reaction.

My reaction was wtf? Two years after the worst recession? After? Really? What about the 26 million people unemployed or underemployed in the country?

What about the 4.4 people applying for every job, compared to the 2.9 people per job after the 2000s recession?

What about the 4.4 million jobs that should have been added, just accounting for a population coming of job age alone, forget any kind of growth, compared to the fact that instead, the job pool declined by a quarter of a million people in the past two years, because the time required to get a job is at record highs?

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Empty Promises: Five reasons why Obama’s State of the Union Address was completely wrong about the economy

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from The Economic Collapse
Posted originally Jan 26, 2011

Please read this in conjunction with the preceding posts by JS Kim on the subject of education. And then wonder at the complete disconnect between two prevailing perspectives… –Aurick

Barack Obama’s State of the Union address sure sounded good, didn’t it? There were lots of solemn promises, lots of stuff about America’s “bright future” and a line about how we are now facing this generation’s “Sputnik moment” that will surely make headlines all over the globe. But we all knew that Obama gives a good speech. That has never been the issue. What the American people really need are some very real answers to some very real problems.

SO WERE THERE ANY REAL ANSWERS IN THE STATE OF THE UNION ADDRESS? Well, he promised that America will “out-innovate, out-educate and out-build” the rest of the world. He also pledged that America will become “the best place in the world to do business” and that the government must “take responsibility” for our deficit spending. But does all of this rhetoric mean anything or is all this just another batch of empty promises to add to the long list of empty promises that Barack Obama has already made and broken?

The American people certainly don’t need any more empty promises. Millions of American families have been pushed to the edge of desperation by this economy. There has been a lot of talk that the economy is “turning around”, but in many areas of the country the employment situation continues to get even worse. Payrolls decreased in 35 U.S. states during the month of December. The truth is that the number of “good jobs” produced by the U.S. economy continues to shrink. In fact, only 47 percent of working-age Americans have a full-time job at this point.

The American people are not going to buy this “economic recovery” as long as unemployment remains at epidemic levels in so many areas. Just consider some of the stunningly high unemployment rates in some of our most important states: Nevada – 14.5%, California – 12.5%, Florida – 12.0%

So did Obama propose anything substantial that will actually create real jobs? No. Instead, all he had to offer was just a bunch of empty promises. It is almost as if he believes that a really good inspirational speech will somehow make things better. The following are just a few of the empty promises Obama made during his address to the nation….

Empty Promise #1: America will “Out-Innovate” the rest of the world and this will create more jobs

During the State of the Union address, Obama promised that the United States will “out-innovate” the rest of the world and that this will create more jobs. Oh really? Perhaps we could create some more cutting edge products like the Apple iPhone, right?

After all, Apple iPhones were one of the most wildly successful American technological innovations of the past decade.  Surely this is the kind of innovation that Obama would like to see more of. Well, do you know that iPhones are manufactured in China by workers making about 293 dollars a month? (and that was after a big raise).

But it isn’t just the Apple iPhone that is made overseas. The truth is that almost all high technology products are made outside of the United States. In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States?  Zero. Not only that, another fact to note is that manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975. So exactly how is more “innovation” going to produce millions of U.S. jobs if all of the high tech manufacturing continues to be shipped out of the United States?

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Everything I learned about succeeding in business, I learned outside of the institutional academic system

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by JS Kim
Originally posted January 26th, 2011

Here is a related article to the previous one (posted earlier today) by JS Kim. I apologize if I appear to be plugging SmartKnowledgeU, Mr Kim’s independent research, education and consulting company, but I happen to completely agree with all that he says about education and related issues. Bold italics are my own. This is a must-read!! –Aurick

In a recent US study called “Academically Adrift: Limited Learning on College Campuses”, researchers studied more than 2,300 students that attended 29 different US universities. Here is what they concluded:

(1) 45% of the students showed no gains in learning the first two years of college, and
(2) 36% gained little learning even after four years of college level courses

even though the average GPA (Grade Point Average) was 3.2 among the sample of students.

Richard Arum, the author of the study, discovered that “students [were] able to navigate through [college] quite well with little effort”. Furthermore, he discovered that many faculty were focused on their own research with a disdain for teaching many of the introductory freshmen and sophomore level courses that colleges required of them.

The gains in learning were ascertained by tests that measured critical thinking, complex reasoning and writing skills in a standardized manner.

Of course, other factors outside of the enormous failures of the US educational system are also responsible for the failures of students to gain any critical thinking or complex reasoning skills during their years spent inside institutional academics.

There is a plethora of mass entertainment designed to prevent young adults from noticing that bankers are ruining their lives and ignoring all the topics that affect their quality of life while keeping them fixated on events that will eventually have no consequence on their quality of life. The Jersey Shore, American Idol, the Bachelor, an 18-game NFL season that will extend the nation’s fixation on football for several more weeks…shall I continue?

Arum’s study found that students spend less time studying today and more time socializing as compared to their peers from a decade ago and blamed students for deliberately seeking easy courses full of fluff for their lack of learning in addition to professors and universities that valued research and money more than teaching. Of course, the question still persists of why do universities even waste students’ time by offering students courses full of fluff? And if students really go to college to socialize more than they study, do they really need to waste $30,000 of their parent’s money every year for the privilege of playing Xbox in their dorm rooms with their friends?

Though the value derived from institutional academia seems to be little, this hasn’t prevented the owners of these institutions from raising tuition prices by 29% over the last four years from $84,940 to $109,172 for a four-year private university degree (Source: the National Inflation Association). In fact, if people were to view institutional academia as the money-making business it really is, one would likely conclude that in terms of value for money spent, this business would rank as one of the greatest all time-scams next to the fractional reserve banking system.

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Why avoiding the traditional path of university education will HELP your children survive

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by JS Kim
Originally posted Jan 26, 2011

Original title: Why avoiding the traditional path of university education will HELP, yes help, your children survive the next five years

WHETHER YOU LIKE IT OR NOT, POLITICAL AND SOCIAL UPHEAVAL THAT HAS ALREADY afflicted Portugal, Spain, Greece, Mozambique, and now Tunisia, Algeria and Egypt will be coming to your country sometime in the next three years. Just visit this link to witness the angry mob violence in Tunisia in protest to soaring food prices that the people can no longer afford. I know what you’re thinking, “But that is Tunisia, and that will never happen in MY COUNTRY.” If you ask Tunisians what they would have thought about the violence in Mozambique last year, most likely, many would have said, “But that is Mozambique, and that will never happen here in Tunisia.”

In fact, in every country that has suffered from circumstances that rapidly devolved into outrage and violence, it is likely that the citizens of that country never saw the violence coming until it was already upon them. When economies and families’ livelihoods are hanging by a thread, a small spark can trigger a massive fire.

So what does education and your child’s future have to do with the situation in Algeria, Tunisia, and Egypt? Everything. Violence and mass protests are occurring in many countries because of soaring food prices that in some instances have risen by 80% in a matter of weeks. Soaring food prices and energy prices are the direct result of the Central Bank policy of quantitative easing, a euphemism for the destruction of purchasing power of all fiat currencies around the world.

If soaring food prices haven’t happened in your country yet, they will. The only reason it hasn’t happened yet is because your government, in collusion with bankers, have kicked the can down the road along with efforts to sell the populace wild fables of economic recovery while the banks in their nation are literally bankrupt.  There have been no solutions implemented, only patchwork efforts of hiding the truth from citizens. Thus, soaring food prices in India, Algiers, Tunisia will come to your doorstep at some point in 2011. Even Western leaders that typically fill newspapers and TV with utter nonsense are warning their citizens to take heed.

Recently, Bank of England governor Mervyn King stated that British families will see their disposable income disappear as they, in his own words, pay “the inevitable price” for the ongoing monetary crisis and begin to suffer the fastest decline in living standards since the 1920’s. King continued to state that savers and “those who behaved prudently” will pay the largest price as this crisis unfolds. However, being the despicable snake (and those are probably much too sweet words to describe that man) that he is, King further declared that the Bank of England, “neither can, nor should try to, prevent the squeeze in living standards.”

What he should have disclosed is that he, along with the Bank of England, the European Central Bank and the Federal Reserve are directly responsible for the greatest decline in living standards since the 1920’s that will afflict all Brits over the next several years.

Thus, as the global monetary crisis accelerates, 2011 will be the year we move from the eye of the financial hurricane back into the hurricane. Given that the modern educational system  teaches students absolutely nothing they need to know about surviving the crisis, after four years, a mountain of debt, and a bleak economic landscape, I firmly believe that setting aside the money targeted for tuition, books, room and board and investing that money in gold and silver now would leave your child a thousand times better prepared to face this crisis in two or four years time.

But I’m not the only one that believes this. The National Inflation Association also believes this. At the very least, if you have a child you are sending to college or graduate school next term, you need to do yourself a favor and READ THIS ARTICLE. Whether you agree or disagree with me, at least you will have the information as well as my perspective AND the perspective of the National Inflation Association to make a proper decision.  The proper decision now regarding your child’s education may be the difference in whether you set your child up for failure or success in four years. So in that regard, this will be one of the most important investment decisions of your life – your investment in your child.

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Finally, It’s the Fed that has become Too Big To Fail

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by Rick Ackerman
Originally posted January 24, 2011

WE’RE STILL NOT SURE WHETHER CNBC WAS MAKING A JOKE or simply advertising its ignorance with a recent headline, “Accounting Tweak Could Save Fed from Losses,” This was a tweak about as subtle and ingenuous as Bernie Madoff’s balance sheet. What the central bank did was revise and advantage its own rules so that if some financial catastrophe were to inflict huge losses on the Federal Reserve System, the U.S. Treasury would take the hit, not the Fed itself. Oh, and taxpayers needn’t be concerned about the presumptuousness of this coy arrangement, since the changes provide for the Fed to pay back the losses with future profits. Do we really need to point out to CNBC et al. that any such profits would have to come almost entirely from… interest income on Treasury bills, bonds and notes held by the Fed?

Who would have believed that the nation’s banking system would one day be powered by the feather merchants’ version of a perpetual motion machine, or that the bulk of America’s liquid “wealth” could be stored on a few computer chips no bigger than a piggy-bank’s snout? As we now know, all it takes to pull off this scam is a credulous press, an ignorant Congress, and central bankers so cynical that they actually believe the public is too stupid to understand what’s going on.

Thus is Helicopter Ben able to say with a straight face: “Under a scenario in which short-term interest rates rise very significantly, it’s possible that there might come a period where we don’t remit anything to the Treasury for a couple of years. That would be I think a worst-case scenario.” Hello!!!!  Are we actually supposed to believe that the day this Zimbabwean twist on quantitative easing is announced, that it won’t send the dollar into a death dive, making Americans poorer by a third, or even half, overnight?

Media Fell for Ol’ Switcheroo

News reports noted that the Fed rule-change was announced on January 6 but that it took a couple of weeks for its significance to sink in. Significant in what way?  In Reuters’ words, it is significant because “It makes [the Fed’s] insolvency much less likely.”  This explanation is darkly funny for two reasons.  In the first place, by accepting the Fed’s spin at face value, the news media have trained their eagle eye not on the crafty magician’s hands, but on the breasts of his assistant, just as the Fed might have hoped. And second, the notion of insolvency’s being “much less likely” is a blatant cop-out that as much as admits the news media don’t know what the hell the rule change is going to accomplish.

They are telling us the Fed’s three-card-Monte switcheroo is significant because it supposedly will protect the Fed against going belly-up. But is that what is significant here?  In fact, when the day comes that the Fed is forced to acknowledges the worthlessness of its vast mortgage holdings – a day that is surely coming — even the village idiot will understand that Treasury is powerless to set things right (other than by ginning up hyperinflationary quantities of cash).

In the meantime, don’t expect the working press to delve into the actual significance of the “accounting tweak;”  for if they were to expose it for the brazen fraud it is, the resulting epiphany of a failing economy with no political route to recovery would be too painful and bewildering to bear.